CXLVII - Is this the 'Final Countdown' in Arizona?

[Shwan]

I just did a cursory Google search and couldn't find anything to corroborate what you're saying for this past year or the year before. Everything I've found is citing information from years ago.

Could you link me to something you found?

It also just completely misses the point of my whole post by taking that one part out of context. If Meruelo can handle $10m in operating losses for 15 years and then sell the team for $600m at that point, he still made $150m in profit. So, in the end, it was still profitable for him.

It's a few pages back but the CEO himself Xavier Gutierrez confirmed the team was on track losing $10M plus for the season.

Team’s financial losses “are in line with what they had been in the past for the team,” Gutierrez said as the Coyotes lost, 4-1, to the Pittsburgh Penguins Sunday night. He did not define an exact figure.

In the multimillion-dollar range?

“Yes,” he responded. “And I tip my hat to [owner] Alex Meruelo for sustaining that.”

More than $10 million?

“Yes, it’s substantial,” Gutierrez said. “We’re meeting our ticketing projections. We knew we’d be making more than our previous location [Glendale’s Gila River Arena]. We’re limited on premium seating. The challenge has been some of the ancillary rights, the merchandising. We’re learning how to pivot as far as finding that additional revenue.”

 

[Tawnos]

It's a few pages back but the CEO himself Xavier Gutierrez confirmed the team was on track losing $10M plus for the season.

Ah ok, missed that one. Thanks. It's not clear to me that includes or does not include annex construction costs.

It still doesn't make a difference to my point though.

 

[Boris Zubov]

Ah ok, missed that one. Thanks. It's not clear to me that includes or does not include annex construction costs.

It still doesn't make a difference to my point though.

Almost zero chance it includes the 20-25 million in construction costs when you consider without those costs the team would have turned a profit if the total losses were between 10-15 million as reported.

 

[Tawnos]

Almost zero chance it includes the 20-25 million in construction costs when you consider without those costs the team would have turned a profit if the total losses were between 10-15 million as reported.

Which would be in line with the amount of profit Forbes claimed they made for 21-22 (~$5m). Forbes has a history of undershooting operating income, just as they do franchise values.

 

[aqib]

Which would be in line with the amount of profit Forbes claimed they made for 21-22 (~$5m). Forbes has a history of undershooting operating income, just as they do franchise values.

Forbes can't possibly know all the revenues and expenses of a team. The details of every media/marketing/sponsorship deal isn't public nor can they know how many tickets have been comped. However, they won't know how much the team has in expenses.

Now with regards to the Coyotes, if they do get a new arena in the valley you also have to factor in debt service on the arena which will also be a pretty penny considering how expensive arenas have gotten in recent years.

 

[aqib]

I just did a cursory Google search and couldn't find anything to corroborate what you're saying for this past year or the year before. Everything I've found is citing information from years ago.

Could you link me to something you found?

It also just completely misses the point of my whole post by taking that one part out of context. If Meruelo can handle $10m in operating losses for 15 years and then sell the team for $600m at that point, he still made $150m in profit. So, in the end, it was still profitable for him.

So a few things.
1) this also ignores the time value of money factor. 50% over 15 years averages out to 2.74% over that time. He could just buy bonds and get that return
2) Seemingly every Coyotes owner just borrows to finance the debt and then the next owner assumes the debt in the deal. Gluckstern/Burke bought the team for $65 million. When Burke sold to Ellman, Ellman and partners paid $27 million (mostly installments) and assumed $60 million in debt. Ellman paid Moyes $100 million and gave him the team to buy out Moyes's interest in Westgate. Moyes somewhere along the way had a loan from Michael Dell's company for like $85 million. IceArizona had a ton of debt in their purchase, then Barroway assumed it when he bought, etc. So on the one hand you will have accumulating debt year after year and interest costs year after year. However since no one seems to be putting in much of their own money it means that their return on equity looks pretty great.

 

[Tawnos]

Forbes can't possibly know all the revenues and expenses of a team. The details of every media/marketing/sponsorship deal isn't public nor can they know how many tickets have been comped. However, they won't know how much the team has in expenses.

Now with regards to the Coyotes, if they do get a new arena in the valley you also have to factor in debt service on the arena which will also be a pretty penny considering how expensive arenas have gotten in recent years.

You should be treating the arena as a separate entity though, because when he sells the Coyotes he'd also be selling the arena.

I don't disagree with you about flaws with Forbes, but they carried a lot of water for the owners "losing money" in past lockouts and it was never as bad as they'd shown. So either they overestimate operating costs or they underestimate revenue. The bottom line number is historically undershot in either case.

So a few things.
1) this also ignores the time value of money factor. 50% over 15 years averages out to 2.74% over that time. He could just buy bonds and get that return
2) Seemingly every Coyotes owner just borrows to finance the debt and then the next owner assumes the debt in the deal. Gluckstern/Burke bought the team for $65 million. When Burke sold to Ellman, Ellman and partners paid $27 million (mostly installments) and assumed $60 million in debt. Ellman paid Moyes $100 million and gave him the team to buy out Moyes's interest in Westgate. Moyes somewhere along the way had a loan from Michael Dell's company for like $85 million. IceArizona had a ton of debt in their purchase, then Barroway assumed it when he bought, etc. So on the one hand you will have accumulating debt year after year and interest costs year after year. However since no one seems to be putting in much of their own money it means that their return on equity looks pretty great.

1) I know, but it was an illustration not a projection.
2) Admittedly, the Coyotes do carry a lot of debt... but this is still fundamentally unimportant to my point.

 

[Shwan]

It's one of the reasons it's a shame Glendale went the way it did. Granted, I've never seen it but everytime anyone complained about the Glendale situation, it seemed like one point of agreement everyone had was that the arena was nice & could stand the test of time.....if only it hadn't been built where it was by whom it was built by for the city gov't for which it was built...

Those last few years after they bought the Piston's old Jumbotron were amazing.

The irony is now after the Coyotes have left, City Manager Phelps and Glendale have gotten their act together and there's a luxury hotel/theme park, luxury apartments, and a whole bunch of other stuff being constructed right on the other end of the football stadium which would have definitely helped attendence for Hockey games.

As such Desert Diamond Arena isn't hurting though.

 

[aqib]

You should be treating the arena as a separate entity though, because when he sells the Coyotes he'd also be selling the arena.

1) I know, but it was an illustration not a projection.
2) Admittedly, the Coyotes do carry a lot of debt... but this is still fundamentally unimportant to my point.

The Coyotes can't make money without control of an arena (Which is true of most NHL teams in non-traditional markets) so you have to factor in the debt and operating expenses of the arena into the finances of the team. Personally I don't see how an arena will be a viable investment in a market with 2 other arenas one of which is already being run by AEG/ASM but whatever.
As far as debt goes, the thing is that every owner uses debt to finance operating losses and the debt keeps growing and gets passed to the next owner. Its not like any owner comes in with cash and clears the debt out. Now some people will say "oh poor Coyotes fans they can't get an owner who will put in the needed cash" while others (like me) will say "no one with any brains will put their own money into it because its not financially viable"

 

[MNNumbers]

Those last few years after they bought the Piston's old Jumbotron were amazing.

The irony is now after the Coyotes have left, City Manager Phelps and Glendale have gotten their act together and there's a luxury hotel/theme park, luxury apartments, and a whole bunch of other stuff being constructed right on the other end of the football stadium which would have definitely helped attendence for Hockey games.

As such Desert Diamond Arena isn't hurting though.

I said many times in 2012-13 that the city of Glendale would have been better off taking the proposal of SMG to manage the arena without the Coyotes. It was a better financial deal, and the only thing it was missing was the 'hey, we're important' factor of having an NHL team in your city.

Now the Coyotes are gone, Westgate is going well, and the arena has lots of activity. It shows that, most often, the sports teams suck the money out of the arena and leave the city with less than it could have had. This is why a privately financed arena is always best for the city and its taxpayers.

 

[BMN]

The irony is now after the Coyotes have left, City Manager Phelps and Glendale have gotten their act together and there's a luxury hotel/theme park, luxury apartments, and a whole bunch of other stuff being constructed right on the other end of the football stadium which would have definitely helped attendance for Hockey games.

There's a similar irony in the Atlanta/Braves situation and actually a double irony...when the Braves left, everyone was incredulous because the building in the Summerhill district was fine and not that old (the Braves only played exactly 20 seasons there. But the Braves couldn't control the real estate around it and furthermore considered the underdeveloped and very ungentrified area a turnoff to their audience.

Once the Braves left, Georgia State University acquired the stadium in a real estate deal that involved the Carter development company. But the stadium had to be awkwardly renovated for football which has been a mixed bag (the reno started out slowly, came along a little better after a few months...then ground to a halt so you can still very much tell "this used to be a baseball stadium"). Meanwhile the development went full-speed getting new apartments and businesses in the area (including a recently opened Publix).

So unlike the Glendale situation, where you once had a "nice stadium, underdeveloped neighbourhood" situation, Summerhill has a "developed the neighbourhood but the stadium needs fixing now" situation...

 

[mouser]

I said many times in 2012-13 that the city of Glendale would have been better off taking the proposal of SMG to manage the arena without the Coyotes. It was a better financial deal, and the only thing it was missing was the 'hey, we're important' factor of having an NHL team in your city.

Now the Coyotes are gone, Westgate is going well, and the arena has lots of activity. It shows that, most often, the sports teams suck the money out of the arena and leave the city with less than it could have had. This is why a privately financed arena is always best for the city and its taxpayers.

Skimming through the event calendars for Glendale arena I count:

Jan - Jun 2022:
18 other events
28 Coyotes games

Jan - Jun 2023
16 other events

Small sample size of course but they don’t appear to be booking more events. Interested to see how the end of year Pollstar numbers tally up.

 

[Shwan]

Skimming through the event calendars for Glendale arena I count:

Jan - Jun 2022:
18 other events
28 Coyotes games

Jan - Jun 2023
16 other events

Small sample size of course but they don’t appear to be booking more events. Interested to see how the end of year Pollstar numbers tally up.

Drake, Grupo Frontera, Nodal and Pepe Aguilar will likely give them more revenue than the Coyotes games.

Plus since they don't have to block off dates for games they'll continue to add events as the year goes on, like Playboy Carti's announced tour today.

 

[PainForShane]

Drake, Grupo Frontera, Nodal and Pepe Aguilar will likely give them more revenue than the Coyotes games.

Plus since they don't have to block off dates for games they'll continue to add events as the year goes on, like Playboy Carti's announced tour today.

You realize Westgate could've booked all those ppl and also hosted the Coyotes in the same year / at the same time, right? As in, the ability to book Drake has nothing to do with booking Yotes games as it's fairly straightforward / almost trivial to move scheduling dates a day or two around an anchor tenant or world class concert in either direction.

Maybe you didn't realize this. Well, now you do. So now, if you decide to keep arguing this, you're welcome to continue to argue in bad faith, that decision is up to you

 

[Shwan]

You realize Westgate could've booked all those ppl and also hosted the Coyotes in the same year / at the same time, right? As in, the ability to book Drake has nothing to do with booking Yotes games as it's fairly straightforward / almost trivial to move scheduling dates a day or two around an anchor tenant or world class concert in either direction.

Maybe you didn't realize this. Well, now you do. So now, if you decide to keep arguing this, you're welcome to continue to argue in bad faith, that decision is up to you

Tell me you know nothing about concert tours without telling me you know nothing about concert tours.

 

[mouser]

Drake, Grupo Frontera, Nodal and Pepe Aguilar will likely give them more revenue than the Coyotes games.

Plus since they don't have to block off dates for games they'll continue to add events as the year goes on, like Playboy Carti's announced tour today.

The 2022 events scheduled over the same time frame included Muse, Billie Eilish, Celine Dion, Journey, Pearl Jam, Snoop Dog/Ice Cube, Justin Bieber. That's along with the 28 Coyotes games.

I'd like to see a longer sample size, but the early results unsurprisingly suggest having the Coyotes as an anchor tenant was not blocking other non-hockey events in any financially material way.


Also, "bigger" more expensive events aren't automatically more lucrative to arenas. The tour Promoter is taking on all the profit risks of paying the Entertainer and selling tickets while negotiating the lowest possible cost with potential event hosts. Multiple arenas or other event sites are engaged in a reverse auction system to bid down their price to host the event. The arena doesn't share in any profits from ticket or merchandise sales for those big events. They're effectively hired labor.

 

[Shwan]

I'd like to see a longer sample size, but the early results unsurprisingly suggest having the Coyotes as an anchor tenant was not blocking other non-hockey events in any financially material way.

Source: Trust me Bro.

Lot of that going around.

Also, "bigger" more expensive events aren't automatically more lucrative to arenas. The tour Promoter is taking on all the profit risks of paying the Entertainer and selling tickets while negotiating the lowest possible cost with potential event hosts. Multiple arenas or other event sites are engaged in a reverse auction system to bid down their price to host the event. The arena doesn't share in any profits from ticket or merchandise sales for those big events. They're effectively hired labor.

Good thing the city, who owns the arena, collects sales tax on the merchandise, collects money on the hotel taxes on the people who stay at nearby hotels and on the people who bother to eat at Westgate before the concert. It's like they did a study on this or something.

Don't worry.

As such Desert Diamond Arena isn't hurting though.

 

[BattleBorn]

Did Glendale/Arena management get a chance to reduce payrolls since they no longer needed a permanent ice/conversation staff as well?

 

[Llama19]

Ahem...speaking of 'profits'...

Gamblers have wagered billions on sports in Arizona in 2023. These companies dominate the market

www.azcentral.com/story/money/business/consumers/2023/07/13/these-sportsbooks-made-the-most-least-off-gamblers-in-arizona-in-2023/70406478007/

The article only shows data for the first four months...January through April...of 2023...but Meruelo's SaharaBets app 'winnings'...was just over $81,000...

 

[PainForShane]

Tell me you know nothing about concert tours without telling me you know nothing about concert tours.

Tell me you know nothing about when the NHL season starts (October) because all of the examples you gave were in the offseason (except for Pepe Aguilar which is Friday, Nov 10 ie a day the Yotes are not playing).

Also tell me you don't know that 41 home games over the course of the season add up to on average 7-8 home games a month. Ie almost always 20+ days every month that are available for other things.

And then tell me you're too lazy / unwilling to take 2-3 mins to look at the past few months at Gila River where you can easily see that so far in 2023 each month has hosted at most 5 events. January 2023 they hosted 1 event, in June they hosted 2. Guess that Yotes presence in Mullett is keeping GRA from booking guests even during the offseason. Yotes forcefield in full effect, now we just have to learn to use it to keep the puck out of our own net.

They do have a whole 6 events in Nov (6!), but then again Footprint also has 6 events in Nov (incl Bruce Springsteen, Doja Cat how bout dem concerts), also tell me you didn't know Footprint has to schedule around Suns.

Source:

https://www.desertdiamondarena.com/events-tickets/pdf/January/2023

https://www.desertdiamondarena.com/events-tickets/pdf/June/2023

Event Calendar

Discover upcoming concerts, sports, and events at Footprint Center. Stay updated with our Events Calendar and never miss a moment of excitement!

www.footprintcenter.com

But yeah, we'll Trust you Bro. Lot of that going around

(edited for clarity)

 

[Shwan]

But yeah, we'll Trust you Bro. Lot of that going around.

lol It's really hilarious the amount of seething such a pedestrian statement can generate.

The arena is fine without the Coyotes, Glendale is fine without the Coyotes. And you don't have to take my word on it.

The city set aside $5.8 million in its budget to keep the arena running, of which nearly $1 million in costs per year will be saved. If Glendale were to keep the facility under its control, the city would end up spending nearly $150 million in city funds to keep the facility at its full capacity.

So the idea to defer those costs to ASM, in exchange for the ownership of the stadium became a mutual benefit.

Putting in $25 million initially comes as a sense of urgency from the city to get Desert Diamond Arena fully restored and back in a position to host events as quickly as possible. But even then, the city isn’t spending any more of its money, as within the first three years of the 20-year lease, the initial appraisal of $33.29 million will be fully paid off by ASM to the city.

The logistical side was well thought out to save money from the city while still leaving the ability to host events in the city.

 

[PainForShane]

lol It's really hilarious the amount of seething such a pedestrian statement can generate.

The arena is fine without the Coyotes, Glendale is fine without the Coyotes. And you don't have to take my word on it.

[MOD]
Shwan was dishonest at best when he said the arena is fine wo the Yotes -- the relevant part (that he himself quoted):

"If Glendale were to keep the facility under its control, the city would end up spending nearly $150 million in city funds to keep the facility at its full capacity."

Which means the arena is expected to lose $150m in the coming years...which is why the city sold it to a third party called ASM Global (as described in the article Shwan linked to). No one wants to be on the hook for that kind of money if they can avoid it. Which is the opposite of "arena is fine."

Takes a special kind of person to enclose a link to an article and then misinterpret / misrepresent it that badly. To pretend it supports your point when really it says the exact opposite. That's all I'm saying

 

[Shwan]

Shwan was dishonest at best when he said the arena is fine wo the Yotes -- the relevant part (that he himself quoted):

"If Glendale were to keep the facility under its control, the city would end up spending nearly $150 million in city funds to keep the facility at its full capacity."

Which means the arena is expected to lose $150m in the coming years...which is why the city sold it to a third party called ASM Global (as described in the article Shwan linked to). No one wants to be on the hook for that kind of money if they can avoid it. Which is the opposite of "arena is fine."

Takes a special kind of person to enclose a link to an article and then misinterpret / misrepresent it that badly. To pretend it supports your point when really it says the exact opposite. That's all I'm saying

Do you know what a lease is?

Through the new agreement, ASM will enter into a ground lease with the city for a minimum of 20 years with the option for multiple 10-year renewals. Glendale City Manager Kevin Phelps said the city has been negotiating the contract for just under a year and that leasing to ASM will allow Glendale to stay involved with the venue.

Further, why would a company go into a 20 year lease if they were going to lose $150M on it like you're trying to say? Hmm.

Maybe someone's not a smart as they think they are?

 

[PainForShane]

Do you know what a lease is?



Further, why would a company go into a 20 year lease if they were going to lose $150M on it like you're trying to say? Hmm.

Maybe someone's not a smart as they think they are?

Bro can you read?

"The deal includes a 20-year lease in which ASM Global will become the full time owner of the arena moving forward."

Because like you said, "If Glendale were to keep the facility under its control, the city would end up spending nearly $150 million in city funds to keep the facility at its full capacity."

The arena is now under ASM Global's control. Which means the city is no longer on the hook for that expected loss of $150m. Either way the arena is clearly struggling otherwise it wouldn't be on track to lose $150m. One obvious reason I can think of that ASM Global would be ok taking that on is that ASM Global owns a ton of arenas (like Crypto.com in LA) and has experience making money with them (experience that Glendale does not have). The article explains this further if you are curious about the logic.

You're welcome


***

P.S. Full article for anyone else who wants to follow along (so you can decide for yourself which one of us knows how to read): Desert Diamond Arena to get $40 million in renovations

 

[Shwan]

Bro can you read?

"The deal includes a 20-year lease in which ASM Global will become the full time owner of the arena moving forward."

Because like you said, "If Glendale were to keep the facility under its control, the city would end up spending nearly $150 million in city funds to keep the facility at its full capacity."

The arena is now under ASM Global's control. Which means the city is no longer on the hook for that expected loss of $150m. Either way the arena is clearly struggling otherwise it wouldn't be on track to lose $150m. One obvious reason I can think of that ASM Global would be ok taking that on is that ASM Global owns a ton of arenas (like Crypto.com in LA) and has experience making money with them (experience that Glendale does not have). The article explains this further if you are curious about the logic.

You're welcome


***

P.S. Full article for anyone else who wants to follow along (so you can decide for yourself which one of us knows how to read): Desert Diamond Arena to get $40 million in renovations

Why would ASG volunteer to get into a business arrangement that would lose them $150,000,000?

Sounds like a dumb business plan to me.