Chartwell Investments decided to skate out of the face-off circle, abandoning its bid to acquire the Buffalo Sabres hockey franchise, as the buying group’s efforts to procure a $33 million assistance package from the State of New York never came through. The firm, along with minority investor Mark Hamister, had worked out a deal in November to acquire the National Hockey League team for between $60 million and $65 million.
“After months of talking, and with a weakening economic climate, the government assistance that we said we needed is not forthcoming,” Chartwell said in a statement. “The lack of government assistance has greatly reduced the attractiveness of this investment in keeping with our traditional investment goals.” A source that was closely involved also noted that there were “complexities from the Adelphia [Communications] bankruptcy,” although it was the lack of assistance that ultimately scuttled the deal.
The NHL has controlled the troubled franchise since last June, following former owner John Rigas’s indictment on fraud charges. In January, the team filed for bankruptcy protection, with a debt load of over $206 million, including a $130 million claim from Adelphia Communications, Rigas’s former company. The bankruptcy filing allows the Sabres to renegotiate its existing concession and arena labor contracts and opens the door for a possible move out of Buffalo.
The NHL has been beset with financial issues of late, with some teams struggling to pay their players. In addition to the Sabres, the Ottawa Senators are also under bankruptcy protection, joining the other 16 teams out of the league’s 30 that are unprofitable, according to estimates printed in Forbes. The St. Louis Blues lost $43.1 million in the 2001-2002 season, while the Los Angeles Kings and the Florida Panthers reported losses of $6.5 million and $17.5 million, respectively, last year.
The NHL had granted the buying group four extensions to finalize the purchase of the Sabres, but soon after the final extension had expired, Chartwell conceded in its press release, “The time for making this deal has lapsed.”
Had the government assistance come through, the money would have gone toward $10 million in capital improvements around HSBC Arena, as well as the refinancing of a $22.9 million loan from when the rink was built. One source close to the situation pointed out that HSBC Arena is owned by the city, county and state, and without a team to play in it, the government would have to pay $8 million a year just to keep up the maintenance. However, the NHL is not alone in a cash crunch, and the source added that the state of the economy certainly didn’t help things. Indeed, New York is projecting a budget gap of $12 billion, which likely led to the state’s inaction regarding the assistance.
Mark Hamister has said he is still interested in pursuing a purchase for the Sabres, yet he is currently without financial backing. Tom Golisano, who flashed his money during a failed campaign to become governor of New York, was in the initial bidding for the Sabres and has expressed interest again. There have also been rumors that the team could be bought by another party and moved, while a worst-case scenario has the team being contracted (and hence disbanded) amid the league’s difficulties.
The collective bargaining agreement the NHL has with the National Hockey League Players’ Association is set to expire in September 2004. While, a new, owner-friendly arrangement could draw potential buyers’ interest, the specter that there could be a work stoppage once the contract expires is scaring off other possible suitors. A recent survey conducted by The Hockey News, polling one player from each team, revealed that 23 of the 30 surveyed believe there will be a work stoppage.