Cedar Park will see Stars soon

Cedar Park will see Stars soon

By Robert Bell Friday, 15 May 2009

A group of lenders recently declared Tom Hicks — who owns Hicks Sports Group, the Texas Rangers, the Dallas Stars and who is also a partner with Cedar Park on the Cedar Park Center — in default for missing an interest payment on loans of more than $500 million. But the action will not have an effect on the construction of the Cedar Park Center.

On March 31, Tom Hicks, a Dallas-based investor whose Hicks Sports Group owns the Texas Rangers, Dallas Stars and who is also a partner with Cedar Park on the Cedar Park Center, missed a quarterly interest payment on loans of more than $500 million.

Though the lenders declared Hicks in default April 6, the billionaire’s loan issues will not affect the completion of the Cedar Park Center.

Hicks missed the payment in an effort to renegotiate some of the loan terms with a group of lenders, he said in a press release.

“We are simply asking the lenders to be reasonable, and they need to understand that these important assets must be managed with a long-term perspective and a commitment to winning,” Hicks said in the statement.

Hicks partnered with Cedar Park on the Cedar Park Center, the $55 million stadium where the Texas Stars — the American Hockey League affiliate of the Dallas Stars — hit the ice this fall.

But the loans in question are separate from Hicks Cedar Park LLC, the holding company he formed to partner with the city. And his financial obligation in the deal — $12 million — was already in an escrow account before the city issued bonds to raise its $43 million share for the CPC, said Phil Brewer, economic development director for the city.

“Everything is moving fast and moving forward,” Brewer said.

Rick McLaughlin, Texas Stars president and general manager for the CPC, echoed that assessment.

“Everything is on schedule, and on budget,” McLaughlin said. “We anticipate moving into the center somewhere around Sept. 1 in order to get organized so that we can have our first event on Sept. 26.”

The Texas Stars also got the official blessing of the AHL April 28, when the board of governors for the organization granted a limited membership to HCP LLC to allow the operation of the team for the 2009-2010 season.

Major acquisitions

HSG’s loan problems highlight the extent of difficulties caused by the ongoing credit crunch. Hicks is no stranger to large amounts of debt. As a private equity investor, Hicks initially made his fortune on heavily leveraged transactions.

He bought the Dallas Stars in 1996 and the Texas Rangers in 1998, and owns 50 percent of Center Operating Company, the group that manages and leases the American Airlines Center, which is home to the Dallas Stars and the Dallas Mavericks.

His other business ventures include stakes in Liverpool FC — a soccer team in England’s Premiership League — as well as numerous real estate investments around the United States. In 2008, Forbes magazine ranked Hicks number 355 on its list of the world’s 400 richest Americans, with an estimated net worth of $1.4 billion.

A spokesman for HSG declined to comment to Community Impact Newspaper on anything related to the recent loan issues. According to an April 14 story in the Wall Street Journal, the default notice triggered a process that could put the banks in control of the Dallas Stars and the Rangers. However, that wouldn’t happen until October at the earliest because of agreements between the lenders and the National Hockey League, which prevent immediate foreclosure on teams, according to the Journal story.

In April, Hicks told the Associated Press he was looking for limited partners to purchase stakes of up to 49 percent of the two teams.

Contractual obligations

When the city was negotiating with Hicks for the Cedar Park Center, there were safeguards put in place to protect the city. One of these was that Hicks would put $12 million into an escrow account. That money was deposited before the city went to the bond market to raise its share, Brewer said.

Another part of the contract stipulates that if HCP LLC does not have an AHL team playing in the center by the start of the 2010-2011 season, it will be in default and owe the city $5 million, Brewer said.

The recent announcement that the Texas Stars were given a limited membership by the AHL alleviates concerns about securing a tenant for the center.

CPC progress

The status of the Texas Stars’ AHL membership is conditional, based on HCP LLC purchasing a franchise within the next year. The AHL has 30 franchises, of which 29 are active. Because the AHL is not looking to add new teams, the Stars must purchase an existing franchise.

“We were in negotiations with several teams, and we just couldn’t complete the purchase. We ran out of time,” McLaughlin said.

“The AHL had to get this date certain so they could start to schedule for 2009-2010. There are a lot of things that require them knowing who’s in and who’s out, so they granted us this limited membership, with the stipulation that we would buy a team within the next 12 months,” he said.

McLaughlin expects to resume negotiations with those teams in early May, adding that he is very optimistic about the process.

“There are teams willing to sell and we just need to close on one of those teams,” McLaughlin said.

Other signs of progress at the CPC include corporate sponsorships and pending deals with ticketing companies and vendors.

Some of the major sponsors include Cedar Park Regional Medical Center, Intel, State Farm Insurance, Anheuser-Busch and Brown Distributing Co. The CPC is also in negotiations with Dell [Inc.] and Microsoft, he said.

So far, season ticket sales have been strong, with about 1,000 sold as of late April, generating more than $1 million in revenue, McLaughlin said.

“We would love to sell out the majority of our building with season tickets,” he said. “I don’t think we’re going to quite be there, so there will be plenty of seats available on days of the game.”

McLaughlin’s goal is to sell about 3,000 season ticket packages, so the team is currently at about a third of its goal. Contracts for luxury suites are also about a third of the way sold. There are 18 suites, and about six have been spoken for as of late April.

“We’re pretty pleased with where we are so far,” he said.