Ottawa Senators left wing Brady Tkachuk watches as his shot on Buffalo Sabres goaltender Eric Comrie crosses the goal line and into the net.The Canadian Press
Sal Galatioto took the stage at an investor conference in Manhattan this summer, on a day when stocks were in free fall.
The host of the panel opened the session by asking Mr. Galatioto, the founder of boutique investment bank Galatioto Sports Partners (GSP), for his take on the state of the investing world, considering the bleak backdrop of soaring interest rates and recession fears.
“I’ve never seen the markets hotter than this,” Mr. Galatioto said. “I have never been busier.”
The host, a Baker McKenzie lawyer named Karl Paulson-Egbert, stopped Mr. Galatioto mid-sentence and asked him to explain what he does, and how he could be so upbeat. The banker explained that he has spent the past four decades advising some of the world’s richest people on buying and selling professional sports franchises.
In those lofty economic circles, Mr. Galatioto explained, there is now a scarcity of teams to buy and ever-increasing demand. “Capitalism is a wonderful thing,” he said. “It is producing more and more billionaires.”
Wanted: Two billionaires to buy NHL’s Ottawa Senators
Mr. Galatioto named some of the deals his New York-based firm was working on, including sales of stakes in Major League Baseball’s Washington Nationals and Italian soccer powerhouse AC Milan. Then he teased the crowd, which included investors with pockets deep enough to buy teams of their own. “We’ve got a bunch of great stuff in our pipeline,” he said.
This month, GSP revealed that its pipeline includes the National Hockey League’s Ottawa Senators. The firm is advising late Senators owner Eugene Melynk’s two daughters on the sale of the team, which their father acquired in 2003 for US$92-million. Mr. Melynk’s heirs have said the franchise must remain in Canada’s capital. Estimates of the eventual sale price range from US$600-million to US$800-million.
Sheldon Plener, a lawyer at Cassels Brock & Blackwell LLP who serves as chair of the team’s board, said in a news release that the Senators had hired GSP as “a necessary and prudent step to connect with those deeply interested parties who can show us what their vision is for the future of the team.”
Connecting billionaires with teams – and with the league officials, politicians and broadcasters that help sports franchises operate – is all Mr. Galatioto does. With a leadership team of just him and four key colleagues, among them former National Basketball Association chief operating officer Russ Granik, GSP has become the go-to investment bank for pro sports owners.
Mr. Galatioto and the remaining three members of GSP’s inner circle – Brad Katcher, Dan O’Brien and Phil Landolphi – got their start in the 1990s, raising money for team owners as bankers at Lehman Brothers. The entrepreneurs who buy teams typically borrow significant sums, because their wealth is tied up in their businesses, and the Lehman bankers arranged the loans. The group struck out on their own in 2004, founding GSP and avoiding Lehman’s bankruptcy in 2008.
Early on, GSP built its brand by advising marquee franchises such as the New York Yankees. The bankers have now advised team owners in every North American league, and in European soccer circles.
Deadpool actor Ryan Reynolds said last week on The Tonight Show that he wants to invest alongside the new owner of the Senators. If he’s serious, Mr. Galatioto has a blueprint for the partnership. He worked with Major League Baseball’s L.A. Dodgers, which counts Magic Johnson as a minority partner.
GSP raises money for its clients, but the firm’s cachet stems from its deep relationships in the clubby and complex world of sports owners. “A franchise is more than a team,” said Chris Bevilacqua, a co-founder of sports consultancy Bevilacqua Helfant Ventures. “It’s a media business, a data business and real estate business.”
That is certainly the case in Ottawa, where the next owner of the Senators will need real estate expertise to take advantage of an opportunity to increase the team’s value by relocating it from its arena in the suburbs to a downtown development in the LeBreton Flats. While the move has been discussed for years, Mr. Melynk‘s attempts to cut a deal with real estate partners ended in lawsuits.
GSP‘s services combine psychology with finance. One co-founder, Mr. Landolphi, specializes in discreetly resolving conflicts and arbitrating disputes between co-owners of teams. Mr. Galatioto and his colleagues declined to comment on their work for the Senators.
Over the past two decades, GSP has benefitted from a continuous bull market for professional sports teams. In 2011, the bankers set a high water mark for the value of an NHL franchise when they advised on the US$265-million sale of the Dallas Stars. The most recent team to change hands, the Nashville Predators, fetched US$775-million.
The Senators auction is attracting entrepreneurs from many sectors: transport billionaire Michael Andlauer, financial services magnate André Desmarais and waste disposal tycoon Patrick Dovigi have all expressed interest.
In coming weeks, Mr. Galatioto will be the person bidders need to impress.
Galatioto Sports Partners blockbuster deals
Boutique investment bank Galatioto Sports Partners, currently selling the NHL’s Ottawa Senators, has quarterbacked some of the biggest deals in pro sports.
2022: Advised venture capitalist Chamath Palihapitiya on the sale of a minority stake in the NBA champion Golden State Warriors, a US$5-billion franchise
2019: Helped the L.A. Dodgers sell minority stakes to two investors, Robert Plummer and Alan Smolinisky, valuing the baseball team at US$3.2-billion
2019: Advised an investor in the St. Louis Blues on a sale to an all-local ownership group. The NHL team is now valued at US$770-million
2011: Advised on the US$265-million sale of the NHL’s Dallas Stars to Vancouver real estate developer Tom Gaglardi, after the franchise filed for bankruptcy
Andrew Willis