CXL - UPDATE 12/9 - Coyotes settle bills after unpaid taxes come to light

[gstommylee]

I think you’re confusing residential and retail leases. Unless Arizona is different, typically commercial leases can be ended if early termination conditions are reached, of course the lease will typically spell out these conditions, opportunities to cure, etc.

now, you can believe the city is just full of idiots with poor legal counsel that have no idea what they’re doing; I’m guessing that’s not the case.

its posturing they are trying to make the yotes be like meanings while basically screw them in trying to get a new building in tempe... THey want the team to agree to their demands of a 15-18 year lease and try to protray them as the only place they can play at.

This is a sports franchise with a lease agreement that ends in 4 months, unless the lease agreement say something that allows them to end it in the middle of the season if there are violations (i doubt it does why would any sports team agree to that) The city more or else probably still has to go through the courts cause if they try to terminate in the middle of the season that could be seen as a violation of the lease agreement in itself. A Sports franchise is also different than a retail business that has a lease to a building.

 

[Montrealer]

I’m not a lawyer, so I might be reading this wrong; but I think this states they can lock out the team as long as they commence legal proceedings at most 30 days *after* the commencement of the action itself.

33-361 - Violation of lease by tenant; right of landlord to reenter; summary action for recovery of premises; appeal; lien for unpaid rent; enforcement; notice and pleading requirements

 

[cutchemist42]

I'd like to say this is hate out of Canadian nationalist sentiment but I can;t disagree. It is a terrible planned city,

But you know, jobs. Texas is growing rapidly.

Believe me, I call out any city whether its Canadian or American when it comes to bad planning.

It's just literally Houston might be in the too5 for worst planned cities in NA and considering how big it is, I dont get it. Much better places to live in the USA let alone Texas. Just a terrible downtown.

 

[gstommylee]

I’m not a lawyer, so I might be reading this wrong; but I think this states they can lock out the team as long as they commence legal proceedings at most 30 days *after* the commencement of the action itself.

33-361 - Violation of lease by tenant; right of landlord to reenter; summary action for recovery of premises; appeal; lien for unpaid rent; enforcement; notice and pleading requirements

Even so that can still get them sued by the team for violating the lease agreement by doing that and the team can get an stay of action from the courts until the issue is decided the matter since the team is out of there in 4 months anyway.

The issue still remains is what does the lease say about what happens team is in volition like late payments rather its rent or if its bad taxes. Again both parties can be guilty of violating the lease.

Government can invoke it buy only the courts can enforce it and allow the city to end the lease early.

Its all more posturing.

 

[cutchemist42]

And if the league ends up paying it, what is Tempe going to think.

If he can't handle a bill less than 1.6 million, how will he finance a development about 1000 times that amount?

Yeah I wouldnt trust this guy at all, at this point. Just doesnt have enough to be part of the club. Hes the billionaire version of the middle-class guy trying to drive an SClass.

 

[Melrose Munch]

FoS is only trashing it cause of the 200m that guy basically says all arena deals must be 100% private or trash to an extent.

I use the term FoS (as in "full of....") for a good reason.

If you only look at the tax receipts from the games against the bond payments you will almost never show a win. However, no data source that I know of can trace every dollar spent by everyone attending the game. When I was in Cleveland every time a team from a city within driving distance came to town I would see thousands of people from out of town. Now what data source would track was 5-6K people from Detroit spent over the course of a 3 games series. Or 2K people who came from Toronto spent while in town for a Raptors game etc. How do you quantify the PR from having the Cavs in the finals 4 years in a row.

Sports teams are an amenity that people enjoy and make your city more desirable for many people to live in and yes the presence of major league sports do certify you as a "big city" I remember when Bud Adams died someone penned a column how the arrival of the Titans and Predators made Nashville an "it" city. Now 20 years later they got part of Amazon's HQ2 (5K jobs) would they have gotten that without the major league sports? I don't know but Austin had a lot going for it and they didn't make it.

As far as Glendale goes, if everything that was originally planned built at Westgate had happened the 180M for the arena wouldn't have been a bad deal.

I agree with this. The guy basically carved out a living bashing every sports deal ever and never factors in local dynamics. I got into it with him when Missouri was trying to keep the Rams and showed that the annual bond payments in what the state offered (it was like $12 million) was very small in terms of the states budget (like over $30 billion) and would have been covered by just income tax on Rams players. He argued that people spending money elsewhere would result in jobs generating income taxes. People going out to dinner and movies isn't going to generate that much payroll.

On your other point about Forbes being trash. I agree with that as well. Once the old man died it went downhill.

I have to admit I like the FoS website. His main idea, of course, is that every economic study which has been done neutrally suggests there is no economic benefit in the government agencies (state, city, etc....) building places to play for sports teams. *****(see footnote) The corollary to that is that there is obviously some other reason that city councils and state governments decide to build them, and of course, there is.....it's the emotional high that people get from feeling connected to the team that plays in their city, especially when that team is winning. It is obvious that this happens, because if some team which is usually middle of the pack has a couple of years of championship play, the ticket sales go up, the viewership goes up, and the memorabilia sales go up. The problem is, of course, that it is very difficult to quantify what that does for a community and weigh it against the cost of the team.

Footnote: What these studies miss, and what is the one place where they err, is in football. And, that is for reasons you describe. NFL is so huge nationally, with so much money coming from national broadcasts, that the kind of thing you describe does outweigh the costs. But I don't believe you can make the same argument for either NBA or MLB, and I know that is doesn't work for NHL.

In the particular case of Glendale.....
About 180M to build GRA
Approx 50M to NHL in the 2 years the league owned the team
Approx 20M to IA in the years of the 15MM/yr AMF
Approx 3M in the next year, when the AMF was 6M, but there were surcharges.

This makes ~250M dollars from the city to the team. Obviously there is no city income tax, so the city gets nothing from the players. The only thing the city gets back from this set up is sales tax on things which happen in the nearby development. The period we are discussing is from 2003 - 2018 or so, so let's call it 16 years. The city would have to get a return of about 15M a year on such sales taxes to make this work. Considering that attendance might average 15000, then yearly attendance might average 600K, that means that every fan through the door has to buy things that produce $25 of sales tax every night. If local sales tax is 3%, that means those people would have to be spending $800 each (including kids) on things besides tickets, every time they came to the arena. This is clearly not the case. Ergo, Glendale would be been better off not building.

The people who hate FOS are just mad that sports is being criticized. Reality that he is correct, spending tax money on sports shows almost no return. Frankly his site only shows bias towards the act, and not any city or region, which is a good thing. More of these deals should be private. People dislike these statements because of feelings, which is no way to evaluate things.

 

[gstommylee]

Yeah I wouldnt trust this guy at all, at this point. Just doesnt have enough to be part of the club. Hes the billionaire version of the middle-class guy trying to drive an SClass.

And how do you propose the league have the legally grounds to force him out with out violating federal laws.

 

[TheLegend]

And how do you propose the league have the legally grounds to force him out with out violating federal laws.

By his failing to pay taxes disrupting the operation of the league.

 

[JelloPuddyPops]

Then sue the darn team and the team/league will countersue.

both the city and team can be consider both guilty of breach of lease.

Go sign a lease to rent an apartment. Then fail to pay your rent. Watch what happens to you - you’ll get evicted. Good luck suing your landlord for “breach”! Hahahahaha

My goodness… you seriously don’t get it.

 

[Mightygoose]

If the league does have to take over the team again, how would this not be the end of the Tempe proposal?

They wouldn't have enough time to find a new owner who can complete the deal

 

[Rob]

Did the Coyotes every follow through on their lawsuit threat against Katie Strang? I'm guessing not.

 

[sh724]

There is going to be significantly more grey area here then many you are implying. If it was as basic of a dispute as the Yotes truly owe $1.6MM the league would no way ever allow it to get to the point where the city was threatening to kick the team out.

I am 100% sure there is much more to the story than what is being tweeted out. I am also 100% sure the team will not be locked out of the arena.

The tweet, to me, comes across as nothing more than the city generating negative publicity for the team. I wont claim to be a lawyer but i would assume there would have to be some sort of legal filing for this to happen, as the debt is "tax" debt which means the city is taking action to enforce tax law. Any legal filing would be publicly available, since no one has posted anything I am going to assume it does not exist.

As far as this "killing" the Tempe deal, again there is obviously going to be more to this than the Yotes being far enough behind on tax payments for action to be taken, as once again the league would not allow it to get to the point where legal action could be taken.

Lets wait for more info to come out before jumping to conclusions.

 

[sh724]

Go sign a lease to rent an apartment. Then fail to pay your rent. Watch what happens to you - you’ll get evicted. Good luck suing your landlord for “breach”! Hahahahaha

My goodness… you seriously don’t get it.

1) commercial real estate and residential real estate are two very different things
2) the tweet doesnt say anything about failure to pay rent, it says tax payments, which is not the same thing as rent.

 

[MNNumbers]

Even so that can still get them sued by the team for violating the lease agreement by doing that and the team can get an stay of action from the courts until the issue is decided the matter since the team is out of there in 4 months anyway.

The issue still remains is what does the lease say about what happens team is in volition like late payments rather its rent or if its bad taxes. Again both parties can be guilty of violating the lease.

Government can invoke it buy only the courts can enforce it and allow the city to end the lease early.

Its all more posturing.

If I am reading this right, they are NOT evicting the team. In other words, they are not canceling the lease. They are canceling their license to do business. City law give them the right to do that, and from what I have read, there is no grey area about that.

Once the license to do business is revoked, then there is no legal standing for the team at the arena.

 

[gstommylee]

Go sign a lease to rent an apartment. Then fail to pay your rent. Watch what happens to you - you’ll get evicted. Good luck suing your landlord for “breach”! Hahahahaha

My goodness… you seriously don’t get it.

Btw like i stated the house across the street where i live used to be a rental house and the homeowner had to get the courts approval to actually kick the renter out. The former homeowner couldn't do it himself and force renter out.

 

[Kryten]

Did the Coyotes every follow through on their lawsuit threat against Katie Strang? I'm guessing not.

If they cant afford to pay taxes and leases they certainly cant afford lawyers in a losing case

 

[Acesolid]

Two more weeks :^)

Time is a flat circle.

But to be honest, I'm not that surprised. By all accounts the new management of the Coyotes are like Antonio Brown when it comes to refusing to pay people in a pennypinching way that leads to a lot more trouble.

That's embarassing for the team and the league.

The Coyotes players on the 21st:

 

[Gotaf7]

Btw like i stated the house across the street where i live used to be a rental house and the homeowner had to get the courts approval to actually kick the renter out. The former homeowner couldn't do it himself and force renter out.

Like you have been told multiple times in the last hour, residential leases are not the same as commercial business leases! Stop foaming at the mouth like a rabid dog and do some research FFS!

 

[MNNumbers]

I think that there are a lot of reasons now to say that Glendale is not bluffing. The relationship between them and the team is shattered.

From Glendale's standpoint:
IA under LeBlanc: Slow to pay ticket surcharges and other lease fees
Barroway: More of the same
Meruelo: We know about this.

If the COG decide it isn't worth the headache, then who can blame them. There is no going back to Glendale.

Next: Is there any rescuing Meruelo? I doubt it. If the league has to pay his tax bills, he is done. Even if he steps up and pays them, for the huge black eye he just gave the league, he is likely done.

Next: What does that do to Tempe? Well, since Bluebird (LLC - the corporation which responded to the RFP) would effectively be defunct, then the Tempe arena is done, too.

Wow. That's all I can say. Wow.

 

[MNNumbers]

Nothing from Bettman, or from the Coyotes.

This is bad. Very bad.

Even in 2015, when Glendale canceled their lease, Bettman and the team responded immediately.

 

[Acesolid]

Nothing from Bettman, or from the Coyotes.

This is bad. Very bad.

Even in 2015, when Glendale canceled their lease, Bettman and the team responded immediately.

I think tomorrow morning we might have an official statement... but what can they say?

Saying "the check's in the mail" ain't exactly an option.

 

[MNNumbers]

I think tomorrow morning we might have an official statement... but what can they say?

Saying "the check's in the mail" ain't exactly an option.

I'm thinking that there is a very serious conversation taking place between Bettman and Meruelo right now.

As I mentioned above, it seems almost impossible for him to remain as owner. The optics of that would be terrible. And, if he disappears, the Tempe situation disappears, too, because his company is on it.

That would seem to mean the end in Phoenix.

It's not problem for the league to pay the bill. But paying the bill doesn't fix the situation.

There could be big plans being made, right now.

 

[Gotaf7]

Feels very similar to the Thrasher situation.

 

[Acesolid]

I'm thinking that there is a very serious conversation taking place between Bettman and Meruelo right now.

As I mentioned above, it seems almost impossible for him to remain as owner. The optics of that would be terrible. And, if he disappears, the Tempe situation disappears, too, because his company is on it.

That would seem to mean the end in Phoenix.

It's not problem for the league to pay the bill. But paying the bill doesn't fix the situation.

There could be big plans being made, right now.

I think the NHL will look for some band-aid "solution" to pay the City and shut everyone up until the Season ends.

Giving the League some time to figure out a new scheme to try to get out of this mess.

But... like... this is probably the worst moment for the franchise since the bankruptcy a lifetime (it seems) ago.

 

[Toodles1980]

So, it doesn’t look like it’s a lease issue. If this article is correct, the state is going to revoke their business license,
“A notice was sent to ASM, the Gila Arena Management company, and Gutierrez about the cancellation of the team's business license. Arizona has a 10-day appeal process available for why their business license should not be revoked, but the city is giving them an extra two days, the sources said.” Sources: Coyotes face arena lockout for back bills
I have no idea how business licenses are handled in Arizona, but I would guess that since all licenses are handled statutorily, the city feels they’re on solid ground to revoke it, or at least threaten to.

My suspicion is, that once the license is revoked, the lease is more easily voided, because there is (I’m willing to bet) at the very least a clause requiring a business license to operate the arena. Heck, the lease may be void because one party to the lease (ASM) would no longer exists, thus no lease can exist.

I’d also bet good money this’ll get squared up before December 20, and I have no idea of the effects on the Coyotes long term, but this is a bad look for the NHL.