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

[Marv4Life]

The Devs' premium seats include free food, and are mostly sold out to corporations. It's the other sections further up that should be criticized.

 

[Freudian]

An unclear ownership situation is negative because it might spill over and start affecting the team. I don't think there is reason to freak out about getting rid of White and Rolston but it might indicate financial limitations on the team already.

If it turns into a Dallas or Phoenix situation, it might be bad news. Hopefully the ownership situation will be solved sooner rather than later for Devils.

 

[DevilChuk*]

So to summarize with the facts from the linked article:


*Chambers and Vanderbeek each own 47%, and Chambers has wanted to sell for 1+ yrs now.

What are they at odds over, player contracts....Kovalchuk is due $6 million this season, then that number zooms to $11+ million for the next five years, and $10 million for year 7. Ouch. I was speculating a while back that the mid-loading had to do with Vanderbeek being the one pushing for the contract and Chambers wanting to keep actual cash costs down while he was still attached to the team.



*The asking price was initially $240 million, now cut to $200 million


*NJD ranks 25th in NHL attendance (announced, I presume)


*Forbes is cited as reporting that NJD and the arena operation company owe 15% more than the team is worth; and I guess that would be the Forbes estimated franchise value of $218 million?
That means they owe: ~$251 million to lenders. However the article also states that the team owes CIT $100 million; the arena management company owes $180 million


*Anonymous source says team is already in bankruptcy protection

*NBA lockout will hurt the arena's profitability, losing 25% of the 161 dates

Read more: http://www.nypost.com/p/news/business/devils_in_the_red_Mi3p63lfff0OCTWRIdroxH#ixzz1Xkkl8rB9
​

From what I know,

Chambers (really Brick City) wants to sell their 47% non-operating share of the team. Years ago, Chambers sold the majority share to Vanderbeek and there was some stipulation in there that Chambers could force a complete sale of the team (including Vanderbeek's part) if certain financial criteria were met. Thats why you see the $260 million dollar figure thrown around. Thats for the entire team, not just the 47%. I believe those criteria have not been met which is why you see Chambers/Vanderbeek working on a buyout at the moment at the more realistic $200 million evaluation.

Every where I see it is reported that Chambers is a non-operating ownership. However, I have a feeling they do still have a say in where the money is spent, etc. Which is why you may have Parise only signing for 1 year. Devils took him to arbitration, Chambers was unwilling to allow a multi-year humongous contract, so they were forced to settle for 1 year deal to avoid arbitration. Chambers may be able to block spending money still. Who knows.

Mid-loading probably had more to do with Rolston, Elias and Brodeur contracts all coming off books this upcoming year.

Also, its worth to point out that forbes is NOT the source of this whole loan for 15% more than the team is worth. Not only does that not make any sense, but that part of the article is severely poorly written. They are saying that based on Forbes evaluation of 210 million, the team owes more than 15% than its worth according to their unnamed source.


Like the Devils also pointed out, the article has several mistakes. The most glaring being the wrong opening to training camp. NYPost is not really the best source of Devil news to begin with but getting that simple fact wrong is the cherry on top of a fail cake.

 

[TheTimTamSlammerMan]

Those ticket prices are nothing compared to MSG.

 

[LadyStanley]

20 year lease? My notes had it at 30. (Add to to-do list to confirm.)

 

[vezna*]

EXACTLY. They continue to sexually assault fans when it comes to ticket prices. They were advertising a new "tiered" price plan that would make games more affordable to fans. Once they rolled it out, I almost threw up looking at it. The CHEAPEST price level is the same exact prices for last year. Then there are two higher levels that raise prices.

The Devils had the top four corners of the arena with 10$ seats for the first three years. They weren't available to season ticket holders and you had to go to the box office on the day of the game to get them. Now they are gone. The CHEAPEST games (Tues, Wed, against Carolina, Florida and the like) are now 20$. They go up to 30 and I think 35 for games against the Rangers/Flyers/Penguins. Fri/Sat/Sun games are now upper tier so they are more expensive.... it's horse **** frankly. The team took a huge dump last year and really embarrassed themselves and the fans. So they repay the fans' loyalty by raising ticket prices significantly AGAIN. I love the players on the team but I hate the management I really do.



Think THIS is fair for a team struggling with attendance?

there is nothing to complain about $35 tickets.

 

[HBK27]

Those ticket prices are nothing compared to MSG.

So?

The Rangers also were the first team in the market with a 56-year head start on the Devils, and play dead smack in the middle of the financial capital of the world on top of the largest transportation hub in North America. Of course they’re going to have some of the highest ticket prices in the NHL.

It’s actually a shame how MSG is pricing out a lot of diehard fans following the renovations that are going on. But we’ve seen it elsewhere, especially with the Yankees, Giants & Jets. Not a surprise that Ranger fans grab up so many tickets when they visit the Rock considering how hard it is to get tickets at MSG, they cost less and in many cases the Prudential Center is easier to get to for fans living in NJ.

 

[Fugu]

Mid-loading probably had more to do with Rolston, Elias and Brodeur contracts all coming off books this upcoming year.

However in total, the actual cash being paid out is being limited in this two year window (last season, current season), not due to cap purposes. One can only surmise that Chambers may indeed have a hand in that.

Also, its worth to point out that forbes is NOT the source of this whole loan for 15% more than the team is worth. Not only does that not make any sense, but that part of the article is severely poorly written. They are saying that based on Forbes evaluation of 210 million, the team owes more than 15% than its worth according to their unnamed source.

I think this may be missing the forest for the trees. Does the team and arena mgt company owe $280 million to lenders? Not sure if the arena mgt company is also with CIT, but the NJD portion has $100 million in debt that presumably was to be paid this month. Do you agree with that portion? It's hard to know what the NJD posters are saying is inaccurate when you just say it's wrong, but don't offer what the accurate situation is in this regard.

If true, the team + arena mgt company owe $280 million. The team is allegedly being valuated at $200 million by Chambers. Is any of this accurate?

Like the Devils also pointed out, the article has several mistakes. The most glaring being the wrong opening to training camp. NYPost is not really the best source of Devil news to begin with but getting that simple fact wrong is the cherry on top of a fail cake.

Not really. One has nothing to do with the other, especially if it's a business reporter. It IS an error, but one error doesn't automatically negate everything else. I think there's some smoke as any business with massive debt should find it concerning to manage its cash flow if refinancing is needed in the current economic climate. That I believe is the core issue. Many teams are looking for owners and co-owners (St. Louis is in a similar situation). Getting it done at a level where the cost of capital doesn't choke the life out of the team is going to be the trick.

 

[njdevil26]

there is nothing to complain about $35 tickets.

There sure is when for the last four years the tickets were $10 every day of the year. It's a 350% increase and after Ticketmaster fees the cheapest seat in the building is over $40 for a team that just missed the playoffs and had thousands of fans walking out of many games last season or not even showing up.

Those ticket prices are nothing compared to MSG.

The Rangers play in the middle of one of the wealthiest, highly populated cities in the world with an amazing public transit system were a $2 subway ride gets you to a game instead of driving and paying gas, tolls, and parking.

I can guarantee you that if the Rangers were the New Jersey Rangers playing at the Prudential Center and it was the New York Devils at the Garden, the NY Devils would be selling out every game while the NJ Rangers were having attendance problems.

How many international corporations have headquarters in NYC? A TON and they all have tickets to the Garden. The Rangers and Knicks can inflate the hell out of their ticket prices if they want because either way, the fill the seats because of their location.

 

[goyotes]

Have fun with the relocation rumors that will start any minute now... (I kid, I kid).

Not good news for the organization or the NHL, but I have no doubt the Devils will not be going anywhere, and whatever the situation is will be resolved in short order. It just seems too many NHL teams are struggling financially. I think just over a third actually made money last year. Forget about the sourthern teams, the entire NHL business model is broke and losing a season hasn't really seemed to fix it.

 

[DevilChuk*]

However in total, the actual cash being paid out is being limited in this two year window (last season, current season), not due to cap purposes. One can only surmise that Chambers may indeed have a hand in that.

I think this may be missing the forest for the trees. Does the team and arena mgt company owe $280 million to lenders? Not sure if the arena mgt company is also with CIT, but the NJD portion has $100 million in debt that presumably was to be paid this month. Do you agree with that portion? It's hard to know what the NJD posters are saying is inaccurate when you just say it's wrong, but don't offer what the accurate situation is in this regard.

If true, the team + arena mgt company owe $280 million. The team is allegedly being valuated at $200 million by Chambers. Is any of this accurate?

Not really. One has nothing to do with the other, especially if it's a business reporter. It IS an error, but one error doesn't automatically negate everything else. I think there's some smoke as any business with massive debt should find it concerning to manage its cash flow if refinancing is needed in the current economic climate. That I believe is the core issue. Many teams are looking for owners and co-owners (St. Louis is in a similar situation). Getting it done at a level where the cost of capital doesn't choke the life out of the team is going to be the trick.

I, like everyone else not in the Devils upper staff, have no clue what they owe to lenders. I assume they do have loans out considering they just built the stadium and all. They have defaulted on a few payments to the City of Newark but that was from a different dispute regarding the Triangle Park plans as I recall.

I can't actually offer what is accurate in this regard at all, I can just say that the NYPost probably doesn't know whats accurate either. Heck, this very same reporter wrote an article last year about how Vanderbeek wanted to immediately sell the team.. to which Vanderbeek vehemently responded. Now he's buying the 47% non-controling share, doesn't look like he wants out to me.

As for the evaluation by Chambers, yes, he's going for a $200 million number after not meeting the full stipulations for the complete sale at $260 million, I'd assume. I think they will settle lower than that since the non-controlling shares aren't really worth a true 47% to Vanderbeek.

When any news source publishes an article, it is fact checked by numerous editors. How multiple people failed to notice that one glaring error is just further proof to the nature of NYPost. Not a trustworthy source.

Vanderbeek is buying the 47%, there is no search for a co-owner. I'm not saying the Devils are sitting pretty and raking in money, I'd assume there is some trouble financially... but on the verge of bankruptcy they are not..

 

[doaner]

An eastern hockey team in financial trouble??? Never!!!!!

 

[BadHammy*]

I know what will solve their money woes: The NJ Devils, Presented by Amway!

 

[HBK27]

Have fun with the relocation rumors that will start any minute now... (I kid, I kid).

Not good news for the organization or the NHL, but I have no doubt the Devils will not be going anywhere, and whatever the situation is will be resolved in short order. It just seems too many NHL teams are struggling financially. I think just over a third actually made money last year. Forget about the sourthern teams, the entire NHL business model is broke and losing a season hasn't really seemed to fix it.

Yup...way too many teams struggling financially in the league right now. Something needs to be done to fix the system.

 

[Muad'Dib]

http://www.sbnation.com/nhl/2011/9/12/2420963/new-jersey-devils-bankruptcy-sale

The New Jersey Devils are not under the threat of bankruptcy, according to... well, the New Jersey Devils. That, of course, flies in the face of a New York Post report Monday morning, which claimed that the Devils had missed a September 1 loan payment and that the banks were getting ready to "push the team into bankruptcy."

...

The real news in the statement, perhaps, is that the Devils are "close" to buying out the shares owned by minority owners Ray Chambers and Mike Gilfillan, who combine to make up the group called Brick City. Until now, the only information we had on the state of Brick City's attempt to sell their shares was that the process wasn't going too well. This statement seems to counter that notion.

 

[GM17*]

TGfireandice Tom Gulitti
NHL deputy commissioner Bill Daly says via e-mail that league stands by all in Devils' statement concerning NY Post report being "untrue"

 

[QuizGuy66]

A note about those ticket prices.

I've had full season tickets in the past as well as cobble together things with partials and single games. In previous years what would happen is that the Devils would discount particular areas of seats (particular those in the end of the 100-level and lower level) through a partner (Comcast for example) and sell them at a price that was lower than what full-season ticket holders paid. This is a good way to crap on your best customers and erode said base of full-season ticketholders.

This year, the Devils have actually switched up the way they've priced things, making a much more concerted effort to get full season ticket holders. This push began late last year (the leafleted many seats that people won a "tour" of the arena which also handily included a sales-pitch for season tickets. This is something that is not reflected in the price chart that has been thrown all over this thread.

I got full season tickets in the section that's labeled $69/$61/$52 for $28 per game (I'm in the end where the Devils shoot twice - at the other end this same section was being sold for $22 per game for full season tickets). They also are making much more of an effort to cater to the season-ticket holders with an actual team of people dedicated to care and maintenance of such (beyond the actual sales team). I think this is good business. The partial plan prices seem to fall in between btw.

The In Lou We Trust blog has a good break down of this if you want to read more:

http://www.inlouwetrust.com/2011/8/24/2382530/overview-new-jersey-devils-variable-pricing-2011-12-season-single-game-tickets

Does this mean the team will stop offering partner special with comcast or group sales discounts? I doubt it. But at the same time as a season-ticket holder I am much more confident that these discounts won't be greater than the one I got to sign up for a whole season. My investment is these tickets won't be undercut. I appreciate that.


As an aside, Amway already sponsors an arena - in Orlando.

-QG

 

[Kershaw]

Pretty sad, I'd expect more fan support from a team that has been very successful over the past decade, including winning multiple stanley cups in the process.

 

[TheDevilMadeMe]

Pretty sad, I'd expect more fan support from a team that has been very successful over the past decade, including winning multiple stanley cups in the process.

NJ Devils fans are spoiled - so used to winning that when the team sucks for a year, they don't feel like supporting it.

I'm the same way - I spent much less energy and money on the team after the season went down the toilet before Christmas. Why waste 100s of dollars (in this economy) on a team that is playing like they don't care?

I don't think this is unique to the Devils - it's a typical reaction of a fanbase that perhaps started taking winning for granted.

The team actually was doing quite well financially for the first couple of seasons in Newark - when they were actually winning.

Edit: Before the lockout, the Devils were never a free-spending team, their payroll always hovered around average. So I never thought this new trend of being one of the league's big spenders (spending to the Cap, front loading contracts, sending bad contracts to the minors) was sustainable long term.

 

[GM17*]

"The organization is also pleased to report that new season ticket sales are up 130% over last year and last week's on-sale for single game tickets were 260% above last year's similar period. Finally, the start of training camp was incorrectly reported in the article as tomorrow. In fact, training camp starts on Friday for the rookies and Saturday for the veterans."

Looks like fan support has gone up

 

[LadyStanley]

A note about those ticket prices.

I've had full season tickets in the past as well as cobble together things with partials and single games. In previous years what would happen is that the Devils would discount particular areas of seats (particular those in the end of the 100-level and lower level) through a partner (Comcast for example) and sell them at a price that was lower than what full-season ticket holders paid. This is a good way to crap on your best customers and erode said base of full-season ticketholders.

This year, the Devils have actually switched up the way they've priced things, making a much more concerted effort to get full season ticket holders. This push began late last year (the leafleted many seats that people won a "tour" of the arena which also handily included a sales-pitch for season tickets. This is something that is not reflected in the price chart that has been thrown all over this thread.

I got full season tickets in the section that's labeled $69/$61/$52 for $28 per game (I'm in the end where the Devils shoot twice - at the other end this same section was being sold for $22 per game for full season tickets). They also are making much more of an effort to cater to the season-ticket holders with an actual team of people dedicated to care and maintenance of such (beyond the actual sales team). I think this is good business. The partial plan prices seem to fall in between btw.

The In Lou We Trust blog has a good break down of this if you want to read more:

http://www.inlouwetrust.com/2011/8/...le-pricing-2011-12-season-single-game-tickets

Does this mean the team will stop offering partner special with comcast or group sales discounts? I doubt it. But at the same time as a season-ticket holder I am much more confident that these discounts won't be greater than the one I got to sign up for a whole season. My investment is these tickets won't be undercut. I appreciate that.


As an aside, Amway already sponsors an arena - in Orlando.

-QG

QG - I think the Amway comment was a reference to the deal the Wings just inked to have them be a "presenting sponsor" and have their logo "everywhere" the winged wheel is (excluding jerseys).

 

[Marv4Life]

Pretty sad, I'd expect more fan support from a team that has been very successful over the past decade, including winning multiple stanley cups in the process.

2003 was a long time. They've done nothing great since then.

What does fan support have to do with this story?

 

[QuizGuy66]

QG - I think the Amway comment was a reference to the deal the Wings just inked to have them be a "presenting sponsor" and have their logo "everywhere" the winged wheel is (excluding jerseys).

Must've missed that one (edited out maniacal laughing smiley)

Just so long as we don't have "The Greatest Vitamin in the World" sponsoring us

-QG

 

[DumFries]

The troubling part about this is how they managed to survive in East Rutherford since 1982, a place of 10 000 people, and are having trouble now in Newark, a real city!! The Nets of the NBA, are also in some sort of trouble, excluding the fact that the NBA season might be in trouble.

I remember Brodeur celebrating in the parking lot of their old arena upon their Cup victory in 2000, with some 500 fans.

This team has no real solid fanbase and no city to identify with. Upon the success years, they marginally surpassed the Rangers in fan support. The Rangers are a historic franchise, nothing will dethrone them, especially a team that plays in NYC suburbs across the river in a different state, eclipsed by a global city which has twice the population the whole state of New Jersey has as a whole. Even, if the Devils are in the NYC market, they have no reference to the word New York in their title.

They should just move inside NYC and finally call this place, home.

 

[ryangib]

The troubling part about this is how they managed to survive in East Rutherford since 1982, a place of 10 000 people, and are having trouble now in Newark, a real city!! The Nets of the NBA, are also in some sort of trouble, excluding the fact that the NBA season might be in trouble.

I remember Brodeur celebrating in the parking lot of their old arena upon their Cup victory in 2000, with some 500 fans.

This team has no real solid fanbase and no city to identify with. Upon the success years, they marginally surpassed the Rangers in fan support. The Rangers are a historic franchise, nothing will dethrone them, especially a team that plays in NYC suburbs across the river in a different state, eclipsed by a global city which has twice the population the whole state of New Jersey has as a whole. Even, if the Devils are in the NYC market, they have no reference to the word New York in their title.

They should just move inside NYC and finally call this place, home.

edit:misunderstood 10,000 people comment. i feel dumb.