This is the first story by Michael E. Jafari for the Business of Sports Network. Look for his articles across our sites, especially here on BizofHockey.com and BizofFootball.com. Please welcome him - Maury Brown
The NHL has more financially struggling franchises to join the New York Islanders and the Phoenix Coyotes. The NY Post has reported that the New Jersey Devils defaulted on a $100 million loan payment that was due on September 1.The report goes on to say that the default could open the door for lenders to “push the team into bankruptcy”.
Trouble has followed the franchise ever since they moved into the brand new Prudential Center in 2007.The Devils, who were estimated to be worth $218 million in the latest Forbes evaluation of the NHL franchises, have declining attendance and unpaid loans related to the building of the team’s new home.
In addition to their arena woes, part-owner Ray Chambers has sought out to sell his 47% share of the team for the past year, after an apparent fall-out with principal owner, Jeff Vanderbeek. Fallout, or not, that appears to be the case today as The Post is reporting that Vanderbeek has agreed to buy out Chambers’ stake.
The team’s financial troubles leave many doubts within the franchise. One of those questions will be the futures of star forward Zach Parise and soon-to-be hall of fame goaltender Martin Brodeur. Parise signed a one-year $6 million deal with the team in the offseason, but their 2003 first round draft pick will be an unrestricted free agent, and now the hopes of resigning their homegrown star looks grim. Brodeur’s contract also expires with the club in the offseason, and at a cap hit of over $5 million, it seems to make the most sense for the Devils to part ways with the 39-year-old. However, the divorce won’t come easy, and it could make an impact on the franchise, since Brodeur is a four-time Vezina trophy winner and led New Jersey to its three Stanley Cup victories in 1995, 2000, and 2003.
New Jersey didn’t appear to be a team under financial scrutiny in the summer of 2010, after the team signed star forward Ilya Kovalchuk to a whopping 15-year $100 million contract.The original deal was a 17-year deal worth $102 million, but the deal was nixed by the NHL due to that fact that the league accused the Devils of circumventing the league’s salary cap.If the team were to lose the legendary Brodeur and/or the young star in Parise, how can the franchise justify Kovalchuk’s contract to their fan base?
There are ways the Devils can increase their revenue and make them an attractive franchise again.The team finished with a horrendous 38-39-5 record and missed the playoffs for the first time since the 1995-1996 seasons.Despite the record, the team made a late-season run going 26-7-3 to end the season.If they start the season the same way they ended it, then perhaps the better team can increase attendance.
Another way they could increase their revenue is to make appropriate upgrades to their uniforms. The Devils haven’t made any uniform alterations since 1992, when they dropped the green from the uniform. The team could also create an alternate jersey, which would drum up jersey and t-shirt sales.
It would be a travesty if the NHL lost a team that was essentially a dynasty in the late 90’s and captured three Stanley Cup championships. It would be an even bigger shame for the New York City area, as the epic-rivalry between the Devils and Rangers brought hockey back to life in the Big Apple.
Michael E. Jafari is a contributing writer for the Business of Sports Network. He can be reached on Twitter @mikejafari