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

[Killion]

...minus Gallacher but including Gagliardi, who had both dropped out at one point.

Is Gallacher truly out of it?. Ive lost track. Gagliardi as you are no doubt aware has a track record up here in the Northwest & indeed across Canada that would lead, or at least point, to believing that he'd be a really great & dedicated owner in Dallas. Yet this I dont quite get.... Seems arcane & predatory.

 

[Roughneck]

I should point out that when Liverpool FC was sold last year it also went for considerably less than value (~$300M US below what some had it valued at) because of Hicks. So I wouldn't see this as a true reflection on the Stars as a franchise but more on just how bad Hicks has been for franchises.

 

[Fugu]

http://hfboards.com/showpost.php?p=32669854&postcount=167

Report about Gaglardi's offer from The Globe.

 

[Kritter471]

Report about his offer from the Dallas Morning News: http://starsblog.dallasnews.com/archives/2011/04/nieuwendyk-moving-ahead-slowly.html

The most relevant section to this thread, assuming you already know what I've quoted from his earlier blog post above.

That said, this still is very complicated. Gaglardi's people have to fashion a legal document that will satisfy the lawyers for the lenders and the NHL. Then, the plan is to put that offer before other bidders to see if they want to go over it. If they do, Gaglardi would have the opportunity to then go over their bids.

The lenders, the Stars and the NHL would like to get any kind of controversy out of the way before they try to send the team through an organized bankruptcy hearing. If they can present a clean deal, the court case could take only three days (the same way the Cubs did it with the Ricketts family back in 2009). That would allow the Stars to avoid the drama that came during the sale of the Texas Rangers in bankruptcy court.

But while this is what the plan is, even the people making the plan caution that there are several potential problems that could creep up.

Killion - the talk is that Gallacher is well and truly no longer a bidder, but that is also with the caveat that we don't know who any of the other bidders are other than Miller's group and Gagliardi. Cuban has also been rumored to be a minority bidder in a group, but that is also not confirmed.

Fugu - Thanks for that. I wouldn't be surprised if Forbes was talking about that offer and got a bad source that didn't get his numbers straight. An offer of $100 million of arena-related debt assumption along with $150 million in Stars-related debt assumption and cash would make a lot of sense given what's been reported about the situation.

 

[Koss]

Are things so bad in the states that assuming debt is now as good as cash? Crazy.

 

[piqued]

Killion - the talk is that Gallacher is well and truly no longer a bidder, but that is also with the caveat that we don't know who any of the other bidders are other than Miller's group and Gagliardi.

Billy Quinn's group has continued to be mentioned as being around the periphery.

 

[Killion]

Killion - the talk is that Gallacher is well and truly no longer a bidder, but that is also with the caveat that we don't know who any of the other bidders are other than Miller's group and Gagliardi. Cuban has also been rumored to be a minority bidder in a group, but that is also not confirmed.

Little wonder we lose track of the players. Here you have the Stars, a top 10 in terms of franchise value left wandering through a financial miasma by Hicks' s triangulations. You need a program to keep up with the players; a compass to make sure you dont get lost & lose sight of the goal when all you see are obstacles; a Dowser to rather quickly find out where the water wells' are located, extinguish the flames before the barn burns to the ground. Gagliardi seems to have found a source, but its miles away, and Im not so sure the creditors are gonna like the hosing they'll be taking in bringing water to the yard.

 

[Dado]

Hey Killion, bud, we're a couple of bright dudes, why don't we make a no-money-down offer on one of these teams?

 

[Killion]

Hey Killion, bud, we're a couple of bright dudes, why don't we make a no-money-down offer on one of these teams?

Ive been a Good Boy and have room on my Cards. You?....

 

[obsenssive*]

how does an arena get in such massive debt?

 

[Killion]

how does an arena get in such massive debt?

T O M H I C K S

 

[Frozen Failure]

how does an arena get in such massive debt?

Cost of building, parking, land... maybe operating costs. But it's a smashing nice arena.

 

[Dado]

how does an arena get in such massive debt?

Ego, usually. There is some irony in an LBO dude getting jacked by his own petard.

He paid $82M for the team more than 15 years ago, if that part goes for $100M that's some serious real-terms deflation.

 

[vofty]

Another Globe and Mail report:
http://www.theglobeandmail.com/sport...rticle2007246/

One person well-connected to NHL financial matters said our estimate of $250-million (all currency U.S.) for the Stars plus a half-interest in the American Airlines Center was far too generous. This source pegged Gaglardi’s offer closer to $125-million, which was disputed by a second source who has connections to the banking side of the sale. That source characterized the $125-million as the cash part of the transaction with Gaglardi assuming debt from the Stars and the arena to make the sale price higher.
...
One source said Cuban studied the finances of more than one NHL team before he spoke to the Stars’ bankers.

Cuban told the bankers he would pay no more than $80-million for the Stars and cover their next three years of losses up to a total of $75-million. If the Stars lost less than $75-million, the source said Cuban was willing to pay the difference to the creditors. That would bring the purchase price to $155-million, quite a comedown not only for the bankers but the NHL, since it has trumpeted the Stars as one of its model franchises.

The banking source confirmed there were talks with Cuban but they did not last long because he “was trying to low-ball this.â€
...
While reports place the Stars’ losses at $15-million this season, our source says $25-million is more likely.

The Stars’ attendance is to blame for the losses, as the fans voted with their feet with the team missing the playoffs for the third time in the last three years. The average crowd steadily declined, with the Stars hitting as low as 23rd in the NHL this season with just 15,073 fans turning up per game.

Even worse are the actual numbers in the seats, which is more indicative of the paying customers. Those who regularly attend games say it became common over the last two seasons to see as few as 6,000 fans at the arena, numbers usually associated with the likes of the Phoenix Coyotes or Atlanta Thrashers.

However, there is no chance the Stars will be moved.

 

[No Fun Shogun]

Seems like a very bad deal, as the Stars were valued at being worth $227 million by Forbes in 2010.

http://www.forbes.com/lists/2010/31/hockey-valuations-10_Dallas-Stars_315393.html

 

[Dado]

Am I the only one who finds this stunning? That the choices appear to be $80M in cash or $100M in debt assumption for what was supposedly one of the more valuable franchises in the league is...

...words fail me.

 

[vofty]

Seems like a very bad deal, as the Stars were valued at being worth $227 million by Forbes in 2010.

http://www.forbes.com/lists/2010/31/hockey-valuations-10_Dallas-Stars_315393.html

Well it is quite possible the "final sale" price ends up around the $225 number after the assumption of debt is factored in (which it will be from my understanding)...hard to judge with such non-descript terms as "to make the sale price higher". The Stars have always had a high debt, even in that Forbes article you cited only the Devils have a higher debt/value % at 115 compared to 88 for the Stars.

 

[Fugu]

Am I the only one who finds this stunning? That the choices appear to be $80M in cash or $100M in debt assumption for what was supposedly one of the more valuable franchises in the league is...

...words fail me.

In the case of the Stars, I really do think that none of this would have happened if Hicks hadn't taken on that soccer team. When you look at it now, it was such an idiotic thing for him to do especially considering how much he was leveraging his other assets to do it. As was pointed out above, his creditors are to blame as well. His debt:assets was clearly out of whack so the creditors only have themselves to blame. Now that the sheer magnitude of the potential losses has come home to roost, they're trying to hold the team hostage to get back more than the value (since that value was never there).


I wonder if the league will put in new mechanism that requires league approval when owners go off the deep end like Hicks did. I know they were involved with the extensions for repayment, but the details escape me now.

 

[Fugu]

They have agreed on a price and most of the major terms of the sale. The goal now is to wrap this up in a package so it can be taken through the U.S. Bankruptcy Court as smoothly as possible and present the team to Gaglardi (assuming none of the other interested parties presents a higher bid to the court) by early June.
...
Two Dallas oil men, Doug Miller and Billy Quinn, made separate bids for the Stars and both were linked to Cuban at different points. They could resurface if they choose to make better offers through the court.

Just wanted this noted from the G&M article because it has names.

 

[Hawker14]

The Stars' $160m team debt and $100m net arena debt reminds me of the Senators, circa 2003, with their approx. $370m pre-bankruptcy team and arena debt.

I think the vultures are out in full force, and expecting to give the creditors a big haircut once this plays out. Melnyk, part deux, imo.

It would seem these two entities (Stars and 50% of arena) have a combined enterprise value of about $375m, so to hear figures of $250m (Shoalts) and especially the $100m Gaglardi offers are stunning.

Hard to believe that the NHL's #1 revenue generating franchise a decade ago finds itself in this situation today.

 

[Kebekoi]

Let's put all 100$ in a basket and buy the team.

 

[Kritter471]

Dado, I don't know where you're getting those numbers from, but they're wrong. The offers are, at worst, $100 mm of debt asumption but far more likely north of $200 mm in a combination of cash and debt assumption.

Fugu - now that multiple sources have said the original Forbes report is wrong and they've got a source directly contradicting the original report of a no-cash bid, might it be time to take the no-cash thing out of the thread title?

 

[ps241]

I think we will have to wait for the actual details on this guys.

There is a difference between predatory and fair market value. At the end of the day the purchaser will drive the toughest bargain he can and if these combined entities (building and business) are currently in the red due to too much debt then it makes sense that the purchaser would not find those conditions favorable or attractive.

Gaglardi has a history of buying and holding onto assets.....he is not a money man like Hicks. If he becomes the eventual owner of this team it will not be to make a ton of cash it will be to fulfill his dream of owning an NHL team. His passion for Hockey is off the charts and much like Terry Pegula up in Buffalo the Dallas faithful will be getting an owner who is in it for the right reasons (from a fans perspective)

In saying that he is tough and he will not overpay for this asset.....he will want to get it for the cheapest price he can but after that he will be committed to win. He will still run it like a business and will want to make money or minimize losses but he is getting in "eyes wide open". if you gave a choice to Tom of Winning a cup and breaking even financially or losing on the ice but making very good money, he would definitely take door number 1.

If he has one fault it might be that i doubt he is an owner who will pick his guys and sit back let them do their job without input .....Tom is use to running a large business with allot of moving pieces and being very involved.....he has amazing capacity for absorbing detail and handling a staggering work load while thriving.......he and his father are tireless, bright, and driven

Dallas should be use to owners who are "involved" (Cowboys and Mavs).....Tom would not have the loony, sitting on the bench and schooling the refs style of Cuban but i do see him in the Jerry Jones model of working.....ahhh.....very closely with his GM (not with the JJ ego but with allot of confidence in his ability)......it will be for all the right reasons i only hope it yields winning results

passion to win and loyalty to the Stars will not be an issue

 

[vofty]

More speculation about the sale price although Heika is usually the most accurate source when it comes to Stars information.
http://www.dallasnews.com/sports/da...ece?utm_source=twitterfeed&utm_medium=twitter

Tom Gaglardi’s offer to buy the Stars and half interest in American Airlines Center is in excess of $250 million, according to one source familiar with the negotiation.
...
However, Gaglardi’s offer, which is expected to include assuming a large amount of debt as well as making a cash payment to the lenders to help cover debt incurred in the past two seasons, is expected to push the value higher. The offer does not include future debt, the source said.
...
One source said that under the Hicks Sports umbrella the Stars would help fund the Rangers during the summer (when the Stars were selling season tickets) and the Rangers would help fund the Stars during the winter (when the Rangers were selling season tickets). Because the separation of the Stars and Rangers occurred in August, the Stars took on additional debt issues and lenders have assumed almost $40 million in debt on the Stars since 2009. Two sources said that debt will likely be addressed with cash from a buyer.

 

[Dado]

So we're still looking at something like (ballpark) $100M for the team and $150M for half the arena...? Or possibly $80M for the team, $130M for half the arena, and $40M in miscellaneous debt repayments...?