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Stars fall into financial peril, Leafs out to bag top pick


In spite of the perception that owning a sports franchise is a license to print money, the opposite is often true in the NHL. The most recent case: the Dallas Stars.

It's only the first stage of what appears to be a serious problem, but Tom Hicks, who also owns Major League Baseball's Texas Rangers under the umbrella of HSG (Hicks Sports Group), has stopped making interest payments on loans of $525 million and, as a result, lenders have declared him in default.

Hicks claims he is merely attempting to restructure debt that it isn't a problem, but the Wall Street Journal has reported that he missed a $10 million quarterly interest payment on the loans, and the largest lender is Galatioto Sports Partners, a New York-based sports-financing group that has HSG on the hook for $100 million. That group is also said to hold a great deal of paper regarding the finances of the troubled Lightning.

The Journal says bankruptcy for the Stars is a possibility, which Hicks disputes, but when that happens in the NHL, there is usually a second skate to drop: new ownership. There are reports (and no comments from the NHL) that the league has moved to institute protective measures, contacting the Stars' lenders about dealing with this situation.

We should point out the NHL is good at handling such matters. See: past bankruptcies in Pittsburgh, Los Angeles, Buffalo, and Ottawa. It has intervened in Phoenix to help keep the Coyotes afloat. There have been meetings with creditors and the Lightning's new owners to solve their difficulties. The league has also gone to great lengths to help clean up the mess involving William "Boots" Del Biaggio's apparent fiscal improprieties with the Nashville Predators.

Dallas was not thought to be on the list of ailing teams, and Hicks' problems illustrate the difficulty faced by highly-leveraged sports franchises in this era of fiscal crisis. Hicks is having trouble attracting investors largely because those who have money want no part of a franchise in this economy, and those who might be interested but don't have financing aren't likely to get any from banks and other such enterprises that now take a dim view of such ventures.

According to several financial publications, Hicks has even more debt problems looming in that a note for some $400 million -- used to finance the purchase of the Liverpool soccer team in England's Premier League along with Montreal Canadiens owner George N. Gillett Jr. -- comes due in June. The note is held by the Royal Bank of Scotland, itself in a great deal of difficulty due to the economic crisis and not likely to be in a mood to restructure the existing loan. This appears to be why Gillett is also "reassessing" his sports holdings, and thus the strong rumors that the Canadiens are for sale.

It's not uncommon to withhold interest payments while attempting to negotiate a more favorable business loan, but it's usually done because a debtor anticipates bankruptcy and doesn't see the value of sending out checks when protection from the courts is the goal. Either that or Hicks expects an even more serious problem and is hording his resources accordingly.

This has profound implications for everyone from Alex Rodriguez (who may have to pull a Mario Lemieux and become a part owner of the Rangers in order to get some of the money Hicks is said to owe him) to the NHL, which barely has room on its plate for more financial issues.

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This situtation is surely no good for the NHL or for hockey. Dallas had been one of the Southern franchises that worked. Since relocating from Minnesota in 1993, the Stars have put a Stanley Cup in their trophy room and enjoyed at least the perception of strong ownership. Now they appear on the endangered species list.

The Toronto Maple Leafs are making noise about acquiring highly-regarded prospect John Tavares, who is likely to become the property of the New York Islanders or the Tampa Bay Lightning in the upcoming entry draft. Leafs GM Brian Burke has said he intends to contact the teams ahead of him (the Leafs draft seventh) in an attempt to make it happen. While Islanders GM Garth Snow and Lightning counterpart Brian Lawton were noncommittal, this bears watching.

Both teams are struggling financially. The Leafs are not. Both could use a star-quality young player who would fit nicely under the salary cap. Both could also use more than one player and some cap relief. The Lightning got some from the Leafs at the trade deadline when they struck a deal that removed players from their roster that the Leafs will likely never use.

Burke may just be grandstanding to the Leafs' restless fanbase, and what he is attempting won't be easy, but he's done it in the past. He made moves while GM in Hartford to get the second pick in the draft and select Chris Pronger behind Ottawa's bust, Alexandre Daigle. When Burke was GM in Vancouver, he made deals with multiple teams that enabled him to draft the Sedin twins in the top five.

Those kind of deals are harder to make now, but Burke can be relentless. If the Islanders are more interested in a defenseman, say the highly-rated Victor Hedman -- a player many feel should be the best prospect coming out of the draft -- then Burke may well have an opening with Tampa Bay. The Lightning is thought to be shopping star center Vinny Lecavalier for salary cap reasons. The Leafs have room, a need for a superstar center and . . .well stranger things have happened and Burke is often at the center of making them happen.

Stay tuned.

Teams seldom make changes off one game, but you can rest assured the Washington Capitals now have Jose Theodore on a shortlist of players who could give away to a replacement if he delivers another performance like he did in the opener of the Capitals playoff series with the New York Rangers.

The Caps dominated everywhere but in goal, and that can't be lost on coach Bruce Boudreau. He has been singing the praises of Theodore and building him up for the playoff run, but that's because he's been regarded as the weak link in a formidable team. The Rangers went high on Theodore, who was often deep in his crease and going down early, a sign that he lacked confidence. If that's the case in Game Two, a switch is likely.

Bet on the officials keeping an even closer eye on New York's Sean Avery after his deft interference play on Washington's Mike Green in Game One. Avery appeared to trip the defenseman with a bit of footwork that escaped their attention. It led to Green being taken down and, eventually, to a New York goal. Almost everyone with a replay angle saw it.

Officiating will also be a topic in the St. Louis-Vancouver series where both sides were surprised by the number of power plays (11) called in Game One, a 2-1 Vancouver victory. What was even more surprising, however, was St. Louis' inability to cash in on the advantages it got. The Blues power play has been a primary reason they raced from the bottom of the pack to a playoff spot in the West, but Canucks goalie Roberto Luongo slammed the door on all but one chance and prevailed when the Blues had a 5-3 advantage. The Canucks will try to be more disciplined in Game Two. The Blues will try to solve Luongo. Both teams will be looking for a clearer definition of what constitutes charging.