Note: For all of our coverage of the Dallas Stars sale, please go here.
As the Dallas Stars get closer to filing for bankruptcy and entering the courts, which will then in turn kick off the final process of the sale of the franchise, media reports are picking up on the sale and the impending bankruptcy. Unfortunately, with many of these national media reports there comes newfound fears about the term "bankruptcy" as many of these sources have not kept up with the sale process as closely as we have.
With headlines around the web like "Broke In Big D", the sensationalist nature of the national media is taking over and creating what seems to be some sort of panic among Stars fans. Last week, a Stars blogger attempted to stir the pot a bit further with "reports" from employees of the franchise - however those reports only supported what we already knew was the case as far as the timeline of the sale goes.
There's also the fact that many reports today are very vague and only mention that the team is heading into bankruptcy. In the same breath, the Stars are lumped in with the Phoenix Coyotes and other sports teams that have filed for bankruptcy in the past few years. Unlike with the Coyotes, this is part of a planned process for getting the sale of the team completed and is far from being anywhere near as bad as it's been made out to be.
The fact is this latest step in the sale of the team is one we knew was coming for a long time now. While the national media may try and make it seem like the Dallas Stars filing for bankruptcy is surprising or a particularly bad thing, the reality is that the financial situation of the franchise has not changed from what it has been for the past year. While no team ever wants to head to bankruptcy court, the fact is this is something that is unique in the NHL, regarding the web of lenders that is tied to the Dallas Stars and Texas Rangers.
Today, fears of relocation are resurfacing and some are wondering just what this latest news means for the organization. After the jump, I want to try and clarify some of the facts associated with the current state of the sale of the Dallas Stars...
Filing for bankruptcy has been planned for months.
As the lenders attempted to get the sale completed and as new bidders made themselves known, it became clear that heading to bankruptcy court was the only way to make the sale process as painless as possible. Filing for bankruptcy has many different meanings in the financial world and in this case it has to do with amount of different lenders and debtors that are still associated with the team and Hicks Sports Group.
Filing for bankruptcy allows the sale to be completed fairly, completely and much more easily than if carried out privately. It provides a legal backdrop for cleansing out all assets and ensuring that all financial liabilities are met. Part of what made the Texas Rangers sale so messy was that there was a fight not to head to bankruptcy court; in this case, it has been the plan all along with the knowledge that this course of action would facilitate the sale in a much cleaner, much more stable fashion.
This is about the lenders and how their stake to certain amounts of debt need to be met before the sale of the franchise is approved. Last year, things got messy with the Rangers sale when certain lenders blocked the sale because they were unhappy with the terms; heading to bankruptcy court clarified everything and ensured a legal recourse to ensure the sale went through smoothly.
It's the same situation for the Stars, only this time it's been planned much further in advance.
The financial situation of the Dallas Stars has not changed.
Simply put, it's still not good. It's well known that the lenders do not want to pay the paychecks of the players once the season rolls around but there is no avoiding that outcome at this point. The season is less than a month away and this process is still at least 60 days from completion -- longer if another buyer wants to make a bid.
That being said, nothing is going to change from where the Stars sit right now. The lenders and the NHL have actually allowed the Stars to increase payroll over last season and the Stars are doing everything possible with their available resources to bring us the best marketing plan they can. While the situation could certainly be better -- and it will be once the sale is complete -- the fact remains that filing for bankruptcy will not affect the day-to-day operation of the organization.
The is no relocation looming around the corner.
This is perhaps the biggest point I want to make and something we've had to reiterate several times over the past year. Yes, Tom Gaglardi is a Canadian businessman from the Vancouver area. Yes, there has been a push in recent years to move struggling franchises back to Canada. The Dallas Stars, however, are not under any such threat.
For one, the NHL must approve of any move. The Dallas Stars, prior to the financial collapse of Tom Hicks' empire, were one of the best teams in the NHL in generating revenue. The sale of the franchise includes ownership of half of the American Airlines Center, one of the most potentially profitable arenas in the NHL. The Stars are a shining example of how hockey can work in non-traditional markets -- and let's not forget that the Dallas-Fort Worth market is one of the largest in North America.
The Stars have been money making machines in Dallas before and they can be again. Unfortunately, the collapse of the financial backing for the Stars coincided with the struggles on the ice; players getting older, failed systems and coaching changes. Not making the postseasn has hurt the fanbase at a time when money available for marketing, public relations and the ability to add quality free agents was just not available. It's been the perfect storm for the Dallas Stars the past three years and it all adds up to what looks like a horrible situation.
The fact remains the team is not heading to bankruptcy because of a lack of support in the area; this is about how the former owner failed to meet his financial obligations while overextending his wallet. The NHL is not going to allow the Stars to move from Dallas, that is a fact.