Dallas Stars: Gaglardi's Stalking Horse Bid: $265 MM for Stars, AAC (50%)

[BigG44]

The Dallas Morning News is pretty strict when it comes to sources. Therefore, they rarely break Dallas Stars news.

However, they are now claiming that two sources confrim Tom Gaglardi is the leader to buy the team, and, "could become the stalking horse bid in an organized bankruptcy case."

http://www.dallasnews.com/sports/dallas-stars/headlines/20110419-businessman-tom-gaglardi-emerges-as-leader-in-battle-to-buy-dallas-stars.ece?utm_source=twitterfeed&utm_medium=twitter


MOD:
Earlier Stars Sale Thread: http://hfboards.com/showthread.php?t=786442
Forbes Update: Post #17
G&M Update: Post #39

Click to read more...

 

[Dado]

The comments section on that article is interesting. Some folks worried that a Canadian owner will - regardless of what is being said - move the team back to Canada.

Also interesting that an NBA lockout would cost the team millions. Any other clubs in a similar situation?

 

[piqued]

Yes they'd lose some of the operational revenue generated by the AAC in the event of a lockout, although you'd have to imagine there'd also be increased ticket revenue due to being the only game in town. That might not totally cover those type of losses, but could mitigate them.

 

[ps241]

he will not move the team back to Canada and will be committed to the Dallas market and team when he gets in if the deal closes. He has made his money at the day job but is extremely passionate about Hockey and he is into the NHL for the right reason's he will want to win and he will definitely want to beat on the Canucks!!!

he is a hands on guy an use to operating his business so he is not a money man type like Hicks. All in all it will be a good day for Stars fans if he gets the ball into the end zone!

 

[Mathletic]

On the intermission Pierre Lebrun mentioned that Cuban was "kicking his tires" on buying the Stars.

Discuss.

damn, I wasn't aware of this, I'm late on this one but if it were to happen ... which isn't going to happen but anyways ... I'm becoming a Stars fan overnight. I'm a big fan of Cuban. I'm sure he'd use the same model he used in the NBA and use analytics to run his team.

 

[GDAWG]

All it takes is one magical season for the Stars to back to relevancy in the DFW area. Look at the Texas Rangers. 2010 was hands down their best year in Franchise history. Whether or not they can repeat that same feat remains to be seen. Before the 2010 season, the Rangers hoped to get at least 25,000 per game. They had near sellout crowds in September and October, especially when people realized it was the start of something special.

Gaglardi won't move the team. He's a Dallas Cowboys fan, which means that buying the Stars gives him every opportunity to catch the Cowboys play at the Jerry Dome. He'll most likely mention that at the press conference to announce he's the owner of the Stars. Plus, it gives him a chance to say "hey, remember us? We're still around."

 

[ThrasherMinion]

The comments section on that article is interesting. Some folks worried that a Canadian owner will - regardless of what is being said - move the team back to Canada.

Also interesting that an NBA lockout would cost the team millions. Any other clubs in a similar situation?

welcome aboard the Relocation Train! Plenty of room in Winnipeg for more teams!!! So far it was Phoenix and our Atlanta team, but Dallas can play an early afternoon game while the other 2 teams play 7 and 10:30 games!!

 

[MetalGodAOD*]

http://www.theglobeandmail.com/sports/hockey/canadian-takes-helm-in-bid-to-buy-stars/article1998473/

Could be good news for the Stars. Bankruptcy court could be a problem, but fans have reason to be confident it won't this time. The problem with the Texas Rangers was Hicks' behind-the-door dealing with other ownership groups despite his promise of exclusiveness.

It seems bankruptcy is the only way to sort out all thle debts to the lenders. I doubt it gets done within a month but there's hope it'll be sorted out before Free agency.

 

[Fugu]

http://www.theglobeandmail.com/sports/hockey/canadian-takes-helm-in-bid-to-buy-stars/article1998473/

Could be good news for the Stars. Bankruptcy court could be a problem, but fans have reason to be confident it won't this time. The problem with the Texas Rangers was Hicks' behind-the-door dealing with other ownership groups despite his promise of exclusiveness.

It seems bankruptcy is the only way to sort out all thle debts to the lenders. I doubt it gets done within a month but there's hope it'll be sorted out before Free agency.

Some snippets:

It is expected Gaglardi, 43, will soon enter an exclusive negotiating period of roughly 30 days to complete the purchase of the NHL team and a 50-per-cent share of American Airlines Center. The last hurdle, according to a source familiar with the sale who requested anonymity because the deal is not official, is taking the Stars through bankruptcy court so Gaglardi will not be hampered by any debts left by current owner Tom Hicks.
Declaring bankruptcy is opposed by the NHL, according to the source, but it is viewed as a necessity because of the Stars’ long list of creditors. It is hoped the sale can be completed by the end of May, but that is not certain as the bidders who lost out to Gaglardi in this round could resurface in bankruptcy court.
...
No one is saying what Gaglardi will pay for the Stars and a half-interest in the arena but it looks to be in the range of $250-million.

 

[Dado]

So what does that work out to - Is $100M for the arena share and $150M for the team approx right?

 

[Steve Passless*]

Almost reminds me of the Lightning sale, where Vinik got an arena and some real estate with a hockey team thrown in for free.

 

[Fugu]

So what does that work out to - Is $100M for the arena share and $150M for the team approx right?

The sale through bankruptcy court, if that is the course taken, would be necessary due to the owner's mismanagement of his assets and incurring too much debt. It's not because the Stars have lost $200 MM over the past few years. And thanks to having the creditors calling the shots, I'm not sure we'll ever know what could have been negotiated in a straight up sale.

 

[vofty]

Well I will say as of yet no one has come out and adamantly denied the report like has happened all the other times.

While I want to be excited, just not going to happen until it is over...I've seen too many debacles over the past year when it comes to teams and bankruptcy. As soon as it is done I will be dancing but till then I will remian skeptical.

 

[GSC2k2*]

So what does that work out to - Is $100M for the arena share and $150M for the team approx right?

I know people love to do this, but this is a deeply flawed way of looking at any such transaction. The only way an arena is worth a substantial amount of money is with anchor tenants like the Stars. Dallas has one anchor tenant in the Mavs, which increases its value, but the presence of TWO anchor tenants increases the value of the arena exponentially.

Similarly, the value of the team is enhanced by the arena.

The value of any transaction is going to be increased enormously by the synergy of the team and the arena. there is no way of allocating that synergy to the team or the arena.

Almost reminds me of the Lightning sale, where Vinik got an arena and some real estate with a hockey team thrown in for free.

It might remind one of that, if your characterization of the Lightning sale was even remotely valid. Since it isn't, I guess it is irrelevant.

 

[Fugu]

I know people love to do this, but this is a deeply flawed way of looking at any such transaction. The only way an arena is worth a substantial amount of money is with anchor tenants like the Stars. Dallas has one anchor tenant in the Mavs, which increases its value, but the presence of TWO anchor tenants increases the value of the arena exponentially.

Similarly, the value of the team is enhanced by the arena.

The value of any transaction is going to be increased enormously by the synergy of the team and the arena. there is no way of allocating that synergy to the team or the arena.

Oh really? I think there's a very straightforward way of doing so. The parking rights alone may be worth hundreds of millions.

It might remind one of that, if your characterization of the Lightning sale was even remotely valid. Since it isn't, I guess it is irrelevant.

You're free to state exactly how it is otherwise then.

 

[Free Edler]

I'd like to be a fly on the wall during the first BOG meeting with Gaglardi and Francesco Aquilini involved.

 

[Fugu]

Forbes: Tom Gaglardi Makes Offer To Buy Dallas Stars Without Cash

I'm going to leave this as a separate thread for the moment since the older Dallas Stars thread has a mix of reports on who may put forth an offer. This article gives out some figures to chew on. Almost as interesting as the Phoenix situation, financially speaking.

Oznian reports that Gaglardi's offer is to assume $100MM of debt in exchange for the Stars and 50% of the arena.

http://blogs.forbes.com/mikeozanian...makes-offer-to-buy-dallas-stars-without-cash/

The $100 million could go to $135 million under certain conditions that were not specified to me. The arena, which is co-owned by Dallas Mavericks owner Mark Cuban, has $260 million of debt and $60 million of cash on its balance sheet.
...
My source says the plan is to use Gaglardi as a stalking horse to get higher bids and he would get a fee should he not get the team. But it is a bit of a gamble because on top of the $100 million Gaglardi offered Hicks owes $160 million tied to the team, and that would be a big bath for the creditors to take if higher bids did not come forth.

 

[Fugu]

There's so much news coming out of the other two threads, no one noticed this yet.

 

[Killion]

Quite the "Stalking Horse" bid!. Absolutely bizarre. As a creditor Id be insulted. Who does business like this & expects a fee?. Predatory.

 

[Dado]

Including half the arena? So team itself is worth maybe $50M?

Holy **** - stalking bid or not - that's a crazy low number for one of the supposedly "successful" southern-strategy teams!!!

 

[Kritter471]

The creditors were the ones who apparently didn't do due diligence on Hicks when deciding to lend him the money that got him in so much trouble.

Hicks overextended himself, pure and simple, and used his owned assets - the Rangers, the Stars and his portion of the AAC- as collateral to take out yet more loans, then took out loans for operating expenses when none of the previous loans (which he used to invest in real estate) turned a large profit. He was trying to use very little money to make money and he got burned. Now he's basically divesting himself of all the mistakes and leaving the people who were dumb enough to lend him money holding the bag. Forgive me if I don't feel that bad for them.

Also, FWIW, the Dallas Morning News reports the Forbes story is basically wrong - there is a lot more debt assumed as well as real money as part of this particular offer.

The other story was a report from Forbes on the offer that Tom Gaglardi is putting into writing to hopefully purchase the Stars. Forbes had a lot of numbers, but the tone of the story is that Gaglardi is trying to buy the Stars at a low price with no cash.

A couple of sources said that's not true. While some of the numbers are accurate, they are incomplete and don't include a lot of the debt that Gaglardi will have to assume in purchasing the team, as well as real money that will be a part of Gaglardi's offer.

The bottom line is the lenders have waited a while to get a good offer, and Gaglardi's offer is clearly superior to that of the other buyers. While there still is a chance that another buyer could outbid Gaglardi when his exclusive negotiating window is completed in late May, one source said the Stars would still be one of the top 10 valued teams in the NHL with this offer.

http://starsblog.dallasnews.com/archives/2011/04/reacting-to-stars-stories-on-kirk-muller.html

 

[Kritter471]

Including half the arena? So team itself is worth maybe $50M?

Holy **** - stalking bid or not - that's a crazy low number for one of the supposedly "successful" southern-strategy teams!!!

The arena, as mentioned in the story, is saddled in more debt than the Stars are. If the NBA goes into a lockout, it would add even more debt to the arena because it would sit empty for 45-50 more dates than it did the previous fiscal year.

And do more reading on the subject before you start griping about this being a sale price, particularly the reporting of people actually in and around the team rather than Forbes, which as we know, is often woefully inaccurate when it comes to summarizing sports-as-business because of the confusing nature of the books.

For all the griping some Stars fans do about Mike Heika at the DMN, he's been very accurate and on top of things when it comes to the sale issues. I will always believe his reporting over people from national outlets who are nowhere near as connected to what's going on.

 

[Fugu]

The earlier reports were that the deal would be $250 MM for both the 50% of the arena and the team. I wonder how that works out to make Dallas one of the top ten in NHL franchise values, even if you say the team and the arena are equal in value?

 

[Dado]

The earlier reports were that the deal would be $250 MM for both the 50% of the arena and the team.

This report is consistent with the earlier one. $100M of Stars debt and $130M of arena debt adds up to $230M, close enough for reportage.

However it's sliced, that is a really really low valuation on the team. Although it is consistent with what we're seeing in Phoenix and Tampa.

I wonder how that works out to make Dallas one of the top ten in NHL franchise values...

It's clearly not.

 

[Kritter471]

Which earlier reports are you talking about? There's been a fair number of reports of values and offers. I'm nearly positive the most recent one I heard was that a group led by Doug Miller offered $150 MM as a stalking horse bid that included (IIRC) $50 million cash and $100 million debt assumption, but that was also before we heard that up to seven parties were interested again, minus Gallacher but including Gagliardi, who had both dropped out at one point.