Last season the New Jersey Devils took a staggering stumble to the bottom of the NHL before a late-season surge brought them back to the level of respectability.
Now they are might be taking another fall. The New York Post's Josh Kosman reports the team is on the verge of bankruptcy after missing a loan payment on September 1. Typically, creditors don't appreciate that much.
The team’s financial hardships could also affect Newark’s four-year-old Prudential Center, the Devils’ home arena. Team-owned Devils Arena Entertainment operates the $375 million building and guarantees the Devils’ loans and, therefore, is in danger of also going bankrupt.
Two issues are complicating matters. First, principal owner Jeff Vanderbeek and co-owner Ray Chambers, each of whom owns 47 percent of the franchise, are on the outs. Chambers, through his Brick City Hockey unit, has been trying to sell his non-controlling stake in the franchise for a year.
But the efforts of Chambers and Moag & Co., a Baltimore investment bank, have been unsuccessful, despite, a source said, cutting their asking price 20 percent to $200 million. Forbes last year estimated the Devils were worth $218 million, No. 11 in the league, down 2 percent from 2010. The team is ranked No. 25 in attendance.
Second, Vanderbeek’s relationship with the lenders is as frosty as the rink surface at The Rock, as the arena is known.
The Devils have told their banks to get lost, the source said.
The Devils’ past-due loan payment of roughly $100 million is owed to a CIT-led lending group. Devils Arena Entertainment owes $180 million, the source said.
For their part, the Devils came out with a statement later Monday:
"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."
To read the full statement, see Tom Gulitti's blog.
But what remains is that, despite their long run of success (besides last season), the Devils have struggled to bring people through the gates, plus they have loans on the still-new Prudential Center. It's a recipe that has led to the franchise losing money. Plus, minority owner Ray Chambers has been looking to sell his 47-percent interest in the organization after a falling out with primary owner Jeff Vanderbeek. It doesn't paint a very stable picture for the franchise's future.
These are certainly new times for the Devils. They suffered through last season partly because of salary cap issues after re-signing Ilya Kovalchuk. That has led to as big of a step back as the Devils have had in a long time. The have a newcomer on the bench (somebody from outside the organization) in former Panthers coach Pete Deboer. They were in the top five of the draft where they picked the concensus top defenseman available in Swede Adam Larsson.
Playing a role in the troubles, too, is the NBA lockout. That's because the New Jersey Nets, scheduled to play their final season in New Jersey at the Prudential Center this year, don't have any games lined up at the moment because of the labor strife. Nets games were a solid source of income for the Prudential Center.
While it's not a prerequisuite, it would sure help the Devils return to the top of the standings on an annual basis with a stable ownership situation. Either way, it's hardly the news a team wants to hear the week training camp opens.
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