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Dallas Stars Going Bankrupt?

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1Dallas Stars Going Bankrupt? Empty Dallas Stars Going Bankrupt? on Tue May 12, 2009 8:01 pm

davetherave

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From the Toronto Star today:

Hockey's bonfire of the bankruptcies

Coyotes win court ruling over prospective sale; Could Dallas Stars be next up for Chapter 11?

May 12, 2009/Kevin McGran/TORONTO STAR SPORTS

While the Phoenix Coyotes turned up the heat on the NHL yesterday, the owner of the Dallas Stars appears to be laying enough kindling and timber to start another bankruptcy bonfire.

The Coyotes won a court ruling that will force the NHL to tell all it knows about White Sox owner Jerry Reinsdorf's mysterious bid to purchase the Coyotes to a Phoenix bankruptcy court judge.

The NHL must produce all documents related to Reinsdorf's bid today, ruled Judge Redfield Baum.

The league has said it was close to announcing Reinsdorf as a white knight who would keep the team in Glendale, Ariz., when Jerry Moyes thrust the Coyotes into bankruptcy. The Moyes camp wants to see how good the offer was.

"The purpose of the production is to examine the content of those discussions and the potential offer outstanding by Mr. Reinsdorf related to these purported interests," read the motion filed by Moyes lawyer Thomas Salerno.

Canadian billionaire Jim Balsillie has made a $212.5 million (all figures U.S.) offer to purchase the Coyotes and move them to Hamilton as part of the franchise's bankruptcy proceedings that are being challenged by the NHL.

But Phoenix is only one of the many franchises in trouble during the recession.

Tom Hicks, who owns the Dallas Stars and baseball's Texas Rangers, defaulted a month ago on $525 million in loans tied to the teams, starting the clock ticking in a showdown with lenders that could see the Stars end up in bankruptcy proceedings in October.

At the time, Hicks said he was trying to work out a new deal with his creditors, and perhaps bring in new investors, but has been mum on the situation since.

Dallas Stars president Jeff Cogen referred calls to a public relations firm, which said there was "nothing" to report.

NHL deputy commissioner Bill Daly did not respond to an email. A group of 40 financial institutions and other investors hold the debt in Hicks Sports Group, which owns the two teams. It would take 180 days for lenders to foreclose on defaulted loans, according the standard deals involving the NHL.

That gives Hicks another five months to find alternate financing, but lenders are tight with their money these days, and those who follow sports financing closely worry it's inevitable that the Stars will follow the Coyotes into bankruptcy.

"He's heading in the same direction," said a broker specializing in sports financing, who didn't want his name used because of his dealings with the NHL.

"It could be the second team in Chapter 11," said Andrew Zimbalist, an economics professor at Smith College, who specializes in sports business. "When Hicks put himself in that circumstance, he's creating a lot of difficulty for himself. He's going to squirm a little bit. Whatever leverage he had, he loses some of it.

"You go to your creditors and try to re-organize your loans," added Zimbalist. "(If) they say no deal, you can declare bankruptcy or sell the franchise or go to other banks and borrow more money."

Hicks also co-owns Liverpool, a soccer team in England's Premier League, another franchise looking for new ownership. His holdings in Liverpool – shared with Montreal Canadiens owner George Gillett –are outside Hicks Sports Group.

None involved believe the Stars are in danger of moving. Dallas is believed to be a strong market with the team able to turn a profit, especially if it makes the playoffs.

It's been a bad year for bankruptcies and the NHL. William (Boots) Del Biaggio faces jail time after having been found guilty of fraud for the way he helped finance his minority purchase of the Nashville Predators.

Meanwhile, the Atlanta Thrashers owners are fighting with each other, Tampa is looking for new investors and the New York Islanders are hinting at leaving unless they get a new arena.

"There could be other (bankrupt) teams down the road," said Zimbalist. "There are a lot of teams – as it were – skating on thin ice."

2Dallas Stars Going Bankrupt? Empty Re: Dallas Stars Going Bankrupt? on Tue May 12, 2009 9:39 pm

davetherave

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One has to wonder if the Balsillie lawsuit may have a 'domino effect' on NHL teams that have financial issues...

3Dallas Stars Going Bankrupt? Empty Re: Dallas Stars Going Bankrupt? on Tue May 12, 2009 11:23 pm

davetherave

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I am also following the activities of Dallas owner Tom Hicks' partner George Gillett in Montreal.

Both of them appear to be in some deep doodoo.

Latest news out of Montreal is that former Habs great Serge Savard has an investor group ready to step up.

4Dallas Stars Going Bankrupt? Empty Re: Dallas Stars Going Bankrupt? on Tue May 12, 2009 11:30 pm

PTFlea

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Wow, that's surprising to me personally. I didn't know the details. Good franchise, there will be a buyer if it comes to that.

5Dallas Stars Going Bankrupt? Empty Re: Dallas Stars Going Bankrupt? on Tue May 12, 2009 11:31 pm

shabbs

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Balsillie lawsuit? I was not aware of anyone being sued.

I'm sure teams in serious financial trouble will look to what the Coyotes are doing and think about filing for Bankruptcy protection themselves.

How much money can the NHL give out to prop up these clubs?

I have a feeling this is gonna get worse before it gets better.

6Dallas Stars Going Bankrupt? Empty Re: Dallas Stars Going Bankrupt? on Tue May 12, 2009 11:58 pm

davetherave

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shabbs wrote:Balsillie lawsuit? I was not aware of anyone being sued.

I'm sure teams in serious financial trouble will look to what the Coyotes are doing and think about filing for Bankruptcy protection themselves.

How much money can the NHL give out to prop up these clubs?

I have a feeling this is gonna get worse before it gets better.

Shabbs, your sharp mind is once again in evidence...I should have said 'legal action' rather than 'lawsuit', though in this case Balsillie's action is effectively a lawsuit, as it blocks the NHL from proceeding as it wished.

Balsillie's team is in fact preparing a legal brief that would challenge a significant number of the NHL's operating procedures, particularly with regard to owners' rights to move teams.

This could be a landmark legal battle...not necessarily with beneficial results for hockey fans.

7Dallas Stars Going Bankrupt? Empty Re: Dallas Stars Going Bankrupt? on Wed May 13, 2009 10:05 am

SeawaySensFan

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504Heater wrote:Wow, that's surprising to me personally. I didn't know the details. Good franchise, there will be a buyer if it comes to that.

This is a far different situation than the one in Phoenix. Dallas is a good hockey market. It's just another owner who overextended himself. I agree, this team will stay put and someone will get a decent deal out of it.

8Dallas Stars Going Bankrupt? Empty Re: Dallas Stars Going Bankrupt? on Thu May 28, 2009 7:11 pm

davetherave

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Hicks: I'd be willing to sell controlling interest in Rangers, not Stars


NEW YORK--Liverpool co-owner Tom Hicks is willing to give up control of Major League Baseball's Texas Rangers if the right deal comes along but he intends to keep the NHL's Dallas Stars.

Hicks said in late March that he was seeking minority investors to purchase up to 49 percent in each U.S. club. About a week later, the holding company that owns the clubs, Hicks Sports Group, defaulted on about $525 million in loans.

Hicks said he intentionally made the move to help negotiate with banks.
"With the right partners, I would be willing to sell a controlling interest in the Rangers," Hicks said on Thursday in an e-mail to the Associated Press. "Not so with the Stars."

Hicks bought the Stars in 1996, and the team won the Stanley Cup three years later. In 1998, he purchased the Rangers from George W. Bush's group and Hicks created a stir in December 2000 when the Rangers signed Alex Rodriguez to a $252 million, 10-year contract. Hicks has said he owns 95 percent of both teams.

Two years ago, he combined with Montreal Canadiens owner George Gillett Jr. to buy Liverpool through a different entity.

9Dallas Stars Going Bankrupt? Empty Re: Dallas Stars Going Bankrupt? on Fri May 29, 2009 8:46 am

Cap'n Clutch

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That's surprising that a seemingly succesful model for building a franchise is possibly facing Bankruptcy. From all I've heard and read about the Stars they built their team and fan base the right way. Is this an issue with an owner having problems in other areas and not a concern for another ownership coming in looking to make money in Dallas?


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10Dallas Stars Going Bankrupt? Empty Re: Dallas Stars Going Bankrupt? on Fri May 29, 2009 8:52 am

shabbs

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Cap'n Clutch wrote:That's surprising that a seemingly succesful model for building a franchise is possibly facing Bankruptcy. From all I've heard and read about the Stars they built their team and fan base the right way. Is this an issue with an owner having problems in other areas and not a concern for another ownership coming in looking to make money in Dallas?
Yeah, the Dallas situation is more about the owners being in financial trouble outside of the hockey operations than the club itself being in financial trouble.

11Dallas Stars Going Bankrupt? Empty Re: Dallas Stars Going Bankrupt? on Fri May 29, 2009 9:39 am

davetherave

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From the article posted above:

"Tom Hicks, who owns the Dallas Stars and baseball's Texas Rangers, defaulted a month ago on $525 million in loans tied to the teams, starting the clock ticking in a showdown with lenders that could see the Stars end up in bankruptcy proceedings in October."

With Hicks owning 95% of the Stars, the suggestion is that his financial troubles directly impact the NHL team.

12Dallas Stars Going Bankrupt? Empty Re: Dallas Stars Going Bankrupt? on Fri May 29, 2009 9:48 am

shabbs

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davetherave wrote:From the article posted above:

"Tom Hicks, who owns the Dallas Stars and baseball's Texas Rangers, defaulted a month ago on $525 million in loans tied to the teams, starting the clock ticking in a showdown with lenders that could see the Stars end up in bankruptcy proceedings in October."

With Hicks owning 95% of the Stars, the suggestion is that his financial troubles directly impact the NHL team.
Exactly.

Owners in trouble = no money to club = club in trouble.

13Dallas Stars Going Bankrupt? Empty Re: Dallas Stars Going Bankrupt? on Fri May 29, 2009 10:45 am

Guest


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Makes me all the more thankful we have Melnyk vs. Bryden...

14Dallas Stars Going Bankrupt? Empty Re: Dallas Stars Going Bankrupt? on Fri May 29, 2009 11:06 am

SensFan71


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it's clear who's to blame for this whole debacle, as per this part of the article.

he purchased the Rangers from George W. Bush's group and Hicks created a stir in December 2000 when the Rangers signed Alex Rodriguez to a $252 million, 10-year contract

okay yeah that is an exaggeration, but wow, that was a huge over extension of money there for a player, does the purchase of Liverpool have anything to play into this as well or is it just the Rangers/Stars in trouble? I sincerely hope they won't move, Dallas is a good hockey market.

15Dallas Stars Going Bankrupt? Empty Re: Dallas Stars Going Bankrupt? on Fri May 29, 2009 11:16 am

shabbs

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SensFan71 wrote:it's clear who's to blame for this whole debacle, as per this part of the article.

he purchased the Rangers from George W. Bush's group and Hicks created a stir in December 2000 when the Rangers signed Alex Rodriguez to a $252 million, 10-year contract

okay yeah that is an exaggeration, but wow, that was a huge over extension of money there for a player, does the purchase of Liverpool have anything to play into this as well or is it just the Rangers/Stars in trouble? I sincerely hope they won't move, Dallas is a good hockey market.
The purchase of Liverpool certainly does factor in as they borrowed $500 MILLION to purchase the club and are now trying to re-negotiate that loan as it's killing them.

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