I know that news about the ongoing sale process of the Dallas Stars is getting to be repetitive and tiresome. Every week it seems we're led to believe that news of progress is imminent and every week we're left disappointed. The latest news is that the process is going to take two to four months longer and based on several news sources independently reporting this timeline, it seems that October is most likely the time when this sale will be completed.
The negotiating window for Tom Gaglardi is now entering the 90-day period as he fights to put forth a bid that everyone is content with, which can then be used to start the process of completing the sale through bankruptcy court.
Unfortunately, heading to court is not just a possibility at this point -- it's an inevitability. Because of the complicated debt structure that is tied to the Texas Rangers and Dallas Stars, the 'lenders' are faced with attempting to get as much of their owed money as possible while maximizing the supposed value of the Stars franchise.
The past few days has brought about a seemingly flurry of sale news, however, after an article yesterday in St. Louis mentioned that prospective buyers now have a deadline to pitch a bid on the sale of the Blues. After the past year or so of dealing with an extremely slow process, that Game Plan LLC is trying to put pressure on bidders -- while we're just happy to have some at all in Dallas -- is astounding, especially when you consider the current economic climate in the United States.
Much more the after jump, including encouraging news on the progress of the sale.
While Gaglardi's bid might not be affected by the economy, the rest of the potential buyers might not be as lucky. Any bids will be tied to credit and assumed debt and right now it appears that Gaglardi is the only bidder that actually has a legitimate shot of navigating these treacherous waters and actually getting an offer to go through and be put before the courts. Potential buyers for the Stars are going to be facing issues with their finances as the US economy struggles, supposedly, and it will be interesting to see just how willing they'll be to attempt to out-bid Gaglardi once the sale hits bankruptcy court.
This is true for any attempted sales in sports right now, not just the NHL and not just the Stars. Because of the recent recession and the more-recent downturn in the stock market, many investors are going to be very reserved in where they put their money -- especially when a lot of their overall worth is being lowered along with the economy. It's very rare that any sale is dealt with in cash -- potential buyers use loans, investors and assumed debt to purchase sports franchises and the economics can become very tricky even in the simplest of sales.
The Globe & Mail had a very interesting article yesterday on the sale process of the Blues, stating how potential bidders could be turned off by the fact that Dave Checketts was unable to turn the Blues into a profitable venture in his five years of running the team. The Blues are under some pressure to get this sale completed because an extended loan from the banks, and it's thought that perhaps a few bidders on the Dallas Stars could get involved in this sale as well.
We've all tried to figure out exactly why putting together a legitimate offer on the Dallas Stars is taking so long for Tom Gaglardi. At this point, that offer is all that stands in front of this process heading to court, as the other bidders need to see what this offer is before making the decision on whether to try and top it. The Globe & Mail mentions that potential buyers such as Dough Miller and Billy Quinn might not be inclined to pay as much as Gaglardi and that while this offer is going to be the "stalking horse" that kickstarts the actual sale process, right now this is all in Gaglardi's court.
So what's the hold up? Why is it taking so long for a bid to be drawn up and put forth in front of the lenders and the courts?
Mike Heika has a post up this morning that sheds a bit more light on the situation:
Several people I have talked to said he is in New York trying to push through all of the paperwork that needs to be pushed through, and this is a difficult time to do that. In addition to lawyers, there also are financial people involved in drawing up loans, and this is a volatile time in the financial market.
Gaglardi and Monarch Investments already have done their negotiating, and now lawyers for the many lenders and the NHL and the Stars are looking at all of the paperwork. They are closer than they were two weeks ago, but nobody really knows when all of the lawyers will be satisfied.
There are so many moving parts involved in this process it's unbelievable. Heika also mentions that the court process could be held in Delaware, not Texas...so there's that. The good news is that the process is moving along, however slowly, and progress is being noted as the two sides try to work out a deal.
The good news is that Gaglardi stated this morning on the radio that he won't be affected by this latest downturn in the stock market. Hopefully, the lenders are being affected and will have even more incentive to push this process through and not hold it up even longer while attempting to get more value from the sale.
One thing that remains clear, however, is that this sale is not going to be worth anything near as much as Tom Hicks originally thought a few years ago nor how much the lenders supposedly were looking for. I imagine that this sale is about nothing more than assuming the debt owed by Hick Sports Group and about obtaining the credit needed to make such a deal.
The important question, of course, is how much is Gaglardi going to be willing to lose once this sale is completed. With the Dallas Stars falling into irrelevancy in the D/FW market it's going to take a very public push to get things righted again. Gaglardi is a smart business man and he's acknowledged that the Dallas market is one that can be a source of incredible revenue for a hockey team -- as it has in the past. The key to this is to not just build a winning hockey team, but to make that hockey team visible to the public.
Right now, the Stars are near invisible in Dallas.