Way back in January of this year, Jeff Vanderbeek became the sole owner of the New Jersey Devils. What was once a group led by Jeff Vanderbeek in partnership with Ray Chambers and Mike Gilfillan along with a minorty share held by Peter Simon became a group of one. Jeff was the public face for ownership from the start but the move established that he would be the owner. The partners got bought out, the NHL Board of Governors approved him, and so the news was announced that their current debt of $78 million would be refinanced. At the time, whatever financial concerns seemed to go away.
However, in a story exclusive to the New York Post, Josh Kosman (as in, this Kosman and this Kosman) reported today that Vanderbeek and the Devils may be in serious trouble. Citing a "source with direct knowledge of the situation," Kosman reports that Vanderbeek missed an interest payment of about $3 million in April. He also reported that the NHL advanced about $5 million to the team, the team apparently needs to sell some kind of minority stake in the team to raise cash, and that the league must approve all major financial decisions. That's some serious trouble. Especially with free agency looming as Lou is trying to lock up contracts for his players and possibly determine what to do for new ones. The last thing the Devils, as a team, needs are financial issues preventing the team from doing what they need to do to get back into the post season. I can understand that some fans are worried.
I'm not so worried. I think there's reason to have some doubt in this article. Namely, with this part of Kosman's article:
The combination of the 113-day lockout, which forced the coughing up of some sponsorship cash, and the team’s failure to make the playoffs blurred the financial picture.
To quote Prime Time, "Hold on, player." I'm sure the Devils missing the playoffs didn't help, but the 113-day lockout couldn't have made their financial situation worse. On the contrary, while they didn't get any revenue, they also didn't have to incur expenses on gameday staffing, security, concessions, merchandising, and - most of all - the players. The latter is definitely a tell-tale sign of how things are going. The Devils' payroll for 2012-13 ended up at a little over $59 million; but that's a pro-rated $59 million. Their actual expense was far less. Throw in the fact that the Devils largely sold out their shortened home schedule and, unless I missed it, they didn't announce any mass staff layoffs during the lockout (clarification: that's an expense, but a lay off would mean money would have had to have been saved), and I'm finding it hard to believe the lockout would hurt the Devils' finances all that much. If anything, it would have more likely helped if only for paying the players for three and a half months.
I also find the timing of this story to be rather...interesting. The Devils missed an important payment in April, and yet only Josh Kosman at the New York Post has the exclusive story in the middle of June. Given that stories about a team's finances are pretty major news to most hockey media outlets - like what's going down in Phoenix - I'm impressed that only Kosman got this news and he got it at least a month and a half after it happened. Maybe it has something to do with the recent good news for Vanderbeek and the Devils. Last Thursday, the Devils and the city of Newark formalized a new lease agreement. David Giambusso's article at NJ.com runs down the major points of the deal, including a small tax for the fans. As much as that is a bummer, albeit a small one, one of them includes the city codifying a $2.7 million per year payment to the Devils, based on prior arbitrator's ruling, while ensuring the lease lasts for another 25 years. That's good for the organization and it ties up a loose end. Perhaps that tipped someone off to call Kosman to tell him something behind the scenes. Or, hey, maybe it's a coincidence.
Jumping away from that, please allow me to put on my pretend Wild Speculation Hat to express some thoughts I have about this. Assuming Jeff Vanderbeek isn't a total dunce that spends money he doesn't have and assuming Kosman's right about the missed payment in April (I doubt he'd make that up), I think it's entirely plausible that Vanderbeek intentionally missed the interest payment. I doubt he didn't have the money. It is only approximately $3 million and the team could exceed that in just re-signing their restricted free agents alone in this very month. The refinancing bank(s) gains nothing if Vanderbeek crashes out, so they may not be happy about it but they'll deal with a delay. Once the Devils start getting their money from Newark - which is close to the $3 million needed - or get some other cash some other way, the Devils make the payments, the bank(s) get some satisfaction, Vanderbeek doesn't spend anymore than he has to, and we move on worrying about how the team does in 2013-14. It wouldn't surprise me if Vanderbeek does seek out someone to take a minority stake in the team for additional money, but I don't think the Devils are in such dire straits that they'll be a cap floor team or require league assistance and therefore stink on the ice. I don't think the Board of Governors would roll the dice on an owner who's in such financial trouble to own a team that provides a decent amount of revenue to the NHL. He's essentially stretching his money. Someone doesn't like that, presumably on the bank's and/or lender's end since they contacted a business reporter instead of a sports reporter/blogger, and so Kosman has an article he can pump up in the Post to slam Vanderbeek. Once the payment is made - as I think it will - it'll be a small bit of news and that will be that unless the same source is unhappy about something else in the future and leaks something else out to Kosman. No NHL takeover. No financial crisis in ownership. No mountains out of what are little hills.
Anyway, that's just my own speculation. The pretend Wild Speculation Hat is off. I can't totally avoid the worst case scenario to allay concerns. From what I gather, that would be the case where Vanderbeek really doesn't have the money to make payments to the debt, and he won't have or get the money needed to run the team. This would require him to swallow a lot of pride and sell the team. I don't think that would be a total disaster, though. The Prudential Center remains a fairly young arena, the Devils kept drawing well despite not winning a lot of games, the league prefers to keep their teams where they are for the most part (see Phoenix), and the city of Newark is giving the team an annual fee on top of other concessions. The Devils aren't going anywhere, regardless of who's owning the team. I think the stability of the team is what most get worried about when there are ownership issues. I don't think that's even in doubt.
What about free agency? It will be seen as a litmus test. If the Devils go super-cheap, then there's reason to think there's something to what Mr. Kosman's reporting today. If the Devils will end up about where they have been spending in the last few seasons, which is about $60 million in payroll, then perhaps not. But I don't think it's an accurate test. Look at Zach Parise, for example. I would have wanted him to stay, but I would have also beenreally uncomfortable for any deal similar or better than what Minnesota gave him. But Parise was a UFA and he made his choice based on the options available. The Devils made a competitive offer and Parise chose someone else. That's not necessarily a fault of ownership; the team could just decide not to offer nearly as much. Remember, the decision lies with the player and what they decide is up to them and their people. What they say publicly may or may not be the whole truth as far as why they played.
Let's consider a hypothetical example. Should some other organization, like Toronto, offer, say, David Clarkson, way more than he's worth on July 5, then I don't think whether he stays or not isn't completely on whether the Devils having finances to keep him. It may play a role, but the Devils could just as easily decide he's not worth the cost of retainment or even that Clarkson is dead-set on going elsewhere or some other possibility. Of course, I expect it to be spinned that the team's apparent financial problems are the cause of a player signing elsewhere if/when something like that happens in about two weeks.
Long story short, I'm not all that concerned at the moment. Based on the last two years of Kosman-induced concern about the team's ownership, things haven't turned out too badly. I don't think this will end up so differently from that. But that's me. If you're interpreting all of this news differently and are concerned, then please say so in the comments and explain why. If you think this is a mountain out of a molehill, then also please say on in the comments and explain why. Thanks for reading.