The team is expected to stay in Anaheim.
Ending its foray into sports team ownership, the Walt Disney Co. agreed Friday to sell the Mighty Ducks to Orange County technology entrepreneur Henry Samueli and his wife, Susan, seemingly assuring that the NHL franchise would remain in Anaheim.
The deal, which must be approved by the league’s Board of Governors, was said to be worth $75 million and includes Disney Ice, the team’s Anaheim training facility.
It comes as the sport is caught in the throes of a financial crisis that led NHL owners to lock out players in September and, last week, cancel the 2004-05 season without a game being played.
The Samuelis said the labor strife had no effect on their decision to buy the team, adding that the deal was attractive because they also control the Ducks’ arena, the Arrowhead Pond.
“Since we manage the Pond … it seemed natural to purchase the team since Disney had it up for sale for quite a while,” said Henry Samueli, 50, the co-founder of Irvine-based Broadcom Corp.
“This keeps the team under local ownership. It made sense for Susan and I to step up.”
The long-expected sale marks the end of an era for Disney, which had sought to use its ownership of the Ducks and Angels to make its Anaheim theme parks a more appealing destination and to create a regional sports channel.
Disney paid a $50-million expansion fee to launch the Ducks in 1993, after the success of the movie “The Mighty Ducks.” The film and the team were offshoots of company Chief Executive Michael Eisner’s interest in hockey, born from his sons’ participation in the sport.
NHL executives hailed Disney’s arrival as a coup, and Eisner’s involvement led to the NHL’s best U.S. TV deal, with ABC and ESPN paying the league $600 million over five years.
In its early years, the team was a cash cow, with merchandise sales among the highest in sports.
But the Ducks began to hemorrhage money – losing about $28 million last season and $12 million in 2002-03, the year they unexpectedly reached the Stanley Cup final.
Disney’s plans for ESPN West had collapsed in 1998, and without that new channel, which would have carried Angel and Duck games, Disney could not justify continued ownership of two money-losing teams.
The company put the Angels and Ducks on the market in 1999 and negotiated with Samueli – and his Broadcom partner Henry Nicholas – to buy both teams.
They had approached Disney about acquiring rights to interactive broadcasts, a way to spur sales of the Broadcom computer chips that would have enabled viewers to buy tickets and team merchandise while watching the game, with a few clicks of the remote control.
Disney responded by asking the two to buy the teams outright, in a $450-million deal that valued the Angels at $300 million and the Ducks at $150 million.
In 2002, after the teams remained unsold for three years, Disney hired the New York investment bank Lehman Bros. to get the teams sold, separately or together. In 2003, Arte Moreno bought the Angels for $183.5 million.
“We are confident that Henry and Susan Samueli will bring continued success to the Ducks, and we will remain among the biggest fans of the team going forward,” Eisner said in a statement.
Samueli is chairman and chief technical officer for Broadcom, which he and Nicholas founded in 1991. Samueli and his wife have become major philanthropists in Orange County through the Samueli Foundation, donating $160 million to a variety of causes over the last five years. The couple and their three daughters are avid sports fans and participants.
Samueli took over management of the Pond in December 2003. Pond officials for years have tried to lure an NBA franchise and were prepared to pursue the Clippers this summer. But when the Clippers signed a new lease with Staples Center in October, Samueli focused his attention on the Ducks.
A source familiar with the deal said it was mostly cash, for about $75 million, with Samueli assuming some minor debt. Another source, with knowledge of the deal’s details, said the price for the team was $60 million, with the additional $15 million going to purchase the training facility and secure merchandising rights to the Mighty Duck name.
The Ducks’ lease with the Pond allowed Disney to share in, and in some cases monopolize, revenue streams from non-hockey events. By owning the Ducks, Samueli will now be able to pocket all profits.
The proposed sale generated cheers at City Hall in Anaheim. The Ducks’ lease allows the team to leave town with two years’ notice, but concern over whether the team would stay in Anaheim in a post-lockout NHL evaporated.
“This is the perfect buyer,” City Manager Dave Morgan said. “Henry and Susan are people of substance here in Orange County. They totally understand the market. We couldn’t be happier to have them as partners.”
Unlike Moreno, who has changed his team’s designation to include Los Angeles, Henry Samueli said the couple had no intention of altering the Ducks’ city affiliation. However, he left open the possibility of changing their nickname. “We like the name Mighty Ducks and certainly see no compelling reason to change it,” he said. “If the fans want to change, we’ll change it.”
Morgan said he believes that the sale will boost efforts to attract an NBA team, a goal echoed by Samueli.
“I would love to lure an NBA franchise. In fact that’s one of the secondary motives” for buying the Ducks, he said.
“Having control over the main tenants at the Pond gives us leverage to lure an NBA franchise.”
The Samuelis competed with a small group of potential buyers and Disney dismissed their original offer, said to be between $50 million and $60 million.
The bidding picked up speed, a source familiar with the process said, after the list of potential buyers was recently trimmed to two. That led to what the source called a “highly complex deal” that was completed Friday.
NHL executives had feared that Disney would unload the team at a bargain price. The NHL was prepared to step in, take over the team and find a buyer, multiple league sources have said.
In recent NHL franchise sales, the Ottawa Senators and Buffalo Sabres went for about $93 million each, though those deals included arenas. The Ducks’ total sale price of $75 million is expected to be acceptable to the NHL.
The Duck sale will not be on the agenda at the NHL board of governors’ meeting Tuesday, a league spokesman said. Nor will it likely make the agenda for the next meeting, which has not been scheduled. League executives must first examine the Samuelis and their financing.
“It’s really a due diligence process,” said Frank Brown, a spokesman for the NHL. “It’s exhausting and time-consuming and there’s never any timeline for it.”
*Times staff writers Richard Verrier, Terril Yue Jones and Helene Elliott contributed to this report.
Disney Will Sell Ducks to Couple
The team is expected to stay in Anaheim.
About Lou Mongello
Lou Mongello is a former attorney who left the practice to pursue his passion, and is now a recognized Disney expert, author, speaker, and host of WDW Radio. Learn more…