The Buffalo Sabres filed for bankruptcy protection yesterday, becoming the second NHL team to seek protection from creditors in the past week and the third since 1998.
The Ottawa Senators, one of the NHL's best teams this season, filed for bankruptcy protection in Canada last Thursday.
"This filing is another step toward the resolution of Buffalo's issues," said NHL Commissioner Gary Bettman. "It will enable the Sabres to secure financing that will allow them to continue to operate in the ordinary course, subject to league supervision, while the sale process is completed."
Bettman said yesterday that Buffalo and Ottawa were isolated cases, but he said that the league's economic model is broken and that several other NHL teams are facing financial difficulty. No other bankruptcies are on the horizon, he said.
The Sabres have had a rough time both on and off the ice. They are in last place in the Northeast Division with only 12 wins. As of last week, the Sabres were averaging more than 12,000 tickets sold per game, down 25 percent from last year, according to Street & Smith's Sports Business Journal.
The Sabres came under control of the NHL last year after the financial collapse of the Rigas family, whose Pennsylvania-based cable television company, Adelphia Communications Corp., is itself under bankruptcy protection. Family patriarch John Rigas and his two sons have been charged with conspiracy for allegedly looting the cable TV provider.
Adelphia is the Sabres' largest creditor, listing a $130 million claim, according to the Associated Press. The money was used by Rigas to help purchase and operate the franchise.
Bettman said yesterday's bankruptcy filing is designed to ensure that the team will finish out the season in Buffalo, that employees and players are paid and that a smooth transition to new owners occurs.
Buffalo businessmen Mark Hamister and Todd Berman are attempting to put a plan together to buy the Sabres, and last Friday they were granted a second, one-week extension from the NHL to secure the purchase of the team.
The Senators, despite being second in the NHL in points, are $225 million in debt. Ottawa missed its payroll Jan. 1 after a financial restructuring deal fell through. Covanta Energy Corp., formerly Ogden, was the owner of the arena but declared bankruptcy. Its owner, Rod Bryden, is attempting to purchase the team.
The two recent bankruptcy filings are the first bankruptcies by a major North American sports team since the Pittsburgh Penguins filed in 1998. The Penguins were rescued by Hall of Famer Mario Lemieux.