Private Sale of Dallas Stars Revealing Few Details

Dallas Stars fans have felt starved for news on the sale of the team since the possibility was first raised and later confirmed in February of this year. Hicks is said to have learned from his mistakes with the Texas Rangers and will keep things as quiet as possible. We may think we want lots of news and updates on the process, but quiet might be the best thing for all of us as the bidders and the team move toward a resolution.

We theorized on Defending Big D Live last week that the Rangers sale might be the fallen domino that gets things rolling with the Stars. We also theorized that if the Stars go to the highest bidder, there would be none of the same shenanigans the Rangers had to deal with. Details have started to emerge about how the sale will go, largely thanks to Mike Heika of the Dallas Morning News, of course. You should go there and read what he has to say if you have not, but some of these tid bits warrant repeating for discussion in this space, so we'd like to try to sort some of this out now.

Here are some things that we think we might know... (We're rarely right about these complicated financial matters.)

News Corp.

News Corp, according to Mr. Heika, is still technically and unfortunately IN on this process. We've discussed the doomsday scenarios and most pessimistic outlooks on such an ownership group, here, and here. The assumption was that News Corp was interested solely for the purposes of preserving their negotiating rights where Fox Sports Southwest was concerned, and from keeping Mark Cuban from starting his own regional sports network.

When News Corp did NOT bid on the Rangers, we had rather optimistically assumed (hoped?) that it also signaled the end of their interest in the Dallas Stars. After all, what good would the Stars be to Fox if the Rangers and Mavs went off to do their own thing? Logically, this still makes sense to us. There is also the clause in the Rangers sale linking the baseball and hockey teams in future television endeavors to consider.

So News Corp's name might still be associated with the Stars sale by way of technicality at this point, because they were approved by the league to bid, etc, but their interest has now diminished. Or they could be interested in the team because they just think it's a sound investment. We're not sure at this point, but we're all hoping for anyone but News Corp.

Bankruptcy

The Texas Rangers sale became extra messy the moment the team entered bankruptcy, a move, they explained at the time, that would help them expedite it. Tom Hicks stood in front of everyone and tried to explain how bankruptcy was really going to get the ball rolling. Chaos ensued.

Luckily, Dallas has a bankruptcy protection, but it expires at the end of August. Currently, indications are that all parties would like to avoid bankruptcy; The NHL in particular after having gone through a messy process with the Phoenix Coyotes.

The bankruptcy protections' expiration at the end of August does not (and I'm mostly guessing here) mean that the Stars will necessarily enter bankruptcy if the sale is not complete by then. That depends on how satisfied the lenders are with the initial sale agreement that comes after the...

Auction .... (contd)

Just because the club likely won't be forced into bankruptcy court doesn't mean there won't be an "auction." The difference is that it will be held privately and discreetly. All parties involved with the sale have signed confidentiality agreements. There should be no information leaking out...technically.

A public auction, complete with the court room drama we saw with the Rangers, is only a possibility if the lenders force the Stars into bankruptcy. Unfortunately, they've already seen first hand that bankruptcy and a public auction can land them some more money.

Galatioto Sports Partners (GSP)

GSP is the entity brokering the sale of the team between Hicks and the interested parties. The perceived advantage here is that GSP is one of the lenders. Says Mike Heika:

The thought there is that GSP will be able to broker a deal that is fair for the lenders, because it is one of the lenders. However, there is some concern whether the lenders can all agree, because there were moments in the Rangers sale when the lenders were not on the same page. In fact, the relationship between the lenders could be the biggest wild card in this negotiation.

We expressed a thought on the podcast that the Rangers problem was that the highest bid wasn't taken originally, and that's what gave the lenders their leverage. What's being suggested now, is that even if the highest bid is taken in the Stars sale, the structure of the deal could be distasteful to the lenders, and they could then seek the help of a bankruptcy judge to "maximize" the assets of the team. Meaning they could use the legal system to make sure they're getting paid as much as they can. The highest bid may not be good enough if the deal isn't structured to their liking.

This is where GSP being a lender and the broker of the deal should help, because we like to think they'll broker a deal that is to their own liking. But as Mike says, if their relationship with the OTHER lenders isn't a good one, then this could descend into madness.

By the Start of the Season

The very minimal word coming from the parties involved is that they "expect" the sale to be completed by the start of the regular season, October 8th.

Stars fans that are also Rangers fans should know better than to put any faith in that, having already been toyed with for well over a year. Still, we seem to be in a mode of looking ahead now, and trying to be optimistic.

News Corp is still the biggest potential spoiler here, in my book.