Hicks loaned $85M to ownership group
DALLAS -- Dallas Stars owner Tom Hicks discussed the team's financial difficulties and other details in his first public comments since Hicks Sports Group announced it was exploring a possible sale of the club.
Among the things Hicks, joined by Stars president Jeff Cogen and general manager Joe Nieuwendyk, told reporters Monday:
- Hicks lent $85 million of his money to Hicks Sports Group, which owns the Stars and Texas Rangers, over a two-year period that ended March 31, 2009, when HSG defaulted on $525 million in loans.
- A sale of the Stars could be completed within six months, and the team has an agreement with American Airlines Center that prevents it from being moved.
- The Stars will reduce ticket prices next season for lower-bowl seats between the blue lines.
- The team can be successful under its current budget, and fans shouldn't expect a new owner to increase the payroll.
It's not something to infer to the fans that once we get a flush owner we're going back to the cap. The only reason a guy would do that is because he wanted to win so bad he was uneconomical. I've done that. I know how that works.” -- Stars owner Tom Hicks, on keeping the team's payroll below the salary cap
Hicks, who hired Galatioto Sports Partners last week to search for new owners for the Stars, said Monday he is willing to sell a majority stake in the club. The AHL's Texas Stars and their arena in Cedar Park, which are owned by Hicks' six children, also could wind up as part of a deal, Hicks said.
Hicks said HSG, which also owns 50 percent of American Airlines Center, must monetize the Stars in order to pay back its loans. It's the same reason HSG has an agreement in place to sell the Rangers to a group led by Chuck Greenberg and Nolan Ryan.
Hicks said the timeline for that sale's completion is around Opening Day, assuming HSG's 40 lenders and Major League Baseball approve the deal. Hicks reiterated that his investment in Liverpool Football Club, which is not a part of HSG, is unrelated to the Stars or Rangers.
"We wanted to do the Rangers first and then understand how much needed to be done with the Stars," said Hicks, who added that his personal financial situation, which is separate from HSG, is stable.
"That's where we are. I don't know if I'm going to be involved. My children may be involved. We are starting to look at all the options. I think hockey has a smaller universe of interested investors than baseball has, so our advisers will be trying to find the most interest they can find."
Cogen, calling the club "the pride of the NHL Sunbelt" despite its current state, explained why the Stars won't be leaving Dallas if a sale is completed.
"We have a non-relocation agreement with American Airlines Center that trumps almost every agreement we have," Cogen said. "The Dallas Stars are not going anywhere."
Hicks said what the hockey team is spending now -- about $50 million in terms of the salary cap hit (about $45 million in cash) -- is likely to be the average in the NHL in a few years. Hicks said the team is losing money at that budget because revenues, including ticket sales and suites, have dropped.
He said teams "south of Pennsylvania" have figured out that if they spend to the $56.8 million salary cap, they will lose money. Five Sunbelt teams (Los Angeles, Anaheim, San Jose, Florida and Carolina) are spending at least $54.5 million in salary cap money this season.
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Hicks said a new owner will discover the same thing and, therefore, isn't likely to increase spending.
"If he goes to the cap, it will all come out of his pocket," Hicks said. "We are losing money where we are now. It's not something to infer to the fans that once we get a flush owner we're going back to the cap. The only reason a guy would do that is because he wanted to win so bad he was uneconomical. I've done that. I know how that works."
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Hicks said the Stars were No. 1 in the NHL in total revenue in 2002, with Colorado No. 2. He said the Stars are now No. 19 with Colorado right behind them. Cogen added that after the club went to the Western Conference Finals in 2008, the team sold 2,000 more season tickets. But when the Stars missed the playoffs in 2009, they were only able to retain 25 percent of those sales.
The declining numbers are one reason Cogen rolled back prices for season-ticket holders in the upper level two years ago and the end zones of the lower bowl last year. He'll add the premium seats in between the blue lines for next season.
"We believe the team plays better in a full building," Cogen said. "Our No. 1 job is to be playing games in May and June, and that's what we're focused on."
In the meantime, Nieuwendyk will focus on building a team around a young core. Hicks said he brought in Nieuwendyk last summer because he felt the hockey operations side was "not advancing the way we needed too" the last few years.
"I felt like we needed our equivalent of what [general manager] Jon Daniels and [team president] Nolan [Ryan] were doing to the Rangers," Hicks said. "We needed new energy, new insight to build the right team with the right character."
Nieuwendyk wants a team with the likes of Jamie Benn, Stephane Robidas, Loui Eriksson and James Neal steadily improving and becoming the foundation of future success. He'll then add pieces where he can, much like Daniels has tried to do with the Rangers.
"You have to draft well, develop on your own and move forward that way," Nieuwendyk said. "I think we can be competitive that way."