While Tom Gaglardi and his people are busy trying to make our collective dreams come true (Goodbye Tom Hicks, hello higher payroll) we wait for news and Forbes.com has provided an interesting bit of it today, but let's call it speculation for now.
Mike Ozanian of Forbes.com claims to have a person 'familiar with the negotiations' telling him that a $250 million dollar sales price is a "pipe dream" and that the actual sale will be about $115 million, and all of that in assumed debt. Not cash. In fact, this report makes it sound as though there will be no real cash at all...
A person familiar with the negotiations tells me Gaglardi's offer is just about $115 million. That's it. The $115 million enterprise value is all debt assumption, no equity, and includes control of half of the arena.
Here is are the numbers behind the deal: HSG currently owes creditors $260 million and has $70 million of cash from the sale of the Texas Rangers to a group led by Nolan Ryan and Chuck Greenberg last August. Netting out the cash leaves $190 million of debt. HSG thinks creditors would accept about 60 cents on the dollar. [Forbes]
Some quick math will tell you that the creditors would have to just end up swallowing about $75 million worth of loans out of all of that, and if they agree then Tom Hicks is out of the sports business and Tom Gaglardi gets a franchise valued at over $225 million for $115 million plus interest.
Then again, we doubt they'll value the Dallas Stars at $225 million next year after all of this.
The question this begs, aside from "Is this report accurate?" (valid question) is will this seemingly attractive deal for the buyer (Gaglardi) spawn competing bids when the sale goes to bankruptcy court, and how long will that delay the eventual transfer of ownership? And of course, how will that affect things on the ice next season?
The Morning News maintains that...
It really is a complicated formula, as they are trying to put together an offer that is fair to them, but also won't allow other potential buyers to get in a bidding war. [DMN]
Rewind to late 2010 when speculation was that the lenders would wait the season out and hope that market conditions improved, a bidding war would start, and they'd get a better deal for the team down the road. Whichever version of "sources say..." you believe these days, it looks like the lenders may have played financial chicken and lost by waiting.