Quebec City's long-suffering hockey fans know they're unlikely to make the cut when the NHL reveals its plans for possible expansion on June 22. But events in Carolina have them wondering if La Belle Province will finally get its team via the long anticipated relocation of the Hurricanes.
It's been well established that both Carolina owner Peter Karmanos and the NHL are committed to keeping the team right where it is in Raleigh. But those reassurances only carry weight if Karmanos is the controlling owner. How long that remains the case is anyone's guess after it was revealed this week that Karmanos is being sued for more than $100 million by three of his sons after he missed multiple payment deadlines on loans taken out against a family trust.
The lawsuit says that, starting in 1999, Karmanos borrowed more than $353 million from the trust. He also used the trust as collateral for “loans and advances from various banks and the NHL” to “support the Hurricanes” from 2000 to 2013.
Karmanos apparently met the terms of the loans until 2013 when he borrowed $104.3 million that he agreed to repay in annual installments by 2022. The lawsuit says that the first two payments, due in June 2014 and 2015, were not made.
And so, the lawsuit reads, "[the trust] may accelerate and declare immediately due and payable the entire balance of principal and interest owing on the June 2013 note."
Does this mean the team itself is in trouble? Not necessarily. But as Hurricanes writer Luke DeCock correctly notes, "the lawsuit raises all the wrong questions about Karmanos’ cash flow and his ability to sustain the Hurricanes."
And it's not the only pressing financial concern he faces. This fall, nine minority investors in the team have an option to get their roughly $22 million back with interest or become full partners. That doesn't seem like an unmanageable sum for a man whose net worth was estimated at a billion dollars as recently as 2014, but times, and fortunes, have changed. If some, or all, of those stakeholders exercise their out clause, all eyes will be on his ability to meet that obligation.
If he fails, it seems likely to alter the approach to selling the franchise that's been percolating for years.
Karmanos has long spoken of "a succession plan" that would see him sell his interest over time to a local investor for $420 million, but remain in control of the 'Canes. It's no surprise he's yet to find a taker. For one, no buyer would invest that kind of capital only to remain on the sidelines. And two, his estimation of the market for his team is a bit inflated. In its 2015 report of franchise values, Forbes put the Hurricanes at just $225 million. That's 28th in the league, ahead of only Arizona and Florida.
If they weren't buying before, it's hard to imagine anyone stepping up to meet his ask now if he's over a barrel.
It's still a long shot that the franchise would be uprooted. The Hurricanes have a lease through 2024 with PNC Arena that's regarded as of the best agreements in sports. Add in the understanding that this market will support a good product, along with the league's long-standing desire not to move a team unless absolutely necessary, and odds are good the 'Canes will remain in place for some time to come.
But they still need someone to pay the bills. And if Karmanos can't get it done, he'll have to find a local buyer who is willing to make the same commitment to the city. That's still possible, but given the slim interest to this point, far from certain.
All told, the situation is murky enough to leave die-hard 'Canes fans wondering if they're destined to have their hearts broken, and to give Quebec's fans hope, however slim, that they might yet get a team to call their own.