Forbes: Gaglardi Attempting to Buy Dallas Stars Without Cash?

Dallas Stars fans have been waiting for 14 months for the "news cycle" to pick up on the sale of the franchise from Tom Hicks and the people who repo'd all his gold toilets and mini-giraffes to the white knight that saves us all from this playoff-less quagmire in which we currently find ourselves festering.

Good news! The news cycle continues to pick up steam.

The bad news is that most of it is refuted or otherwise contraindicated by other reports, and we spend our time refreshing the Dallas Morning News Stars blog waiting for the latest rebuttal. This afternoon Forbes published a report online that contains a dozen different confusing figures and odd representations of debt and value of the American Airlines Center, and separately, the team.

More and more we are starting to see the two separated in these reports. X amount on the arena, X amount on "the team," when all along it's been said the Stars were valuable because of the American Airlines Center. The Forbes report says the AAC has $260 million in debt on the books. That doesn't sound valuable.

The report asserts that Tom Galgardi could somehow purchase the team by just assuming $100 million in debt.

The arena, which is co-owned by Dallas Mavericks owner Mark Cuban, has $260 million of debt and $60 million of cash on its balance sheet. The Stars lost at least $10 million before interest, taxes, depreciation and amortization during the 2010-11 season, according to my source.

The $100 million is of course an unrealistically low valuation. The building is currently valued at $300 million, which implies Gaglardi’s offer (which would just cover half the net debt on the arena) places a negative value on the Stars. My source says the plan is to use Gaglardi as a stalking horse to get higher bids and he would get a fee should he not get the team. But it is a bit of a gamble because on top of the $100 million Gaglardi offered Hicks owes $160 million tied to the team, and that would be a big bath for the creditors to take if higher bids did not come forth.

Mike Heika rejected most of that, again, and said his sources claim the details are not entirely true...

The bottom line is the lenders have waited a while to get a good offer, and Gaglardi's offer is clearly superior to that of the other buyers.

"The bottom line." "Clearly superior." If you want to get really pessimistic about this, those terms are all relative. If Gaglardi's offer really is a bunch of assumed debt with no cash down, is clearly superior like saying "Getting stabbed in the thigh is clearly superior than getting stabbed in the neck."?

The Forbes report makes no mention of the previously rumored $250 million offer, the 30 day negotiating period, or organized bankruptcy court, and yet it could be just as factual from someone's point of view. Because no one operates strictly in liquid funds, the $250 valuation could be accurate(ish) because of the structure of the deal, and Forbes is just hearing part of it or someone's biased opinion.

It's hard to understand for those of us in the real world who buy things with real dollars, and if we don't have the funds, we don't. Buying something with credit that's losing $10-$15 million a year is a head scratcher as well, and is seemingly how Tom Hicks got into this mess in the first place: Borrowing on top of borrowing on top of borrowing...

We were already told Doug Miller was being used as a "stalking horse" bid and it seems the lenders have used several parties in that capacity over the last year to up that asking price in any way possible. The assertion that this latest, very promising sounding Gaglardi bid could be yet another stalking horse is disconcerting to say the least, as we've begun to grow hopeful of timely resolution.

The report also states that he could get a fee should someone outbid him. So instead of incurring a large amount of debt, he'd get paid a sum of (likely) millions of dollars? Win-win?

For now we'll continue trusting Heika and continue hoping for clarity in what is rapidly becoming a cacophonous round of conflicting reports and untrustworthy noise, but as we say these days: Things are definitely moving along.

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