The New Jersey Devils of the National Hockey League (NHL) are reported to be in severe enough financial trouble that the league is considering taking over the team. Current owner Jeff Vanderbeek, a former Lehman Brothers executive, was not able to meet payments on his newly restructured loan which was suppose to help ease payments. Forbes reported earlier this year that the Devils have are more than $230 million in debt, which is around the amount that the Atlanta Thrashers were in debt before they were purchased and moved to Canada. Curiously, Forbes is also reporting that the NHL does not want the Devils to declare bankruptcy as the Phoenix Coyotes did. Rather, they are going to try and take control of the team and then help find a new ownership group to takeover the Devils.
The takeover seems to have some logic to it, as we have seen teams like the Los Angeles Dodgers get taken over by Major League Baseball to get rid of incompetent ownership and management. The Dodgers were bought out at a major profit, and the team somewhat rejuvenated. While I do not think there will be any “mega” offers for the Devils, the franchise has won Stanley Cups in recent memory, and was once one of the dominant clubs in the NHL. With the league taking over the team, they may be losing out on the $25 million they are currently owed from Vanderbeek, as well as the $55 million in salaries that are due to players this season.
While it does not surprise me that another team has had such financial troubles in the NHL, to see one in one of the larger markets in the league may be a sign of several things. It could be poor management from a financial perspective, an owner trying to bite off more than he can chew, or it could be that the metro area cannot support that many professional hockey teams. In any case, this will probably be another point in the argument by the owners to get an even larger split of the revenue the next time they negotiate a collective bargaining agreement.