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Forbes: Islanders value keeps rising, to 18th in league, even as profits remain elusive

The value of the New York Islanders keeps rising, to $520 million from $440 million, now 18th in the 31-team league, according to Forbes's annual round-up of team valuations.

And the team's finally worth more than the 2016 purchase price, despite a history of losses, thanks in part to a general rise in team values around the league. Surely, the future Belmont arena--replacing the too-small-but-beloved Nassau Coliseum, and the awkward Barclays Center--is part of that estimate.

The screenshot below indicates an 18% increase in value, a 58% debt-to-value ratio (second-highest in the league), $115 million in revenue, and a loss of $3.5 million in operating income.

The big picture

Forbes 12/11/19 published The NHL’s Most Valuable Teams 2019; New York Rangers On Top At $1.65 Billion, by Michael Ozanian, Kurt Badenhausen and Christina Settimi.

The Rangers benefit from being in New York City, home to corporate clients. The Islanders not so much, though they're doing better. Write the authors:
The 31 team NHL is the most bifurcated major North American sports league. The top five teams (Rangers, Toronto Maple Leafs, Montreal Canadiens, Chicago Blackhawks, Boston Bruins) are worth a combined $6.58 billion, 3.7 times more than the bottom five teams (Arizona Coyotes, Florida Panthers, Columbus Blue Jackets, Buffalo Sabres, Winnipeg Jets). 
The other leagues get to share a bigger pie of national TV deals.

Note that the valuation formula is inexact:
Our valuations are enterprise values (equity plus net debt) that include the economics of each team’s arena deal, but not the value of the real estate itself. We do our best to adjust values for teams moving into new arenas based on how the arena is being financed, when it will open and the degree to which we can estimate revenues from the new arena.
About the Islanders

From Forbes's page on the Islanders:
The Islanders broke ground this summer on their new arena and entertainment complex near the Belmont racetrack. The team, which currently plays its home games at both the Barclays Center (home arena for the NBA's Brooklyn Nets) and the Nassau Coliseum on Long Island, is expected to move into its new digs for the 2021-22 season. The $1.3 billion construction project is expected to add Long Island Railroad access to Belmont Park— home of the Belmont Stakes. The project includes retail space and a 250-room hotel. The project is being privately financed by New York Arena Partners, a joint venture between Sterling Equities, Scott Malkin Group and Oak View Group.
That of course is generous--there is already LIRR access, just awkward for Long Island fans, and the "privately financed" project includes cheap publicly owned land.

Changes over time

The screenshot below, from a neat Forbes interactive graphic, shows changes over time. The increase in the team's value is fairly steady, while the revenue is bumpy, and the operating income consistently in the red, except for one year.

By the way, that seemingly high 2016 income was just $2.7 million, though the height of the bar graph vastly exceeds the depth of the highlighted bar for the $3.5 million loss. That seems a flaw in the graphic design.

So, why do team values continue to rise when there's no profit to distribute? (Note that operating income does include league-wide revenue-sharing.)

That's a bit of a mystery to me, but teams are scarce commodities, "paintings for billionaires" (as Jay-Z said of the NBA), and leagues are monopolies, so the overall components of valuation, as noted below, depend less on the annual bottom line than general trends.

Changing Valuation Breakdown

Note the components of the 2019 Valuation:
  • Sport: $150 million
  • Market: $218 million
  • Stadium: $82 million
  • Brand: $69 million

Note the components of the 2018 Valuation, below:
  • Sport: $132 million
  • Market: $187 million
  • Stadium: $67 million
  • Brand: $54 million
That's a steady a steady increase on all fronts. It's hard to think that more games at the Nassau Coliseum add that much value.

Note the components of the 2016 (not 2017) Valuation, at right:
  • Sport: $98 million
  • Market: $169 million
  • Stadium: $69 million
  • Brand: $49 million
Historical valuations

Thanks to past Forbes coverage, let's take a look at the past valuations of the Islanders.

The graphic below is based on 2019, 2018, 2017, 2016, 2015, 2014, and 2013 coverage in Forbes, thanks to the Internet Archive.

Note that in all but one year the operating income ran a deficit, hence the red ink.

2019 coverage of New York Rangers

From Forbes: