Today's big news came early this morning and was a big shock for Devils fans everywhere. In an exclusive story in today's New York Post, Josh Kosman reported that the Devils were in serious financial trouble, missing a $100 million loan payment. Based on Josh Kosman's reporting and his source(s), the Devils "are blowing up," they told banks to "get lost," the Nets made the Prudential Center profitable, that Ray Chambers has cut his asking price for 47% share in the Devils down to $200 million, and the Devils would be starting training camp tomorrow.
In a word: wow. This report caught on like wildfire; and why not? A professional ice hockey team finding themselves in financial dire straits is most seriously news. The claims are massive and should cause at least a little concern. It blew up among the hockey media and a lot of fans were either surprised or defiant at Kosman's article. Well, the latter group can claim bragging rights as the Devils' own statement on the matter metaphorically kicked Kosman's claims in the teeth. Here's the statement the Devils made, reported here by Tom Gulitti:
"Today’s New York Post story is inaccurate. The notions that the Devils are facing bankruptcy or that "the Devils have told their banks to get lost" are patently untrue. The Devils value their relationship with their banks and are confident a refinancing will be completed shortly. As stated previously, ownership is close to finalizing an agreement that would lead to a buyout of Brick City’s share of the company. The organization is also pleased to report that new season ticket sales are up 130% over last year and last week’s on-sale for single game tickets were 260% above last year’s similar period. Finally, the start of training camp was incorrectly reported in the article as tomorrow. In fact, training camp starts on Friday for the rookies and Saturday for the veterans."
Well, that was right to the point. And it even called out that error in the beginning of Kosman's article. Adding tersly to this point, Tom Gulitti relayed Bill Daly's reaction in this tweet.
NHL deputy commissioner Bill Daly says via e-mail that league stands by all in Devils' statement concerning NY Post report being "untrue."
So the New Jersey Devils are not going bankrupt. Good. However, I don't think everything is perfectly well and good with the team. I think this statement says more than it does and it's worth examining further. If only to clarify it for those like Rich Chere, who called this a rambling statement.Rich Chere called this a "rambling statement" and I'm not sure why. Angry, sure. I'd be angry if Josh Kosman tried to throw my organization (is In Lou We Trust an organization?) under the bus based on "anonymous sources." But each part of the statement serves a purpose relevant to these claims.
But, first, I want to sympathize with Mike Gilfillan, who is the president of Brick City LLC, the group that owns 47% of the team. Based on Kosman's article, you're not even mentioned even once as co-owner of the group. Not one mention in the article. Sorry, man.
Anyway, the statement. Let's break it down. Here are the first two sentences.
Today’s New York Post story is inaccurate. The notions that the Devils are facing bankruptcy or that "the Devils have told their banks to get lost" are patently untrue. The Devils value their relationship with their banks and are confident a refinancing will be completed shortly.
I don't think it's a big leap to figure that the team telling the banks off was false. I don't think anyone can really say that to a bank and get away with it. They're the ones with leverage, after all.
The most important part here is that "a refinancing will be completed shortly." The Devils didn't deny that they didn't pay their loan payment on September 1. If they didn't, it's not because the team could or would not be able to do so; it's because they're refinancing their deal. They're replacing their current debt to their banks with debt under different terms. I don't believe it would be possible for a refinancing to be in process if the bank or banks aren't on board. Moreover, their payments would likely be rolled into the refinanced deal; the Devils and the banks likely agreed to pay them when that would be complete. To me, the Devils are saying that they are on the same page with the banks - and I'm not seeing much reason to doubt this explanation. It's sensible in my opinion. Maybe if I was Josh Kosman and/or his anonymous source, I'd think differently.
As stated previously, ownership is close to finalizing an agreement that would lead to a buyout of Brick City’s share of the company.
This is probably the one thing that needs to happen before refinancing is completed and payments continue. Since February, Ray Chambers (and Mike Gilfillan!) have been trying to sell their share in the team. I don't know for how much, though I would hope Josh Kosman's anonymous source was kidding when he said it was $200 million. Given that Kosman's own article points out Forbes' estimate of the team's value at $218 million. I can't imagine too many people would be interested in buying 47% of a team for 91.7% worth of Forbes' estimate.
Though, this may be moot. Way back in June, Tom Gulitti reported that Jeff Vanderbeek has been in talks with Chambers and Gilfillan. There hasn't been much discussion since then, but there also hasn't been any news of an outside party buying into Brick City. It's not much of a leap to conclude that perhaps Vanderbeek is still interested in taking over.
However, the Devils' statement is quite clever here. It does not say that Vanderbeek is close to finalizing an agreement - but ownership. Now, we know Vanderbeek is the managing partner of the Devils. Why does it use the generic "ownership?" Well, I have two guesses. The first is that the Devils wanted to avoid being personal at all. By not mentioning any names, the message is the only focus. The second is pure speculation. Perhaps there's an outside partner that Vanderbeek wants to bring in to buy up the shares. Instead of revealing their name or committing to someone, it's "ownership" that's buying up Brick City. It's probably the first guess.
In any case, once this issue gets resolved, the refinancing will probably then be able to be completed, payments will resume, and it'll be like this never happened. That's my reading into this statement. Let's continue on.
The organization is also pleased to report that new season ticket sales are up 130 percent over last year and last week’s on-sale for single game tickets were 260 percent above last year’s similar period.
At first glance, this seems out of place. Why pump up your own sales in a statement against an inaccurate report?
Well, let's consider the issue at hand. Kosman's article alleges the Devils are in financial trouble. The Devils have responded by providing some explanation about the loan payment without directly stating it and brought up the ownership issue. That doesn't really address the business, though. At the heart of these allegations is that the Devils' business is not doing well. The Devils recognized that and so they note that sales have increased since a year ago.
Now, I've done the math and figured that the Devils have raised their ticket prices for some sections at the Rock for the 2011-12 season. Surely, some of the increase in sales would be a result of that. However, I don't think that alone would cause an increase of 130% in season ticket sales or 260% in single games. it was not an across-the-board increase; they've made changes or froze prices elsewhere. Therefore, the increase would have to be result of more people buying tickets, people buying more expensive tickets, or some other combination. It follows that business hasn't been all that bad for the Devils.
It's not a very clear statement, though. We don't know exactly how much an increase in 130% or 260% is worth. We don't know whether it's substantial enough to the team's bottom line. That's not public information, and I don't think it will ever be. So the Devils have to be intentionally general here. The point remains: business isn't bad.
Finally, the start of training camp was incorrectly reported in the article as tomorrow. In fact, training camp starts on Friday for the rookies and Saturday for the veterans.
This really doesn't have much to do with the report. It's just a dig at Kosman's incorrect opening to his article. A stab at his credibility. The intent is to raise this question: If Kosman got something as simple as that wrong, then who knows what else he got wrong? I can't say I blame the Devils for this ending.
So that's the statement broken down. It worked well enough and Bill Daly of the NHL said they stand with New Jersey. That alone justifies how well the statement worked. If it was poor or ranting, the NHL wouldn't be
That said, I think it could have been stronger. For example: If the Devils made loan payments in the past, then I would have mentioned that in conjunction that there is a refinancing of their loan with the banks. It would highlight that this isn't an ongoing problem and that recent developments haven't made it possible to do so (like the Nets becoming temporary tenants). Of course, I don't know if the Devils did or not; I'm only assuming since we haven't had any news of them missing a loan payment prior to today. I would just bring that up if that was the case along with other claims being disprovable without bringing up sensitive information. But, then, these statements would be as long as the posts I write here and who really wants that?
Anyway, I want to take another shots at the messenger, but this isn't the first time the Devils hit back at the NY Post for making some sensationalist claims. The last time I believe was on June 16, when Tom Gulitti reported at Fire & Ice a joint statement from Vanderbeek and Chambers/Gilfillan against the Post's inaccuracies - which included the a false sale price for Brick City's share as in today's article. Guess who wrote the article in the Post that led to that response? That's right: Josh Kosman with an anonymous source! What are the odds?
Seriously, I wouldn't take this to mean that Kosman or the NY Post should be ignored or blacklisted either by the team or even the fans. For the team: a simple response, like today's, when he reports what are inaccuracies would suffice. As for the fans: If it's dumb, then point out why you think so it's dumb with facts and reasoning.
Most of all, while the Devils aren't going bankrupt or dissing banks or moving elsewhere, I wouldn't immediately conclude that everything is fine with respect to the team. While you may not think much of the finances of the Devils and the Rock, they do have a direct impact on the team. If you recall the past few months, you'll remember that the Devils traded away Brian Rolston and ultimately bought out the return Trent Hunter; they bought out Colin White; and they only committed one season to Zach Parise. Rich Chere even pointed out that several members of management have been let go, possibly as a cost-cutting move in this article with a now-obsolete headline. The Devils shaved their payroll down to just over $59 million after spending over $63 million on players last season. Knowing that there is now a budget, it's easy to connect all these dots and with an article like Kosman's, get genuinely worried about the team. While Kosman's report may be a lot of hooey, the Devils' moves speak for themselves. Perhaps these ownership issues have led to these moves; or perhaps they were just agreed upon to not spend so much money (Seriously, Brian Rolston wasn't worth his contract). It might even be just coincidence, with different reasons behind each move - yet it looks like the sole driver were the team's finances.
So to that end, I don't know what the real situation is with respect to the team's or arena's finances. Ergo, I'm not going to worry unless the Devils start dumping players left and right (and before you say they did: remember, they added Eric Boulton and Cam Janssen - and both are wholly unnecessary to the team and added to payroll) or raising prices to incredible heights or some other extreme situation. While it does affect the team directly; most of the actual truth isn't going to be public. While there's value in not taking team statements at face value, that also goes for sensational reports that provide more claims than proof. Like those by Josh Kosman and his anonymous source(s).
Anyway: thoughts. What did you make of this statement by the Devils to Josh Kosman's article? Did you think it was effective as I thought, or do you think it could have been better? Do you agree or disagree with my interpretation of the statement? What do you think about the Devils' financial situation given the article from the Post and the response? Please leave your answers and other thoughts in the comments.