HFeed - 3 to 5 NHL teams could file for bankruptcy (Speculation)

[alko]

Source
Alarming title, i know. Maybe it means nothing. But still, is it possible?

Click to read more...

 

[Albatros]

Of course it is possible. A number of franchises have went bankrupt before, some several times.

 

[Fenway]

Larry Brooks wrote this article last Friday after the BoG had a Zoom meeting.


https://nypost.com/2020/11/12/nhl-would-prefer-to-avoid-hub-cities-for-2020-21-season/

 

[Mightygoose]

If the league and PA reach an agreement to play which of course will have a salary cap and floor with no guarantee of game related revenue. 5 no votes would still push the season ahead.

So yes if there are some teams that are in rough shape now, BK may be their only option. Even those that don't, the losses they incur may exceed the amount they want to that could spur a sale earlier than planned. Wouldn't rule that out.

 

[Fatass]

Is there potential for contraction?

 

[CanadianCoyote]

I wouldn't be surprised if a couple of the teams in smaller markets or with less wealthy owners did end up bankrupt, like FLA or OTT. The Sens, in particular, have been bankrupt before.

Now, if that impacts relocation discussions at all...I wouldn't say "definitely makes it more likely", because the NHL has precedent for taking over bankrupt franchises to keep them in their market. But we all know it'll only intensify them anyways.

But it could also end up being an Atlanta situation, where there's multiple fires and the NHL has to choose which to put out; and I think they keep Ottawa in that situation because of the bad publicity letting a Canadian team move would cause for them (already had enough in the 90's that still hasn't shaken for some people).

 

[tarheelhockey]

No big surprise there. The lack of revenue means these teams are accumulating serious debts just to stay operating, and that's going to really hit home if they return to play without fans in the arena. I don't doubt that some of them are better off declaring bankruptcy than trying to face that red ink.

 

[Major4Boarding]

I removed Larry Brooks as the cited reference in the thread title. The title seemingly implied Larry Brooks was the source. HFeed is the one speculating their could be the possibility of bankruptcy and piggy-backs the Brooks article Fenway posted above. Brooksie made no such reference or even implied it.

Carry on

 

[Fenway]

I removed Larry Brooks as the cited reference in the title. The title seemingly implied Larry Brooks was the source. HFeed is the one speculating their could be the possibility of bankruptcy and piggy-backs the Brooks article Fenway posted above. Brooksie made no such reference or even implied it.

Carry on

Brooks wrote

Sources report that between three-to-five owners have claimed they would be unable to survive under these circumstances and would be better off not playing the season. We’re told that the league on Thursday brought up the possibility of proposing an additional deferral of pay to the players association rather than pressing prorating.

Brooksie is tight with Bettman and Daly so.............. (How do you think Larry got into the HHoF?)

Larry has moved on to the current issue over player pay for 2020-21

NHL players fuming over league's shocking ploy

November 18, 2020 | 9:23pm

Contract renegotiation has been forbidden under the NHL CBA since the adoption of the hard cap in 2005. That is one of the core tenets of the unyielding system. Except, apparently, when it comes to renegotiating the CBA itself. Because just four months after agreeing to a six-year extension in early July, the NHL is requesting the NHLPA revisit critical areas in the CBA as a prelude to opening the 2020-21 season, The Post has learned.

 

[Major4Boarding]

I saw that. But "unable to survive" doesn't automatically equal straight to bankruptcy. It may lead to that after other measures are exhausted, sure, but it's not necessarily automatic as HFeed implied.

 

[Fenway]

I saw that. But "unable to survive" doesn't automatically equal straight to bankruptcy. It may lead to that after other measures are exhausted, sure, but it's not necessarily automatic as HFeed implied.

Understood

Here in Boston, Delaware North is in trouble.

Just a year ago they opened a massive retail area where the old Boston Garden stood

The Hub on Causeway Grand Opening | TD Garden

Star Market | Boston largest urban grocery store with over 60,000 sq. ft.
· ArcLight Boston | Northeast’s first 15-screen ArcLight Cinema.
· Big Night Live| An intimate concert venue for 1,500 people.
· Guy Fieri’s Tequila Cocina | A 6,000 square foot Latin-American inspired restaurant.
· Banners Kitchen & Tap | An immersive two-story restaurant and bar featuring upscale tavern cuisine.
· Hub Hall |A food hall showcasing 18 local eateries and food vendors.
· ProShop powered by ’47 | The official team store of the Boston Bruins and Boston Celtics.
· citizenM hotel | A European inspired hotel with over 270 rooms, rooftop bar and lounge area.
· Hub50House | A residential tower including 440 luxury units in a 38-story tower.
· TD Garden expansion | A legendary transformation of the 24-year-old arena, with an additional 64,000 square feet of expansion spaces on floors 3-9.
· TD Garden & North Station Entrance | Over 10,000 square feet of outdoor space serves as the new entrance.
· North Station Garage Expansion | Over 500 new below-grade parking spaces that connect to the North Station garage.
· North Station pedestrian connector tunnel | A covered, underground connection from the commuter rail to the subway at North Station.
· Creative office space | Over 145,000 square feet, home to Rapid7’s world headquarters.

Phase III consists of a 31-story office tower with approximately 630,000 square feet. It is expected to be completed in 2021. Verizon is the anchor tenant with 17 floors of office space.

Jacobs sat on the land for over 20 years until the time was right and it appeared to be a huge success and then COVID hit.

A year ago North Station was seeing 60,000 arriving passengers every workday - last month it was 5,000 so foot traffic has vanished along with the arena closed. Since nobody is working downtown the condo sales have stopped and now Verizon has pulled out of the office building which is 90% complete.

This week Jacobs has reopened TD Garden as the building needs to be ready for the Celtics and he won't see a dime from it as the Celtics get free rent in exchange for concessions and club seating that he controls - but there will be no fans.

DN was built to be a company with constant cash flow coming in and since March they have been hammered worldwide.

Madison Square Garden is hurting as all their venues are closed except Las Vegas.

Every NHL team is looking at losing at least $30 to $50 million without fans and that number might be conservative.

 

[Major4Boarding]

After thinking about what I posted, perhaps I should explain where I'm at on this.

Clubs have more options available to them than the Nuclear option of bankruptcy.

* There's the internal Credit facilities the NHL has in place for each club member.
* OPM ("Other People's Money") - Two examples by the NYR provided here and here.
* Minority stake/managing partner search(es).
* Bankruptcy

I have to imagine the last thing Bettman and Daly need right now is a few franchise owners filing for bankruptcy. I'd gather they would be reaching out to Citi to extend the 2014 credit facility if they haven't done so already. The latter there'd be an announcement, but it may be something that's quietly in the works. As bleak as the existing landscape looks right now, there's a pathway towards normalcy rather soon.

Lot's of cans to kick around, aside from the options above too. That's all I meant with what I posted.

 

[Golden_Jet]

I wouldn't be surprised if a couple of the teams in smaller markets or with less wealthy owners did end up bankrupt, like FLA or OTT. The Sens, in particular, have been bankrupt before.

Now, if that impacts relocation discussions at all...I wouldn't say "definitely makes it more likely", because the NHL has precedent for taking over bankrupt franchises to keep them in their market. But we all know it'll only intensify them anyways.

But it could also end up being an Atlanta situation, where there's multiple fires and the NHL has to choose which to put out; and I think they keep Ottawa in that situation because of the bad publicity letting a Canadian team move would cause for them (already had enough in the 90's that still hasn't shaken for some people).

Melynk said in his interview he was ready to play, but did say there was a handful of owners not willing but said Gary is working with them.
Ottawa gets about 50 million in TV revenue on a 82 game schedule.

 

[eddygee]

Excuse my ignorance but just looking for a explanation. In better times we'd often hear how well the league was financially secure and that unlike a few leagues it had a extremely large line of credit with Amex or was it Discover. Shouldn't they be able to tap in that a bit for those handful of teams in trouble right now?
Edit** I see someone touched on this granted it was a few years back but I have to think now would be a time to crack that $1.4 billion line of credit window if it's still available or hasn't been touched yet.

 

[Flukeshot]

I feel like the league should go 100 percent revenue share this season. Divide all HRR by 31.

 

[Golden_Jet]

I feel like the league should go 100 percent revenue share this season. Divide all HRR by 31.

that would prevent pushing all the owed money to future years, and allow you to get close to normal a lot quicker.
I’d be in favour of that.

 

[LeHab]

Excuse my ignorance but just looking for a explanation. In better times we'd often hear how well the league was financially secure and that unlike a few leagues it had a extremely large line of credit with Amex or was it Discover. Shouldn't they be able to tap in that a bit for those handful of teams in trouble right now?
Edit** I see someone touched on this granted it was a few years back but I have to think now would be a time to crack that $1.4 billion line of credit window if it's still available or hasn't been touched yet.

I'm not too concerned as league is sharing +1B from recent expansions. League-backed loans at preferential interest rates can be extended if needed for sure. Owners still may want to appear poorer than reality while attempting to get further concessions. NHLPA has good insight into HRR but don't really know the full picture of revenues/expenses. All part of negotiation tactics.

What I do like overall is, unlike MLB which had a rather public negotiation, we don't really hear any official word from NHL or NHLPA other than what some players report. Meanwhile media will pry on anything to send fans on an emotional rollercoaster.

 

[Golden_Jet]

I feel like the league should go 100 percent revenue share this season. Divide all HRR by 31.

Probably not a bad idea, with some allowed fans and others it’s a no go.

 

[Spartachat]

Even a bankrupt NHL team is worth USD 500 mil to another billionaire. It is an exclusive toy.

 

[Nino33]

Brooksie is tight with Bettman and Daly so.............. (How do you think Larry got into the HHoF?)

Brooks won an award given out by the HHoF (Elmer Ferguson Memorial Award - Wikipedia). He's not in the HHoF

 

[Digital Kid]

I can't imagine the NHL allowing or tolerating a one-year hiatus for some teams like back in the early days (Brooklyn Americans, Ottawa Senators I think etc)

 

[TheLegend]

Brooks wrote

Sources report that between three-to-five owners have claimed they would be unable to survive under these circumstances and would be better off not playing the season. We’re told that the league on Thursday brought up the possibility of proposing an additional deferral of pay to the players association rather than pressing prorating.

Brooksie is tight with Bettman and Daly so.............. (How do you think Larry got into the HHoF?)

Larry has moved on to the current issue over player pay for 2020-21

NHL players fuming over league's shocking ploy

November 18, 2020 | 9:23pm

Contract renegotiation has been forbidden under the NHL CBA since the adoption of the hard cap in 2005. That is one of the core tenets of the unyielding system. Except, apparently, when it comes to renegotiating the CBA itself. Because just four months after agreeing to a six-year extension in early July, the NHL is requesting the NHLPA revisit critical areas in the CBA as a prelude to opening the 2020-21 season, The Post has learned.

Brooks was absolutely positively sure Andrew Barroway wasn’t buying into the Coyotes either and boasted he had three sources confirming it. The deal was done less than a month later.

So it’s YMMV with any of there reports.

That said.... I have no doubts the smaller owners are in a tight squeeze right now.

 

[vorky]

I know they are using other mechanism but if they have such financial problems, they just should lower the salary ceiling/floor by 20, 30, 50% whatever. The clubs would love it, the players not.

 

[Ernie]

The title is erroneous and not what the source, Larry Brooks said. Brooks said that teams would not be "able to survive." Which is also misleading but at least more accurate.

It's clear that virtually every team will be taking a loss this offseason. Those without big local TV contracts will obviously be worse off.

A lot of owners have seen their other business operations take a major hit so may not be able to prop up their franchise.

Will that lead to bankruptcy? Highly unlikely. Even if every team loses an average $50m this year, that's only $1.5bn. That's less than 10% of the leagues overall valuation.

Individually, franchises might not be able to accumulate more debt, if they already have high debt levels or do not have the profits to justify additional debt.

But the league has a $1.7bn line of credit and at current interest rates, that debt should be very cheap to service. That line of credit could almost certainly could go higher. Of course, as we saw with the Coyotes, debt to the league usually doesn't come without strings attached. Would an owner declare bankruptcy in order to force a move instead of taking the NHL's cash?

That would be a terrible move. The NHL has the right to set a relocation fee, potentially leaving the current owners with peanuts. So it makes more sense for everyone to ride this out. If the league was willing to put in $100m plus to keep the Coyotes in their market, I doubt they're going to suddenly reverse course now. The league will only go down that route unless it absolutely has to, and we're far from that right now.

 

[Llama19]

<snip>

That would be a terrible move. The NHL has the right to set a relocation fee, potentially leaving the current owners with peanuts. So it makes more sense for everyone to ride this out. If the league was willing to put in $100m plus to keep the Coyotes in their market, I doubt they're going to suddenly reverse course now. The league will only go down that route unless it absolutely has to, and we're far from that right now.

Can you provide a source for that statement...