Why Now Is a Great Time to Buy the Hurricanes

Carolina Hurricanes owner Peter Karmanos is looking to sell his NHL franchise. His reasoning seems to be sound, as he’s 71 and would prefer to leave on his own terms rather than being forced out like we’ve seen happen to two NBA owners this year. He’s looking for the $400 million range that divisional rival New York Islanders sold for this summer when John Wang ended his tenure. That number seems high, according to the most recent Forbes’ valuation of the franchise, where the team ranked 27th overall, just behind the Islanders. However, the team’s new management, combined with the potential in the “Research Triangle” that includes Raleigh, actually makes now a good time to invest in the team.

VALUE OF THE ON-ICE TEAM

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Carolina Hurricane Eric Staal – Photo By Andy Martin Jr

Carolina finished seventh in the very competitive Metropolitan Division last season. The team took a huge hit with Jordan Staal breaking his tibia this week in Buffalo. According to capgeek.com, Jordan is one of three top-paid forwards who are locked in with the Canes through 2018. Jordan’s older brother Eric is the highest-paid Cane at 8 million/year and has two seasons left on his current contract. The three highest paid blueliners are locked in for the next two years, including Justin Faulk for six years. Andrej Sekara has been a steal at $2.75 mil but he’ll be up for a new deal (and presumed raise) once this year ends. Cam Ward has two years left on his contract with $ 6 million-plus in cap hit and a no-trade clause. Whether or not he can wrest his starting job from Anton Khudobin will tell if this contract becomes an albatross.

The offseason created some front-office changes in Raleigh. Stanley Cup champion Ron Francis takes over at GM and Bill Peters is the bench boss. Peters worked as an assistant to Mike Babock in Detroit after years as head coach in juniors and the AHL. Francis has been with the Hurricanes franchise for years as a player and executive. This is a good battery that has already secured Alex Semin, a top-rate forward with tremendous upside. In a division like the Metropolitan (which absolutely sucks as a name and I demand a return to the old name divisions from the 80s/90s), teams need one agitator to counter the likes of Zac Rinaldo in Philly and Dan Carcillo on the Rangers. The on-ice productivity should go up and look for Carolina to contend for the playoffs in the next couple seasons if they can get their goaltending situation solved.

THE BUSINESS SIDE

It’s been almost twenty years since Karmanos contentiously moved the Hartford Whalers from New England to the Carolinas. Hockey in Dixie wasn’t a new proposition but a dicey one at that. Not only has the team won a Stanley Cup, they have helped grow the sport in the area. The ECHL has three teams in South Carolina alone. The Charlotte Checkers, the Hurricanes’ AHL affiliate, consistently draw in the top third of the league, after the town moved up from the ECHL.

Part of the reasoning behind leaving Hartford was the business drain from the Northeast that headed South. This trend is continuing, as the Research Triangle Region notes. Over 60,000 move to the region annually, according to the organization, as the combination of top-flight universities, low taxes, and the fact that it doesn’t snow all winter continues to attract businesses big and small.

Here’s where the Hurricanes can succeed on the financial scoreboard. The “brain gain” will continue to draw talent, especially those from hockey areas like New England and the Midwest. Top science schools like Michigan and those in the Northeast have renown hockey programs and attract students who are fans. As has happened in other Metropolitan Division markets, more kids will take to the ice and pique interest in the NHL franchise. These businesses and schools will need to use entertainment options to close deals and recruit and retain top employees. In Raleigh-Durham, the Canes are the best option Their prices are reasonable and your overall value is better compared to other teams in the Northeast.

$400 million is a high price right now. Karmanos will probably close his deal north of $250 million and still make a large profit off his initial $48 million purchase price 20 years ago. That price tag would bring it in line with the price David Blitzer and Josh Harris payed for the Devils in 2013. This is a team with perhaps the most financial upside in the Eastern Conference and can make someone a lot of money on their own growth potential. The league will continue to increase teams’ value as it adds more franchises. To borrow a line from Ferris Bueller: “If you have the means, I suggest picking one up.”