REUTERS - In October, Jeff Sprecher, chief executive of upstart IntercontinentalExchange , approached NYSE Euronext CEO Duncan Niederauer with a modest proposal to team up on clearing trades in London.
As the men continued talking, Sprecher grew bolder, instead suggesting that ICE buy NYSE in what became an $8.2 billion deal announced on Thursday.
The deal will link up two powerful derivatives exchange and clearing house operators, but threatens to further reduce the clout of the New York Stock Exchange. While the New York Stock Exchange has stood for 200 years as an iconic symbol of U.S. capitalism, it is almost an afterthought in this deal.
For ICE, the crown jewel of NYSE Euronext is Liffe, Europe's second-largest derivatives market, analysts said. Niederauer had long felt that NYSE's shareholders did not appreciate the true value of the London-based futures and options exchange, and had talked to bankers about how to improve NYSE's stock price, a person familiar with the matter said.
Liffe will help ICE compete against U.S.-based CME Group, owner of the Chicago Board of Trade. Derivatives trading remains highly profitable for the exchanges, and new rules next year will dramatically expand the demand for clearing over-the-counter contracts.
The stock market businesses are less valuable to ICE. The company said it will try to spin off the Euronext European stock market businesses in a public offering, generating speculation it may also have little interest in the NYSE trading floor. Profits from stock trading have been significantly eroded by new technology and the rise of other places for investors to trade, including venues known as "dark pools."
ICE's Sprecher will be CEO of the combined organization, and the NYSE Euronext CEO will be president, a ceremonial title at many U.S. companies. In an interview, Niederauer said he would remain at least through 2014 as an "important senior member" of Sprecher's management team.
Niederauer will also be CEO of the NYSE Group. The combined company will be based in New York and Atlanta, where ICE is headqurtered.
Sprecher and Niederauerhave been friends for years, but the two stopped talking for about six weeks in 2011 when ICE teamed up with Nasdaq OMX Group to make an unsolicited bid for NYSE Euronext. That bid came even as the New York Stock Exchange operator was trying to sell itself to Deutsche Bourse . Regulatory concerns killed both deals.
Without the Nasdaq or Deutsche Bourse's huge equity operations, ICE alone has far less overlapping business and should face easy approvals, antitrust lawyers said.
The deal values each NYSE Euronext share at $33.12, a 28 percent premium to the stock's closing price on Wednesday. NYSE Euronext stock rose 34 percent to end at $32.25 on Thursday. ICE's shares fell as much as 4 percent but finished regular trading at $127.60, up 1.4 percent on the day.
ICE said it would pay annual dividends of $300 million to the companies' shareholders once the deal closes, about what NYSE pays its shareholders now.
IN THE DOLDRUMS
The deal reflected Niederauer's inability to get his company's share price out of the doldrums. Before the latest ICE offer emerged, NYSE Euronext's shares had fallen by nearly a third since ICE and Nasdaq launched their thwarted joint bid.
Further consolidation of exchanges was "inevitable" and ICE was a "great partner," Niederauer said on a call with analysts, so continuing on alone did not make sense.
"We can sit here and keep slugging away and keep working hard, but the bottom line is we had not delivered, in my mind, sufficient returns to shareholders," Niederauer said. NYSE bought Euronext, including Liffe, for 8 billion euros in 2007.
Sprecher incorporated the stalled stock price - and the unrecognized value of Liffe - as part of his pitch.
"The reason that we were prepared to pay $33 a share for a company that was trading at $24 a share was that there is a $33 company in here and the market was just not either seeing it or willing to give credit for," he said in an interview. "We said, 'let's just force the credit.'"
The two sides negotiated in secret for about eight to 10 weeks, the two CEOs said. In options markets, there were some signs that word might have leaked out, with a sudden upswing in the demand for call options on NYSE, which perform well when a company's share price rises.
ICE started out as an online marketplace for energy trading before Sprecher initiated a string of acquisitions from the London-based International Petroleum Exchange in 2001, to the New York Board of Trade and, most recently, a handful of smaller deals, including a climate exchange and a stake in a Brazilian clearing house.
ICE's current main operations are in energy futures trading and, it has steered clear of stocks and stock-options trading, key businesses for NYSE Euronext.
"This deal is probably not going to generate a lot of concern from an antitrust perspective," said Warren Rosborough, a veteran of the U.S. Justice Department's antitrust division who is now with the law firm McDermott Will & Emery.
In clearing, ICE has a popular U.S. over-the-counter and listed business, while Liffe's operation is strong in futures and based in Europe.
Concerns over a small amount of competing derivatives business could be addressed with straightforward divestitures, Rosborough said. "It's an open question about whether it will generate questions," he added. "If there is a fix, it will be relatively easy fix."
Sprecher said the deal had been "well received" by regulators after he and Niederauer completed a "whirlwind tour" in the United States and Europe ahead of Thursday's announcement. Officials at the European Commission, the Department of Justice and Securities and Exchange Commission declined to comment.
Last year, Justice Department objections blocked ICE and Nasdaq OMX's $11 billion bid on concerns the tie-up would dominate U.S. stock listings. The rival $9.3 billion bid by Deutsche Boerse fell afoul of European regulators.
A combined ICE-NYSE Euronext would leap-frog Deutsche Boerse to become the world's third-largest exchange group with a combined market value of $15.2 billion. CME Group has a market value of $17.5 billion, Thomson Reuters data shows.
Hong Kong Exchanges and Clearing is the world's largest exchange group with a market cap of $19.5 billion.
ICE said it expected to achieve $450 million in cost savings from the takeover. In the first year after the deal closes, additional earnings of 15 percent are expected.
Long-time Wall Street traders saw the potential takeover of the venerable stock exchange by a 12-year-old derivatives upstart as fraught with symbolism.
"It's the end of an era," said a director on the board of a rival exchange who did not have clearance to speak to the press and asked not to be named. "I think ultimately the floor will be closed, because Jeff (Sprecher) has shut every floor he's ever had," the person said.
With the deal still a long way from completed, Sprecher and Niederauer said they planned to keep the high-profile NYSE trading floor running. "The floor has value and in particular, it has a lot of brand value," Niederauer said. "So we are committed. Jeff is committed."
The exchange was prepared to shut down the floor temporarily during superstorm Sandy and trade completely electronically, Wall Street executives said.
Shareholders will have the option of accepting $33.12 in cash per NYSE Euronext share or 0.2581 ICE share or a mix of $11.27 in cash and 0.1703 ICE share, subject to a maximum cash consideration of $2.7 billion.
Morgan Stanley was the lead financial adviser to ICE, with assistance from BMO Capital Markets Corp, Broadhaven Capital Partners, JPMorgan Chase & Co , Lazard Group LLC , Societe Generale Corporate & Investment Banking, and Wells Fargo Securities LLC . ICE legal advisers are Sullivan & Cromwell LLP and Shearman & Sterling LLP.
The main financial advisers to NYSE Euronext are Perella Weinberg Partners and BNP Paribas. Further financial advice to NYSE Euronext was provided by Blackstone Advisory Partners, Citigroup , Goldman Sachs & Co. and Moelis & Co. Legal advisers to NYSE Euronext are Wachtell, Lipton, Rosen & Katz, Slaughter & May, and Stibbe NV.
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Wall Street bounces back on hope for "cliff' solution
Labels: BusinessNEW YORK (Reuters) - U.S. stocks rebounded from early losses on Thursday after Republican House Speaker John Boehner said he would keep working on a solution to the "fiscal cliff" while also slamming President Barack Obama's approach to budget talks.
NYSE Euronext was the S&P 500's biggest gainer, surging 34 percent to $32.25 after IntercontinentalExchange Inc said it would buy the operator of the New York Stock Exchange for $8.2 billion.
ICE shares shot up 1.4 percent to $130.10.
Republicans in the U.S. House of Representatives pushed ahead with their own plan to avoid a series of steep tax hikes and spending cuts due in early 2013, complicating negotiations with the White House. Obama has vowed to veto the plan.
Investors have hoped for an agreement soon between policymakers, but progress has been slow. Boehner said he expected to continue to work with Obama, but repeated his charge that the president and Senate Democrats were trying to "slow walk" the country over the fiscal cliff.
"Speaker Boehner went on the air and basically told us he doesn't like what the president's doing or not doing, and the markets rallied on that, which was kind of weird," said Stephen Guilfoyle, a trader at Meridian Equity Partners, in New York.
The Dow Jones industrial average <.dji> gained 59.75 points, or 0.45 percent, to 13,311.72 at the close. The S&P 500 <.spx> rose 7.88 points, or 0.55 percent, to 1,443.69. The Nasdaq Composite <.ixic> climbed 6.02 points, or 0.20 percent, to 3,050.39.
Stocks rallied earlier in the week on signs of progress in the fiscal cliff negotiations. But with the S&P 500 up 14.8 percent so far this year, investors are taking the opportunity to engage in some hedging as 2012 comes to a close.
Herbalife lost 9.6 percent to $33.74 following news that hedge fund manager Bill Ackman was betting against the company as part of his big end-of-the-year short.
The S&P Financial Index <.gspf> gained 1.4 percent.
The U.S. economy grew 3.1 percent in the third quarter, faster than previously estimated, while the number of Americans filing new claims for jobless benefits rose more than expected in the latest week.
Existing home sales jumped 5.9 percent in November, more than expected, and by the fastest monthly pace in three years. An index of housing shares <.hgx> gained 0.78 percent.
But KB Home slid 6.4 percent to $15.60 as the company reported higher homebuilding costs and expenses in the fourth quarter.
About 6.4 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, roughly in line with the daily average so far this year of about 6.46 billion shares.
On the NYSE, advancers outnumbered decliners by a ratio of about 2 to 1. On the Nasdaq, five stocks rose for every three that fell.
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Regulator plans to sanction JPMorgan on "Whale" trade - report
Labels: Business(Reuters) - A U.S. bank regulator is planning to issue a formal action against JPMorgan Chase & Co , demanding that the bank fix lapses in risk controls that allowed some of its traders to build a risky bet that lost $6.2 billion, the Wall Street Journal reported on Thursday.
The Office of the Comptroller of the Currency, a division of the Treasury Department that oversees banks, is not expected to levy a fine, but it does plan to issue an enforcement action, the Journal reported, citing unnamed people familiar with the matter.
It would be the first regulatory sanction stemming from the high-profile trading debacle at JPMorgan, which happened in its London office. Bruno Iskil, a trader involved with the bet, earned the nickname "London Whale" because of the huge position he and his colleagues had been built using complex derivatives.
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ICE to buy NYSE Euronext for $8.2 billion
Labels: BusinessREUTERS - In October, Jeff Sprecher, chief executive of upstart IntercontinentalExchange , approached NYSE Euronext CEO Duncan Niederauer with a modest proposal to team up on clearing trades in London.
As the men continued talking, Sprecher grew bolder, instead suggesting that ICE buy NYSE in what became an $8.2 billion deal announced on Thursday.
The deal will link up two powerful derivatives exchange and clearing house operators, but threatens to further reduce the clout of the New York Stock Exchange. While the New York Stock Exchange has stood for 200 years as an iconic symbol of U.S. capitalism, it is almost an afterthought in this deal.
For ICE, the crown jewel of NYSE Euronext is Liffe, Europe's second-largest derivatives market, analysts said. Niederauer had long felt that NYSE's shareholders did not appreciate the true value of the London-based futures and options exchange, and had talked to bankers about how to improve NYSE's stock price, a person familiar with the matter said.
Liffe will help ICE compete against U.S.-based CME Group, owner of the Chicago Board of Trade. Derivatives trading remains highly profitable for the exchanges, and new rules next year will dramatically expand the demand for clearing over-the-counter contracts.
The stock market businesses are less valuable to ICE. The company said it will try to spin off the Euronext European stock market businesses in a public offering, generating speculation it may also have little interest in the NYSE trading floor. Profits from stock trading have been significantly eroded by new technology and the rise of other places for investors to trade, including venues known as "dark pools."
ICE's Sprecher will be CEO of the combined organization, and the NYSE Euronext CEO will be president, a ceremonial title at many U.S. companies. In an interview, Niederauer said he would remain at least through 2014 as an "important senior member" of Sprecher's management team.
Niederauer will also be CEO of the NYSE Group. The combined company will be based in New York and Atlanta, where ICE is headqurtered.
Sprecher and Niederauerhave been friends for years, but the two stopped talking for about six weeks in 2011 when ICE teamed up with Nasdaq OMX Group to make an unsolicited bid for NYSE Euronext. That bid came even as the New York Stock Exchange operator was trying to sell itself to Deutsche Bourse . Regulatory concerns killed both deals.
Without the Nasdaq or Deutsche Bourse's huge equity operations, ICE alone has far less overlapping business and should face easy approvals, antitrust lawyers said.
The deal values each NYSE Euronext share at $33.12, a 28 percent premium to the stock's closing price on Wednesday. NYSE Euronext stock rose 34 percent to end at $32.25 on Thursday. ICE's shares fell as much as 4 percent but finished regular trading at $127.60, up 1.4 percent on the day.
ICE said it would pay annual dividends of $300 million to the companies' shareholders once the deal closes, about what NYSE pays its shareholders now.
IN THE DOLDRUMS
The deal reflected Niederauer's inability to get his company's share price out of the doldrums. Before the latest ICE offer emerged, NYSE Euronext's shares had fallen by nearly a third since ICE and Nasdaq launched their thwarted joint bid.
Further consolidation of exchanges was "inevitable" and ICE was a "great partner," Niederauer said on a call with analysts, so continuing on alone did not make sense.
"We can sit here and keep slugging away and keep working hard, but the bottom line is we had not delivered, in my mind, sufficient returns to shareholders," Niederauer said. NYSE bought Euronext, including Liffe, for 8 billion euros in 2007.
Sprecher incorporated the stalled stock price - and the unrecognized value of Liffe - as part of his pitch.
"The reason that we were prepared to pay $33 a share for a company that was trading at $24 a share was that there is a $33 company in here and the market was just not either seeing it or willing to give credit for," he said in an interview. "We said, 'let's just force the credit.'"
The two sides negotiated in secret for about eight to 10 weeks, the two CEOs said. In options markets, there were some signs that word might have leaked out, with a sudden upswing in the demand for call options on NYSE, which perform well when a company's share price rises.
ICE started out as an online marketplace for energy trading before Sprecher initiated a string of acquisitions from the London-based International Petroleum Exchange in 2001, to the New York Board of Trade and, most recently, a handful of smaller deals, including a climate exchange and a stake in a Brazilian clearing house.
ICE's current main operations are in energy futures trading and, it has steered clear of stocks and stock-options trading, key businesses for NYSE Euronext.
"This deal is probably not going to generate a lot of concern from an antitrust perspective," said Warren Rosborough, a veteran of the U.S. Justice Department's antitrust division who is now with the law firm McDermott Will & Emery.
In clearing, ICE has a popular U.S. over-the-counter and listed business, while Liffe's operation is strong in futures and based in Europe.
Concerns over a small amount of competing derivatives business could be addressed with straightforward divestitures, Rosborough said. "It's an open question about whether it will generate questions," he added. "If there is a fix, it will be relatively easy fix."
Sprecher said the deal had been "well received" by regulators after he and Niederauer completed a "whirlwind tour" in the United States and Europe ahead of Thursday's announcement. Officials at the European Commission, the Department of Justice and Securities and Exchange Commission declined to comment.
Last year, Justice Department objections blocked ICE and Nasdaq OMX's $11 billion bid on concerns the tie-up would dominate U.S. stock listings. The rival $9.3 billion bid by Deutsche Boerse fell afoul of European regulators.
A combined ICE-NYSE Euronext would leap-frog Deutsche Boerse to become the world's third-largest exchange group with a combined market value of $15.2 billion. CME Group has a market value of $17.5 billion, Thomson Reuters data shows.
Hong Kong Exchanges and Clearing is the world's largest exchange group with a market cap of $19.5 billion.
ICE said it expected to achieve $450 million in cost savings from the takeover. In the first year after the deal closes, additional earnings of 15 percent are expected.
Long-time Wall Street traders saw the potential takeover of the venerable stock exchange by a 12-year-old derivatives upstart as fraught with symbolism.
"It's the end of an era," said a director on the board of a rival exchange who did not have clearance to speak to the press and asked not to be named. "I think ultimately the floor will be closed, because Jeff (Sprecher) has shut every floor he's ever had," the person said.
With the deal still a long way from completed, Sprecher and Niederauer said they planned to keep the high-profile NYSE trading floor running. "The floor has value and in particular, it has a lot of brand value," Niederauer said. "So we are committed. Jeff is committed."
The exchange was prepared to shut down the floor temporarily during superstorm Sandy and trade completely electronically, Wall Street executives said.
Shareholders will have the option of accepting $33.12 in cash per NYSE Euronext share or 0.2581 ICE share or a mix of $11.27 in cash and 0.1703 ICE share, subject to a maximum cash consideration of $2.7 billion.
Morgan Stanley was the lead financial adviser to ICE, with assistance from BMO Capital Markets Corp, Broadhaven Capital Partners, JPMorgan Chase & Co , Lazard Group LLC , Societe Generale Corporate & Investment Banking, and Wells Fargo Securities LLC . ICE legal advisers are Sullivan & Cromwell LLP and Shearman & Sterling LLP.
The main financial advisers to NYSE Euronext are Perella Weinberg Partners and BNP Paribas. Further financial advice to NYSE Euronext was provided by Blackstone Advisory Partners, Citigroup , Goldman Sachs & Co. and Moelis & Co. Legal advisers to NYSE Euronext are Wachtell, Lipton, Rosen & Katz, Slaughter & May, and Stibbe NV.
(Additional reporting by Luke Jeffs and David Brough in London, Jessica Toonkel, Jed Horowitz, Jonathan Spicer, David Gaffen and Karen Brettell in New York, Sarah N. Lynch and Diane Bartz in Washington and Ann Saphir in Chicago; writing by Carmel Crimmins and Aaron Pressman; Editing by
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Trafigura 2012 earnings fall below $1 bln - FT
Labels: BusinessSINGAPORE, Dec 21 (Reuters) - Commodities trader Trafigura
earned about $1 billion for the second straight year
in 2012, but down from a record achieved last year due to higher
staff costs and new investments, the Financial Times reported.
The privately-held company, based in Geneva and Singapore,
made a profit of $991.9 million in the year to September, down
11 percent from last year's record $1.11 billion, the FT said,
citing data from Trafigura's annual report.
The commodities trader's profits show that the profitability
of the world's top houses that dominate raw materials trade is
strong despite slower economic growth in top consumer China.
The drop from 2011 was due to higher staff costs and
expenses related to new investments and business purchases, the
FT reported.
Gross profit, a rough measure of underlying profitability,
was up on the year. Revenues fell 1.6 percent to $120 billion,
it said. The company does not release its accounts publicly.
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ICE to acquire NYSE in $8.2bn deal
Labels: BusinessLondon, Dec. 21 (ANI): IntercontinentalExchange (ICE), the 12-yr old firm dealing in contracts tied to energy and commodity prices, has agreed to buy NYSE Euronext for cash and stock in a deal worth 8.2 billion dollars.
As part of the deal, ICE also gains control of the Liffe (London International Financial Futures and Options Exchange) and stock exchanges in Paris, Lisbon, Brussels and Amsterdam. However, Liffe, an exchange through which investors can make bets on the future level of interest rates, is estimated to generate about 40pc of profits at NYSE, The Telegraph reports.
According to the paper, ICE said it would merge Liffe with ICE Clear Europe, its London-based business that clears derivatives trades once they are agreed.
"Liffe is the crown jewel in NYSE Euronext. It is a sign that exchanges are very interested in expanding in London," said Richard Perrott, an analyst at Berenberg Bank.
The deal will see ICE pay NYSE investors 33.12 dollars for each of their shares, 38pc higher than the price they closed at on Wall Street on Wednesday night, the paper said.
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NHL lockout has chilling effect on business
Labels: SportsBUFFALO, N.Y. (AP) — Most everywhere Lou Billittier turns these days, the Buffalo restaurateur is reminded of the NHL lockout, and its impact on his blue-collar, sports-mad town where Dominik Hasek became a star and the French Connection is still revered.
Billittier misses the familiar faces of Sabres players having their traditional game-day lunch at his restaurant, Chef's. He recalled a recent conversation he had with his seafood supplier, who's struggling because he also provides salmon and chicken wings to the Sabres arena, the First Niagara Center.
And then there are the arena's idled, part-time employees who stop in looking for work. With his own business down 15 percent, Billittier can only turn them away because he's concerned whether there's enough work for his staff.
"It's amazing the trickle-down effect," Billittier said, standing in his lobby, not far from Chef's "The French Connection" room, honoring the famed former Sabres line of Gilbert Perreault, Rene Robert and Rick Martin. "It bothers me, not only because we're down, but it affects everything. Our community out-reach, we can't donate to the people we normally donate to. It's brutal."
From south Florida to Vancouver, Montreal to Anaheim, a wide array of businesses located in the NHL's 30 markets have taken a significant hit because of the lockout, which is now in its fourth month and has wiped away 625 games. On Thursday, the league canceled all games through Jan. 14.
Joe Kasel, owner of the Eagle Street Grille in St. Paul, Minn., last month wrote a letter expressing his concerns to NHL Commissioner Gary Bettman.
"I had to look 32 of 48 employees in the eyes and inform them that I no longer can afford to keep them on staff," Kasel wrote. "The impact on our lives is immeasurable. One city's devastation may not seem like a powerful incentive to end the lockout; but I know this is happening in other cities around the nation."
Chris Ray, manager of the Brewhouse Downtown in Nashville, said his establishment is losing an estimated $5,000 for every canceled Predators' home game. That's already a $90,000 hit, given 18 Predators' home games have been wiped out.
It's no different at Wayne Gretzky's sports bar in Toronto, where much of the Great One's memorabilia is on display.
"Yes, it's been very slow," said a bartender, who wouldn't give her name. "I'm scared about January."
The Hockey Hall of Fame in Toronto is feeling the pinch. Hall of Fame spokeswoman Kelly Masse said they've made "adjustments" to staff because gate and retail revenues are down significantly.
And so's Hockeytown, aka, Detroit.
The downtown three-level Hockeytown Cafe, operated by Red Wings owner Mike Ilitch, was nearly empty on Monday.
"If there's not a show at the Fox, this is what it's like in here," bartender Molly Brown said, referring to the Fox Theatre next door. "We haven't fired anyone, but everyone has had their days and hours cut because the Red Wings aren't playing. We're all suffering."
The effect goes beyond bars, restaurants and tourism.
In Chicago, Gunzo's Hockey Headquarters, a four-store chain that sells hockey equipment and jerseys, is losing business.
"It's been a huge impact. Huge, huge, huge. People don't see the games and it's out of sight, out of mind," owner Keith Jackson said. "It's kind of a double-whammy for us. We're losing out on equipment sales and we're losing out on the jerseys and licensed apparel sales."
With the Christmas shopping season nearly over, Jackson worries those are sales he'll never get back even if the NHL resumes playing soon. Mid-January will be a critical time, since Bettman has said the league doesn't want to play a season shorter than 48 games per team.
With an entire season wiped out in 2004-05, outsiders are wondering whether the two sides — rich owners and well-paid players — are indifferent to the effects their labor disputes create.
"People are disgusted," said Tom Woolsey, owner of Andrews On the Corner in Detroit. He estimates his business is down 75 percent on nights the Red Wings are playing.
"It's incomprehensible to me that after four or five prosperous years in the NHL, that they can't figure out how to split $3.2 billion (in revenue)," Woolsey said.
It's mind-boggling to John Heidinger, chairman of the Service Employees International Local 200 in Buffalo, who represents about 225 ushers at First Niagara Center.
"When you're making 12 bucks an hour working at an arena, and these guys are haggling over hundreds of millions of dollars, I think for a lot of people it's a hard reality to understand," Heidinger said. "It really frustrates you."
Sabres president Ted Black can understand the frustration.
"We are disappointed the NHL and NHLPA have not been able to negotiate a new collective bargaining agreement," Black said. "Our fans are extremely disappointed, and we know the lack of NHL hockey is having a negative impact on many local businesses. At the same time, we want to play hockey under the right circumstances that the NHL will negotiate on our behalf. ... The league has our full confidence."
The impact of another lost season would be high.
In Buffalo alone, the city's tourism bureau, Visit Buffalo Niagara, estimates local hotels that host visiting NHL teams will lose between $850,000 and $1 million if there's no season.
City transit is affected. Douglas Hartmayer, spokesman for the Niagara Frontier Transportations Authority, says up to 1,700 riders use Metro Rail to attend each Sabres home game.
There's even a psychological cost, especially in a place like Buffalo, where the winters are already long, and the Sabres provide an entertaining outlet, particularly when the Buffalo Bills are struggling, as they are once again are this year.
"Especially with Pegula, you had some hope," said Joe Allman, bartender at the Swannie House, referring to Sabres owner Terry Pegula, who's raised expectations since purchasing the team two years ago. "They probably are our best chance to win."
With no hockey, and the Bills out of playoff contention for a 13th straight season, there's little for Buffalonians to fall back on.
Read More..
Billittier misses the familiar faces of Sabres players having their traditional game-day lunch at his restaurant, Chef's. He recalled a recent conversation he had with his seafood supplier, who's struggling because he also provides salmon and chicken wings to the Sabres arena, the First Niagara Center.
And then there are the arena's idled, part-time employees who stop in looking for work. With his own business down 15 percent, Billittier can only turn them away because he's concerned whether there's enough work for his staff.
"It's amazing the trickle-down effect," Billittier said, standing in his lobby, not far from Chef's "The French Connection" room, honoring the famed former Sabres line of Gilbert Perreault, Rene Robert and Rick Martin. "It bothers me, not only because we're down, but it affects everything. Our community out-reach, we can't donate to the people we normally donate to. It's brutal."
From south Florida to Vancouver, Montreal to Anaheim, a wide array of businesses located in the NHL's 30 markets have taken a significant hit because of the lockout, which is now in its fourth month and has wiped away 625 games. On Thursday, the league canceled all games through Jan. 14.
Joe Kasel, owner of the Eagle Street Grille in St. Paul, Minn., last month wrote a letter expressing his concerns to NHL Commissioner Gary Bettman.
"I had to look 32 of 48 employees in the eyes and inform them that I no longer can afford to keep them on staff," Kasel wrote. "The impact on our lives is immeasurable. One city's devastation may not seem like a powerful incentive to end the lockout; but I know this is happening in other cities around the nation."
Chris Ray, manager of the Brewhouse Downtown in Nashville, said his establishment is losing an estimated $5,000 for every canceled Predators' home game. That's already a $90,000 hit, given 18 Predators' home games have been wiped out.
It's no different at Wayne Gretzky's sports bar in Toronto, where much of the Great One's memorabilia is on display.
"Yes, it's been very slow," said a bartender, who wouldn't give her name. "I'm scared about January."
The Hockey Hall of Fame in Toronto is feeling the pinch. Hall of Fame spokeswoman Kelly Masse said they've made "adjustments" to staff because gate and retail revenues are down significantly.
And so's Hockeytown, aka, Detroit.
The downtown three-level Hockeytown Cafe, operated by Red Wings owner Mike Ilitch, was nearly empty on Monday.
"If there's not a show at the Fox, this is what it's like in here," bartender Molly Brown said, referring to the Fox Theatre next door. "We haven't fired anyone, but everyone has had their days and hours cut because the Red Wings aren't playing. We're all suffering."
The effect goes beyond bars, restaurants and tourism.
In Chicago, Gunzo's Hockey Headquarters, a four-store chain that sells hockey equipment and jerseys, is losing business.
"It's been a huge impact. Huge, huge, huge. People don't see the games and it's out of sight, out of mind," owner Keith Jackson said. "It's kind of a double-whammy for us. We're losing out on equipment sales and we're losing out on the jerseys and licensed apparel sales."
With the Christmas shopping season nearly over, Jackson worries those are sales he'll never get back even if the NHL resumes playing soon. Mid-January will be a critical time, since Bettman has said the league doesn't want to play a season shorter than 48 games per team.
With an entire season wiped out in 2004-05, outsiders are wondering whether the two sides — rich owners and well-paid players — are indifferent to the effects their labor disputes create.
"People are disgusted," said Tom Woolsey, owner of Andrews On the Corner in Detroit. He estimates his business is down 75 percent on nights the Red Wings are playing.
"It's incomprehensible to me that after four or five prosperous years in the NHL, that they can't figure out how to split $3.2 billion (in revenue)," Woolsey said.
It's mind-boggling to John Heidinger, chairman of the Service Employees International Local 200 in Buffalo, who represents about 225 ushers at First Niagara Center.
"When you're making 12 bucks an hour working at an arena, and these guys are haggling over hundreds of millions of dollars, I think for a lot of people it's a hard reality to understand," Heidinger said. "It really frustrates you."
Sabres president Ted Black can understand the frustration.
"We are disappointed the NHL and NHLPA have not been able to negotiate a new collective bargaining agreement," Black said. "Our fans are extremely disappointed, and we know the lack of NHL hockey is having a negative impact on many local businesses. At the same time, we want to play hockey under the right circumstances that the NHL will negotiate on our behalf. ... The league has our full confidence."
The impact of another lost season would be high.
In Buffalo alone, the city's tourism bureau, Visit Buffalo Niagara, estimates local hotels that host visiting NHL teams will lose between $850,000 and $1 million if there's no season.
City transit is affected. Douglas Hartmayer, spokesman for the Niagara Frontier Transportations Authority, says up to 1,700 riders use Metro Rail to attend each Sabres home game.
There's even a psychological cost, especially in a place like Buffalo, where the winters are already long, and the Sabres provide an entertaining outlet, particularly when the Buffalo Bills are struggling, as they are once again are this year.
"Especially with Pegula, you had some hope," said Joe Allman, bartender at the Swannie House, referring to Sabres owner Terry Pegula, who's raised expectations since purchasing the team two years ago. "They probably are our best chance to win."
With no hockey, and the Bills out of playoff contention for a 13th straight season, there's little for Buffalonians to fall back on.
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