Post by swervinmervin on Sept 12, 2011 11:37:38 GMT -6
www.nypost.com/p/news/business/devils_in_the_red_Mi3p63lfff0OCTWRIdroxH
Devils skate to verge of bankruptcy
By JOSH KOSMAN
Last Updated: 9:18 AM, September 12, 2011
Posted: 9:32 PM, September 11, 2011
More Print EXCLUSIVE
The New Jersey Devils training camp doesn’t open until tomorrow but already the three-time NHL champs are skating on thin ice, The Post has learned.
The attendance-challenged, heavily indebted team missed its Sept. 1 loan payment, giving its lenders a breakaway chance to push the team into bankruptcy, a source with direct knowledge of the situation said.
“The Devils are blowing up,” the source said.
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.
“You have a bank group that wants nothing to do with Vanderbeek,” said a source, who added they have been upset with how late they have been with financial information.
Some lenders are already considering selling their stakes to vulture investors, the source said.
“This is going to be a very difficult situation.”
If the Devils, who along with the arena operation company, owe 15 percent more than the team is worth, according to Forbes, are declared bankrupt -- and one source speculates that has already happened -- lenders cannot repossess the team and force a sale for at least 180 days.
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.
The financial forecast at The Rock is also stormy. While it is expected to post its first profit this year, the arena is facing a potential loss of revenue from the NBA lockout. The New Jersey Nets, who are scheduled to play their second and last season in Newark beginning next month, could be forced to cancel many games.
Collecting proceeds from Nets games is what makes Devils Arena Entertainment profitable, and the NBA lockout could result in The Rock losing 25 percent of its 161 dates, according to a recent Bloomberg News article.
The Nets will face no financial penalty if the lockout forces them to cancel games. “So the facility is at risk,” Richard Krezwick, the GM of the arena, told Bloomberg.
A Devils spokesman did not return calls.
jkosman@nypost.com
Read more: www.nypost.com/p/news/business/devils_in_the_red_Mi3p63lfff0OCTWRIdroxH#ixzz1XlHm9mJ2
Devils skate to verge of bankruptcy
By JOSH KOSMAN
Last Updated: 9:18 AM, September 12, 2011
Posted: 9:32 PM, September 11, 2011
More Print EXCLUSIVE
The New Jersey Devils training camp doesn’t open until tomorrow but already the three-time NHL champs are skating on thin ice, The Post has learned.
The attendance-challenged, heavily indebted team missed its Sept. 1 loan payment, giving its lenders a breakaway chance to push the team into bankruptcy, a source with direct knowledge of the situation said.
“The Devils are blowing up,” the source said.
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.
“You have a bank group that wants nothing to do with Vanderbeek,” said a source, who added they have been upset with how late they have been with financial information.
Some lenders are already considering selling their stakes to vulture investors, the source said.
“This is going to be a very difficult situation.”
If the Devils, who along with the arena operation company, owe 15 percent more than the team is worth, according to Forbes, are declared bankrupt -- and one source speculates that has already happened -- lenders cannot repossess the team and force a sale for at least 180 days.
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.
The financial forecast at The Rock is also stormy. While it is expected to post its first profit this year, the arena is facing a potential loss of revenue from the NBA lockout. The New Jersey Nets, who are scheduled to play their second and last season in Newark beginning next month, could be forced to cancel many games.
Collecting proceeds from Nets games is what makes Devils Arena Entertainment profitable, and the NBA lockout could result in The Rock losing 25 percent of its 161 dates, according to a recent Bloomberg News article.
The Nets will face no financial penalty if the lockout forces them to cancel games. “So the facility is at risk,” Richard Krezwick, the GM of the arena, told Bloomberg.
A Devils spokesman did not return calls.
jkosman@nypost.com
Read more: www.nypost.com/p/news/business/devils_in_the_red_Mi3p63lfff0OCTWRIdroxH#ixzz1XlHm9mJ2
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