Are the Devils in bankruptcy trouble? UPD: Chambers to pay $25m to exit?

[abev]

The NY Post prints a fabricated story and the Devils beat reporter who has no horse in the race rushes to post a blog falsifying the rumor. Seems about right.

 

[sawchuk1971]

http://www.nypost.com/p/news/business/devils_in_the_red_Mi3p63lfff0OCTWRIdroxH

this is the reason owners want taxpayers to build arenas....they don't want to be in debt...

 

[Marc the Habs Fan]

I thought the salary cap was locked in as a certain percentage of league revenues, as per the CBA?

It's not like the league is just sittinga round deciding, "hey, let's raise the salary cap again this year!" If revenues keep going up (and they have), then so does the cap.

Correct on all accounts.

It's not the fault of the franchises that bring in massive revenue to the NHL that several others are struggling.

I think MoreOrr meant the cap floor, no team is forced to spend to the cap. But even the cap floor, under the terms of this CBA, is always 16 M below the salary cap.

 

[MoreOrr]

I thought the salary cap was locked in as a certain percentage of league revenues, as per the CBA?

It's not like the league is just sittinga round deciding, "hey, let's raise the salary cap again this year!" If revenues keep going up (and they have), then so does the cap.

That is in fact the case, I believe. Nevertheless, it just seems as though the League is setting itself up to have a number of failures amongst its member teams. It's gradually re-creating the old two tier League, of those that Have and those which are Dependent on those that Have, until the bleeding gets too extreme.

 

[sawchuk1971]

The game I went to last year was Oct. 26th vs. Buffalo. Paid 300 bucks for myself, my wife and daughter. That was the game MacLean healthy-scratched Kovalchuk and the team lost 5-1 and it wasn't even that close. Team showed 0 effort and it was 4-0 by the 5 minute mark of the 2nd period.

300 bucks in my eyes completely wasted. think I'll do that again this year???

$300 for one game? thats obscene...

 

[MoreOrr]

Correct on all accounts.

It's not the fault of the franchises that bring in massive revenue to the NHL that several others are struggling.

I think MoreOrr meant the cap floor, no team is forced to spend to the cap. But even the cap floor, under the terms of this CBA, is always 16 M below the salary cap.

No, I meant the Cap in general. Otherwise the League eventually gets itself right back to where it was before the Lockout.

Unless you can somehow guarantee that the lower salary teams will have the better management, and thus with that they can compete with the higher paid teams... you're eventually slotting them for failure, one way or the other. Fans, well most fans, want to watch competitive teams. If their team can't afford to be competitive, then the Cap floor for that team is likely to need to be lower every year, because without the fan $ that's the direction things are going to go. Until the team is eventually priced below League sustainable levels.

 

[Marv4Life]

I never really understood why the devils moved to Newark. Maybe that was the only choice on the table, but a move to Hoboken would have made far more sense.

Hoboken made no sense logistically nor from a fanbase standpoint(closer to Rangers territory, harder to get to for the bulk of the state), and the city didn't want it. Why even attempt to go somewhere you're not wanted?

And if you actually knew the location of the arena in Newark you'd understand why it makes plenty of sense. Largest city in the state; biggest transit hub in the state and one of the biggest hubs in the east coast.

$300 for one game? thats obscene...

Depends where you sit.

 

[GAGLine]

I thought the salary cap was locked in as a certain percentage of league revenues, as per the CBA?

It's not like the league is just sittinga round deciding, "hey, let's raise the salary cap again this year!" If revenues keep going up (and they have), then so does the cap.

It is. The problem is that the revenue growth of the teams at the top is carrying the league and even averaged out, is outpacing the revenue growth of the smaller markets. So the league as a whole is increasing revenue by X percent, but the small market teams' revenue growth is less than X and they are struggling to keep up.

In the next CBA, they might be better off to base the cap ceiling on an average of the middle 10 teams.

 

[Burrows Bite]

there's no way Parise re-signs with a team about to go into bankruptcy. Maybe this was one of the reasons why he did not sign a long-term deal

 

[gary laser eyes]

Just think of how much more money they could bring in if fans could actually afford to attend games.

My girlfriend and I went to the Red Bulls game Saturday. Paid $15 each for seats in the lower level, 13 rows off the field. Drove and parked for free in Ironbound and walked over to the stadium. Food for the both of us was $10 each. There's $50 for an entire event plus food. You can get one Devils ticket for that... maybe.

LOL you're comparing the MLS to the NHL? The Red Bulls payroll is like $13 million. Besides LA and NY, average MLS payroll across the league is about $3 million. Kovalchuk will make $11 million in salary next season alone...

 

[TheDevilMadeMe]

I have no idea of the cost of living in Montreal, but in New Jersey it's pretty high, particularly near New York City. I wouldn't say that NJ fans are any less affluent than NYR fans. Many Ranger fans live in New Jersey, myself included. It's simply that they have less fans overall and can't support that high of a ticket price.

I never really understood why the devils moved to Newark. Maybe that was the only choice on the table, but a move to Hoboken would have made far more sense.

Hoboken would have been more easily accessible to New York City, but the Devils pull the majority of their fans from suburban New Jersey, so I think Newark makes more sense.

 

[MoreOrr]

It is. The problem is that the revenue growth of the teams at the top is carrying the league and even averaged out, is outpacing the revenue growth of the smaller markets. So the league as a whole is increasing revenue by X percent, but the small market teams' revenue growth is less than X and they are struggling to keep up.

In the next CBA, they might be better off to base the cap ceiling on an average of the middle 10 teams.

Now that sounds like an excellent idea. As with anything, the extremes shouldn't be counted into the "average". I would say that they could even make it the middle 16 teams, and to calculate the Floor as well as the Ceiling... The teams in the bottom 7 needing revenue sharing, the teams in the top 7... Great Job!

 

[LEAFANFORLIFE23]

Playing the role of Brad Richards will be Zach Parise

 

[Anksun]

I have no idea of the cost of living in Montreal, but in New Jersey it's pretty high, particularly near New York City. I wouldn't say that NJ fans are any less affluent than NYR fans. Many Ranger fans live in New Jersey, myself included. It's simply that they have less fans overall and can't support that high of a ticket price.

I never really understood why the devils moved to Newark. Maybe that was the only choice on the table, but a move to Hoboken would have made far more sense.

Mtl living cost is low compare to most big cities. The prices are a bit higher however, Marc was wrong for most sections (example, the highest tickets goes all the way up to 405$ each for games against Bruins, Leafs and some more... (However it's close and it doesnt make any sense at all.) The habs tickets went for sale saturday and i forgot. Just went to the habs site, i couldnt buy 2 tickets (non-splits) for any regular season game, every single game and every single category available, it's all gone.

With low attendance, matching those prices makes no sense at all.

 

[GAGLine]

Hoboken made no sense logistically nor from a fanbase standpoint(closer to Rangers territory, harder to get to for the bulk of the state), and the city didn't want it. Why even attempt to go somewhere you're not wanted?

And if you actually knew the location of the arena in Newark you'd understand why it makes plenty of sense. Largest city in the state; biggest transit hub in the state and one of the biggest hubs in the east coast.

I know exactly where it is. I've been there plenty of times. Just because it's near the train station doesn't make it a good location. Newark is a hole. There's very little to do outside the arena. The city is very poor compared to Hoboken. Being the biggest city doesn't mean anything when the majority of the residents could care less about hockey and can't afford the high ticket prices.

If Hoboken didn't want the team, then they didn't want the team. That still doesn't make Newark a good choice.

 

[KINGS17]

That is in fact the case, I believe. Nevertheless, it just seems as though the League is setting itself up to have a number of failures amongst its member teams. It's gradually re-creating the old two tier League, of those that Have and those which are Dependent on those that Have, until the bleeding gets to extreme.

The owners forgot about the revenue sharing plan. IMO, you can't have a 30 team league without a revenue sharing plan that works.

To be honest though, I would be fine if the league contracted to 24 teams.

 

[King Woodballs]

so are they moving to Hamilton now?

but seriously though... IF this is true that stinks for the NHL.
I hope it isnt.

 

[TheDevilMadeMe]

I know exactly where it is. I've been there plenty of times. Just because it's near the train station doesn't make it a good location. Newark is a hole. There's very little to do outside the arena. The city is very poor compared to Hoboken. Being the biggest city doesn't mean anything when the majority of the residents could care less about hockey and can't afford the high ticket prices.

If Hoboken didn't want the team, then they didn't want the team. That still doesn't make Newark a good choice.

What would have been a better choice than Newark? IMO, it's the best choice in the state.

Newark actually has a better restaurant scene than Hoboken, IMO. It doesn't have as many bars as people like Hoboken does, but I really don't think that makes up for how much easier Newark is to reach for the majority of the state (especially people who drive).

 

[GAGLine]

Hoboken would have been more easily accessible to New York City, but the Devils pull the majority of their fans from suburban New Jersey, so I think Newark makes more sense.

Hoboken is just far more affluent and plenty of suburban New Jerseyans go to Hoboken to party. My friends and I have been there 3 times in just the last month since they opened the Pilsner Haus

 

[Kurrilino]

Way to chose a team that won't be moved due to financial difficulties, Kovalchuk

New Jersey moved to Atlanta would be awsome

 

[Marv4Life]

I know exactly where it is. I've been there plenty of times. Just because it's near the train station doesn't make it a good location. Newark is a hole. There's very little to do outside the arena. The city is very poor compared to Hoboken. Being the biggest city doesn't mean anything when the majority of the residents could care less about hockey and can't afford the high ticket prices.

If Hoboken didn't want the team, then they didn't want the team. That still doesn't make Newark a good choice.

So it's a race thing. Gotcha.

Seriously. Newsflash: The majority of Detroit, Philadelphia and Buffalo residents don't care about hockey. And since you've been there you'd know that the Ironbound(with numerous ethnic restaurants) is closeby. You'd also know there are/will be several restaurants across the street from the place for the upcoming season, as well as two hotels behind the arena being worked on as we speak. So I dunno where you get the idea that there's little to do. Maybe in 2007, yeah. It's in the downtown CBD, and there are worse locations current NHL arenas/sports stadiums are located.

 

[Fugu]

http://blogs.northjersey.com/blogs/...hat_team_is_facing_bankruptcy_patently_untrue

haters keep hating though

So to update with the facts that could be gleaned from this piece:

The Devils value their relationship with their banks and are confident a refinancing will be completed shortly. As stated previously, ownership is close to finalizing an agreement that would lead to a buyout of Brick City’s share of the company.

Brick City LLC, headed by Ray Chambers and Mike Gilfillan, own 47 percent the Devils and is in the process of completing a sale of its share to managing partner Jeff Vanderbeek, who also owns 47 percent of the team. As the statement above says, that buyout agreement is close to being finalized. The refinancing of the team, which is mentioned in the statement, is contingent on that sale being completed.
Peter Simon owns the remaining six percent of the team.

The debt undertaken was probably based on an estimated value of the Devils that is in excess of its current value--- hence Chambers needing to lower his price by 20%. Both owners/groups are still responsible for servicing all the existing debt.

All that needs to happen is for Chambers to agree to a valuation that suits Vanderbeek; the sale is then imminent; and they cannot refinance until the sale is completed. Meanwhile the existing debt accrues and needs to be paid by both owners. I can see some haggling going on over the actual valuation, and then when Vanderbeek assumes the debt. The refinancing will have to be based on the actual value of the team in that transaction. It's not like Vanderbeek can tell Chambers the team value is $150 MM in order to buy him out, then turn around and refinance at a higher estimated value.

 

[HBK27]

I know exactly where it is. I've been there plenty of times. Just because it's near the train station doesn't make it a good location. Newark is a hole. There's very little to do outside the arena. The city is very poor compared to Hoboken. Being the biggest city doesn't mean anything when the majority of the residents could care less about hockey and can't afford the high ticket prices.

If Hoboken didn't want the team, then they didn't want the team. That still doesn't make Newark a good choice.

John McMullen fought to get an arena built in Hoboken, but when it was clear that that wasn’t a possibility he decided to sell the team. It’s tough enough as is to get to Hoboken on weeknights and especially weekends since you generally have to deal with tunnel traffic & the side streets once you get into Hoboken wouldn’t be able to handle the volume of fans coming in to an arena. There would’ve had to been major infrastructure improvements made to support the arena, even if many fans took trains in or even parked at a nearby PATH station in Jersey City and came in from there. I think the city of Hoboken probably rejected the arena because of the traffic & parking nightmares it would’ve caused for residents.

With Hoboken out, Newark made the most sense given the transportation available and location near highways. Otherwise, where would they have gone – maybe stayed at the Meadowlands? Things might’ve gotten a little bit better now that they finally built a train line out there, but given the attendance struggles they had there and the fact that Newark was helping to pay for the new arena, it made sense to go to Newark.

 

[Fugu]

Tangentially related - I came across this NY Times Slap Shots piece by Chris Botta from 2010 (which I don't recall being posted here back then):

http://slapshot.blogs.nytimes.com/2010/12/17/daly-says-n-h-l-revenue-sharing-may-change/

In other words - Since Wirtz is dead we can scrap that rule.

Yeah, no one here ever said that the second or third team in a large market just may not be as financially well off as their big brothers? Yet another shortsighted item in the CBA.

It is. The problem is that the revenue growth of the teams at the top is carrying the league and even averaged out, is outpacing the revenue growth of the smaller markets. So the league as a whole is increasing revenue by X percent, but the small market teams' revenue growth is less than X and they are struggling to keep up.

In the next CBA, they might be better off to base the cap ceiling on an average of the middle 10 teams.

Revenue gap? Nope, no one ever mentioned that might be an issue either, or that the current CBA locks teams into a certain status quo that maybe isn't in their own best interest.

Ah well.

 

[Marc the Habs Fan]

however, Marc was wrong for most sections (example, the highest tickets goes all the way up to 405$ each for games against Bruins, Leafs and some more... (However it's close and it doesnt make any sense at all.)

Well, I was not looking at the ''special'' games (or premier games as the Devils site called them/Price optimum games as the Habs site called them).

A few examples discounting the special games...

Devils highest ticket price: 300$ or 250$ (for a classic game) for a gold seat.
Habs highest ticket price: 249$ for a platinum seat.

For center ice seats very close to benches/penalty boxes:

Devils black seats on their graphic: 250$ or 225$ (classic game)
Habs ''red A premium'' seats: 176$

For seats right after those in the same part of the arena behind benches/penalty boxes:

Devils silver seats on their graphic: 250$ or 175$ (classic game)
Habs ''red A'' seats: 159$

Exchange rate is virtually even today too, so not a factor.