Fans cheer at the start of Game 1 of the NHL Stanley Cup finals between the New Jersey Devils and the Los Angeles Kings on Wednesday, May 30, 2012, in Newark, N.J.Kathy Willens/The Associated Press
Skepticism abounds in the wake of reports New Jersey Devils co-owner Jeff Vanderbeek found a financial saviour.
Several sources connected to the NHL and the banking community expressed doubt when asked if there were anything to reports Vanderbeek found an investor, either an individual or a group, to help him meet a $77-million (all currency U.S.) loan payment that is due in late summer and buy out his co-owners, Ray Chambers and his son-in-law, Michael Gilfillan. Vanderbeek has been looking for help for more than a year because the Devils' annual losses are in the $20-million range and the franchise is carrying more than $100-million in debt.
The Devils' run to the Stanley Cup finals produced much-needed cash from 10 playoff dates at the Prudential Center but the team is a long way from breaking even. The situation was so bad the Devils needed advances from the NHL of revenue that is shared between the teams, such as broadcasting and sponsor money.
The reports say sources close to Vanderbeek claim he has a handshake agreement with a person or group that would invest as much as $200-million into the NHL team in cash and assumption of debt.
However, several sources expressed doubt that anyone would invest in the Devils. They said the team's financial situation is so dire that the only way to survival is declaring bankruptcy and flushing out the debt through the courts. Then the team could start over with a new owner and a new lease agreement with the city of Newark.
There are at least two groups watching the Devils' situation closely, according to the same sources. They say the groups are only interested in buying the Devils if they go into bankruptcy because they believe their current financial situation is unsalvageable.
The sources were also skeptical Vanderbeek could find a partner because he is known for his nasty business disputes. After the city partially lost a court battle with the Devils over sharing the arena revenue, Newark Mayor Cory Booker called Vanderbeek a "high-class, high-falutin' huckster." Vanderbeek shot back, saying he now regrets moving the Devils to Newark from their former arena in East Rutherford, N.J. Vanderbeek's relationship with his co-owners, who have lost many millions of dollars on their investment and will probably walk away from the team with nothing, is also said to be chilly.
Just how much the franchise owes its bankers is murky. The $77-million loan payment is for building the arena but there is thought to be at least another $80-million in debt. The total debt could be more than $200-million.
A group that agreed to invest in the Devils backed away from the deal last year after undisclosed debts started turning up, according to a source. When those debts hit $20-million, the group pulled out.