Maybe this is some sick message from the hockey gods. Maybe they just want to give Commissioner Gary Bettman a proxy vote at the owner’s table until he retires. The Arizona Coyotes have been sold just in time for the New Jersey Devils to go under. Last season, I had argued that New Jersey was the team most likely to follow Phoenix into receivership. It certainly doesn’t make me happy to be right in this case.
Here’s the current situation. The Devils are nearly a quarter of a billion dollars (230 million US) in debt. Devils’ owner Jeff Vanderbeek missed the first payment on a recently restructured bank loan. The team’s annual debt payment is nearly fifteen million a year and in the past the Devils have used the ‘gladly pay you Tuesday for a hockey game today’ revenue system to pay their bills.
Attorney Andrew Barroway was ready to buy the hockey team and the right to use the Prudential Center. He in fact lent the Devils thirty million dollars. The NHLPA confirmed this to the players in a memo sent out to the players on June 27th.
“The New Jersey Devils and the current ownership group headed by Jeff Vanderbeek have recently been experiencing serious cash flow issues. This has resulted in late or missed payments (including required pension and escrow payments) and League intervention and funding. Importantly, we believe that all money owed to Players, including pension and escrow, has now been paid.”
“Recently, the Club was able to arrange a significant infusion of debt capital ($30 million) from an investor that is interested in purchasing the the Club from Vanderbeek. We understand from League officials that the new investor, Andrew Barraway, is currently negotiating with Vanderbeek and thier expectation is that either Barroway or another ownership group will end up owning the team within the next 120 days or so.”
Unfortunately, once Barroway’s people took a look at the sad state of the Devil’s financial affairs, he chose to withdraw his offer. It doesn’t appear that the Devils are going to follow the Coyotes into bankruptcy, but they are on track for the NHL to assume control of the team. The NHL has already loaned fifteen million dollars to the Devils organization, and that’s usually a really bad sign.
Once the NHL assumes control, Vanderbeek will be owner in name only. This means that once again Gary Bettman will have a proxy vote. (Thankfully, the league isn’t in danger of another work stoppage for the next few seasons.)
So, will the Devils end up in receivership for an excruciating four years like the Coyotes? Will they eventually declare bankruptcy and get sold like the Dallas Stars were two years ago? Here is a financial breakdown of the New Jersey Devils from Forbes. com.
The team is in obvious financial trouble. The only bright spots here are that there are several people making inquiries into purchasing the franchise, and that the fans will not have to worry about the new owners taking them out of New Jersey for the time being.