Stars Going Bankrupt?
According to a story in the Toronto Star, Dallas may be the next NHL team to file for bankruptcy
By SCOTT M. CRISP
Updated 1:30 PM CST, Tue, May 12, 2009
On Monday, as Sidney Crosby and Alexander Ovechkin prepared to battle it out in Game Six in Pittsburgh, embodying all that is good and marketable in the NHL, the Phoenix Coyotes were engaged in a battle of their own.
The team’s ownership won a court ruling on Monday that will force the NHL to spill its guts on potential buyer, White Sox owner Jerry Reinsdorf and his plans to purchase the bankrupt organization.
While Reinsdorf’s plans didn’t include moving the team from Glendale, Ariz., another bid, of a cool $212.5 million by Canadian billionaire Jim Balsillie, would have the team packing for the Toronto area.
For now though, this is mere speculation, part of the long, boring and increasingly common NHL bankruptcy proceedings.
Next on the list, says Andrew Zimbalist, economics professor at Smith College, could be none other than your Dallas Stars.
"It could be the second team in Chapter 11," said Zimbalist in Tuesday’s Toronto Star. “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.”
Zimbalist, of course, is referring to owner Tom Hicks, who defaulted on $525 million in loans tied up in the Stars and the Texas Rangers last month.
According to standard practices in the NHL, investors have 180 days to collect on defaulted loans, giving Hicks until October to either find new investors, restructure his loans.
"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."
Dallas and Phoenix are just a couple of examples of NHL teams facing potential crises due to the recession, a list that includes the Atlanta Thrashers, the Tampa Bay Lightning and the New York Islanders.
While Dallas may be on the verge of immense change with respect to ownership, and financial backing, there seems to be no evidence whatsoever that the team is in danger of moving to another city.
Insiders are quick to cite the fact that Dallas has been, and still is, a strong market for hockey, one that is more than capable of turning a profit.
Hicks downplayed the events last month, and has remained tacit on the issue since.
Copyright NBC Local Media
First Published: May 12, 2009 12:43 PM CST
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