Yesterday, the New York Post published an article stating that the New Jersey Devils missed a September 1st deadline to pay $100 million to lenders. Later in the day, the Devils organization announced that the Post’s story was “patently false.” If that’s the case, it sounds like Forbes has the same false information—because they too are reporting that the franchise was unable to pay creditors on September 1st.
Forbes goes deeper to explain that even if the team failed to make promised payments earlier this month, any bankruptcy proceedings would still be in the distant future (read: after the season). Forbes Executive Editor Mike Ozanian explains the details:
“Despite being unable to pay lenders $100 million that was due September 1, the NHL’s New Jersey Devils do not have to worry about being forced into bankruptcy by creditors for at least nine months because a consent letter stipulates lenders cannot take action against the Devils until after the last game of this season’s Stanley Cup playoffs, which should be around mid-June.”
Jeff Vanderbeek and Brick City LLC currently co-own the Devils with each claiming 47% in the NHL franchise. Brick City LLC has been looking to sell off their interest since February—an interest that Vanderbeek now plans on purchasing in order to refinance the team. Where it could get interesting is the value of the team vs. the amount of the debt. Forbes valued the Devils at $218 million last December—a value that includes money made from non-NHL events. Unfortunately for Vanderbeek, those projections for the coming year can be expected to decrease as forty-one New Jersey Nets home games would vanish if a potential NBA lockout wipes out the 2011-12 season. Even if the teams can salvage part of the season, revenue will be lost with each and every game missed. Mix in the fact that the outstanding debts stand at $250 million and refinancing the team might not be as easy as it sounds.
For the moment, we can give both sides the benefit of the doubt. Yes, the New York Post was correct when they said the Devils could face bankruptcy proceedings for failing to pay on September 1. On the other hand, the Devils don’t believe their facing bankruptcy because they have until June to hammer out the Brick City buyout and refinance the team. Either way, we’re splitting hairs.
No matter how you slice it, it would help everyone involved if the Devils could get off to a good start. They’ve already sold more tickets than they had at this time last season—so there’s potential to start bringing fans into the building. In a gate-driven league, there’s no substitute for sellout crowds packing the arena, paying for parking, buying beer, and picking up merchandise at The Rock.
Let’s be honest: nothing brings in fans and revenue quite like winning.