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

[Mr Atoz*]

They haven't declared bankruptcy. All major corporations have bankruptcy protection. This article is coming from this business writer who was told the Devils missed their Sep 1 loan payment and is now excited to write a story. The payment is less than two weeks late. If the Devils make the payment today or in the next few weeks, this article becomes useless. They haven't defaulted on the loan and it's not even in collections. If they are three months behind, then we have a problem.

All major corporations have bankruptcy protection? Really? Do they go down to the corner drugstore and buy bankruptcy protection? [mod: deleted]


"If the devils make the payment in the next few weeks the article is useless."

Only if they never have to make another payment.



"If they are three months behind, then we have a problem."

This isn't a car loan.

It's an anonymous source. Do you think the New York Times or Washington Post could get away in today's day and age with reporting on things like this from an "anonymous source?" This is the New York Post we're talking about... the paper that has had "Holy Shiite" "Osama Bin ****in" and many other gems as headlines. When this pops up in the Times or the Wall Street Journal, let's talk about it.

The New York Times and Washington Post live off of anonymous sources. [mod: deleted]

Take a look at this annual article by Forbes:

http://www.forbes.com/lists/2010/31/hockey-valuations-10_land.html

Look at the debt ratio. No one is close to the devils. Not even the teams at the bottom of the league.

If the devils had the same hockey record as the islanders they'd be gone by now. Even with winning they can't sell out. When the devils went to the finals they barely sold out.

This financial trouble has been brewing for a long time. The new arena in Newark was insane. If the devils didn't make that deal at the top of the real estate bubble it never would have happened.

The devils are not a public company so their filing for Chapter 11 bankruptcy is not necessarily public information. They could have done it already for all we know. I don't know if the NHL bylaws demand that they tell the league. My guess is that's the only way we'd find out it happened.

 

[TheDevilMadeMe]

The Devils have such a huge debt load because they are the most recent team to build an arena. If (and that's if), they pay off the 100 million that they are now just a little late on, they will be back in the same range as the other teams.

 

[Mr Atoz*]

The Devils have such a huge debt load because they are the most recent team to build an arena. If (and that's if), they pay off the 100 million that they are now just a little late on, they will be back in the same range as the other teams.

The devils are estimated to be worth a total of $200 million and all they have to do is pay off $100 million and everything will be fine?

Do you have any idea what you just wrote?

Kovalchuk's contract is more than that.

 

[TheDevilMadeMe]

The devils are estimated to be worth a total of $200 million and all they have to do is pay off $100 million and everything will be fine?

Do you have any idea what you just wrote?

Kovalchuk's contract is more than that.

Yes, I'm pretty sure I know what I just wrote. I am the one who wrote it, afterall...

I don't know the details of the Devils financing and neither do you, but it's not like this payment date has been a surprise where they suddenly have to come up with the cash; they've known about it for years and may just be holding off until they get the ownership situation sorted out.

Question: Do the 104 million in yearly revenue and 6.9 million in yearly operating income include all the money that the arena makes or just the team itself?

 

[Retail1LO*]

I didn't realise the Dev's were that heavily indebted. I knew there was always the discussion about attendance, but that was it.

This just adds another question mark to the other teams in the league that are struggling. It's unfortunate we have to NY based/area teams struggling, and I agree with the idea that it showing it's not just the sunbelt teams struggling.


Those ticket prices: wow, those are type I expect to see in like a Toronto type market.

The league thinks it's growing. However, the economy sucks. People are making less, if they're making anything at all. Meanwhile, the cost of things as basic as gas and food have gone through the roof. Decreased disposable income combined with increased cost of everything else just isn't a good recipe for success. Combine that with poor on ice performance, and the fact the building cost them an effin fortune and a payroll that is astronomical...and this is what happens.

Sports in general...across all leagues...are headed for some serious...SERIOUS issues. There's simply no way salaraies for people that are just playing a GAME...can continue to command so much money. I'm everyone's to blame...from the owners to the GM's to the players. They're in this together. If it falls apart everyone loses. There has simply GOT to be a sustainable system where players can make money, owners can make money, and fans can afford to attend the games. It just takes players realizing that they don't need to make more in a year than a whole street worth of married couples make in a lifetime, to play a game. I don't know when...but one day sports as we know them now...are going to be no more. Big changes will come. They have to.

 

[QuizGuy66]

One hidden fact in this is the continued presence of the Meadowlands Arena (now IZOD or whatever) that still competes for events to book with the Devils. No small part of the plan was predicated on that Arena no longer existing as the Xanadu monstrodebacle was getting built on that land...but that's another story.

I see the financing as being from NJ since they devoted the Port Settlement $ to the arena as opposed to other projects. That settlement had been brewing for a long time - it just happened to become a convenient solution. In it's zeal to get the arena built as a magnet for other things Newark basically gave away the farm so that it's income is minimal for it's $200m investment is not all that shocking.

It's not so much Canadian media that is less trustworthy - it's the Toronto media which has a pretty poor record regarding rumors (or rumours if you will) with the Devils, with the one exception being the Doug Gilmour trade that was the worst kept secret ever.

As far as the debt chart goes, the Habs are 6th on that list. Should we worry about their future too?

Gulitti is the guy I'll trust on this story - if he raises the alarm I'll be much more concerned.

-QG

 

[guyincognito]

redundant

 

[guyincognito]

It's not even confirmed if they missed the date. One thing that's pretty certain is that they are currently not operating like a bankrupt franchise. They don't carry $60M payrolls, especially if they're getting assistance from the league... as Dallas turned out to be.

It's not an operational problem, it's a debt problem and is similiar to the one Montreal got themselves in. Arena debt takes a long time to pay off and this is precisely why no one wants to pay privately for them (see: Wang, Charles).

As for the poster who got snide before, what do you think Dolan is paying for the improvements with? His own money? Keep an eye on the markets over the next year or so, you'll be lucky not to find yourself in this mess as well.

 

[Fugu]

It's not even confirmed if they missed the date. One thing that's pretty certain is that they are currently not operating like a bankrupt franchise. They don't carry $60M payrolls, especially if they're getting assistance from the league... as Dallas turned out to be.

It's not an operational problem, it's a debt problem and is similiar to the one Montreal got themselves in. Arena debt takes a long time to pay off and this is precisely why no one wants to pay privately for them (see: Wang, Charles).

As for the poster who got snide before, what do you think Dolan is paying for the improvements with? His own money? Keep an eye on the markets over the next year or so, you'll be lucky not to find yourself in this mess as well.

NJD are ineligible for the revenue transfer portion of revenue sharing, due to the size of the TV market they're in. Daly did mention that the NHL would want to re-visit the eligibility for NYI, NJD in the next CBA.

Now if you meant that the NHL has taken over and is dealing with the lenders directly, that would probably mean that some form of bankruptcy filing had happened.

 

[guyincognito]

NJD are ineligible for the revenue transfer portion of revenue sharing, due to the size of the TV market they're in. Daly did mention that the NHL would want to re-visit the eligibility for NYI, NJD in the next CBA.

Now if you meant that the NHL has taken over and is dealing with the lenders directly , that would probably mean that some form of bankruptcy filing had happened.

That's what I mean. There's no way they would carry that kind of payroll in that situation. Or continue their moronic spending on non-hockey activities. I mean this was an organization that two offseasons ago was having ownership meet and greets at Morton's and covering the check for drinks and happy hour food.

Dallas and Phoenix have $50M payrolls. Considering replacement for Zajac, the Devils are at or around $60M. Obviously in a dire situation there's $10M there that can be saved. Now, if around clear day, $10M of player mysteriously disappears, then there's some smoke to an immediate problem where the league is already in.

 

[htpwn]

One hidden fact in this is the continued presence of the Meadowlands Arena (now IZOD or whatever) that still competes for events to book with the Devils. No small part of the plan was predicated on that Arena no longer existing as the Xanadu monstrodebacle was getting built on that land...but that's another story.

I see the financing as being from NJ since they devoted the Port Settlement $ to the arena as opposed to other projects. That settlement had been brewing for a long time - it just happened to become a convenient solution. In it's zeal to get the arena built as a magnet for other things Newark basically gave away the farm so that it's income is minimal for it's $200m investment is not all that shocking.

It's not so much Canadian media that is less trustworthy - it's the Toronto media which has a pretty poor record regarding rumors (or rumours if you will) with the Devils, with the one exception being the Doug Gilmour trade that was the worst kept secret ever.

As far as the debt chart goes, the Habs are 6th on that list. Should we worry about their future too?

Gulitti is the guy I'll trust on this story - if he raises the alarm I'll be much more concerned.

-QG

The Globe and Mail is not a Toronto newspaper, but a national one, much like the USA Today. It is based in Toronto, but then, the majority of the major English-speaking print publications in Canada either have their HQ in Toronto or are owned by a parent company that does.

The Canadian media has been one of the best source for the NHL's business dealing, sans perhaps the Phoenix Coyotes bankruptcy documents and the HFBoards BOH board (), over the past two years. Yes, news reports should be taken with a grain of salt (on any topic for that matter), but they should not be disregarded at whim, particularly when the source has proven to be reliable in the past (See: Thrashers, Coyotes).

 

[guyincognito]

This isn't totally topical, but I think one of the more interesting things about this spurt of news lately is.... what seemed like a pretty mundane CBA renewal maybe a year or so ago, doesn't seem so much that way now.

This almost seems similiar to what teams were saying/doing in the buildup to 9/15/04.

I hope not, but I don't think is going to be so simple now.

 

[Ola]

The Devils have such a huge debt load because they are the most recent team to build an arena. If (and that's if), they pay off the 100 million that they are now just a little late on, they will be back in the same range as the other teams.

I've not followed everything that's been written, but it seriously sounds like they failed/have yet to RESCHEDULE A LOAN, not "repay it" in the sense that they ment to repay it. The result if you fail to reschedule a loan is that you have to repay it, so I am not saying that the reports per automatic is wrong. But NJD can go anywhere they want and take another loan and basically just exchange lenders, or they can work out a new loan with old lender.

If they have financial trouble, its perfectly possible that they aren't given great conditions on a new loan -- at the same time, that would also mean that whoever have granted them the loan probably don't have the best security for it and it wouldn't make much sense for them to try to force NJD into bankruptcy, which ought to make it more likely for NJD to get a new loan from them.

Hence the talk about NJD telling bankers to "[whatever the Post's states]".

Everything sounds like its tough negotiation and that NJD aren't in great financial shape, but who is these days? I've yet to -- even remotely -- get the impression that they face real danger of going into bankruptcy. I mean, they are unprofitable? I seriously doubt that they do not have a business plan in which they plan to be profitble in 5-6 years, and cannot carry the cost up untill than. Because if they go down in flames now, a ton of value will be destroyed for everyone involved. Before that you gotta atleast expect that they would cut costs like crazy and try to steer the ship out of the GFC and then get some value for it. They are still trying to build up a buzz and turn a profit by icing a good team, sign 1 is when they abandon that strategy.

 

[Ola]

This isn't totally topical, but I think one of the more interesting things about this spurt of news lately is.... what seemed like a pretty mundane CBA renewal maybe a year or so ago, doesn't seem so much that way now.

This almost seems similiar to what teams were saying/doing in the buildup to 9/15/04.
I hope not, but I don't think is going to be so simple now.

Yeah, but there is one diffrence. One that I cannot value, but one that you atleast can observe as present.

Last time around Bettman had:
-Valuble organizations.
-(But still) unprofitable.
-Owned by rich dudes.

This time Bettman have:
-Organizations with very questionable value in many cases.
-That also are unprofitable.
-That probably in many cases are owns by dudes with very questionable balance sheets.

These org's constitutes a great value on the balance sheet for their owners. They also grant a owner a legitimacy when it comes to investing in a city. Like dude X owns a pro-team. He goes to city council -- hey dudes, can you get me some prime land that I can build a arena on? Sure, that city council goes. Then he gets a 300m post in his balance sheet. He goes to a bank, hey dudes, can you borrow me 300m? The bankers go like, sure dude, you could cover it. He's legit they tell their bosses. And so forth. Then add a very modest growth to that (say 3% yearly due to price of land going up and such. The normal economic growth you have every year unless there is a recession), and a possibility to sell the whole bunch down the road for book-value, you gain like (3% times 600m á year) + 600m - loans (when you are out). And mean time you have a pro-team that carry the loans and use their income to pay of the mortgages etc. So even if they suffer some losses, they still carry big costs that enables the owner in question to get a big body of assets. Like a big body of assets, in normal times, or more like anything but horrible times, equals a big increase in fortune.

Thats how you build a fortune.

Now back to my point. Last time around, the owners could take a short-impact hit to in order to make their teams easier to sell. It was about making it possible to sell the org's that were the big diffrence, you got a cap on expenses (look, it saved money which was essential for a few, and always good for everyone, but many rich teams just as well would like to spend and make more money that way -- but, for them, and probably like the majority of teams, what really made it worth -- like no doubt -- for everyone was that it raised the end price).

Anyway, this time around, like nobody is buying anything anywhere. You wouldn't get more than butcher-value for many org's in this league. A big hit to the league and game of hockey, that another lock-out surely would result in, is definitely not as easy to take this time around as last time around. Neither for the owners nor players.

Look, like before any negotiation like this, you could bet the bank on that there will be a build-up and we will hear the sound of guns (or whatever the saying is ), but I am not sure if things are the same.

 

[Mr Atoz*]

As for the poster who got snide before, what do you think Dolan is paying for the improvements with? His own money? Keep an eye on the markets over the next year or so, you'll be lucky not to find yourself in this mess as well.

Take a look at the Forbes report. The Ranger debt is zero.

The Dolans own MSG & the Knicks as well as the Rangers plus they have the cash cow known as Cablevision. They could buy the devils tomorrow @ $200 million with the change in their pockets. The devils and that arena don't bring in the kind of money that the Garden does and it never will. That was all well and good when the devils shared an arena with the Nets and didn't foot the bill for the arena. And people saying that the proof the story isn't true is that the devils aren't shedding payroll is a joke. If you owe $100 million and don't have it what is cutting Bryce Salvador going to do for you? Make you $98 million short instead of $100 million? The only bigger joke is devil fans ridiculing the Post story while believing the owners' press releases saying everything is fine. There is a very good chance that the leak came from Chambers trying to force Vanderbeek to buy him out to keep his mouth shut.

 

[kdb209]

The Dolans own MSG & the Knicks as well as the Rangers plus they have the cash cow known as Cablevision.

MSG has little to do with Cablevision - CVC spun off MSG as a separate company in 2010.

You make it sound as if CVC/MSG are the Dolan's private little piggy bank. They are publicly traded companies owned 75%/90% by institutional investors and mutual funds.

Dolan may be CEO of CVC and Executive Chairman of MSG, but the Dolans own < 1% of Cablevision & MSG.

 

[Duke749]

The league thinks it's growing. However, the economy sucks. People are making less, if they're making anything at all. Meanwhile, the cost of things as basic as gas and food have gone through the roof. Decreased disposable income combined with increased cost of everything else just isn't a good recipe for success. Combine that with poor on ice performance, and the fact the building cost them an effin fortune and a payroll that is astronomical...and this is what happens.

Sports in general...across all leagues...are headed for some serious...SERIOUS issues. There's simply no way salaraies for people that are just playing a GAME...can continue to command so much money. I'm everyone's to blame...from the owners to the GM's to the players. They're in this together. If it falls apart everyone loses. There has simply GOT to be a sustainable system where players can make money, owners can make money, and fans can afford to attend the games. It just takes players realizing that they don't need to make more in a year than a whole street worth of married couples make in a lifetime, to play a game. I don't know when...but one day sports as we know them now...are going to be no more. Big changes will come. They have to.

I agree completely. I find it so weird how the league can continue to raise the cap yet more and more teams are having trouble. Ok, so they fixed ONE team by moving Atlanta to Winnipeg, but they, at best, can only do that one more time. If the cap continues to increase, the NHL is going to be in a lot of trouble. The cap will become irrelevant when half the league can barely afford to reach the cap floor. This next CBA could determine the fate of the league for the next 10 years.

 

[Rob]

Can't wait for Gary to do another Baghdad Bob impression.

 

[guyincognito]

MSG has little to do with Cablevision - CVC spun off MSG as a separate company in 2010.

You make it sound as if CVC/MSG are the Dolan's private little piggy bank. They are publicly traded companies owned 75%/90% by institutional investors and mutual funds.

Dolan may be CEO of CVC and Executive Chairman of MSG, but the Dolans own < 1% of Cablevision & MSG.

MOD

BTW, the reason they're at 0 debt load is because the project started THIS SUMMER and Forbes valuations are off the *2009-10 season*.

 

[guyincognito]

Take a look at the Forbes report. The Ranger debt is zero.

The Dolans own MSG & the Knicks as well as the Rangers plus they have the cash cow known as Cablevision. They could buy the devils tomorrow @ $200 million with the change in their pockets. The devils and that arena don't bring in the kind of money that the Garden does and it never will. That was all well and good when the devils shared an arena with the Nets and didn't foot the bill for the arena. And people saying that the proof the story isn't true is that the devils aren't shedding payroll is a joke. If you owe $100 million and don't have it what is cutting Bryce Salvador going to do for you? Make you $98 million short instead of $100 million? The only bigger joke is devil fans ridiculing the Post story while believing the owners' press releases saying everything is fine. There is a very good chance that the leak came from Chambers trying to force Vanderbeek to buy him out to keep his mouth shut.

First of all, paragraphs are your friend.

Secondly, the reason it would be significant what their payroll is.... a bankrupt team is going to be in coordination with (or under stewardship of) the league, dealing with the lenders.

You think a bankrupt team is going to be able to carry a $60M payroll? Seriously?
You think the owners who are having to assist two teams as is, would allow a 3rd to carry that much money?

Like I said, you're way in over your head there and probably the main board would be a better place for you to post.

A large renovation project on MSG, with some of the silly things that are involved that make the pricetag higher, IN NEW YORK (same labor pool that bloated the cost on the Prudential Center), is going to involved a significant borrowing of money. In a climate that is not particularly friendly towards it, nor does it look to be any friendlier afterwards.

Like I said, good luck not getting into the same mess.

 

[Whiplash27]

I agree completely. I find it so weird how the league can continue to raise the cap yet more and more teams are having trouble. Ok, so they fixed ONE team by moving Atlanta to Winnipeg, but they, at best, can only do that one more time. If the cap continues to increase, the NHL is going to be in a lot of trouble. The cap will become irrelevant when half the league can barely afford to reach the cap floor. This next CBA could determine the fate of the league for the next 10 years.

While this is true, there are too many teams that are in locations where it is unfeasible to have a profitable hockey team. If a team isn't making money, they're a waste. Why have three teams in NY? Two in Florida? Sure we can say some of the southern markets need time to grow, but how long do you give them? 5 more years? 10 more years? 20? By the time we give them time to grow they may go bankrupt.

The league is forced to raise the cap each year unless you want the NHLPA to flip a ****. The CBA agreement was to have the cap tied to revenue. Revenue shot up. Are you going to tell me that the league is going to have to fight to drag down the cap even further? A cap that it lost a season trying to create?

Sure, it can be seen as "unfair" that the floor raises so much because the top teams keep raking in more money. However, the whole purpose of the cap floor is so that we don't have the pre-lockout situation where big market team spends 70M per year and small market team spends 30M per year. The NHL is trying for parity so that, like the NFL, any team can break out in any year and make a run. What fan wants to watch a team that puts out a sub-par team every year because they don't want to spend any money at all while the cap goes up and salaries with it.

 

[kovultrick]

leave bryce out of this, hes one of my favs and probably knows alot about whats going on with the suits having sat out last year with a real mans injury.

lets take a look at ildiva kovy, and that decision, losing a pick and fines and probably parise and more because of it.

the meadowlands has fond memories, homey, newark not so much.

i think bankruptcy is justa crude business tool being used to pay what you can rather than all that you have, id rather speculate on seedy rumors and mob ties but my post gets cut, i mean i want to know as a fan so i can decide if i want to "support the team"

 

[Dado]

The Globe and Mail is not a Toronto newspaper...

Yes, it is.

The joke out here is "G&M - Toronto's national newspaper".

 

[LadyStanley]

http://www.nypost.com/p/news/business/devilish_deal_in_nj_KmuYDayXtRes0wWHLYVCHN

In a stunning development, New Jersey Devils co-owner Ray Chambers has agreed to pay $25 million to unload his 47 percent stake in the team, sources close to the situation told The Post.
Team lenders will get the cash as part of a deal to refinance the franchise’s debt, and principal owner Jeffrey Vanderbeek will get Chambers’ stake in the team, sources said.
The strange deal highlights both the shaky financial condition of the Newark-based team and the caustic relationship between the two owners.
As the deal is structured, Chambers, who has been looking to exit the mostly money-losing franchise for about a year, appears to feel the equity in the NHL team is worthless.
It also means that the billionaire Chambers, through his Brick City operation, is tired of pumping money into the troubled team.
People close to Chambers said he was never interested in making a profit from his Devils investment -- but simply to help re-develop Newark.
Under National Hockey League rules, Chambers is on the hook for any cash infusion the Devils might need as long as he’s listed as the owner, sources said.
The sale of Chambers’ stake in Devils Arena Entertainment also includes his piece of the company that operates the Prudential Center, the Newark arena where the Devils, Nets and Liberty play.

 

[Classic Devil]

This development is not particularly "stunning."