So, Just How Financially Stable Are The Dallas Stars?

So while researching some info for a mothership post for tomorrow, I came across something rather interesting, and something which I thought I might bring out over here for discussion purposes, if you guys don't mind.

Now I've written in the past that Tom Hicks and Hicks Sports Group are having some financial problems and that Hicks has decided to deliberately default on his debt. He has placed a majority interest in the Texas Rangers up for sale, and he has placed a minority interest in the Dallas Stars up for sale. Now we're being told that everything is a-ok with the Stars, and that the team has no financial problems and will make it through the season fine.

And that could be so, but...

It is now being reported in Dallas that Major League Baseball is effectively running the Texas Rangers, going so far as to step into negotiations between the team and a draft pick and withdrawing an offer that the team had made and substituting a substantially lower offer at the signing deadline because other MLB owners thought the offer was too high.

I'm not sure of what exactly this means for the Stars, but I've really got to question just how stable the Stars really are.

Hey Dallas! Have You Been Paying Attention To Phoenix?

I hope the Dallas Stars fans have been paying attention to what's been going on with the Phoenix Coyotes, because Tom Hicks is having some severe financial problems with the Texas Rangers, and there's nothing to indicate that, come hockey season, this won't be happening with the Stars.

Specifically, and stealing from my summary over at my ClownVision Chronicles blog, it goes like this. According to Yahoo! Sports the Rangers recently borrowed $15 million from MLB to meet payroll obligations.

Now, unlike with the NHL and the Phoenix Coyotes, MLB isn't claiming that this loan of money is allowing it to take control of the team. It is assumed that should the team attempt to add payroll come the trading deadline, that MLB will have a say in whether that happens -- kind of like what happened when MLB was running the Montreal Expos.

There's been some major financial problems with the Rangers and Stars for Tom Hicks this year, and the problems have been so serious that owner Hicks has announced that he's selling a controlling interest in the Rangers and is willing to part with an ownership interest in the Stars. And earlier this year, Hicks purposefully defaulted on loans for money that was used to purchase the Rangers and the Dallas Stars.

This could all mean nothing when it comes to the Stars. The Yahoo! post seems to imply that the Rangers will soon be sold, which would probably give Hicks the money needed to handle affairs with the Stars. But if not, is it possible that there could be another repeat of Phoenix in Dallas with the NHL loaning Hicks money to keep the Stars afloat and the NHL attempting to take control of the franchise?

It's too early to know the answer to this question. But for those of you interested in the well-being of the Stars, keep a close eye on the state of the Texas Rangers. The sicker the Rangers, then possibly the sicker the Stars.

More From Chapter 11: The Strange Case of the Phoenix Coyotes and Some Other NHL Oddities

There was a bankruptcy court hearing in Phoenix yesterday regarding the attempt of Jerry Moyes to put the Phoenix Coyotes into Chapter 11 Bankruptcy while selling the team to Canadian billionaire Jim Balsillie who wants to move the team to Hamilton, Ontario. And in 12 days, we should all have some idea of where the Coyotes will be playing next season.

The judge yesterday ordered all parties to file briefs by June 5, 2009, and he ordered a hearing for June 9, 2009, in which he stated he hopes to offer a ruling on whether putting the Coyotes into bankruptcy allows the team to be relocated without approval, per NHL bylaws, of the owners. The NHL, with the support of the NBA, NFL, and MLB, is arguing that the bankruptcy court doesn't have the power to order a move that contradicts league bylaws. Moyes and Balsillie say that the court can void whatever contracts it wants and ignore whatever internal bylaws it wants in order to set whole the creditors.

According to the Toronto Globe & Mail, the judge expressed reluctance to order the move, and says he's not sure that he has the power to rewrite NHL bylaws. He might be reluctant, but I call bullshit on his argument about NHL bylaws. If bankruptcy courts can void union contract after union contract after union contract when mismanaged corporations go into Chapter 11, then he can ignore NHL bylaws.

The judge stated that if he rules in favor of relocation, the bankruptcy auction for the club will be held on June 22. If he rules that there can be no relocation, then the bankruptcy auction will be held on September 10.

Balsille has stated that if there is no decision regarding relocation by June 29, he will withdraw his bid for the team. And the Globe & Mail is also reporting that the NHL will be spending about $17 million over the next several weeks to keep the team running -- most of that money will be going to one Wayne Gretzky.

AND SOME MORE NON-HOCKEY NHL NEWS:

The Wall Street Journal yesterday mentioned that one of the teams closely following the Coyotes matter is the Atlanta Thrashers. Without citing any sources, the Journal reported that if the Chapter 11 relocation is allowed, then the same thing would probably be happening with the Thrashers. It also stated that the Nashville Predators are also in the mix for this type of relocation since the team has a clause in its contract that allows it to get out of its lease if the team averages under 14,000 per game in attendance for a season.

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The Columbus Blue Jackets, meanwhile, are heading up an effort to sell Nationwide Arena to Franklin County, the county where the Blue Jackets arena is located. The purpose of the sale would be to help the Blue Jackets, who are having financial difficulties that are partly originated from the lease the team has with the arena.

Apparently, the County's assuming of the arena would result in a better lease for the team. As it stands, the Blue Jackets lease the arena and pay for its operations, but arena revenue isn't covering the operating costs. The club states that this forces the team to take money from hockey operations to make up the rest of the operating costs.

The sale of the arena to the county would be funded by, of course, the taxpayers, who would pay increased tax costs on alcohol and tobacco sales. The puck is now in the zone of the state politicians who are debating whether to grant the county the authority to impose the tax, or else giving the county the approval to hold an election on the issue.

Oh, and the Blue Jackets stated that if the lease problems aren't resolved in their favor, they will relocate to another city.

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Charles Wang, the owner of the New York Islanders, announced last week that unless the Town of Hempstead, NY approves of an arena project for the Islanders by October 3, then the Islanders will be relocating when the team's lease expires in 2015. The franchise, apparently, makes the Coyotes look like a financial success, having lost between $15-20 million last season alone. And among the suitors mentioned for the Islanders, should relocation result, are all of the usual suspects: Hamilton, Las Vegas, Kansas City, and Houston.

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And things are getting interesting up Dallas way where today Tom Hicks, owner of the Dallas Stars and Texas Rangers, announced that he is now selling a majority interest of the Rangers. It was not long ago that Hicks defaulted on loans to the creditors who made the purchase of the Stars and Rangers possible, saying that the default was just a negotiating tactic to get better terms on the loans. At that time, Hicks also stated that he was willing to sell a minority interest in the Stars and Rangers.

Now he's on the record as saying that he's up for selling a majority interest in the Rangers. It appears, for now, that the Stars are safe. But then again, Hicks appears to be having some real financial difficulties, no matter the PR spin, so I wouldn't count out Hicks putting a majority interest in the Stars up for sale soon.

Et Tu, Wayne: More On Chapter 11 And The Strange Case of the Phoenix Coyotes

Things continue to get interesting in the bankruptcy controversy of the Phoenix Coyotes.

Before I get further into that, let's further address an issue that arose on Saturday when I noted there were reports that the Atlanta Thrashers were being sold to Canadian interests who would move the team to that same Southern Ontario region that the Phoenix Coyotes are hoping to relocate to. But representatives for the Thrashers announced over the weekend that the team was not for sale and that it would not be relocated.

So that aside, what about the Phoenix Coyotes?

The really interesting news came yesterday when the judge in the bankruptcy court ordered the NHL to produce all documents relating to the possible sale of the franchise to Chicago White Sox owner Jerry Reinsdorf (or any other parties who have been in discussions about buying the franchise). This was requested by current (?) Coyotes owner Jerry Moyes. And the judge rightfully granted the motion.

It's one thing for the NHL to state that Jim Balsillie's bid to purchase the team in bankruptcy should be denied because they've got another lined up. But at some point in the proceedings, the NHL has to demonstrate that a valid bid was actually made because the Court's concern is setting whole the parties, particularly the creditors. And if Balsillie's bid will do more to set the whole the creditors than Jerry Reinsdorf's bid, then the judge is going to go with Balsillie. NHL objections be damned.

But the NHL has petitioned the Court to stay that order until after the Court has made a ruling as to whether Jerry Moyes actually has enough control of the club to put it into bankruptcy. The NHL is stating that Jerry Moyes gave all control of the franchise to the NHL in return for financing that would keep the club operating (it's somewhat ironic that the NHL is now making this argument considering that they spent most of this season arguing that the Coyotes were in fine financial shape and that the NHL was exercising no control over the team). But there are also reports that part of an agreement between Moyes and some of the minority owners (including one Wayne Gretzky) overrides any agreement between Moyes and the NHL. (I reiterate what I stated last week: I think this argument is a loser for the NHL).

And the NHL is further arguing that exposing the details of the Reinsdorf bid would actually harm the sale and the value of the club. Once again, I think that's a losing argument. If there's a valid bid that sets things right, then I don't really think a judge will give a damn if a lesser bid is harmed -- especially if that bid was never going to come close to eclipsing the larger bid.

The Toronto Globe and Mail took a more in-depth look into the matter, and it's got a bunch of legal experts saying that the NHL will win because they don't think a judge will dare to go against internal NHL rulings regarding relocation. Most of the experts think the Oakland Raiders matter was just a hiccup, but I still disagree with that. The guys they talked to seem to know the workings of the leagues, but none of them discussed the antitrust aspects, and I firmly believe that that Raiders decision is firmly on point when it comes to the Coyotes -- and if that decision is followed, then the NHL loses and the Coyotes are in Hamilton come this time next season.

There was another expert who made a point, based in bankruptcy law, that the bankruptcy courts can void legal and legitimate contracts to protect creditors. And the franchise agreement between the NHL and the franchises are contracts that can be voided to protect the creditors. Could this harm the league (and all leagues) should the court void that contract? Yes, it could. But damn it, this is the fault of the NHL and Gary Bettman who have let this situation get to where it is now.

The interesting thing, to me, is some stuff I read earlier which is stating the trigger to this whole thing is one Wayne Gretzky. Gretzky's a minority owner of the Coyotes, and supposedly he's the one who forced Moyes to file for bankruptcy and accept the deal with Jim Balsille. It seems that, despite the NHL supposedly assuming control of the franchise, neither Gretzky (in his role as head coach), the team ticket sellers, nor nearly 400 other team employees have been paid recently, so it's alleged that Gretzky is forcing this deal and might be the man responsible for the demise of Gary Bettman.

And finally, last month I wrote about the situation with the Dallas Stars and Tom Hicks, who put the team into default to its debtors by refusing to make debt payments. Well there are people out there who think that Tom Hicks is carefully paying attention to the Coyotes situation because the Stars could be next to take the Chapter 11 route.

There's a long time to go before this matter is settled. But right now, I just think the NHL is a loser on this. Especially if this stays in bankruptcy court, and especially if the antitrust argument begins to come into play. I love hockey, and I really want the NHL in Houston some day, but the NHL deserves what it's getting. It's a poorly run league with a poor TV deal and almost no national coverage in the country where most of its teams are located while the country that longs for hockey is almost shut out.

Stars Falling Over Texas

Allow me to go off of the AHL playoff track for a moment for some possibly more pressing matters affecting the state of hockey in Texas. At least if not now, then possibly in the long run.

I'm sure that many of you have somewhat followed the NHL along with following the Aeros and the AHL. So I'm sure that many of you are aware that there has been a lot of whispering over the past year or so regarding the continued viability of many NHL franchises, especially the so-called southern franchises. The NHL, for instance, has taken an active role in attempting to help the Phoenix Coyotes find new ownership while being kept apprised of all significant financial decisions that the team makes. William "Boots" Del Biaggo, part owner of the Nashville Predators, recently pled guilty to securities fraud, with some of the funds from the fraud going to the purchase of the Predators. The Atlanta Thrashers have been embroiled in an ownership fight for years, and reportedly had trouble with meeting payroll this past season. And there have been questions about the stability of Tampa Bay and Florida.

The one team that has never been mentioned is the Dallas Stars. And it is the Dallas Stars, not any of those other teams, which has just recently defaulted on interest payments on its loans. Well, not the Stars exactly, more like the Hicks Sports Group, which owns the Stars and the Texas Rangers of Major League Baseball. And Tom Hicks, the owner of Hicks Sports Group, is currently in default on ten million dollars in interest payments on $525 million in loans from various banks and other lenders. This default could ultimately dislodge the teams from Hicks's control. And supposedly, both teams are now unable to pay both their operating expenses and their debt service.

(Here's an excellent primer from the Dallas Observer, which in turns links to more in-depth articles at the Wall Street Journal and the New York Times.)

Hicks claims that he has defaulted on purpose. He claims that he is attempting to restructure a new deal with his lenders while he tries to find partners for the Rangers and Stars. He wants to negotiate a new deal that makes economic sense going forward for himself, HSG, and the lenders. As the Observer quotes, Hicks says "the current situation simply does not make economic sense."

Hicks claims this is no big deal, but it seems to me that, generally, deals like this are restructured all of the time without defaults. (And a personal aside -- I'm pretty sure that if I were to go into default on my varied student loans that those lenders wouldn't give me the power of figuring out the best way to restructure those loans, they would instead come looking for every bit of money that I possess while doing everything possible to destroy my credit rating.) And that Hicks has gone into default shows a desperation that might lead to his losing control of the teams. Now there are NHL provisions that prevent the lenders from immediately foreclosing on the Stars, and the Wall Street Journal states that lenders have agreed not to take control of the Stars for at least six months.

Now I'm going into full on conjecture mode, but...if the Stars are foreclosed on, it's not a guarantee that the Stars stay in Dallas. The lenders would probably make the deal that gives them the most money. And it's possible that there are some Canadians out there who would love to steal a U.S. franchise.

But what I'm most wondering about is the still non-existent Austin AHL franchise. It's the Stars, and the Hicks Sports Group who are behind the Austin-area arena, and who want to own the AHL franchise. AHL commissioner David Andrews made it clear to us last month that it was nearly a certainty that there would be a franchise in Austin come next season. But what if the Hicks Sports Group has been foreclosed on? What if the lenders are unwilling to follow through on the deal in Austin?

Like I said, that is conjecture on my part. But what isn't conjecture is that Hicks appears to be having some serious financial problems, that he is defaulting on debt payments, and that the Stars are unable to pay operating expenses. I thought of typing this up a last month when I first read about it, but there really weren't many details. Today there are a lot more details, so I thought I would bring it to everybody's attention.

I now return you to your playoff programming.