WHL seeks new owner for Winterhawks
The Western Hockey League issued a statement Sunday expressing optimism about the future of the Portland Winterhawks, despite news that the club is in receivership because of bankruptcy court filings in Portland and Toronto involving team owner Bill Gallacher.
Portland Winterhawks Inc. was among the Gallacher companies put into receivership on May 7 as part of chapter 15 bankruptcy filings in Portland and Toronto.
The WHL statement about the situation indicated the league is confident a new owner can be found that will keep the Winterhawks in Portland. President Doug Piper and Mike Johnston, Winterhawks vice president, general manager and head coach, remain employed by the club along with other executive staff.
Johnston on Monday declined to comment about the team's ownership or the receivership proceedings. When it issued its press release, the WHL indicated neither the league nor the Winterhawks would have further comment about the situation.
The Winterhawks are not bankrupt. The club was part of the collateral put up when Gallacher took out a $20 million (Canadian) loan from Toronto-based Bridging Finance. Chapter 15 is a United States bankruptcy tool used when the debtor has business in more than one country.
Court documents state that in November 2019, Gallacher told Bridging he would seek to sell the Winterhawks, among other assets, to repay the loan.
The court-appointed receiver — Toronto-based KSV Kaufman Inc. — states in court documents that the Winterhawks do not appear to have financial distress other than the club's involvement in the Bridging loan. The receiver states that the Winterhawks will continue normal operations (to the extent that normal operations are continuing in the current COVID-19 pandemic environment) in order to preserve the value of the franchise.
In part, the statement from the WHL reads:
"The WHL is working closely with the Receiver and the Winterhawks team management to ensure the smooth transition to new ownership in short order."
The WHL press release left it unclear what "short order" means, stating:
"The Winterhawks are a highly successful and valuable WHL franchise, and we expect that there will be a great deal of interest in obtaining ownership of the Club."
Gallacher, a Calgary businessman who has founded and managed companies that invest in the oil and energy sectors, bought the Winterhawks in October of 2008 when the team was at the bottom of the league. The club turned around under his ownership.
Though the Winterhawks club is not bankrupt, the news that the club is for sale under these circumstances has to send a shiver through the entire WHL. A major junior hockey league for players ages 16-20 looking to develop into professional players, the WHL relies on ticket sales for a significant percentage of revenue. The league canceled the last two weeks of the regular season and all of its playoffs because of COVID-19, costing clubs vital ticket sales and other revenue.
Portland was viewed as one of the best and most stable operations in the 22-team league. The Winterhawks averaged 5,540 fans per home game this season, fifth best in the league. Historically, attendance increases the deeper in the playoffs a team goes.
This season, despite having a young roster, Portland finished with the best record in the WHL, which ended prematurely because of the coronavirus. The Winterhawks looked like a team that could make a deep run in the 2020 playoffs.
Johnston said the club plans over the next month to start to bring back staff members furloughed because of the cancelation of the season.
Johnston said the league will closely follow what the NHL, NBA and other top leagues do when they return to play.
The WHL will not be able to return to business as usual until the Canada/United States border reopens. Most teams carry the two allotted European players, who will be unavailable until international travel restrictions are lifted.
Johnston joined the Winterhawks as coach/GM when Gallacher bought the club in October of 2008. He has been with the team for 10 of those 12 seasons, leaving in 2014 to coach the NHL's Pittsburgh Penguins and returning two seasons later.
Gallacher, who over the years has been described in reporting as a billionaire, hired a staff with National Hockey League experience, including Johnston. Gallacher invested in an extensive scouting department, and the Winterhawks regularly developed first-round NHL draft picks.
Between the 2010-11 and 2013-14 seasons, the Winterhawks played for the WHL championship four seasons in a row, winning the league title in 2013.
The rocky point of Gallacher's ownership came during that championship season. In November of 2012, the Winterhawks were sanctioned and Johnston suspended by the WHL for the remainder of that season after a league audit determined that the Winterhawks broke several rules, including paying for flights for the families of several players to visit Portland.
At the time, Gallacher and Johnston each said there was no intent to cheat and that the penalties — which included a $200,000 fine — were too harsh for the few violations confirmed through a league audit. Travis Green, now the head coach of the Vancouver Canucks in the NHL, served as interim head coach and general manager.
The Winterhawks have been in Portland since the 1976-77 season, when the franchise relocated from Edmonton, Alberta and became the first WHL franchise in the United States.
The team plays its home games in Veterans Memorial Coliseum and Moda Center and leases and manages the Winterhawks Skating Center in Southwest Portland. Rip City Management LLC, which is affiliated with the Trail Blazers and operates the Moda Center and coliseum, is among those listed as seeking relief through the chapter 15 process.
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