A little over 15 years ago, a television show debuted on ABC that forever changed how laypeople look at and discuss business. Unless you were a business person you rarely ever cared how much a company was worth. Sure, you’d care how much your car or house was worth when attempting to sell it, but that’s not really the same thing. But why is this being discussed in a hockey column?

Every year, a handful of sports business publications puts out their lists of the most valuable franchises in each of the major sports. However, unless you possessed the type of wealth that would allow you to purchase either part of or a whole pro sports team, you likely didn’t care how much your favorite team was worth. Did New York Rangers fans ever care that their team was one of the most valuable in The NHL? Did they care if the team was worth $2 billion or $3 billion? Again, unless they were trying to purchase a share of the team, or the whole team from Owner James Dolan, what did it matter? 

Well, funny thing, that show we mentioned at the top of the column, was named “Shark Tank.” The investor “sharks” quickly became a hit on mainstream television as they taught the world about business, valuations and so forth. They made people young and old want to get into business as entrepreneurs. The show became so popular that even kids tuned in on a weekly basis and that generation of children has now grown up to become business people themselves. It’s no longer “strictly” business people who talk about valuations and how companies grow or decline in revenue.

That goes the same for sports teams. If you pay attention online when those sports business publications drop their valuation lists, fans now care. They argue till they’re blue in the face about whether or not their favorite team should be worth more or less than the other teams on the list. 

In The NHL, for the first time ever, all 32 franchises are reportedly worth at least $1 billion. We say “reportedly,” because there’s always the matter of negotiating that comes into play when a team goes up for sale. If the owner is trying to sell quickly, he or she may take a slightly lesser deal in order to finalize the transaction sooner rather than later. But we digress.

CNBC’s Senior Sports Reporter is Michael Ozanian and he recently published his list of where each team in The NHL ranks according to their current valuations; which he determined through a lot of hard work. For those of you wishing to see the full list, you can click on it here.

In the interest of helping you, our readers, learn more about how Ozanian figured out the current values of all 32 NHL teams, “Blittner’s Blue Line” caught up with him to talk about how the valuations were determined.

*Editor’s Note: Questions and Answers have been lightly edited for clarity.

Blittner’s Blue Line: How did you reach the valuation for each team?

Ozanian: “I value teams based on multiples of revenue. Six times revenue, seven times revenue and so forth. And those revenue multiples are based on historical deals. So, for example, the Tampa Bay Lightning, just sold for $1.8 billion or 8.2 times revenue. We look at comparable teams and comparable markets with comparable arena situations and then adjust the revenue multiples accordingly. As an example, a big market team with high ticket prices that always sells out like the Toronto Maple Leafs or the New York Rangers, they’re gonna go for a higher revenue multiple than say teams at the bottom of our list who, have low ticket prices and have trouble selling out, like Winnipeg and Columbus. 

“Also, a factor is, do teams control the economics of the arenas so they can also get revenue from non-NHL events; like concerts and so forth? That’s a big advantage. Recently, we’ve had the Tampa Bay Lightning sell. We’ve had the Ottawa Senators sell for 7.4 times revenue. We had a deal struck a couple of years (ago where the) Nashville Predators had a $930 million valuation. And then, (there’s the) pretty significant stake in the Maple Leafs (that’s) about to change hands. So we look at all these deals and then do comps with the other teams in The League.”

Blittner’s Blue Line: How do you fairly determine what revenue multiple to use? Especially since not every team and transaction is created the same.

Ozanian: “What we do is, you have to (take) teams (and) sort of group them in similar situations. You wouldn’t value Tampa, they operate their arena and they have a certain market, we know what they do in terms of ticket sales, what their TV deal is, what their sponsorships are and so forth. So we would use that multiple to value similar type teams in similar situations. 

“We wouldn’t value Columbus at the same revenue multiple as Tampa because Columbus has bad arena economics. They don’t get revenue, for example, from non-NHL events. So you have to group teams in like markets with similar arena situations and so forth. I also speak to many, many sports bankers, sports attorneys and people like that to get as much detail as I can on transactions, team economics and so forth.”

Blittner’s Blue Line: Were you surprised by where any of the teams landed on your list?

Ozanian: “No. If you look at the revenue numbers, in most instances, when teams are grouped together, their revenues are very close. Now you gotta realize, in some cases, the revenue could be really high if a team, let’s say goes to The Stanley Cup Final like the Panthers. So their revenue of $181 million, that’s going to be hard to match next year because it would only be matched if they go to The Final again. 

“You have to look at variances like that and account for stuff like that. In terms of a surprise, once you figure out and get an understanding of what the team’s lease is or memorandum of understanding in their arena, what the economics are and you piece together all the revenue streams the team has, the value itself is not a surprise.”

Blittner’s Blue Line: Which teams do you think could see the biggest jump in their valuations over the next few years?

Ozanian: “First of all, you have to look at and really get an understanding of what their arena economics are in terms of how they might change. Is a team going to get, for instance, The Capitals or the Flames, they’re teams who are getting major renovations or new arenas in the next few years. Those are teams who could see increases. If, for example, the Calgary Flames were to sell out all their suites, maximize their arena sponsorship revenue and get a good ticket price for their premium seating and stuff, they could be a team who could see a big increase in a few years when they move into their new building.”

Blittner’s Blue Line: What do you make of the valuations for the teams at the top of the list? Can they see any big deltas over the next few years?

Ozanian: “A big thing for The League overall is, ‘what is going to happen with the next Canadian TV deal?’ (That) would start in two years. Rogers has an exclusive on the negotiating window that begins next year. We kind of think there’s gonna be a pretty big increase, which I’ve adjusted for a little bit in my numbers, but until we actually know what that increase is gonna be, it’s tough to have that fully reflected in the valuation of all these teams. 

“The other factor that could determine how these teams do is, ‘Are there gonna be any changes in their local media rights?’ So, Edmonton, for example, this season is starting a new TV deal, which is twice their previous deal. You could see (that) if Montreal or Toronto were to get new TV deals in the next few years, that were also at big increases, that could certainly help the value of those teams as well.”

Blittner’s Blue Line: Do you foresee any teams dropping in value? If so, why might that happen?

Ozanian: “The only way you’re gonna know if a team is gonna go down in value is if you could predict a serious drop in their revenue decline. And I think what’s gonna happen for a lot of these teams is, as the regional sports network model continues to weaken and teams go to more of a combination of local broadcast TV with streaming, in The US I’m talking about, not the Canadian teams. I think that teams who cannot figure out how to monetize their local rights outside of the RSN model are gonna face some headwinds to their revenue.

“It’s going to be challenging. That said, it doesn’t mean that they have to get the same revenue in local media two years from now that they got two years ago in their RSN deal to keep their overall revenue going up. I mean, the Devils took a small haircut in their local media rights with MSG recently, but they more than made up for it with increases in revenue in other areas. 

“The teams who can navigate that and find increases in revenue outside of the local media market, in The US, they’re gonna continue to do well. If teams struggle with that, then they could face revenue challenges and they’re the ones who are gonna have to hope that the national TV money, like the next Canadian deal, makes up for that difference.” 

There you have it, a comprehensive lesson in the art of determining franchise valuations for NHL teams.