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.
Earlier today, The New York Post released an exclusive article that claimed the New Jersey Devils could be headed for bankruptcy after failing to pay back a loan on Sept. 1. The story illustrated what might be a significant issue for the franchise, especially since the Prudential Center could be prone to losses if the NBA’s lockout robs them of New Jersey Nets games.
The Devils’ brass didn’t respond to interview requests from the Post, but they did release a statement about the matter today. The team reiterated their statements that their ownership situation should be resolved. The plan is that co-owner Jeff Vanderbeek will buy out Brick City LLC (both parties currently own 47 percent of the shares) and then the franchise will be able to complete a refinancing process.
Here is the team’s statement that refutes the article, via Tom Gulitti of Fire & Ice.
“Today’s New York Post story is inaccurate. The notions that the Devils are facing bankruptcy or that “the Devils have told their banks to get lost” are patently untrue. The Devils value their relationship with their banks and are confident a refinancing will be completed shortly. As stated previously, ownership is close to finalizing an agreement that would lead to a buyout of Brick City’s share of the company. The organization is also pleased to report that new season ticket sales are up 130% over last year and last week’s on-sale for single game tickets were 260% above last year’s similar period. Finally, the start of training camp was incorrectly reported in the article as tomorrow. In fact, training camp starts on Friday for the rookies and Saturday for the veterans.”
Hopefully it’s true that the Devils aren’t in as dire a situation as the Post reports. The NHL has enough problems on its hands with teams such as the New York Islanders, Phoenix Coyotes and Columbus Blue Jackets struggling. The last thing it needs is to hear rumors fly around about a team that won three Stanley Cups since the mid-90s.
It might be a while before there are any other significant developments in this story, but we’ll keep an eye on the situation either way.
The news about the potential sale of the New Jersey Devils that hit earlier this afternoon managed to put a scare into Devils fans and around the league as well. After all, the Devils made a huge splash in the off-season by signing Ilya Kovalchuk to a massive deal and now the team is mired as one of the worst in the NHL.
As it turns out, the details of the team being sold were just partially true. Majority owner Jeff Vanderbeek is not looking to sell his part of the team, but it appears that the partners are looking to get out. Vanderbeek issued a statement today clearing up matters on his part.
“As Managing Member of the New Jersey Devils, it is not my desire to sell the team. My partner, Brick City, and I have different visions for the franchise. While Brick City has a right, under our partnership agreement, to explore a sale and Moag and Co. has been retained to assist in these effort, I anticipate maintaining a controlling interest.”
Brick City is co-owned by Mike Gilfillan and as Tom Gulitti of Fire & Ice notes, Gilfillan and Vanderbeek have had a bit of a tenuous relationship over the last couple years as owners. With Brick City being the party looking to get out, it makes a huge difference compared to how the story appeared to be earlier today.
A change coming for the minority owners won’t necessarily effect the day-to-day operations of the team nor should it play a role in whether or not the Devils can get a long-term deal worked out with future restricted free agent Zach Parise.
In short, nothing really to see here folks. Move along.