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THN.com Blog: Dallas ownership starting to resemble Phoenix situation

Despite the off-ice news, the Stars are off to a 4-0 start. (Photo by Andy Marlin/NHLI via Getty Images)

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Despite the off-ice news, the Stars are off to a 4-0 start. (Photo by Andy Marlin/NHLI via Getty Images)

The Dallas Stars went into their game Saturday night against the St. Louis Blues scoring more than four goals a game and with a shocking 3-0-0 record. Brad Richards was leading the league in scoring and goalie Kari Lehtonen was providing spectacular goaltending.

And in a market where attendance has been trending downward, the Stars attracted just 11,750 to the American Airlines Center, the smallest crowd for hockey the building has ever seen.

There is little doubt the Phoenix Coyotes and their lease/ownership situation has caused NHL commissioner Gary Bettman no shortage of sleepless nights, but the Stars are doing a pretty good job of keeping him up as well. In fact, when you consider the Stars were once the crown jewel of the NHL’s Sunbelt franchises compared to where they are today, Bettman must be downright depressed.

THN.com has learned the NHL has already had to front the Stars about $8 million in revenue sharing and league television money to help them pay the bills. And since there is essentially no owner – aside from the Monarch Investment Group and Galatioto Sports Partners, the two groups charged with ushering the sale of the Stars – the franchise has had to have its budget approved by the league and must receive league approval for all transactions.

While it’s not exactly as desperate as the Coyotes situation, there are some eerie parallels. You have two teams that have hit an all-time low in fan interest, both are for sale because the previous owners essentially ran out of money and threw the keys on the table, neither one is looking terribly attractive as an investment and both are relying on the league to prop them up in the short term.

Of the two, though, the Stars situation is far more discouraging. You could argue Phoenix has never really been an NHL market and the decision to put the arena in the Phoenix suburb of Glendale was an error of biblical proportions.

But the Stars were a different story. From the moment they arrived in Dallas in 1993, they’ve done almost everything right. It helped they won a Stanley Cup six years after they arrived, but the Stars were probably the most savvy and proactive franchise among those in non-hockey markets. Under the leadership of former president Jim Lites, the Stars immediately set about to developing grassroots opportunities in hockey by building rinks and establishing minor hockey programs that are beginning to produce legitimate NHL prospects. Last year’s rookie of the year, Tyler Myers, was born in suburban Dallas and got his start playing hockey there until he moved to Calgary when he was 10 years old.

Unlike the Coyotes, though, the Stars’ situation is probably not something that a contending team and solid, stable ownership wouldn’t cure. But therein lies the problem. As much as the NHL would have people believe the Stars are a precious commodity, there’s a reason why the sale has taken so long and the franchise is being funded by the two lenders and the league.

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If the Stars were worth buying at their asking price, they would have had a new owner by now. Instead, Calgary oilman Bill Gallacher decided to pull out of the bidding, leaving a group including Tom Gagliardi of Vancouver and some local investors as the leaders to get the team.

But the Gagliardi group is probably seeing the Stars’ financials and the losses they would have to absorb in the short term in order to get the team back on track and balking at the asking price. The NHL would like to believe the Stars are worth in the neighborhood of $300 million, but no buyer is going to pay anywhere near that in this economic climate.

When Gallacher was in the running for the team, sources told THN.com the final price would have been about $225 million and that price tag continues to be moving downward, perhaps as low as south of $200 million. The NHL has a vested interest in keeping franchise values high, which is why the initial asking price of the Stars was more than $300 million, but there is a built-in problem with that kind of thinking.

When prices of franchises are artificially inflated, as they were with the Stars, it tends to turn off the good potential owners, simply because good businessmen don’t overpay for anything. Bad businessmen do – and the league need to look no further than the Len Barrie/Oren Koules debacle in Tampa Bay for proof of that.

All of which is troubling, since NHL owners and prospective owners seemed at one time willing to live with the day-to-day losses if it meant they could recoup them later by selling the team at an inflated value. But it appears the market for doing that has essentially evaporated for teams that are not revenue-rich.

What does it all mean for the Stars and their attempts to extend Richards’ contract? It’s too early to tell, but you can bet that particular transaction won’t be finished until the team has a new owner.

Ken Campbell, author of the book Habs Heroes, is a senior writer for The Hockey News and a regular contributor to THN.com. His blog will appear every Monday throughout the season.

For more great profiles, news and views from the world of hockey, subscribe to The Hockey News magazine.

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