CXLV - Tempe Entertainment District citizen referendum vote upcoming May 16th

[TheLegend]

Tempe-Coyotes deal: A guide to dueling economic studies

To quote:

"The Arizona Republic reviewed both reports and interviewed their authors to help voters make sense of it all. This article focuses only on the city-specific tax revenue forecast made in both reports for the entire Coyotes project site.

Economists who do those types of impact reports have to make assumptions to forecast how much cash the project might generate over the course of three decades. They use tools such as market trend data to ensure their estimates are reasonable, but it's not a perfect science, so researchers can disagree on how to approach it.

Here, the biggest difference between the two audits is how they presented their numbers:

- GCI adjusted its financial figures to show the actual value of the money generated by the Coyotes project over the course of three decades.
- ASU used what's called "cumulative" or "nominal" figures. That basically means that Hoffman's team counted the number of dollars, rather than keeping their value consistent with inflation year-over-year, which can make the total revenue appear to be worth more than it actually would be at a future date.

Those different approaches can have a massive impact on how lucrative the deal seems to onlookers. When the revenue forecast in the Coyotes’ first study is adjusted for inflation over the project’s 30-year life span, it decreases by more than half, for example."

Source (Paywall): www.azcentral.com/story/news/local/tempe/2023/04/30/tempe-coyotes-deal-a-guide-to-competing-economic-studies/70136561007/

Holy context, Batman! You literally took three pieces of the article and mashed them together.

(nevertheless.... it's another good article from Sam Kmack of the AZ Republic, if you read the entire thing. )

 

[jonathan613]

I really wish the NHL could have some form of a loan system like the NFL G4 program for building arenas. Everybody is so negative about the coyotes, but I think they will be very successful if this arena gets built. I will opine that meruelo seems to be very passionate about hockey and that counts a lot more than just having money (but in no way am i implying he is poor). I am pretty certain the if fertitta were passionate about hockey, he would have a team already. Owners looking to make a quick buck are not good owners for the league to have. The owners that are needed are ones prepared to grow the game in nontraditional markets and understand that for maybe 10 years they will lose money. They will understand this but are in it for the long haul. You either as an owner believe in hockey or you do not. If you do not, then you should not be an owner.

 

[Yukon Joe]

I really wish the NHL could have some form of a loan system like the NFL G4 program for building arenas. Everybody is so negative about the coyotes, but I think they will be very successful if this arena gets built. I will opine that meruelo seems to be very passionate about hockey and that counts a lot more than just having money (but in no way am i implying he is poor). I am pretty certain the if fertitta were passionate about hockey, he would have a team already. Owners looking to make a quick buck are not good owners for the league to have. The owners that are needed are ones prepared to grow the game in nontraditional markets and understand that for maybe 10 years they will lose money. They will understand this but are in it for the long haul. You either as an owner believe in hockey or you do not. If you do not, then you should not be an owner.

So a disclaimer Coyotes fans... this is going to come across as negative but I honestly have no desire to see the Coyotes leave Arizona. I'd be happy to see them stay long-term.

But if we take a big picture view here (rather than just worry about how the team makes it through the next year or two)... what exactly is the evidence Meruelo is "very passionate about hockey"? He earlier attempted to buy the Atlanta Hawks, and was never linked to an NHL franchise beforehand.

My take (and I have zero inside knowledge here) is more than Meruelo saw the Coyotes as a distressed asset he could buy on the cheap, and that there was a good real estate development angle that he could go along with (which is more in keeping with his business history). And there's nothing wrong with that! I just don't think you can look at the situation and figure Meruelo is someone who will happily lose money for years on the team.

Also there's the notion that the Coyotes will be "very successful if this arena gets built". The Coyotes at this point have a 25 year history in the Phoenix area. They had a once-new arena built for them in Glendale, and they have lost money pretty much every year from what we can tell.

Now I know the counter-argument. First the Coyotes played downtown at the Suns arena, which was not designed with the idea of hockey and had terrible seating. Then they played in Glendale at what is by all accounts a very nice rink, but much further away from where many of the fans live. The proposed arena in Tempe will be much more centrally located - but is that going to be enough? I have my doubts.

 

[awfulwaffle]

So a disclaimer Coyotes fans... this is going to come across as negative but I honestly have no desire to see the Coyotes leave Arizona. I'd be happy to see them stay long-term.

But if we take a big picture view here (rather than just worry about how the team makes it through the next year or two)... what exactly is the evidence Meruelo is "very passionate about hockey"? He earlier attempted to buy the Atlanta Hawks, and was never linked to an NHL franchise beforehand.

My take (and I have zero inside knowledge here) is more than Meruelo saw the Coyotes as a distressed asset he could buy on the cheap, and that there was a good real estate development angle that he could go along with (which is more in keeping with his business history). And there's nothing wrong with that! I just don't think you can look at the situation and figure Meruelo is someone who will happily lose money for years on the team.

Also there's the notion that the Coyotes will be "very successful if this arena gets built". The Coyotes at this point have a 25 year history in the Phoenix area. They had a once-new arena built for them in Glendale, and they have lost money pretty much every year from what we can tell.

Now I know the counter-argument. First the Coyotes played downtown at the Suns arena, which was not designed with the idea of hockey and had terrible seating. Then they played in Glendale at what is by all accounts a very nice rink, but much further away from where many of the fans live. The proposed arena in Tempe will be much more centrally located - but is that going to be enough? I have my doubts.

It's pretty simple business concept, the owner needs to have the district around the arena to cover losses on the hockey side and be profitable at the end of the day. Simply owning an arena and that's it will not make the team money.

 

[Yukon Joe]

It's pretty simple business concept, the owner needs to have the district around the arena to cover losses on the hockey side and be profitable at the end of the day. Simply owning an arena and that's it will not make the team money.

Yes. That was the same model for Westgate / Glendale. It failed.

Now you can argue that was because of the unique situation of the 2008 crash, which I understand hit the Phoenix area particularly hard. But was it that unique?

 

[bleedblue94]

It's pretty simple business concept, the owner needs to have the district around the arena to cover losses on the hockey side and be profitable at the end of the day. Simply owning an arena and that's it will not make the team money.

Well I think one question (I am genuinely wondering this) is does the deal prevent him from selling the team within X number of years of the building deal? I could see this as a move for him to get the real estate and once the team building is done he could sell the team to someone else and stay on as a part owner to maintain his sportsbook. again, nothing wrong with smart business plays, but the way Gutiérrez keeps talking like this is about the coyotes is funny. the coyotes are like number 3 or 4 on the list of why the ownership cares about the team and this project. hell, even after the arena goes up the owner could keep losing money on the team to offset some of the major profits he will reap through other businesses associated with the real estate development.

 

[Yukon Joe]

Well I think one question (I am genuinely wondering this) is does the deal prevent him from selling the team within X number of years of the building deal? I could see this as a move for him to get the real estate and once the team building is done he could sell the team to someone else and stay on as a part owner to maintain his sportsbook. again, nothing wrong with smart business plays, but the way Gutiérrez keeps talking like this is about the coyotes is funny. the coyotes are like number 3 or 4 on the list of why the ownership cares about the team and this project. hell, even after the arena goes up the owner could keep losing money on the team to offset some of the major profits he will reap through other businesses associated with the real estate development.

That was what happened earlier. As I mentioned the plan was (although never stated to plainly) for the Coyotes to make money from developing the Westgate shopping district. Ellman though sold the team (but not Westgate) to Jerry Moyes, severing that link.

But I think it highly unlikely that would happen again, for precisely the reason people saw that happen. Who on earth would buy the Coyotes but not their rights in the TED?

 

[mouser]

So a disclaimer Coyotes fans... this is going to come across as negative but I honestly have no desire to see the Coyotes leave Arizona. I'd be happy to see them stay long-term.

But if we take a big picture view here (rather than just worry about how the team makes it through the next year or two)... what exactly is the evidence Meruelo is "very passionate about hockey"? He earlier attempted to buy the Atlanta Hawks, and was never linked to an NHL franchise beforehand.

My take (and I have zero inside knowledge here) is more than Meruelo saw the Coyotes as a distressed asset he could buy on the cheap, and that there was a good real estate development angle that he could go along with (which is more in keeping with his business history). And there's nothing wrong with that! I just don't think you can look at the situation and figure Meruelo is someone who will happily lose money for years on the team.

Also there's the notion that the Coyotes will be "very successful if this arena gets built". The Coyotes at this point have a 25 year history in the Phoenix area. They had a once-new arena built for them in Glendale, and they have lost money pretty much every year from what we can tell.

Now I know the counter-argument. First the Coyotes played downtown at the Suns arena, which was not designed with the idea of hockey and had terrible seating. Then they played in Glendale at what is by all accounts a very nice rink, but much further away from where many of the fans live. The proposed arena in Tempe will be much more centrally located - but is that going to be enough? I have my doubts.

I have no doubt Meruelo viewed the Coyotes as a distressed asset. That's been the case with many businesses Meruelo has bought.

Notably Meruelo is not known as a fix and flipper though. He's continued to own and operate most of those businesses he's purchased over the years.

 

[aqib]

It's pretty simple business concept, the owner needs to have the district around the arena to cover losses on the hockey side and be profitable at the end of the day. Simply owning an arena and that's it will not make the team money.

There are 2 problems with this: 1) If the value is in the surrounding development, then why do an arena? Just do a development without an arena. Unless you can point to a reason why the arena will make the surrounding development more valuable. Like will people pay more for an apartment or will a company pay more for rent in an office building if there was an arena next door. 2) if the housing is "for sale" housing, once the housing is sold how does that make the arena/team viable if checks have already cleared for the housing.
I am reminded of the Brooklyn Nets project. The arena was a loss leader so that Ratner could get permission to do all the other things he wanted to do because he was giving Brooklyn its first major league franchise since the Dodgers left. He dumped the arena and team before the cement even dried.

 

[bleedblue94]

Who on earth would buy the Coyotes but not their rights in the TED?

probably no one, although if there are no direct restrictions and only bettman saying "this team will be here forever" then who is to say the team isnt sold at some point with eyes on something different. I understand the point that no one would want the team without ted, but the franchise at this point is just a gateway to different opportunies for owners and as we have seen for decades in business when one "goal" is reach often times a new angle will emerge for further profits. it may not be right away, but this is why i am curious if say 7 years after the new rink opens and franchise values remain on this insane course what stops the team from being sold? if attendance does suffer and there is a call to possibly move it at that point are there restrictions in the lease? I haven't read the agreements so I am asking these questions for clarification and understanding. is it possible that meurelo knows this team wont survive in arz long term but right now it got him his sportsbook and it can be used to get ted to happen, and later he can sell the asset to another group elsewhere looking for a team to justify a similar development in a different market but with ted a reality and him controlling that land he wouldnt care about the team being gone? i am wondering if there are any formal restrictions on relocation or outs from the lease and commitment from the new arena? i am not being negative, but i think these questions are legit given the history of this franchise and the scope of this deal.

 

[TheLegend]

Yes. That was the same model for Westgate / Glendale. It failed.

Now you can argue that was because of the unique situation of the 2008 crash, which I understand hit the Phoenix area particularly hard. But was it that unique?

It failed because the developer wasn’t deep pocketed enough to get Westgate off the ground.

Biggest indicator of that was when he had to bring in another investor to provide him the money needed to purchase the Coyotes in 1999. Plus the fact he wouldn’t allow the city of Scottsdale to review his financial strength when he was trying to build his dream project there.

 

[TheLegend]

There are 2 problems with this: 1) If the value is in the surrounding development, then why do an arena? Just do a development without an arena. Unless you can point to a reason why the arena will make the surrounding development more valuable. Like will people pay more for an apartment or will a company pay more for rent in an office building if there was an arena next door. 2) if the housing is "for sale" housing, once the housing is sold how does that make the arena/team viable if checks have already cleared for the housing.
I am reminded of the Brooklyn Nets project. The arena was a loss leader so that Ratner could get permission to do all the other things he wanted to do because he was giving Brooklyn its first major league franchise since the Dodgers left. He dumped the arena and team before the cement even dried.

I'm reminded how Calgary needs $800 million from the city and province just to get a new barn.

 

[TheLegend]

That was what happened earlier. As I mentioned the plan was (although never stated to plainly) for the Coyotes to make money from developing the Westgate shopping district. Ellman though sold the team (but not Westgate) to Jerry Moyes, severing that link.

But I think it highly unlikely that would happen again, for precisely the reason people saw that happen. Who on earth would buy the Coyotes but not their rights in the TED?

Ellman planned on selling it all once Westgate was completed in about 10 years (per the original timeline).

Coyotes were a means to an end.

 

[Yukon Joe]

probably no one, although if there are no direct restrictions and only bettman saying "this team will be here forever" then who is to say the team isnt sold at some point with eyes on something different. I understand the point that no one would want the team without ted, but the franchise at this point is just a gateway to different opportunies for owners and as we have seen for decades in business when one "goal" is reach often times a new angle will emerge for further profits. it may not be right away, but this is why i am curious if say 7 years after the new rink opens and franchise values remain on this insane course what stops the team from being sold? if attendance does suffer and there is a call to possibly move it at that point are there restrictions in the lease? I haven't read the agreements so I am asking these questions for clarification and understanding. is it possible that meurelo knows this team wont survive in arz long term but right now it got him his sportsbook and it can be used to get ted to happen, and later he can sell the asset to another group elsewhere looking for a team to justify a similar development in a different market but with ted a reality and him controlling that land he wouldnt care about the team being gone? i am wondering if there are any formal restrictions on relocation or outs from the lease and commitment from the new arena? i am not being negative, but i think these questions are legit given the history of this franchise and the scope of this deal.

So yes. Part of this transaction would be the Coyotes sign a long-term (like 25 year) lease on the new arena.

So lets go back to 2009, since that's the nightmare scenario. Jerry Moyes puts the Coyotes into bankruptcy. The Coyotes had a long-term lease, but that lease was cancelled by the bankruptcy court. But here's the thing - by Moyes putting the team into bankruptcy, Moyes lost his investment in the team. Anything he put in to the team was wiped out. Bankruptcy is to protect creditors, not the owner.

So obviously if something happened before it can happen again. But my point was only that nobody is likely to buy only the Coyotes from this point out, because of what happened before.

 

[bleedblue94]

So yes. Part of this transaction would be the Coyotes sign a long-term (like 25 year) lease on the new arena.

So lets go back to 2009, since that's the nightmare scenario. Jerry Moyes puts the Coyotes into bankruptcy. The Coyotes had a long-term lease, but that lease was cancelled by the bankruptcy court. But here's the thing - by Moyes putting the team into bankruptcy, Moyes lost his investment in the team. Anything he put in to the team was wiped out. Bankruptcy is to protect creditors, not the owner.

So obviously if something happened before it can happen again. But my point was only that nobody is likely to buy only the Coyotes from this point out, because of what happened before.

yes, but if the team went into bankrupcy again that would be the team situation and would have no bearing on the greater entity that is the rest of the real estate development, correct? the real estate around the arena would not be property of the coyotes and would be a part of a separate business i assume. so IF something happened to the team is there any language that would affect the real estate that is gained by the developers due to the pledge/commitment to the team if something happens to the team? is there a safeguard for the city (if needed) AFTER the arena is built?

 

[Llama19]

yes, but if the team went into bankrupcy again that would be the team situation and would have no bearing on the greater entity that is the rest of the real estate development, correct? the real estate around the arena would not be property of the coyotes and would be a part of a separate business i assume. so IF something happened to the team is there any language that would affect the real estate that is gained by the developers due to the pledge/commitment to the team if something happens to the team? is there a safeguard for the city (if needed) AFTER the arena is built?

Correct...that is why there is a ‘shell’ company...Bluebird Development LLC...protecting the Coyotes from any liability...should there be any issues in the rest of the development...

 

[uhlaw97]

A report out of Phoenix suggests that the Yotes could move as soon as next week (likely to Houston, according to him) if the upcoming vote goes badly.

Not sure how much a reliable or "inside" source this guy might be, but here is the article.

If it is true, then I sure hope that they come to Houston and become the NEW Houston Aeros!!!

MAJOR | Coyotes could be moving out of Arizona as soon as next week

The Arizona Coyotes have grown into a joke over the last few years and their Arena situation has only added oil to the burning fire.

www.canucksdaily.com

 

[Yukon Joe]

A report out of Phoenix suggests that the Yotes could move as soon as next week (likely to Houston, according to him) if the upcoming vote goes badly.

Not sure how much a reliable or "inside" source this guy might be, but here is the article.

If it is true, then I sure hope that they come to Houston and become the NEW Houston Aeros!!!

MAJOR | Coyotes could be moving out of Arizona as soon as next week

The Arizona Coyotes have grown into a joke over the last few years and their Arena situation has only added oil to the burning fire.

www.canucksdaily.com

It's not a report out of Phoenix. The only source here is a Frank Seravalli radio hit on Calgary sports radio from last week. We discussed it a few pages back in this thread.

 

[uhlaw97]

Ah, OK.

Still, would be good news for H-Town if true!

 

[Tawnos]

Easy to tell that one wasn't anything. "As soon as next week if the vote goes badly"... except the vote isn't for another two weeks. So they're going to announce a move before the referendum date?

 

[TheLegend]

It's not a report out of Phoenix. The only source here is a Frank Seravalli radio hit on Calgary sports radio from last week. We discussed it a few pages back in this thread.

Reminiscent of 2010 when the day the Coyotes were to begin the playoffs in Detroit Canadian announced a relocation was eminent.

Seravalli made the same assumption everyone else has since 2009.

 

[BKIslandersFan]

What news? Seravalli speculating or sticking a mic in someone's face for virtually the same opinion as his own does not qualify as news. It's what he does.

The Coyotes are not moving. Not this summer, possibly not ever. There will be a plan B, or a plan C, or God knows what. As long as it embarrasses Bettman, I will inhale more popcorn, chuckle evilly, and enjoy the gift that keeps on giving right up to the moment I probably choke to death on my popcorn.

Your obsession with Bettman fascinates me. As if he is losing any sleep or money over Coyotes.

 

[Yukon Joe]

Reminiscent of 2010 when the day the Coyotes were to begin the playoffs in Detroit Canadian announced a relocation was eminent.

Seravalli made the same assumption everyone else has since 2009.

Well hang on - in 2010 a relocation was imminent. It was explicitly stated that either Glendale pony up $25 mil for the next season or the team would move to Winnipeg. It just so happened that in 2010 Glendale saved the day (unlike several years later when Glendale kicked them out of the arena).

And in 2011 it was reported that the Thrashers were moving to Winnipeg. The league denied it, but a couple of weeks later the move became official.

In fairness to Seravalli he did not report that the Coyotes would move. I was all conjecture, with a lot of things phrased as "I think" or "I imagine".

 

[TheLegend]

Well hang on - in 2010 a relocation was imminent. It was explicitly stated that either Glendale pony up $25 mil for the next season or the team would move to Winnipeg. It just so happened that in 2010 Glendale saved the day (unlike several years later when Glendale kicked them out of the arena).

And in 2011 it was reported that the Thrashers were moving to Winnipeg. The league denied it, but a couple of weeks later the move became official.

In fairness to Seravalli he did not report that the Coyotes would move. I was all conjecture, with a lot of things phrased as "I think" or "I imagine".

Well… other than we here locally knew Glendale was going to put the money up.

The first time there was any doubt was 2014 when IceArizona barely squeaked by with their 15-year agreement. And it took some mutual back-scratching between two council members to get it.

 

[bleedblue94]

Correct...that is why there is a ‘shell’ company...Bluebird Development LLC...protecting the Coyotes from any liability...should there be any issues in the rest of the development...

I understand that, but that is exactly why I am asking the question I am. They keep talking about this like it's an arena that will have also have a surrounding development but really it's a surrounding development that includes an arena, and the coyotes are the vehicle to that end. That's why I am concerned