The Dallas Stars have been in financial trouble since 2009 when the Hicks Sports Group defaulted on $525 million in loans. In 2010 it was rumored that the Stars were among six teams that were receiving advances from revenue sharing or television money from the NHL so they could continue to operate. As Puck Daddy points out, both the Stars and the NHL denied this. In June 2010, Gary Bettman flatly denied the NHL was involved with the Stars.
Yesterday, Tyler Dellow of mc79hockey.com, published some excerpts from legal documents that make it appear as though the Stars have been aided by the league. According to “Declaration of Robert L. Hutson, Chief Financial Officer of Dallas Stars, Dallas Arena and StarCenter, and Treasurer of U.S. Holdings, dated September 15, 2011,” the NHL may have been a little more hands-on than previously known.
In January 2010, Dallas Stars again faced cash flow deficiencies once the Interest Reserve Account had been fully depleted. HSG and Dallas Stars began discussions with the NHL and the Prepetition HSG Lenders with respect to securing additional funds to meet its cash flow needs for the remainder of the 2009-2010 NHL season. On February 1, 2010, after weeks of discussions, Dallas Stars executed a Promissory Note with the Prepetition CFV Lender (together with the other agreements and instruments related thereto, the “Original CFV Debt Agreement”), pursuant to which the Prepetition CFV Lender agreed to make available to Dallas Stars advances in an aggregate principal amount of up to $19,000,000 (the “Original CFV Debt Amount”).
I didn’t understand that either. Luckily, Dellow explained.
So, to translate the legalese, according to Mr. Hutson on January 14, 2010, the commissioner of the NHL obtained the exclusive right to control the operations of the Dallas Stars and the Dallas Arena, including the authority to cause a sale. Hicks Sports Group had no ability to control the Stars or the Arena, or their operations, from that date forward. On February 1, 2010, Dallas executed a Promissory Note pursuant to which it obtained access to money from CFV I LLC, an affiliate of the NHL.
This is kind of a big deal. The NHL already controls the Phoenix Coyotes which already seems like one team to many. Fans from all over the league will be happy to know their ticket money has been paying the way for another team. It seems that some of these teams should be contracted instead of given handouts.