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Report: Devils miss Sept. 1 loan payment, could face threat of bankruptcy

Sep 12, 2011, 11:16 AM EST

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Last season was a tough one on the ice for the New Jersey Devils, but a report in The New York Post indicates that things are much rockier on the accounting spreadsheets. Josh Kosman cited an anonymous source who reports that the team missed a $100 million Sept. 1 loan payment, which is a troubling issue because it could push the franchise toward bankruptcy.

The bankruptcy problems could also reportedly extend to the Prudential Center, the Devils’ four-year-old arena located in Newark. Devils Arena Entertainment is on the hook for $180 million in payments, according to Kosman and other reports.

The source told Kosman that the Devils are “blowing up,” which we will assume isn’t slang for “on a roll” in this instance. The report indicates that the Devils’ issues are multifaceted.

The first problem is that the team’s ownership is in a state of flux, even if majority owner Jeff Vanderbeek stays in the picture. Co-owner Ray Chambers has been trying to sell his share of the team for about a year but hasn’t had any luck so far. Kosman also writes that Vanderbeek doesn’t have a good relationship with lenders, which could exacerbate the issues.

“You have a bank group that wants nothing to do with Vanderbeek,” said a source, who added they have been upset with how late they have been with financial information.

Some lenders are already considering selling their stakes to vulture investors, the source said.

“This is going to be a very difficult situation.”

The third problem is truly outside the Devils’ hands: the NBA’s lockout could ruin the New Jersey Nets’ final season at the Prudential Center. A full lockout would knock out 25 percent of the building’s 161 scheduled events, which is even more problematic considering the fact that the Nets are reportedly the reason why the building earned its first profitable year. Either way, the Nets aren’t going to be a part of a long-term solution for the Devils’ alleged financial problems.

It all seems like a very messy situation for the Devils, who haven’t responded to the report at this time. Like many other ownership/bankruptcy scenarios, this looks to be a fluid situation, so we will keep an eye out for responses from the team and any other updates.

  1. icelovinbrotha215 - Sep 12, 2011 at 4:22 PM

    For those who deny that America is in a recession, and ready to double-dip into another recession, ask the Jersey Devils. It’s tough out there, but yet the analysts and ‘experts’ continue to give their shallow and contradicting opinions.

    • stakex - Sep 12, 2011 at 4:38 PM

      I think the Devil’s issues are far more complex then “Eh, theres a recession going on”. Not to mention the well kept secret is that most big business in the US is doing just fine… they simply are not hiring people because they don’t need to.

      So I highly doubt the financial problems of the Devil’s are at least directly related to the economy. Sounds a lot more like poor management, and big spending.

      • icelovinbrotha215 - Sep 12, 2011 at 10:36 PM

        What is one way they make money? Fans in the stands. What money do the fans spend to be in those seats? Disposable income. Are fans willing to spend more or less during a recession? Less. Of course it’s more ‘complex’ than ‘Eh, theres a recession going on.’ But if fans were more willing to come to games, their other ‘complex’ problems wouldn’t be problems at all. And most sports franchises don’t compare to most ‘big businesses’ in America. Why? Sport franchises are seasonal. And no to mention that more and more ‘big businesses’ are outsources their labor to ease up on their employment and tax expenses. That means less jobs for Americans. And remember: 70% of our economy is contingent on one thing, consumer spending. If one has no job, why would they want to go to a Devils’ game or any other sporting event? Don’t get it twisted my dude. The economy has a big part of why the Devils, and many other sport franchises, are struggling to make ends meet.

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