With the ink barely dry on a new ownership agreement for the Phoenix Coyotes comes news that the New Jersey Devils may soon fall into the same purgatory that tormented the Coyotes for the last four years. News has been leaking out that bankruptcy is close for the Devils, and the NHL may have to step in and take control of the team before the 2013-14 season begins.
For astute hockey fans and those watching the situation unfold in Jersey, this should come as no surprise. Despite restructuring loans last year, the team and owner Jeff Vanderbeek have been unable to make debt payments, the total of which are now in the ballpark of $230 million. Currently the team owes the NHL alone around $25 million. The team’s annual debt payment is about $15 million per year, but compounding the issue is that they’ve been using prepayments on future revenue streams, which aren’t coming.
Vanderbeek owns both the Devils and the Prudential Center in which they play, neither of which have been making much revenue. Though getting Ilya Kovalchuk’s contract off the books is a huge boon, the team took another hit this year when they missed the playoffs and all the bonus revenue that comes with it. In 2011-12, when the Devils went to the Cup Final, they turned a $2.8 million profit. However this season, with fewer home games thanks to the lockout and missing the playoffs, the team operated in the red.
It’s not just the Devils that are weighing Vanderbeek down however.
The Prudential Center has been struggling to find non-NHL events, which only worsens Vanderbeek’s financial situation. Arena operators often have to prepay acts, such as rock bands, to entice them to come to their building. Vanderbeek simply doesn’t have the cash to do so, and is losing even more as a result. Last year the Prudential Center was the 11th busiest arena in the world, so far in 2013 they haven’t even broken the top 50.
It looked like the team may have found a new owner recently in the form of attorney Andrew Barroway, but he withdrew his offer a couple weeks ago once he found out the true nature of the situation. There is a report floating around that the group who owns the NBA’s Philadelphia 76ers may be interested in purchasing the Devils. However, if that doesn’t come together soon, the NHL may need to take action. Some feel that the NHL wants to do anything it can so the Devils will avoid filing for bankruptcy like the Coyotes did back in 2009. Their only recourse would be to operate a team with a $55 million payroll (which doesn’t include the potential future signing of key RFA Adam Henrique) and which owes them $25 million until a new owner could be found.
It’s an unfortunate situation for the league, and also undoubtedly so for fans of the Devils and the NHL in general. After everything the league has done to make all 30 teams financially stable, it’s disheartening that they may be forced to jump from one messy situation immediately into another.
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