CXLI - UPDATE 1/27 - Coyotes working on deal to play at 5,000-seat arena at ASU

[gstommylee]

We're way down the rabbit hole now, but why wouldn't the league already be looking for such an expansion one-off now? Maybe they are.

Maybe they are fine with 32 teams...

 

[voyageur]

$750 million was the announced number in the 2022 Money & Power issue of the Hockey News that Graham Roustan said is the minimum franchise value that Gary Bettman would accept for any small market team in the NHL right now.

That number is truly insane when you look at it.

Think that an expansion team from 1990-1992 was worth $50 million. The next round of expansion came at $80 million.

Over a decade passed and the price of the Thrashers was $110 million, plus $60 million relocation fees.

Expansion in 2016 was $500 million, and 2018 $650 million.

What changed in the last decade?

NBC TV deal in 2011, Rogers in 2013, and the newest TV deal in the U.S added revenues unquestionably.

The two newest teams add brand value.

But it seems to be a power play by the NHL, riding off purchases like Steve Ballmer's Clippers acquistion. I can't see any other way a pro sports league sees its bottom franchise value jump almost 7X in just over a decade. Compared with previous rates of inflation that's absurd. It's crazy enough that Jets are worth 5X more than their orginal purchase price. And someone is saying that they are worth even more.

Meruelo is laughing if he can turn a $450 million purchase into $750 million in 3 years, by making payroll, tax payments, and debt payments on it. Maybe that does justify financing a new arena, and selling off shares in the process.

 

[Ciao]

I would never count the Coyotes out in terms of staying in Arizona. It's like Die Hard. You can't kill them, no matter the odds.

 

[MNNumbers]

Maybe they are fine with 32 teams...

I happen to think you are right.

However, the poster I was answering was discussing a situation in which PHX>>QUE and then the NHL offered Houston a one-off. Clearly, that situation was not a 'fine with 32 teams' situation.

 

[Melrose Munch]

Quebec will not make the NHL more money nor would it actually increase the canadain tv deal. Its also a smaller market compared to arizona and houston in terms of population.

Can we stop acting like the NHL owes Quebec anything. Also lets not acting like Houston will low ball the NHL you don't know that. No team has actually been actually available on the movable market since the thrashers.

Its the comissioners job to make the league grow in revenue and viewership. Quebec isn't going to increase the league's overall revenue and its potential viewership growth is limited. Quebec again is not that huge of a canadian market.

It would on a temporary basis. But that is not what the league is looking for.

 

[TheGreenTBer]

I would never count the Coyotes out in terms of staying in Arizona. It's like Die Hard. You can't kill them, no matter the odds.

Yeah I still almost think Tempe goes through and I have no idea why. I have no evidence or educated opinion, just a feeling, but I still kind of think it works out.

I do think they really are legitimately out of options if Tempe doesn't work though.

 

[aqib]

Yes. That was me. It would have to be private if it's in Houston, or in Harris County. That is in the lease. No county or city money going to help with that.

If you go where the money is, then you have to go toward The Woodlands. There is lots of good money there (I'm around there a lot), so selling high value tickets would not be a problem. However, I don't know if there any governmental agency in Montgomery County that would have the money to support something like that. That means it has to be private there as well.

On the positive side of Montgomery County is that there is plenty of land nearby to The Woodlands, so a site would not be an issue. It's an intriguing idea.

I'm not sure. But you must be looking at an idea like:
Person A buys the team, and moves to Houston, and rents from Fertitta. Obviously that means heavy losses in the first few years.
Person A would likely not do this without a clear idea in Montgomery County. So, you are asking that someone does this:

1- Work behind the scenes to get some kind of an idea for a private arena in Montgomery County.
2- Once you do that, you start talking about buying the team.

That's an intriguing idea.

So I'm curious why every scenario in Houston has Meruelo selling? Why couldn't he move the team to Houston, rent from Fertilla for a couple of years while building an arena in Montgomery County. Someone (might have been you) posted the Toyota Center lease on a previous thread which showed he has to allow an NHL team. So here are the considerations I see:

1) the NHL team would only be getting game day revenues while they are a tenant in the arena but that's the situation they are in currently in Glendale and would be in any temporary arena in Arizona. In Houston they would have the attendance bump and higher price points during the honeymoon period.

2) The temporary tenant period would be shorter because if there is land available he could start construction sooner and not have to wait for land to be cleaned

3) He would be out of pocket for an arena but if he would be willing to do that in Tempe why not Woodlands?

4) While he would be the second arena in the Houston area that might be better than being 3rd in Phoenix.

 

[Mightygoose]

So I'm curious why every scenario in Houston has Meruelo selling? Why couldn't he move the team to Houston, rent from Fertilla for a couple of years while building an arena in Montgomery County. Someone (might have been you) posted the Toyota Center lease on a previous thread which showed he has to allow an NHL team. So here are the considerations I see:

1) the NHL team would only be getting game day revenues while they are a tenant in the arena but that's the situation they are in currently in Glendale and would be in any temporary arena in Arizona. In Houston they would have the attendance bump and higher price points during the honeymoon period.

2) The temporary tenant period would be shorter because if there is land available he could start construction sooner and not have to wait for land to be cleaned

3) He would be out of pocket for an arena but if he would be willing to do that in Tempe why not Woodlands?

4) While he would be the second arena in the Houston area that might be better than being 3rd in Phoenix.

There are 2 major issues with Meruleo setting up shop in the Toyota Center while a new arena is being built.

One is being a tennant he would have very little to no access of revenue outside of game day. True there will be a bump at the gate based on the newness, there was at then America West Arena too but it wasn't viable. The wait for a new building would be longer than waiting in Tempe.


The other is, if Fertitta is not involved then the NHL team is a competitor as would a another building in the region. What would be the incentive for Fertitta in giving Meruelo a short term home?

 

[MNNumbers]

There are 2 major issues with Meruleo setting up shop in the Toyota Center while a new arena is being built.

One is being a tennant he would have very little to no access of revenue outside of game day. True there will be a bump at the gate based on the newness, there was at then America West Arena too but it wasn't viable. The wait for a new building would be longer than waiting in Tempe.


The other is, if Fertitta is not involved then the NHL team is a competitor as would a another building in the region. What would be the incentive for Fertitta in giving Meruelo a short term home?

I agree. Basically, no matter what market you are in, the temporary arena situation is a big problem.

 

[aqib]

There are 2 major issues with Meruleo setting up shop in the Toyota Center while a new arena is being built.

One is being a tennant he would have very little to no access of revenue outside of game day. True there will be a bump at the gate based on the newness, there was at then America West Arena too but it wasn't viable. The wait for a new building would be longer than waiting in Tempe.


The other is, if Fertitta is not involved then the NHL team is a competitor as would a another building in the region. What would be the incentive for Fertitta in giving Meruelo a short term home?

1) He has no access to revenues outside of game day now and won't in any of the temporary arena situations in Phoenix either. So at worse its a wash.

2) Why would the wait for a new building be longer in the Houston area then Tempe? The Tempe site needs to be vacated then environmental remediation needs to happen before he can start building

3) If I read the lease correctly (it was posted on a previous thread) there was a clause allowing for an NHL team to come to the arena. Fertitta doesn't have "veto" over that.

 

[Mightygoose]

1) He has no access to revenues outside of game day now and won't in any of the temporary arena situations in Phoenix either. So at worse its a wash.

2) Why would the wait for a new building be longer in the Houston area then Tempe? The Tempe site needs to be vacated then environmental remediation needs to happen before he can start building

3) If I read the lease correctly (it was posted on a previous thread) there was a clause allowing for an NHL team to come to the arena. Fertitta doesn't have "veto" over that.

Point 1: Agreed it would be a wash but still a wash in significant red ink

Re point 2: Is there a new building being planned in greater Houston? Unless there is that alone makes it a longer wait. Even if Tempe fails it's still more advanced.

I'm not sure if it's much of a veto as much as there's wouldn't be a good economic case for either party. Has anyone tried to be tenant there before?

 

[TheLegend]

I agree. Basically, no matter what market you are in, the temporary arena situation is a big problem.

He may already have that part resolved in Arizona. We just won’t know about it until something happens with Tempe. Because it all hinges on that.

 

[WeaponOfChoice]

It seems like his imposter syndrome was correct

 

[MNNumbers]

He may already have that part resolved in Arizona. We just won’t know about it until something happens with Tempe. Because it all hinges on that.

I wasn't referring to 'finding one'. I was answering about the situation in Houston - in which the proposal was to build in The Woodlands, but you need a temp situation in order to do that.

Meruelo might well have a temp situation, but it's going to be a costly one. "Costly' in the sense that there won't be a lot of seats, and won't be a lot of high end seats, and as a result he will lose big money while he waits for his arena.

 

[patnyrnyg]

Quebec will not make the NHL more money nor would it actually increase the canadain tv deal. Its also a smaller market compared to arizona and houston in terms of population.

Can we stop acting like the NHL owes Quebec anything. Also lets not acting like Houston will low ball the NHL you don't know that. No team has actually been actually available on the movable market since the thrashers.

Its the comissioners job to make the league grow in revenue and viewership. Quebec isn't going to increase the league's overall revenue and its potential viewership growth is limited. Quebec again is not that huge of a canadian market.

Aside from that, how many people in the Quebec Metro area are currently not watching the NHL who would all of a sudden start if the NHL returned to the area? I am sure there are some, but I don't think it is as many as most think.

 

[patnyrnyg]

That number is truly insane when you look at it.

Think that an expansion team from 1990-1992 was worth $50 million. The next round of expansion came at $80 million.

Over a decade passed and the price of the Thrashers was $110 million, plus $60 million relocation fees.

Expansion in 2016 was $500 million, and 2018 $650 million.

What changed in the last decade?

NBC TV deal in 2011, Rogers in 2013, and the newest TV deal in the U.S added revenues unquestionably.

The two newest teams add brand value.

But it seems to be a power play by the NHL, riding off purchases like Steve Ballmer's Clippers acquistion. I can't see any other way a pro sports league sees its bottom franchise value jump almost 7X in just over a decade. Compared with previous rates of inflation that's absurd. It's crazy enough that Jets are worth 5X more than their orginal purchase price. And someone is saying that they are worth even more.

Meruelo is laughing if he can turn a $450 million purchase into $750 million in 3 years, by making payroll, tax payments, and debt payments on it. Maybe that does justify financing a new arena, and selling off shares in the process.

It is not just the NHL. Once Ballmer bought the Clippers for that ridiculous price, the franchise "values" sky rocketed across the league. However, values on paper are meaningless unless someone is willing to pay that much. Fertita is not interested in buying at that price to bring to Houston. Th question becomes who is willing and can?

 

[powerstuck]

That number is truly insane when you look at it.

Think that an expansion team from 1990-1992 was worth $50 million. The next round of expansion came at $80 million.

Over a decade passed and the price of the Thrashers was $110 million, plus $60 million relocation fees.

Expansion in 2016 was $500 million, and 2018 $650 million.

What changed in the last decade?

NBC TV deal in 2011, Rogers in 2013, and the newest TV deal in the U.S added revenues unquestionably.

The two newest teams add brand value.

But it seems to be a power play by the NHL, riding off purchases like Steve Ballmer's Clippers acquistion. I can't see any other way a pro sports league sees its bottom franchise value jump almost 7X in just over a decade. Compared with previous rates of inflation that's absurd. It's crazy enough that Jets are worth 5X more than their orginal purchase price. And someone is saying that they are worth even more.

Meruelo is laughing if he can turn a $450 million purchase into $750 million in 3 years, by making payroll, tax payments, and debt payments on it. Maybe that does justify financing a new arena, and selling off shares in the process.

One thing that happened if Steve Ballmer and the Clippers. It's out of question that the team was worth that much, it wasn't but Ballmer had the cash and didn't care to spend it (kinda look at me, I am so rich I don't care if I pay too much).

Every league and owner of the team suddenly realized they could ask the moon for their own equite. And, sometimes it works (Vegas and Seattle).

I mean, last expansion was over 16 years before Vegas joined the league, a lot of things worldwide happened to ''justify'' the jump from less than 100M a team to 500M.

But in less than two years later, Seattle joins at 650$M...that 150$M extra right there, no one can reasonably justify.

 

[BKIslandersFan]

But in less than two years later, Seattle joins at 650$M...that 150$M extra right there, no one can reasonably justify.

They were willing to pay it. Thats justification right there.

 

[aqib]

Point 1: Agreed it would be a wash but still a wash in significant red ink

Re point 2: Is there a new building being planned in greater Houston? Unless there is that alone makes it a longer wait. Even if Tempe fails it's still more advanced.

I'm not sure if it's much of a veto as much as there's wouldn't be a good economic case for either party. Has anyone tried to be tenant there before?

On point 1) We know there is red ink in any temporary solution anywhere. So to say "he can't do Houston because there is red ink" or "he has to move because Tempe will have red ink" so its a question of which has less red ink

On point 2) A deal could come together quickly assuming there is land available (which I will defer to people in the Houston area to weigh in on). Also, we don't know if a county outside of Harris County would provide some funding. We know that isn't available in Tempe

 

[aqib]

It is not just the NHL. Once Ballmer bought the Clippers for that ridiculous price, the franchise "values" sky rocketed across the league. However, values on paper are meaningless unless someone is willing to pay that much. Fertita is not interested in buying at that price to bring to Houston. Th question becomes who is willing and can?

The Hawks, Nets, and Jazz sold for a lot less. The whole thing about one team sale setting the floor for the next team sale has no basis in reality.

 

[powerstuck]

They were willing to pay it. Thats justification right there.

Sure but doesn't means it's justified. If I was rich, I would buy my house with cash and not be dependant on a bank to lend me money. But any wise inverstor would say that it's more productive to keep an active mortage on your home, pay 2% interest, and invest the money you keep on stocks earning 10% interest.

The Hawks, Nets, and Jazz sold for a lot less. The whole thing about one team sale setting the floor for the next team sale has no basis in reality.

Never said it was setting the floor but it definitely did screw the value, if Calippers were worth 1,5 billion and got sold for 33% price increase even the owner of a team worth only 100 millions suddenly hopes someone overpays the value by 30%+.

 

[TheLegend]

I agree. Basically, no matter what market you are in, the temporary arena situation is a big problem.

Gotcha.

But there’s also been a lot of speculation on a temporary location here and I was addressing that.

 

[BKIslandersFan]

Sure but doesn't means it's justified. If I was rich, I would buy my house with cash and not be dependant on a bank to lend me money. But any wise inverstor would say that it's more productive to keep an active mortage on your home, pay 2% interest, and invest the money you keep on stocks earning 10% interest.

Well you know, value of anything is always subjective.

 

[OG6ix]

It would on a temporary basis. But that is not what the league is looking for.

I don't think the 800k metro of QC (which are not all sports fans of hockey fans) will make a dent in tv ratings to justify a large increase. Not even temporarily. The revenue they will bring to the table is ticket sales (splitting up corporate Quebec between the Habs and Nords - the Habs will be the sexier option). No league wants to rely on ticket sales anymore. You live and die by performance.

 

[Lions67]

I don't think the 800k metro of QC (which are not all sports fans of hockey fans) will make a dent in tv ratings to justify a large increase. Not even temporarily. The revenue they will bring to the table is ticket sales (splitting up corporate Quebec between the Habs and Nords - the Habs will be the sexier option). No league wants to rely on ticket sales anymore. You live and die by performance.

If we go by your last sentence, then the Coyotes should have been dead well over a decade now.
This league will always rely on the gate revenue.
And QC will at the very least bring stability. The big markets are great no doubt, but.. those markets have to WANT and then SHOW that they will make the league stronger.
The league keeps trying to fit a round peg in a square hole in this regard.
Quebec City should most definitely be the market for tue Coyotes now. Houston and the others really should put in their due diligence on acquiring and assessing its viability first. The last thing the NHL needs is another weak spot.
QC is not that weak spot.