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

[Ciao]

So this is why the whole "1 billion is being thrown at Muruelo to go away" narrative is one that doesn't pass the sniff test. If it is true that the team lost 60 million last year, you can then assume that they lost more than that at Gila given the constant comments by the organization about how they made more at ASU than they did at Gila. Plus covid.

So then the question becomes, how much of that one billion simply covers the debt of the team? If we take those numbers at face value, then we can do some napkin math based on the snippets that have been released over the years and can probably come up with a number that is at least in the 600 - 700 million range.

I also have a hard time believing that the relocation fee is only 200 million considering that the expansion fee a few years ago was 650 million.

I have my own semi conspiracy theory on Muruelo's "ownership" that I've stated enough times already but this gives even more ammo for that particular theory.

I have no inside knowledge here, but it wouldn't surprise me if a good chunk of the purchase price goes back to the NHL as accumulated debt repayment. Just a guess.

Arizona STH got the above

Options?

What options, for a team that doesn't exist?

 

[LadyStanley]

Probably keep $$ invested with % return (and perhaps no increase in sth price) vs getting all funds returned???



Friedman with a few things

Biggest: December 31, 2027 is deadline AM has to be 50% into arena build to reactivate franchise.

 

[Tawnos]

You’re losing 60 million a year it gets down to which bill do you pay today and which tomorrow. And do it without triggering some other problem.

Easy thing for posters like ourselves to play sideline CEOs here, but until you put yourself in his position you really can’t judge it fairly.

Cash flow is a bitch, even when it’s a small business.

In a lot of ways, shutting the team down will make it easier for Meruelo to get the arena accomplished. Not saying he will be able to do it, but keeping the hockey team going is a burden he doesn’t have to worry about for now. Not having the burden will help.

 

[Llama19]

Opposition has already started...

Tell the State Legislature to VOTE NO on HB2274!

To quote the message from the petition to be sent to the legislators:

"I am aware that the first responders’ PTSD coverage bill (HB2274) has been amended with a strike-everything amendment from Sen. Hoffman that exchanges proposed benefits for firefighters for a bill to reduce local input in the formation of "theme park districts" (which includes sports facilities such as stadiums) as special taxing districts. These special tax districts can levy as much as a 9% sales tax within the district's bounds, which can be used by developers to recover construction-related debt. Currently, both the county and the city governments would have to sign off on such a district. Under HB2274, only the county government is needed, essentially removing cities from being guaranteed a role in the decision-making process.

City and county input and oversight is essential to ensuring that the surrounding communities are considered when development decisions are made. Residents have much more opportunity to express their concerns and needs to their local government officials.

HB2274, as written, would charge residents and customers who frequent the stadiums and parks that would get built a premium on retail sales. However, those dollars will not get put back into our roads and schools. That tax revenue would be sent out of our communities to developers!

The kind of deals that this legislation would support are already unpopular with residents. When the Coyotes’ Tempe Entertainment District was put to a vote, the proposed deal involved a Community Facilities District with a surcharge on goods paid by guests to be used to cover the costs of developing the site. Voters rejected the prospect of that kind of deal there, but with this new legislation, cities will have significantly less power to reject projects and the taxes that come with them.

The Coyotes ownership is vying for land in North Phoenix right now and this legislation could make it easier for them to get these subsidies, at the cost of taxpayers. Arizona residents have already rejected giving tax breaks to stadium developers. Why are we making it easier for developers to expropriate tax revenue that should be going back into our communities?

So we’re asking you to VOTE NO on HB2274. Preserve local control and refuse to make it easier for developers to obtain tax breaks."

Source: act.workerpower.com/a/opposehb2274

 

[MNNumbers]

Opposition has already started...

Tell the State Legislature to VOTE NO on HB2274!

To quote the message from the petition to be sent to the legislators:

"I am aware that the first responders’ PTSD coverage bill (HB2274) has been amended with a strike-everything amendment from Sen. Hoffman that exchanges proposed benefits for firefighters for a bill to reduce local input in the formation of "theme park districts" (which includes sports facilities such as stadiums) as special taxing districts. These special tax districts can levy as much as a 9% sales tax within the district's bounds, which can be used by developers to recover construction-related debt. Currently, both the county and the city governments would have to sign off on such a district. Under HB2274, only the county government is needed, essentially removing cities from being guaranteed a role in the decision-making process.

City and county input and oversight is essential to ensuring that the surrounding communities are considered when development decisions are made. Residents have much more opportunity to express their concerns and needs to their local government officials.

HB2274, as written, would charge residents and customers who frequent the stadiums and parks that would get built a premium on retail sales. However, those dollars will not get put back into our roads and schools. That tax revenue would be sent out of our communities to developers!

The kind of deals that this legislation would support are already unpopular with residents. When the Coyotes’ Tempe Entertainment District was put to a vote, the proposed deal involved a Community Facilities District with a surcharge on goods paid by guests to be used to cover the costs of developing the site. Voters rejected the prospect of that kind of deal there, but with this new legislation, cities will have significantly less power to reject projects and the taxes that come with them.

The Coyotes ownership is vying for land in North Phoenix right now and this legislation could make it easier for them to get these subsidies, at the cost of taxpayers. Arizona residents have already rejected giving tax breaks to stadium developers. Why are we making it easier for developers to expropriate tax revenue that should be going back into our communities?

So we’re asking you to VOTE NO on HB2274. Preserve local control and refuse to make it easier for developers to obtain tax breaks."

Source: act.workerpower.com/a/opposehb2274

At the risk of sounding like an anti-Coyotes fanatic......I'm in favor of this petition. "We're going to finance this ourselves" sure doesn't look like financing it themselves, when they are looking to take advantage of the theme park district designation.

 

[aqib]

One other thing I feel I just found kind of annoying was the number of times they said this was unprecedented. This is literally the Browns deal all over again with a few modifications.

 

[GKJ]

One other thing I feel I just found kind of annoying was the number of times they said this was unprecedented. This is literally the Browns deal all over again with a few modifications.

Unprecedented to hockey I suppose. Probably because it was the first time all the IP was not moved in the transaction.

 

[TheLegend]

At the risk of sounding like an anti-Coyotes fanatic......I'm in favor of this petition. "We're going to finance this ourselves" sure doesn't look like financing it themselves, when they are looking to take advantage of the theme park district designation.

Which does what… puts a surcharge just on those who use the district.

There are no tax breaks here being asked for to date. No GPLETs.

Worker Power is blustering with the same misleading talking points that somehow everyone is going to get screwed.

The land sale already benefits the schools. Unless there is pending action to delay or mitigate the property taxes the schools will benefit again. Unless the city does something to defer sales taxes to other means the schools continue to benefit.

The current theme park district law requires city, county and state authorization. Another group is looking to remove the city and county from the equation which is what this is all about.

That’s primarily why Meruelo is meeting with the mayor of Phoenix. He can’t count on this law changing.

 

[Big Z Man 1990]

If I wanted to add a 9th team to the Metro I would add Indianapolis. The West currently has three Midwestern teams to the East's two. Indianapolis would balance things out.

 

[MNNumbers]

Which does what… puts a surcharge just on those who use the district.

There are no tax breaks here being asked for to date. No GPLETs.

Worker Power is blustering with the same misleading talking points that somehow everyone is going to get screwed.

The land sale already benefits the schools. Unless there is pending action to delay or mitigate the property taxes the schools will benefit again. Unless the city does something to defer sales taxes to other means the schools continue to benefit.

The current theme park district law requires city, county and state authorization. Another group is looking to remove the city and county from the equation which is what this is all about.

That’s primarily why Meruelo is meeting with the mayor of Phoenix. He can’t count on this law changing.

So, I agree with all of that. I'm not despising Meruelo for looking for that designation. But, my point is that the optics look bad.

If you....#1- Claim you are going to finance this yourself and then
#2 - Ask the government for a special designation.....

It seems like you are still trying to find loopholes.

Now, if Meruelo just point blank said...."Hey, we are going to try to build this district. But, it a lot of money, and money is expensive right now, because of high interest rates. It is possible that our ability to do the project depends on getting a theme park designation for the area, because that allows us to bring in more funding....." That would be much more in keeping with building the public trust.

Talking about an idea, and then talking about the details and the subtle advantages you need later, doesn't cause people to trust you.

 

[TheLegend]

So, I agree with all of that. I'm not despising Meruelo for looking for that designation. But, my point is that the optics look bad.

If you....#1- Claim you are going to finance this yourself and then
#2 - Ask the government for a special designation.....

It seems like you are still trying to find loopholes.

Now, if Meruelo just point blank said...."Hey, we are going to try to build this district. But, it a lot of money, and money is expensive right now, because of high interest rates. It is possible that our ability to do the project depends on getting a theme park designation for the area, because that allows us to bring in more funding....." That would be much more in keeping with building the public trust.

Talking about an idea, and then talking about the details and the subtle advantages you need later, doesn't cause people to trust you.

At this point optics are out the window.

Arizona politics are a street fight. If the opposition can spin Mary Poppins to look like Stormy Daniels they’re going to do it.

 

[sh724]

So the whole "they lost $60MM last year" narrative, assuming that is accurate (which we have no idea if it is) they paid $40MM for the annex and prepaid the lease for 3 years. Idk how much the lease costs off the top of my head but the vast majority of that loss is from those two items and not from actual operations. There is also likely non operational costs in there related to the search for a new arena, which we know AM spent millions own. If the $60MM loss is accurate it's entirely possible nearly all, if not all, of that is unrelated to the actual operations of the team.

We have no idea if that $60MM, again assuming its correct, is a cash number or an accounting number, which can vary drastically. Many accounting line items, like depreciation, aren't actual cash expenses, but are treated as such, and we know tax laws regarding depreciation for sports teams are very favorable to the owners. Then there are all the others ways in which business owners can legally manipulate the tax code to show less taxable income.

Point being we have, once again, been provided a random number with zero context and people are running with it and making extrapolations as if it has actual meaning. The reality is these numbers are thrown around to generate clicks and without additional information they shouldn't be given any validity.

 

[TheLegend]

So the whole "they lost $60MM last year" narrative, assuming that is accurate (which we have no idea if it is) they paid $40MM for the annex and prepaid the lease for 3 years. Idk how much the lease costs off the top of my head but the vast majority of that loss is from those two items and not from actual operations. There is also likely non operational costs in there related to the search for a new arena, which we know AM spent millions own. If the $60MM loss is accurate it's entirely possible nearly all, if not all, of that is unrelated to the actual operations of the team.

We have no idea if that $60MM, again assuming its correct, is a cash number or an accounting number, which can vary drastically. Many accounting line items, like depreciation, aren't actual cash expenses, but are treated as such, and we know tax laws regarding depreciation for sports teams are very favorable to the owners. Then there are all the others ways in which business owners can legally manipulate the tax code to show less taxable income.

Point being we have, once again, been provided a random number with zero context and people are running with it and making extrapolations as if it has actual meaning. The reality is these numbers are thrown around to generate clicks and without additional information they shouldn't be given any validity.

The costs of the annex and such were two years ago. All of which was paid up front so I wouldn’t think those are includdd.

But I agree there’s a lot numbers being haphazardly tossed around.

 

[mouser]

So the whole "they lost $60MM last year" narrative, assuming that is accurate (which we have no idea if it is) they paid $40MM for the annex and prepaid the lease for 3 years. Idk how much the lease costs off the top of my head but the vast majority of that loss is from those two items and not from actual operations. There is also likely non operational costs in there related to the search for a new arena, which we know AM spent millions own. If the $60MM loss is accurate it's entirely possible nearly all, if not all, of that is unrelated to the actual operations of the team.

We have no idea if that $60MM, again assuming its correct, is a cash number or an accounting number, which can vary drastically. Many accounting line items, like depreciation, aren't actual cash expenses, but are treated as such, and we know tax laws regarding depreciation for sports teams are very favorable to the owners. Then there are all the others ways in which business owners can legally manipulate the tax code to show less taxable income.

Point being we have, once again, been provided a random number with zero context and people are running with it and making extrapolations as if it has actual meaning. The reality is these numbers are thrown around to generate clicks and without additional information they shouldn't be given any validity.

Fully agreed. I’d like to highlight that any debt service expenses won’t give us the full story about the profitability of the core business operations.

 

[mouser]

I have no inside knowledge here, but it wouldn't surprise me if a good chunk of the purchase price goes back to the NHL as accumulated debt repayment. Just a guess.

Unlikely any team accumulated debt goes directly back to the NHL (and teams). The NHL has a revolving credit facility with a third party financial institution that all teams can make use of if they choose to.

If there are any debts the Coyotes franchise “owe to the NHL”, I expect those debts are actually owed to the third party financial company.

The Coyotes almost certainly have a good chunk of debt. Whether that debt is still primarily held by the NHL’s revolving credit partner, or AM “refinanced” some or all of it with a different lender at a lower rate is a question on which I’d love to see more detail become public.

 

[dj4aces]

Elliotte Friedman writes in his written 32 Thoughts that Meruelo must give his reactivation request by December 31, 2027

Seeing as how deadlines have been fluid thoughout the lifespan of the megathreads, I'm inclined to believe this deadline is also fluid.

 

[GKJ]

Seeing as how deadlines have been fluid thoughout the lifespan of the megathreads, I'm inclined to believe this deadline is also fluid.

I'm sure there will be wiggle room, but he does have to actually do it. If the building is 50% completed, it probably doesn't take a year and a half to finish it. But let's say, they're not satisfied - they gonna go find someone to build a 4th building?

 

[dj4aces]

I'm sure there will be wiggle room, but he does have to actually do it. If the building is 50% completed, it probably doesn't take a year and a half to finish it. But let's say, they're not satisfied - they gonna go find someone to build a 4th building?

Exactly. He has to put in the work. We'll know more about that beginning 27 June.

 

[hangman005]

Yeah I can't imagine the NHL being like, that bolt in your hand if in it's proper place would have put you at 50% oh well no reactivation for you. I'd imagine even 40% done they probably give him a bit more time... unless the only reason it was only at 40% was because he wasn't paying his bills to the contractors who stopped work as a result.

 

[JS19]

Hypothetically speaking, if Meruelo doesn't win the land auction, what happens then? Would there be a stipulation that the trademarks and IP would simply transfer back to the NHL?

I know Meruelo says he's committed, but there seems to be intense skepticism around the league that he can actually get it done.

 

[dj4aces]

Hypothetically speaking, if Meruelo doesn't win the land auction, what happens then? Would there be a stipulation that the trademarks and IP would simply transfer back to the NHL?

I know Meruelo says he's committed, but there seems to be intense skepticism around the league that he can actually get it done.

When the Thrashers relocated, the league kept the trademark. From what I understand, it was non-negotiable, so that Atlanta Spirit or anyone else couldn't sit on it when Atlanta returns to the league, if the new owner also wants to call the team the Thrashers.

If Meruelo fails to procure land and form those necessary relationships to make it possible for a team to play in the valley again in five years, I can only imagine the league keeps control of everything related to the Coyotes.

 

[GKJ]

Hypothetically speaking, if Meruelo doesn't win the land auction, what happens then? Would there be a stipulation that the trademarks and IP would simply transfer back to the NHL?

I know Meruelo says he's committed, but there seems to be intense skepticism around the league that he can actually get it done.

According to Craig Morgan, he has a year to acquire land. If he doesn't win the auction, he can still turn to one of the other two plots he has letters of intent on, but the reason it's on this auction is because it's zoned properly.

 

[Ciao]

Unlikely any team accumulated debt goes directly back to the NHL (and teams). The NHL has a revolving credit facility with a third party financial institution that all teams can make use of if they choose to.

If there are any debts the Coyotes franchise “owe to the NHL”, I expect those debts are actually owed to the third party financial company.

The Coyotes almost certainly have a good chunk of debt. Whether that debt is still primarily held by the NHL’s revolving credit partner, or AM “refinanced” some or all of it with a different lender at a lower rate is a question on which I’d love to see more detail become public.

No matter who the debt is owed to, the point is that he probably doesn't walk away with a billion dollars cash. He gets what's left after an unknown but probably sizeable amount of debt is retired.

 

[MNNumbers]

At this point optics are out the window.

Arizona politics are a street fight. If the opposition can spin Mary Poppins to look like Stormy Daniels they’re going to do it.

I disagree that optics are out the window. He still wants to own a team here. He is therefore dependent on the good will of local people. There is a huge mountain of trust that he needs to rebuild in order to have that good will.

ETA: There are tremendous sales tax advantages for the owner of the "theme park district" as well. Plus, he gets to use city financing capabilities.

Again, this is "I'm financing this all myself."

It's not even tax meutral because if someone else wins the auction, they aren't going to ask for that, so the sales tax advantages that Meruelo gets wouldn't apply elsewhere. That's tax money given away.

 

[LadyStanley]

Seeing as how deadlines have been fluid thoughout the lifespan of the megathreads, I'm inclined to believe this deadline is also fluid.

No, that is a hard/unmoveable deadline date. NHL needs 18 months to plan for expansion-type draft and scheduling to re-incorporate Coyotes 2.0 into league.

Now if he's close to 50%, they may allow it, but that date is not moving.

Will Utah NHL’s team keep Coyotes coach and GM? New owner addresses personnel and other early questions

A roundup of some of the notable statements from Ryan Smith and commissioner Gary Bettman on Utah's new NHL team.

www.sltrib.com

So Smith's only "getting the people". That's a lot of equipment and tools the Utah team needs to acquire. I'd imagine the trainers have their personal favorite things/organization, but sounds they'll have to get brand new. A number of things will expire (thinking specifically of medical supplies), or fall apart (leather) or seize up (unlubricated exercise equipment).

I can see AM having a garage sale so he doesn't have to store all that stuff for five years.