His franhcise heading into bankruptcy, Tom Hicks won't be in the Dallas Stars' owner's box much longer. (LM Otero/AP)
By Stu Hackel
We're getting kind of anxious for training camps to open because the off-ice news this summer has been so joyless. The prospect tournaments and rookie camps now underway make for more enjoyable reading. Still, we can't ignore some big off-ice stories. While yesterday's reports of the Devils being near or in bankruptcy were rather inaccurate (the New York Post backpedaled today), one NHL club is filing: the Dallas Stars. Tom Hals of Reuters reports that it could happen as soon as Wednesday, with the team quickly being sold out of bankruptcy to Vancouver investor Tom Gaglardi.
Unlike The New York Post story, which came out of nowhere and appears to have been planted by someone with an agenda, the bankruptcy and sale of the Stars is something that has been in the works for a while. It was planned to facilitate the legal transfer of ownership. As is the procedure when a bankruptcy auction sale takes place, Gaglardi's bid can trigger other potential buyers who wish to outbid him, but Reuters reported that it is unlikely that anyone else will come forth and the process could be completed in 60 days.
Update: The Stars ownership filed for bankruptcy on Thursday.
The Stars fell into trouble with the collapse of the financial empire of Tom Hicks, the leverage buyout businessman who also owned half of the Stars' arena, the Texas Rangers baseball team and part of Liverpool FC, among his holdings. The team prospered for a time under Hicks, including winning the Stanley Cup in 1999, but in April 2010, Hicks Holdings LLC defaulted on $525 million in bank loans backed by the Stars and his 50-percent interest in the American Airlines Center.
Hicks Holdings is still the titular owner of the Stars, but the team has been under day-to-day control of a group of lenders led by Monarch Investment Group and Galatioto Sports Partners and they weren't going to sink much additional money into it, which is why Brad Richards walked away from Dallas on July 1. A real owner will help the Stars, who have missed the playoffs for three straight seasons, become more competitive once again.
Getting back to the erroneous reports of the Devils' bankruptcy, as we wrote yesterday, a source with knowledge of the team's finances told us that the team did not default on a loan payment, contrary to what The Post reported, because the franchise is being refinanced. Managing partner Jeff Vanderbeek is working to buy out the 47 percent share held by Ray Chambers and Michael Gilfillan. The New York Times subsequently wrote that the deadline for loan payment had been extended 45 days.
David Shoalts in The Globe and Mail unearthed an interesting tidbit about how every NHL franchise has in its loan agreement a "stand-still" that says lenders must wait a minimum of 180 days after declaring that a team is in default before moving to take over and place it in bankruptcy. So even if the Devils had defaulted on Sept. 1, lenders could not have taken over. Further, if the 180 days expire when the NHL season is underway, the lenders must wait until the season concludes. So we'd be looking at next spring before any theoretical takeover of the Devils occurred.
It's wacky how much misreporting goes on about NHL finances. Bloomberg News, for example, reported last February that Vanderbeek was seeking to sell the Devils and had hired Baltimore investment bank Moag & Co. to oversee the sale. Turns out that it was his partners, Chambers and Gilfillan, who hired the bank to just sell their share of the team. Wisely, Bloomberg made the correction within hours. But the half-cooked stories unfortunately get repeated like a bad meal and yesterday's Post article was no exception.
Detente coming? In a briefing published on the league's website, KHL President Alexander Medvedev said Tuesday that he is interested in improving relations with the NHL in the aftermath of last week's Lokomotiv Yaroslavl plane crash.
“After the Lokomotiv tragedy I had a call from NHL Commissioner Gary Bettman, who expressed his condolences," he said. "The grief is felt by the whole hockey family. Now we can take a new view of all our differences with the NHL. I repeat once again: When we cooperate we can achieve much more for hockey than when in conflict or in isolation. I would like very much for this to be no mere surge of emotion, but that we move in step with each other. Gary and I agreed to meet in the near future and consider how we can further work together.”
This is good news because relations between the two league have sometimes been frosty, with gusts up to nasty, for a few years. The trouble was triggered by accusations of player poaching and disrespect of each others' contracts. At the heart of the matter is the absence, since the birth of the KHL in 2008, of a transfer agreement between the leagues and an understanding of how much money would flow from one to the other when a player moves from Russia to the U.S. or Canada and vice versa. Until that matter is settled, there's going to be some degree of distance between the leagues.
A mystifying statement last year from the KHL's North American publicity outlet that a new agreement had been reached turned out to be untrue. NHL executives had no idea what the KHL was talking about. "There always seems to be something lost in translation between the two leagues," wrote Chris Johnson of Canadian Press.
Last September, the Carolina Hurricanes and Phoenix Coyotes played exhibition games against SKA St. Petersburg and Dinamo Riga, the first time that NHL teams had played in Russia in 20 years. “If there was a war, we wouldn’t have had the Hurricanes play in St. Petersburg today,” Bettman said at the time. “It is what it is. There hasn’t been a thawing (in the relationship), there hasn’t been a cooling — it’s pretty much business as usual, which for the most part hasn’t been much business.”
Medvedev mentioned in his Tuesday briefing that the KHL would need an infusion of money from the Russian government to help pay the lost players' salaries to their families. More money will be needed to get Lokomotiv up and running again. So here's an idea for NHL-KHL cooperation that might bring in a few pennies:
Why doesn't the NHL and KHL agree to sell Lokomotiv items -- hats, T-shirts, jerseys, etc. -- on NHL.com so the fans in North America who share the grief of the loss in Yaroslavl can wear them as a show of support? The NHL could then turn all the proceeds over to the Lokomotiv organization to help it rebuild the club. That way, we on this side of the Atlantic could assist in the team's revival.
I bought a Lokomotiv T-shirt on eBay last week and I'm going to wear it later when I go to my Tuesday night skate, but the guy who sold me the shirt got my money. I'd rather see Loko get it. I'm a big hat wearer and I'd wear a Loko logo chapeau without hesitation.
It would be a small step, but a good first gesture by the NHL that might lead to something positive. It's way better than a civil war.