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The Globe and Mail

New Jersey Devils the latest ownership headache for NHL

New Jersey Devils goalie Martin Brodeur deflects a shot from the Ottawa Senators in the first period of their NHL hockey game in Newark, New Jersey, February 18, 2013.


Now that the Phoenix Coyotes are stable in the short term after a sale to a group led by Canadian businessmen George Gosbee and Anthony LeBlanc, the New Jersey Devils quickly became the NHL's biggest financial headache.

However, in the wake of a report by Forbes magazine that the league is poised for a Coyotes-style takeover of the Devils if a new owner cannot be found quickly, an NHL source said Thursday the league is hopeful the team's "ownership situation will be resolved shortly."

At this point, league officials think they can avoid taking over the team (as the NHL was forced to do with the Coyotes in October, of 2009) or have current Devils owner Jeff Vanderbeek put the franchise into bankruptcy because of its staggering debt, which is estimated to be between $200-million and $250-million (all currency U.S.).

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NHL commissioner Gary Bettman denied the league has any plans to take the team away from Vanderbeek.

"I haven't seen the Forbes report, but if the suggestion is we're going to take over the Devils, which is what I've heard the report says, it's not accurate," Bettman told reporters in New York after a press conference about the NHL's two outdoor games next season at Yankee Stadium.

The NHL's hopes to settle the Devils situation come after a report by Howard Eskin of Philadelphia radio station WIP and television station Fox 29 that Josh Harris, the leader of the ownership group of the NBA's Philadelphia 76ers, is interested in buying the team. Harris was reported to have met with Vanderbeek last week.

This approach came after another Philadelphia businessman, lawyer and hedge-fund manager Andrew Barroway, let an offer for the Devils expire. Forbes magazine reported Barroway lent the Devils $30-million to help the team make its payroll, escrow and pension payments before stepping away from a purchase offer after he examined the team's finances in detail. But the NHL is hoping Barroway will remain in the sale picture.

However, sources in both the NHL and the banking communities are skeptical the Devils can be sold quickly. They repeated Thursday what has been said for months: The only way any credible buyer will take the Devils is if the debt is removed or reduced considerably through bankruptcy, or if the Devils creditors take a voluntary haircut.

But the same sources said this will be difficult, at least in the short term, because Bettman is opposed to a bankruptcy filing because it would be another black eye for the NHL.

Barroway is not the first buyer to run after a closer look at the books. Two years ago, Vanderbeek was well along in sale negotiations with a pair of businessmen until they found out there was at least $20-million more debt on the franchise than they were initially led to believe. They quickly walked away from the sale.

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While one source with knowledge of the Devils' finances said the team is manageable on an operating basis because it gets most of the revenue from the Prudential Center, the debt is the big problem because it burns up too much of the team's income. The $200-million-plus debt was recently refinanced with the considerable help of Bettman, but Vanderbeek missed the first payment in the spring.

Arena revenue has also plunged since the former New Jersey Nets NBA franchise moved to the new Barclays Center in Brooklyn last fall. The Barclays Center is the source of considerable pain for the Devils, as it is attracting a lot of other events – such as concerts – in an already competitive market.

Editor's note: An omitted comma in an earlier version left the incorrect impression that the National Hockey League is poised to take control of the New Jersey Devils. This version has been corrected.

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