CXLVIII - Coyotes owner Alex Meruelo had 'productive' meeting with Phoenix mayor

[GKJ]

This is a big question in my mind. I genuinely can't figure out why Fertitta wasn't even rumored to be in on the Coyotes. Maybe it wasn't even presented as an option to him? Maybe he simply wants to start from scratch? I don't think he cares much about hockey outside of the business side of it, so it's hard to get a good grasp on where his mind is really at on getting s team to Houston. The city could support a team today, so any delay is strictly due to financials.

Makes me also really wonder about the 2B price for expansion. Are we really gonna just have a nearly 200% jump in the fee only about 5 years from the previous expansion? Is this simply the starting price for the league and it'll be negotiated down?

The $2B was just a number they threw out there.

 

[LT]

2B would also immediately put both franchises near the top 5 in valuation.

I have a hard time seeing the actual expansion fees go over the 1.3B that was just paid for the Coyotes. A third of the league is still valued at under 1B.

2B for both combined makes sense. 2B for each is just crazy and very difficult to wrap my head around.

 

[Tawnos]

This is a big question in my mind. I genuinely can't figure out why Fertitta wasn't even rumored to be in on the Coyotes. Maybe it wasn't even presented as an option to him? Maybe he simply wants to start from scratch? I don't think he cares much about hockey outside of the business side of it, so it's hard to get a good grasp on where his mind is really at on getting s team to Houston. The city could support a team today, so any delay is strictly due to financials.

Makes me also really wonder about the 2B price for expansion. Are we really gonna just have a nearly 200% jump in the fee only about 5 years from the previous expansion? Is this simply the starting price for the league and it'll be negotiated down?

The framework for this deal has apparently been on and off for months. They're solidifying all the language now, but it seems like there was a lot of work done during the on and off period. Fertitta jumping back into the mix is more recent than that.

 

[Ernie]

2B for both combined makes sense. 2B for each is just crazy and very difficult to wrap my head around.

Well $1.2bn is the floor now. If they don't get offers above that they just won't expand. Who knows how much franchise values will be in 5 years? $2bn is not out of the realm of consideration.

 

[PredsHead]

This is a big question in my mind. I genuinely can't figure out why Fertitta wasn't even rumored to be in on the Coyotes. Maybe it wasn't even presented as an option to him? Maybe he simply wants to start from scratch? I don't think he cares much about hockey outside of the business side of it, so it's hard to get a good grasp on where his mind is really at on getting s team to Houston. The city could support a team today, so any delay is strictly due to financials.

Makes me also really wonder about the 2B price for expansion. Are we really gonna just have a nearly 200% jump in the fee only about 5 years from the previous expansion? Is this simply the starting price for the league and it'll be negotiated down?

You probably had a couple of things that would have made a deal with Fertitta more difficult. First would be the fact that Fertitta is in many of the same industries that Meruelo is in so would likely have been seen as a bit more of a rival to Meruelo than Smith would be. Second would be how Fertitta has a bit of a reputation for being a tough negotiator and not afraid to use the press when he needs to for leverage, that might have made the BOG a bit apprehensive to take him a deal that needs this much finesse to get done. Not saying he couldn't have pulled it off, just this deal seems tailor made for a guy with Smith's temperament but not for a guy with Fertitta's.

 

[aqib]

It was $170m, but yeah, essentially a fire sale. $40m of it was an relocation fee.

That said, Atlanta Spirit bought both the Hawks and the Thrashers for $250m in 2004, so they probably didn't really take a loss on the sale, the bigger hit would have been covering all the losses. The original expansion fee was $80m in 1999 for what it's worth.

$60 million was the relo fee.

Yes it was $250M for the Hawks, Thrashers, and the operating rights to the arena. By comparison the Cleveland Cavaliers and operating rights to their arena sold for $375 million a few months later. So basically they got the Thrashers for free. They claimed they lost $100 million on the Thrashers the last 5 years of owning them so they basically broke even on the Thrashers and made a boatload on the Hawks.

 

[tucker3434]

If the rumors of Atlanta and Houston being as close as they are to done are true, they’ll probably all come in right at $1.3b. That would be about $3b in total after you include the Yotes $300m relocation fee. Not a bad chunk of change.

$2b each is nutty. That’s ahead of the Bruins valuation. That doesn’t make sense.

 

[sneakytitz]

I can't even imagine how much a madhouse things must be on Smith's end. Finalizing this deal plus getting everything ready by October and, oh yeah, a draft.

 

[OG6ix]

I can't even imagine how much a madhouse things must be on Smith's end. Finalizing this deal plus getting everything ready by October and, oh yeah, a draft.

If they keep the management in place I think the Draft would go smoothly... everything else? Yeah... going to take a lot of work within a few short months.

 

[Ernie]

The Athletic dropped a story, basically a rehash of what has already been reported, but with this relevant detail:

Nothing’s done until it’s done, but there is an understanding among the parties that it’s preferable to try to wrap the sale up before Saturday’s start of the Stanley Cup playoffs so as not to overshadow the most important part of the NHL calendar, but obstacles remain coming out of the weekend, per sources.

Among them was the precise language around what conditions Meruelo would have to satisfy and on what timeline to be granted the contractual rights to a future expansion franchise in Arizona. What is known is that he won’t be able to sell or transfer those rights. They will be his to exercise alone.

Johnston: How the Coyotes-Salt Lake relocation plan came together — and what issues remain

Inside details on the NHL-brokered deal to move the Coyotes to Salt Lake City and how it could lead to an expansion team in Arizona.

theathletic.com

You really have to wonder how Meruelo is going to finance this whole thing. We know that the Tempe project had up to $500m in incentives which is clearly not available in Phoenix, but even then the financing was considered questionable. The new project is also a much more expensive and in a less desirable location.

 

[CHRDANHUTCH]

Friedman believes Arizona was under a gag order, clearly lost control as they had intentions of announcing nothing until it was done.

Meruelo keeping the Roadrunners is supposed to be part of the deal, so they can keep the business operations and those people employed and also to keep all the youth hockey programs. But there is not an affiliate agreement coming out of it. Not a slam dunk, far from certain.

Roadrunners playing at Mullett is not a done deal either.

because the PDC already exists between AZ/UT AND Tucson... the only difference is two seperate ownerships much like the Coyotes were prior to 2014 when they exercised the option to buy the AHL Franchise from Springfield private ownership and relocate it to Tucson. the other piece is the team lease deal, whether at TCC or Mullett, which falls now on AM.... Remember, SEG now has to be granted a team since there's 32 teams... or the PDC is retained between Tucson and AZ/UT.... there is also an issue w/ Carolina likely needing an affiliation to meet AHL Bylaws since the AHL allowed Chicago to be declared independent, something the AHL has basically blocked since the mid 1990s.... when the rule was implemented that no AHL Member club can be independent and must have an affiliation in hand before being allowed to operate....

 

[ponder719]

You really have to wonder how Meruelo is going to finance this whole thing. We know that the Tempe project had up to $500m in incentives which is clearly not available in Phoenix, but even then the financing was considered questionable. The new project is also a much more expensive and in a less desirable location.

I can't help but feel like this is why the league likes this solution better than many others: they probably think he can't.

 

[OG6ix]

The Athletic dropped a story, basically a rehash of what has already been reported, but with this relevant detail:

Johnston: How the Coyotes-Salt Lake relocation plan came together — and what issues remain

Inside details on the NHL-brokered deal to move the Coyotes to Salt Lake City and how it could lead to an expansion team in Arizona.

theathletic.com

You really have to wonder how Meruelo is going to finance this whole thing. We know that the Tempe project had up to $500m in incentives which is clearly not available in Phoenix, but even then the financing was considered questionable. The new project is also a much more expensive and in a less desirable location.

I think even the NHL has its strong doubts and this whole exercise is just a way for them to get him away from the franchise hoping he shoots himself in the foot trying to do whatever he is trying to accomplish with Phoenix. What would be kind of crazy is if wins the land auction, gets shovels in the ground, has some hiccups or blocks that go over the 5 year period. Would the NHL say no to the guy and make him go through the regular Expansion process?

 

[aqib]

If they keep the management in place I think the Draft would go smoothly... everything else? Yeah... going to take a lot of work within a few short months.

I think they have to keep management in place. The Jets changed out management but they had the management team from the Moose they just swapped them in. Smith doesn't have a hockey org in hand, plus the Coyotes front office seems to be doing a good job so there wouldn't be a reason to get rid of them.

Ticket sales and marketing will be a bigger challenge for Smith vs TNSE because the arena was already a full time hockey venue. and they already had a list of Moose season ticket holders/sponsors/suite holders. Sure Smith has the Jazz customers but its not going to have the same cross over list.

 

[Melrose Munch]

I think even the NHL has its strong doubts and this whole exercise is just a way for them to get him away from the franchise hoping he shoots himself in the foot trying to do whatever he is trying to accomplish with Phoenix. What would be kind of crazy is if wins the land auction, gets shovels in the ground, has some hiccups or blocks that go over the 5 year period. Would the NHL say no to the guy and make him go through the regular Expansion process?

I can't help but feel like this is why the league likes this solution better than many others: they probably think he can't.

Hope so. No way should he be back in.

 

[TheLegend]

We can't forget the Goldwater Institute, who's lawsuit killed Jamison's chances of having the Glendale taxpayers help him finance his purchase and keep the team in the arena long term. They even got John McCain involved at one point.

[whoops.... left this post dagling in the queue]
It was Matt Hulsizer who came up with the $100 million parking scheme that Goldwater went after them for.

Jamison just didn’t have a investor with a big enough share to make the league happy.

(Fun nugget…. The IceEdge gang were also part of the Jamison group. When they realized the league wanted a major shareholder they left the group, went out and found George Gosbee.)

McCain was a big supporter of all Arizona sports.

 

[OG6ix]

I think they have to keep management in place. The Jets changed out management but they had the management team from the Moose they just swapped them in. Smith doesn't have a hockey org in hand, plus the Coyotes front office seems to be doing a good job so there wouldn't be a reason to get rid of them.

Ticket sales and marketing will be a bigger challenge for Smith vs TNSE because the arena was already a full time hockey venue. and they already had a list of Moose season ticket holders/sponsors/suite holders. Sure Smith has the Jazz customers but its not going to have the same cross over list.

I have a feeling marketing of tickets won't be a big deal. The market is already thrilled with the rumours of the yotes moving - it's also a winter sports town too. But regardless of that information they also can provide offers to Jazz Season seat holders like other teams have done with PSLs.

 

[Ernie]

If they keep the management in place I think the Draft would go smoothly... everything else? Yeah... going to take a lot of work within a few short months.

They already have most of the stuff they need for the business side in place. Having two pro franchises in the city already gives them a definite head start.

 

[TheLegend]

The Athletic dropped a story, basically a rehash of what has already been reported, but with this relevant detail:

Johnston: How the Coyotes-Salt Lake relocation plan came together — and what issues remain

Inside details on the NHL-brokered deal to move the Coyotes to Salt Lake City and how it could lead to an expansion team in Arizona.

theathletic.com

You really have to wonder how Meruelo is going to finance this whole thing. We know that the Tempe project had up to $500m in incentives which is clearly not available in Phoenix, but even then the financing was considered questionable. The new project is also a much more expensive and in a less desirable location.

"Theme park district."

Hence his impromptu effort since early April to meeting with Phoenix's mayor.

 

[Ernie]

I think even the NHL has its strong doubts and this whole exercise is just a way for them to get him away from the franchise hoping he shoots himself in the foot trying to do whatever he is trying to accomplish with Phoenix. What would be kind of crazy is if wins the land auction, gets shovels in the ground, has some hiccups or blocks that go over the 5 year period. Would the NHL say no to the guy and make him go through the regular Expansion process?

Elliotte Friedman made it sound like there was a bit of leeway there, as in the arena had to be well on the way to completion with a firm opening date.

 

[OG6ix]

They already have most of the stuff they need for the business side in place. Having two pro franchises in the city already gives them a definite head start.

Yup they have the assets but if that front office / operations management understands how to roll with hockey smoothly is the question.

 

[Ernie]

"Theme park district."

Hence his impromptu effort since early April to meeting with Phoenix's mayor.

A week ago you were sure this wouldn't be an issue.

 

[kaiser matias]

[whoops.... left this post dagling in the queue]
It was Matt Hulsizer who came up with the $100 million parking scheme that Goldwater went after them for.

Jamison just didn’t have a investor with a big enough share to make the league happy.

(Fun nugget…. The IceEdge gang were also part of the Jamison group. When they realized the league wanted a major shareholder they left the group, went out and found George Gosbee.)

McCain was a big supporter of all Arizona sports.

Thanks for clarifying. So many characters over the years, it's hard to keep track at times.

 

[RoyalAir]

$60 million was the relo fee.

Yes it was $250M for the Hawks, Thrashers, and the operating rights to the arena. By comparison the Cleveland Cavaliers and operating rights to their arena sold for $375 million a few months later. So basically they got the Thrashers for free. They claimed they lost $100 million on the Thrashers the last 5 years of owning them so they basically broke even on the Thrashers and made a boatload on the Hawks.

This is largely through some creative accounting. The way the Spirit operated was to have all sponsorships run through PASM- Philips Arena Sports Marketing. This allowed any and all sponsorship revenue that the Thrashers generated to be completely and 100% awarded to Philips. I would imagine that most Thrashers tickets were also awarded/attributed to the Philips' gate. This, in turn, made sure that the Thrashers always looked like they were hemorrhaging money, thus chasing away investors.

Contrast this with how Blank runs Mercedes-Benz and the Falcons/United. Each entity runs itself, and exists as a separate org. This allows MBS to literally flip a switch with a sponsorship and signage, so that a Falcons sponsor needn't be a United sponsor or vice versa. MBS just serves as a host location/ landlord. The Spirit never operated like this.

The Thrashers were acquired as an asset that needed to be discharged/disposed of. As they were described in one of the lawsuits.

 

[Tom ServoMST3K]

I did wonder after Tempe it seemed to becoming a game of "we are going to go to X city and try here" and I was wondering how long the NHL was going to let him keep going from city to city with seeming false hope after false hope. Sounds like Tempe was the "enough of this" moment.

The writing was on the wall post-Tempe. I was too gunshy to predict it, considering the saga's history - but after the vote, NHL lost complete faith in ownership, as they should have.