Dan Friedkin the man behind NHL to Houston

[StreetHawk]

Building outside of Harris County seems really risky. Unless there's a massive cluster of hockey fans outside of the county, I dont see that being the smart move. You'd be putting an arena away from the majority of the population and depending on the area, far from any public transit hubs.

Going outside of Harris county does seem like a Glendale type scenario for the Coyotes. Yes, you get gov help, but in he end, it's all about location for the fans. You are asking them to attend like 20 home games between Mon-Thur during the season. So, they need to be able to get there and home within a reasonable time.

Figure, they would build up the surrounding area as well, but that also needs to consider location.

 

[LT]

Building outside of Harris County seems really risky. Unless there's a massive cluster of hockey fans outside of the county, I dont see that being the smart move. You'd be putting an arena away from the majority of the population and depending on the area, far from any public transit hubs.

There isn't really any cluster of hockey fans in Houston. There also isn't much public transit.

Downtown is the best option. Anywhere else has obvious major issues.

 

[dj4aces]

There isn't really any cluster of hockey fans in Houston. There also isn't much public transit.

Downtown is the best option. Anywhere else has obvious major issues.

I think the best way to determine where prospective fans would be then is a little market research. The easy solution is a downtown building, absolutely, but if a little research reveals that most of the folks who would buy season tickets live in The Woodlands -- just as an example -- then considering a location in an area of town that would favor those residents would be better.

It doesn't necessarily have to be outside Harris County, but it's still something to consider, and something Friedkin would need to conduct some market research to find out for sure.

 

[ViD]

If it’s outside the downtown, it’s gotta be the Woodlands. They already have a venue that hosts A list performers, for example the Offspring will play there this summer

 

[LT]

If it’s outside the downtown, it’s gotta be the Woodlands. They already have a venue that hosts A list performers, for example the Offspring will play there this summer

Honestly I think that's part of what would help rule out the Woodlands

West Houston is where the money is, particularly south of I-10. But Harris County spreads quite far out into that direction.

I ultimately think a deal with Toyota Center will eventually be the solution. Most of this is all speculation, I've only seen one decent source mention a new arena. I'm sure it's an option that was discussed internally, but who knows what Fertitta's group is thinking. I am quite certain they will absolutely want to avoid a new arena somewhere else, though.

 

[Voight]

Honestly I think that's part of what would help rule out the Woodlands

West Houston is where the money is, particularly south of I-10. But Harris County spreads quite far out into that direction.

I ultimately think a deal with Toyota Center will eventually be the solution. Most of this is all speculation, I've only seen one decent source mention a new arena. I'm sure it's an option that was discussed internally, but who knows what Fertitta's group is thinking. I am quite certain they will absolutely want to avoid a new arena somewhere else, though.

This is why I think Fertitta will be open to sharing the arena; if they offer him a piece of the team it'll be a good incentive to work together.

 

[aqib]

This is why I think Fertitta will be open to sharing the arena; if they offer him a piece of the team it'll be a good incentive to work together.

He could have had the whole team on multiple occasions. He is stuck on valuations.

Another question for people who are local. Just from looking at Google Maps there seems to be a lot of surface lots around the arena. So I'll kick this back to the locals, why hasn't there been more development there and are there other parts of Houston that would be prime for someone to scoop up and do the mixed use?

 

[Voight]

He could have had the whole team on multiple occasions. He is stuck on valuations.

Another question for people who are local. Just from looking at Google Maps there seems to be a lot of surface lots around the arena. So I'll kick this back to the locals, why hasn't there been more development there and are there other parts of Houston that would be prime for someone to scoop up and do the mixed use?

Sure but he likely does not want to spend 1-1.5bn on a team. Hence why he might be OK with spending a tenth or quarter of that. I think he has an issue with paying the whole price but would be more open to a smaller piece.

 

[aqib]

Sure but he likely does not want to spend 1-1.5bn on a team. Hence why he might be OK with spending a tenth or quarter of that. I think he has an issue with paying the whole price but would be more open to a smaller piece.

He balked at $500M for an entire team, that seems like a bargain compared to $150 million for 10%.

 

[dj4aces]

He balked at $500M for an entire team, that seems like a bargain compared to $150 million for 10%.

That's exactly where I stand with this too. Plus, what does Friedkin stand to gain by practically giving Fertitta (in this example) 10% of the team to play in the Toyota Center? What if Friedkin decides he wants his own building, assuming he hasn't already made that decision?

The love-in with Fertitta just feels really weird. If anyone can prove they can get things done in the Houston sports world *without* Fertitta and taxpayer assistance, it's Friedkin.

 

[Voight]

That's exactly where I stand with this too. Plus, what does Friedkin stand to gain by practically giving Fertitta (in this example) 10% of the team to play in the Toyota Center? What if Friedkin decides he wants his own building, assuming he hasn't already made that decision?

The love-in with Fertitta just feels really weird. If anyone can prove they can get things done in the Houston sports world *without* Fertitta and taxpayer assistance, it's Friedkin.

It all depends if hes willing to sink almost half of his net worth into his thing. A new arena plus expansion fee its going to run him 2.5-3bn, assuming he builds within Harris County (which seems to be the most likely scenario).

 

[aqib]

It all depends if hes willing to sink almost half of his net worth into his thing. A new arena plus expansion fee its going to run him 2.5-3bn, assuming he builds within Harris County (which seems to be the most likely scenario).

He's not going to pay cash for the entire thing. Stan Kroenke was worth about $6 billion when he moved the Rams to LA. Its not like he paid for the stadium in cash.

 

[KevFu]

He could have had the whole team on multiple occasions. He is stuck on valuations.

Another question for people who are local. Just from looking at Google Maps there seems to be a lot of surface lots around the arena. So I'll kick this back to the locals, why hasn't there been more development there and are there other parts of Houston that would be prime for someone to scoop up and do the mixed use?

I'm not "local" to Houston, but local to the TV market (Austin) and can help with that answer.

The Houston market is geographically massive, and mass transit is incredibly weak. Simply put, anyone going to a sporting event in Houston is driving. (also the percentage of commuters in giant pickup trucks probably the highest of any fan base in the country).

 

[KevFu]

That's exactly where I stand with this too. Plus, what does Friedkin stand to gain by practically giving Fertitta (in this example) 10% of the team to play in the Toyota Center? What if Friedkin decides he wants his own building, assuming he hasn't already made that decision?

The love-in with Fertitta just feels really weird. If anyone can prove they can get things done in the Houston sports world *without* Fertitta and taxpayer assistance, it's Friedkin.

It's not a love-in with Fertitta, it's the terms of the Toyota Center lease. NHL Houston essentially HAD to go through Alexander then Fertitta, or any would-be owner is doubling their costs to buy in, making it a pipedream and not a realistic possibility.

The reason you're seeing movement on Houston NOW is because the NHL expansion timeline and the remaining time on the Toyota Center lease are lining up.. We talked about Vegas and Seattle as the next expansion teams.... back in 2013 and the Kraken started play eight years later.

Houston and Friedkin could work out an arena deal that doesn't violate the lease they have with Fertitta,
so it's built with Friedkin's part and the loans are paid back using the City's part (starting the second the Toyota Center lease expires), and then Houston has to work out a new lease for the Rockets and the Toyota Center (as they wouldn't be going forward with the same terms as now).

THAT'S why Fertitta has a reason to partner up with Friedkin: because "50% of two arenas" versus "100% of one arena" is a better deal when you're the one controlling the 31-year old arena, and the other arena is brand new.

He can also fill his "lost" summer dates for the Toyota Center with a WNBA team. The costs of that is more in his price range, has synergy with the Rockets team he owns, sharing expenses; he just likes basketball more than hockey; AND the payroll/operations expense of an NHL team is like $200m vs a WNBA team being like $25m-50m.

(Oh, and regional sports network. If Houston gets an NHL team and WNBA team, they need TV deals, so you cut in Friedkin and make Space City 2 for when MLB/WNBA and NBA/NHL are on at the same time).

 

[dj4aces]

It's not a love-in with Fertitta, it's the terms of the Toyota Center lease. NHL Houston essentially HAD to go through Alexander then Fertitta, or any would-be owner is doubling their costs to buy in, making it a pipedream and not a realistic possibility.

The "love-in" was solely in regards to folks talking about Friedkin selling him a portion of the franchise for rights to Toyota Center, when there's a distinct possibility that Friedkin wouldn't want the NHL franchise to play there. If he has the drive (and the league has the preference) to go his own way, I don't see the Toyota Center being a part of the equation.

The easiest solution isn't always the best solution. It's damn easy for him to just sign a lease and wipe hands on pants, but is it really the best solution?

 

[aqib]

I'm not "local" to Houston, but local to the TV market (Austin) and can help with that answer.

The Houston market is geographically massive, and mass transit is incredibly weak. Simply put, anyone going to a sporting event in Houston is driving. (also the percentage of commuters in giant pickup trucks probably the highest of any fan base in the country).

Other than NYC, Boston, and a few other east coast cities aren't most cities reliant on cars? Now football needs surface lots due to tailgating (although that seems to be less of a priority as time goes on and the NFL is pricing out the fans who tailgate). Dallas doesn't have a bunch of surface lots around their arena.

It's not a love-in with Fertitta, it's the terms of the Toyota Center lease. NHL Houston essentially HAD to go through Alexander then Fertitta, or any would-be owner is doubling their costs to buy in, making it a pipedream and not a realistic possibility.

The reason you're seeing movement on Houston NOW is because the NHL expansion timeline and the remaining time on the Toyota Center lease are lining up.. We talked about Vegas and Seattle as the next expansion teams.... back in 2013 and the Kraken started play eight years later.

Exactly this. Houston probably could have gotten in when Seattle got a team had Fertitta been willing to pay the $650 million. They would have probably gotten the Coyotes at some point had they been willing to pay for that too. Now you've got 8 years left on the lease. If the a new CBA is done this fall you can expect an expansion announcement in the spring. Which means 2029ish for a new team. So at most 4 years of being bunkmates.

 

[KevFu]

Other than NYC, Boston, and a few other east coast cities aren't most cities reliant on cars? Now football needs surface lots due to tailgating (although that seems to be less of a priority as time goes on and the NFL is pricing out the fans who tailgate). Dallas doesn't have a bunch of surface lots around their arena.

Yeah, I think it's partly that the old stadiums held massive amounts of people, those parking lots serve both baseball and basketball, and the fact that it's just not easy to build parking garages when such a large percentage is driving gigantic pickup trucks vs midsized cars.

 

[LT]

Houston is a bit unique in that it may have the worst urban sprawl of any major US city and is probably the least walkable city on the entire planet. The lack of public transit cannot be understated, either - what is available usually still requires driving to a parking lot that's just further out from the arena or stadium.

For the Toyota Center, I'd bet that 99+% of fans attending events there drive themselves and park at the attached Tundra garage or nearby. I'm not sure you can say the same for most other arenas in the US, but maybe I'm wrong there.

 

[KevFu]

Exactly this. Houston probably could have gotten in when Seattle got a team had Fertitta been willing to pay the $650 million. They would have probably gotten the Coyotes at some point had they been willing to pay for that too. Now you've got 8 years left on the lease. If the a new CBA is done this fall you can expect an expansion announcement in the spring. Which means 2029ish for a new team. So at most 4 years of being bunkmates.

Yeah. I think we EXPECT people to be combatants when this one is a good marriage. I think Fertitta's main motivation for kicking the tires on the NHL is more about "Houston sports" than about "I want a HOCKEY team."

The expense of owning a team (where payrolls are $90m and climbing) vs the additional revenue just didn't add up when home hockey games ALSO cut into "outside event" dates for an arena he operates.

But a partnership with Friedkin just makes sense for everyone, because these guys NEED each other now:

By forming a joint company for arena management to operate a new arena AND the Toyota Center, they both have leverage with the City on leases. The math for Fertitta to give up "outside arena events" for a new sports team he owns WORKS for the cost of owning a WNBA team, not NHL, AND not actually losing business if the outside events are just in a second arena. They don't compete with each other for those outside events, so they maximize profits. They can get MORE with two arenas.

It helps Friedkin with the NHL: "whatever timeline you want is fine, because we can play in the Toyota Center." And it helps Friedkin get a TV deal -- with Space City, co-owned by Fertitta.

If Friedkin tries to usurp Fertitta on the arena control front, what's going to happen when he goes to get a TV deal from Space City?

It just makes far more sense for them to conquer together than compete.

 

[aqib]

Yeah. I think we EXPECT people to be combatants when this one is a good marriage. I think Fertitta's main motivation for kicking the tires on the NHL is more about "Houston sports" than about "I want a HOCKEY team."

The expense of owning a team (where payrolls are $90m and climbing) vs the additional revenue just didn't add up when home hockey games ALSO cut into "outside event" dates for an arena he operates.

But a partnership with Friedkin just makes sense for everyone, because these guys NEED each other now:

By forming a joint company for arena management to operate a new arena AND the Toyota Center, they both have leverage with the City on leases. The math for Fertitta to give up "outside arena events" for a new sports team he owns WORKS for the cost of owning a WNBA team, not NHL, AND not actually losing business if the outside events are just in a second arena. They don't compete with each other for those outside events, so they maximize profits. They can get MORE with two arenas.

It helps Friedkin with the NHL: "whatever timeline you want is fine, because we can play in the Toyota Center." And it helps Friedkin get a TV deal -- with Space City, co-owned by Fertitta.

If Friedkin tries to usurp Fertitta on the arena control front, what's going to happen when he goes to get a TV deal from Space City?

It just makes far more sense for them to conquer together than compete.

The Rockets have 45ish days plus playoffs. As busy as the Toyota Center it doesn't have 320 non-Rockets dates. IF you add an NHL team you're talking about extra 45ish dates for a hockey team plus playoffs which you can easily slot in. Yes payrolls are rising but people aren't paying over a billion for NHL teams to lose money.

 

[varsaku]

He's not going to pay cash for the entire thing. Stan Kroenke was worth about $6 billion when he moved the Rams to LA. Its not like he paid for the stadium in cash.

No one lives in the city for Houston. It is a primarily all commercial space hence all the parking from people commuting in. Plus a lot of major employers have moved to the suburbs since they can build a whole space of their own. Exxon moved to the Woodlands (Northern Suburb) to build their own campus. Shell, ConocoPhillips & BP moved to the energy corridor towards Katy (Western Suburb).
Within the city the really only niceish place is Midtown with bars and restaurants. EDO (East Downtown) has been gentrifying but still has a long way to go. Then everything else around downtown is either really expensive or really bad for the average person.

 

[KevFu]

The Rockets have 45ish days plus playoffs. As busy as the Toyota Center it doesn't have 320 non-Rockets dates. IF you add an NHL team you're talking about extra 45ish dates for a hockey team plus playoffs which you can easily slot in. Yes payrolls are rising but people aren't paying over a billion for NHL teams to lose money.

Yeah, but in Fertitta's mind, it's "how long does it take to make the money BACK?" If you're making $25m a year running a hockey team and it costs $800m to a billion, you're making your money back in 20-25 years and he's 67 years old. (And that's a made-up number, as many on this site would probably love to argue hockey in Houston would not be THAT profitable!)

Most profit is made on selling the team a decade or two later. But he can't JUST sell the NHL team while maintaining ownership of the Rockets/control of the arena, because no one is going to want a tenant asset (hence the Winnipeg Jets 2.0).

So that's why he's always been interested in $200m-$300m "buy them and move them like the 1990s" team, but not a $500m to $800m or more "modern NHL expansion/relocation fee team."

Partnering with Friedkin accomplishes the financial goals of "also owning an NHL team" while not tying the Rockets and an NHL together. Obviously, he wouldn't get AS MUCH directly; but there's also indirect aspects.

They can structure the like three separate deals they need to make (arena management, minority share, and TV) so it's win-win. While Fertitta would be "giving up" revenues from inside the arena by not owning the team, he's gaining revenue on the Space City side of things from selling ads to 80+ more games. The money Feritta is "leaving on the table" is being picked up by Freidkin, who's leaving money on the table that Fertitta picks up.

Throw in that he WANTS to bring a WNBA team to Houston, too, and that'd take arena dates away in the summer, but if he's controlling half of a second arena...

You're right about the "45 of 365" aspect, but not all 365 dates are equal business. WEEKENDS are just more lucrative than weekdays.

 

[ponder719]

Yeah, but in Fertitta's mind, it's "how long does it take to make the money BACK?" If you're making $25m a year running a hockey team and it costs $800m to a billion, you're making your money back in 20-25 years and he's 67 years old. (And that's a made-up number, as many on this site would probably love to argue hockey in Houston would not be THAT profitable!)

Most profit is made on selling the team a decade or two later. But he can't JUST sell the NHL team while maintaining ownership of the Rockets/control of the arena, because no one is going to want a tenant asset (hence the Winnipeg Jets 2.0).

So that's why he's always been interested in $200m-$300m "buy them and move them like the 1990s" team, but not a $500m to $800m or more "modern NHL expansion/relocation fee team."

Partnering with Friedkin accomplishes the financial goals of "also owning an NHL team" while not tying the Rockets and an NHL together. Obviously, he wouldn't get AS MUCH directly; but there's also indirect aspects.

They can structure the like three separate deals they need to make (arena management, minority share, and TV) so it's win-win. While Fertitta would be "giving up" revenues from inside the arena by not owning the team, he's gaining revenue on the Space City side of things from selling ads to 80+ more games. The money Feritta is "leaving on the table" is being picked up by Freidkin, who's leaving money on the table that Fertitta picks up.

Throw in that he WANTS to bring a WNBA team to Houston, too, and that'd take arena dates away in the summer, but if he's controlling half of a second arena...

You're right about the "45 of 365" aspect, but not all 365 dates are equal business. WEEKENDS are just more lucrative than weekdays.

Also, he CAN just sell a minority share of the NHL team when the valuation is right, so being a junior partner in that regard facilitates what we posit he actually wants to get out of this deal.

 

[rojac]

I asked about this earlier but no one responded, so I'll ask again. Is there any possibility that Fertitta would sell the Rockets (and thus, control of the Toyota Center) to Friedkin?

 

[LT]

I asked about this earlier but no one responded, so I'll ask again. Is there any possibility that Fertitta would sell the Rockets (and thus, control of the Toyota Center) to Friedkin?

No.