SBJ/September 26-October 2, 2011/Franchises

Court papers disclose NHL’s loan of $51.7M to Stars

The NHL has lent $51.7 million to the Dallas Stars since 2009 to keep the troubled franchise afloat, according to court documents and financial sources. The NHL, whose regular season begins next week, itself borrowed the money from current lenders to Stars parent company Hicks Sports Group, the sources said.

The figure is disclosed in the bankruptcy filing the Stars submitted earlier this month. The document shows an entity called CFV I LLC as the Stars’ runaway top creditor, owed $51,691,783. The mailing address for CFV is care of NHL Enterprises and William Daly, and the sources said the hockey league owns CFV.

Daly, NHL deputy commissioner, declined to comment.

GETTY IMAGES
Former Stars coach Marc Crawford (left) is the team’s third-biggest creditor, according to documents.
The Hicks Sports Group lenders have about $200 million due to them, including the Stars-NHL debt, the sources said. The ongoing effort to sell the Stars is not expected to net that much in the sale, meaning many of the lenders will not be paid back in full, a point several sources confirmed.

“There is some serious blood in the water,” one financial source said.

The bankruptcy filing was intended to ease the path for the sale of the team to Canadian businessman Tom Gaglardi, though others could step forward and offer more. Gaglardi is believed to have valued the Stars and its 50 percent interest in American Airlines Center at $240 million, though that includes a $90 million mortgage note, sources said. Of the $150 million remaining, not all of that will be cash paid to lenders, the sources said, because they have agreed to finance Gaglardi’s offer.

The Stars are the final chapter in the troubled franchise ownership saga of Hick Sports Group. The entity, which once owned the Texas Rangers too, had borrowed $525 million. Hicks Sports Group defaulted on its debt on March 31, 2009, moving the NHL to begin assisting the hockey franchise.

The group tried to sell the Rangers to buyers led by Nolan Ryan, but the lenders objected over price. Hicks Sports Group threw the team into bankruptcy, and Ryan ultimately emerged with the club, though at a far higher price. The proceeds went to pay off the debt.

The Stars, the final Hicks Sports Group asset left for sale, clearly are hemorrhaging money, evidenced by the NHL loan. Financial sources, who requested anonymity because they do business with the NHL, wondered if the red ink was due to neglect by Hicks Sports Group or, instead, to the league’s general struggles in Southern cities. The former Atlanta Thrashers moved to Winnipeg this summer, and the financially ailing Phoenix Coyotes remain owned by the NHL. Florida and Nashville are two other clubs that have been mentioned as franchises that could find greater success in Northern markets.

After the NHL loan, the Stars’ biggest creditor is a fellow team, the New York Rangers. According to the bankruptcy filing, the Rangers are owed $2 million for a contractual obligation for a player picked up on waivers. Former Stars coach Marc Crawford is listed as the third most-owed creditor, with $1,101,654 due to him.

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