Latest on the Arizona Coyotes Arena ordeal

[80s Kid]

Phoenix is the 5th largest city in the US and one of the fastest growing cities. It also has a very large metro area with areas like Scottsdale, Mesa, etc. The point being that the NHL is going to do everything it can to keep and maintain a franchise there...Too much potential.

You can cite stats from the past but as I previously mentioned, the city continues to grow as it's one of the few large US cities that hasn't been run into the ground yet.

The one caveat is that the city has a lot of transplants from other areas. If the team can find stability, I don't think attendance will be an issue but the arena will likely have a lot if fans from visiting teams.

 

[D34DLYB1RDS]

I say move the Coyotes to Utah, Winnipeg back to Atlanta, Houston as an expansion.

 

[BB79]

Yet, you want a team in Quebec, right

Way to dance around the fact that Tampa, Florida, Carolina, Dallas, Nashville, and Vegas all have great attendance.

And as I already said, most of the franchises I already went over took YEARS to get to respectable attendance and had to be sold the game, but way to dance around what I already said and I think Quebec could draw more than 5k fans, unlike Arizona. As usual though, keep picking on Canadian teams with their 70% exchange rate if it helps your case. They would probably be more profitable even still. The Coyotes can't even get a damned tv deal and air their games over rabbit ears

 

[Silky Johnson]

Not a financial expert but...

If, the Coyotes have lost $141m in the last 10 and if Meruelo bought the Coyotes for $300m 5 years ago (which he did) and if the value of the asset is now $400m (which Westhead says in his graphic) then this billionaire has lost less than $41m in the process of turning an unprofitable business around.

Time value if money. Purchases like that are measured in NPV &/IRR. By those (correct) metrics he has lost much more than that.

So yes, you are not a financial expert.

 

[AtlantaWhaler]

And as I already said, most of the franchises I already went over took YEARS to get to respectable attendance and had to be sold the game, but way to dance around what I already said and I think Quebec could draw more than 5k fans, unlike Arizona. As usual though, keep picking on Canadian teams with their 70% exchange rate if it helps your case. They would probably be more profitable even still. The Coyotes can't even get a damned tv deal and air their games over rabbit ears

You keep going after the one team that's playing in a temporary arena. And I'm not just going after Canadian teams... You completely ignored my questions from a couple posts ago...even cut them out of the reply. Funny that you say "same mistake" but defend an already relocated QC.

If only southern market teams have attendance issues, then how about Boston and Pittsburgh in the late 90’s and early 2000’s? What about Chicago and the Islanders after that? And Ottawa? How about Winnipeg now? Just about every team has had stretches of low attendance.

 

[CheckingLineCenter]

Time value if money. Purchases like that are measured in NPV &/IRR. By those (correct) metrics he has lost much more than that.

So yes, you are not a financial expert.

not really. it’s not possible to know unless we understand the deal structure tbh.

The future losses could have been underwritten and fully funded by a credit facility, and Mereulo hasn’t lost a dime (or made one) until there is a capital event.

Could be off a HNW line of credit. Could be he wrote a check every year. Reality is we don’t know and that’s why reporters like Westhead and Strang should stay away from concepts they don’t understand.

 

[Bandit]

And where will they move to, I wonder. Canada?

You wish. Mexico City here we come!!

Honestly I’d love to see it, just to watch people’s heads explode.

 

[LeafalCrusader]

Even the Neverending Story ended but not this saga.

 

[Mike Jones]

I say move the Coyotes to Utah, Winnipeg back to Atlanta, Houston as an expansion.

Nope - Calgary needs to go back to Atlanta. Calgary needs to make money off its new arena and we can't do that with an NHL franchise demanding all the revenue and paying only pennies in return.

You wish. Mexico City here we come!!

Honestly I’d love to see it, just to watch people’s heads explode.

Given the NHL's current thinking and obsession with desert cities you're not that far off.

 

[DustyDangler]

Time value if money. Purchases like that are measured in NPV &/IRR. By those (correct) metrics he has lost much more than that.

So yes, you are not a financial expert.

You are unkind to say but I appreciate your prideful response nevertheless. Could you restate the first sentence in a complete sentence so I can attempt to understand what you are saying?

 

[DustyDangler]

You keep going after the one team that's playing in a temporary arena. And I'm not just going after Canadian teams... You completely ignored my questions from a couple posts ago...even cut them out of the reply. Funny that you say "same mistake" but defend an already relocated QC.

If only southern market teams have attendance issues, then how about Boston and Pittsburgh in the late 90’s and early 2000’s? What about Chicago and the Islanders after that? And Ottawa? How about Winnipeg now? Just about every team has had stretches of low attendance.

Correct. Arizona attendance at Gila River was better than Pittsburgh pre-Lemieux or even pre-Crosby. Pitt attendance will likely take bigger and bigger hits as they finally, commit to rebuilding and Crosby retires. The Chicago bandwagoners stopped selling out when they went rebuild, then the NHL gifted them Bedard and now they show up. Point being, every NHL market, save for Toronto and Montreal, will have attendance problems if they are not competitive or don't have a star to watch.

 

[DustyDangler]

Arizona is last in the NHL in franchise value, attendance and revenue. They can't get a stable arena or owner.

They are without a doubt the very worst hockey market. There only franchise value is in the potential for it to be moved. ie buy something worth 500M and move it to a better market and then own something worth in the Billions.

Arizona now has a stable owner who has a net worth of $2b. They are on track for purchasing land in NE Phoenix and have a stable arena.

Arizona is a solid hockey market as evidenced by participation statistics and things like ASU having a division 1, top 20 ranked program that did not exist prior. The NHL has benefitted via the talents of Matthews, Knies, Daccord & more who developed in AZ.

When the Coyotes had a good on ice product in the Tkachuk, Roenick, Numminen era, they filled buildings and had high playoff energy. Fans have had to endure incompetence on and off the ice since and yes, that will effect attendance (in every market). When they have a good product (which they are putting together) and a good building (which they are working on), they will have strong attendance and support.

 

[Silky Johnson]

You are unkind to say but I appreciate your prideful response nevertheless. Could you restate the first sentence in a complete sentence so I can attempt to understand what you are saying?

You are forgetting the time value of money.

Money devalues over time (inflation) and you can do other things with it (opportunity cost). When evaluating an acquisition you should use Discounted Cash Flow analysis like NPV (Net Present Value) or IIR to evaluate the success.

You said 300M paid for the team, minus 141M in losses is a 41M loss after selling the team 5 years later for 400M. This is a poor way of evaluating the acquisition.

In an NPV calculation you would apply a discount rate to the cash flows of the transaction. There are various methods of determining an appropriate discount rate, like Weighted Average Cost of Capital (WACC), but for this exercise let's use a very middle of the road 14%.

The operating losses of 141M million would look worse under this analysis but not knowing precisely when they occurred and in the interpretation of time let's say they amount to 200M (good round number that's not to far off).

The 400 million sale of the team would be discounted to 208M after 5 years.

The Net Present Value of the acquisition would be something like a 292M loss (300M purchase with 200M operating losses and 208M for the sale).

That is a terrible investment.

My response, while maybe unkind (I don't think pridefull??), was in response to your arrogant and ill informed assertions

 

[Silky Johnson]

not really. it’s not possible to know unless we understand the deal structure tbh.

The future losses could have been underwritten and fully funded by a credit facility, and Mereulo hasn’t lost a dime (or made one) until there is a capital event.

Could be off a HNW line of credit. Could be he wrote a check every year. Reality is we don’t know and that’s why reporters like Westhead and Strang should stay away from concepts they don’t understand.

The assertion was made about Westheads figures.

Under any structure there would currently be a negative NPV on the aquisition and certainly with the proposed hypothetical sale price of 400M.

There would need to be a sale price of north of 1B to make this a positive NPV and that is way off any current valuations.

It would need alot of lipstick to make this pig pretty.

 

[Kimota]

Cold climates never required work for attention? You might want to check attendance history.

While you’re there you will also see Florida is top-10 in attendance. As is many warm climate cities.

wat

 

[CheckingLineCenter]

The assertion was made about Westheads figures.

Under any structure there would currently be a negative NPV on the aquisition and certainly with the proposed hypothetical sale price of 400M.

There would need to be a sale price of north of 1B to make this a positive NPV and that is way off any current valuations.

It would need alot of lipstick to make this pig pretty.

Yeah, no. Negative NPV =/= actual losses mate.

 

[sxvnert]

Coyotes probably relocate to a city the NHL is interested in but wont pay the massive expansion fee. No chance the owners skip on the Utah expansion fee.

 

[FMichael]

You keep going after the one team that's playing in a temporary arena. And I'm not just going after Canadian teams... You completely ignored my questions from a couple posts ago...even cut them out of the reply. Funny that you say "same mistake" but defend an already relocated QC.

If only southern market teams have attendance issues, then how about Boston and Pittsburgh in the late 90’s and early 2000’s? What about Chicago and the Islanders after that? And Ottawa? How about Winnipeg now? Just about every team has had stretches of low attendance.

Those franchises haven’t hemorrhaging $$$ and were never owned/managed by the league

 

[Laus723]

And as I already said, most of the franchises I already went over took YEARS to get to respectable attendance and had to be sold the game, but way to dance around what I already said and I think Quebec could draw more than 5k fans, unlike Arizona. As usual though, keep picking on Canadian teams with their 70% exchange rate if it helps your case. They would probably be more profitable even still. The Coyotes can't even get a damned tv deal and air their games over rabbit ears

Who took years, much less YEARS to get to respectable attendance? Look at attendance in Florida back in 96, especially the Finals. People love hockey here and it’s grown like wildfire.

People didn’t however appreciate, or want to pay for, an owner holding the team hostage as he tried to build a casino on adjacent property. He set an internal cap, made players pay for their own game worn jerseys, the list goes on…he drove fans away.

 

[Chaos2k7]

Yet, you want a team in Quebec, right

Way to dance around the fact that Tampa, Florida, Carolina, Dallas, Nashville, and Vegas all have great attendance.

Inconvienient truths

 

[Chaos2k7]

wat

Our 6 fans buy a lot of tickets

 

[TheLegend]

Friedman just said on HNIC if Arizona doesn't win the June auction that the NHL is open to relocation

Friedman also walked it back some this morning.

(15:00 minute mark.)

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Hockey fans already know the name, but this is not the blog. From Sportsnet, 32 Thoughts: The Podcast with Jeff Marek and NHL Insider Elliotte Friedman is a weekly deep dive into the biggest news and interviews from the hockey world.

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Sometimes the best thing to do is NOT make generalizations.

 

[LPHabsFan]

The assertion was made about Westheads figures.

Under any structure there would currently be a negative NPV on the aquisition and certainly with the proposed hypothetical sale price of 400M.

There would need to be a sale price of north of 1B to make this a positive NPV and that is way off any current valuations.

It would need alot of lipstick to make this pig pretty.

The two of you @CheckingLineCenter are having way too nuanced of a discussion for the main board.

 

[WaitingForThatCab]

Arizona is last in the NHL in franchise value, attendance and revenue. They can't get a stable arena or owner.

They are without a doubt the very worst hockey market. There only franchise value is in the potential for it to be moved. ie buy something worth 500M and move it to a better market and then own something worth in the Billions.

The potential value of the Coyotes is actually very, very high in Phoenix. Huge metro area.

 

[AtlantaWhaler]

Those franchises haven’t hemorrhaging $$$ and were never owned/managed by the league

You got a link for that? Chicago was in trouble for a long time under Wirtz and the Isle with Wang. I believe Ottawa was struggling for revenue for awhile.

And to go back to the poster who said "teams in cold climates and never required hard work for attention", I must also remind him that it gets pretty chilly in Winnipeg, Hartford, and Quebec.