Part XV: Phoenix - the battle of evermore (UPD #443ff 14-Dec agenda/lease links)

[Whileee]

With all due respect explaining something to a group of people that pick and choose thier facts (and I mean that on both pro relocation and phoenix fan sides) explaining does no good.

Having said that experts have said that the cost of running Jobing.com could run up to 20 million a year. I cant vouch for the validity of the experts, it could be billy bob is her expert, or it could be a paid consultant that is reputable and unbiased. This is quoted in the Azcentral.com artice this week by Mayor Scruggs. also if you arent familiar with westgate without the coyotes there isnt a great deal of reason to go out there, so you are in danger of losing a major employer in the bedroom comunity off of phoenix. Glendale doesnt have a lot of economic development or shopping other than some strip malls Westgate is the most $$ from a development that they have, other than a power plant. Major developments that draw people and dollars are in suprise, avondale and peoria. Without the coyotes in a few years they would either need to wrap the entire project in saran rap untill they could get another hockey team. You may or may not believe it but rest assured that the city of glendale believes it, and that is why this has been so screwed up. They are screwed no matter what and are choosing between the lesser of 2 evils.

Bottom line is that in all likelyhood this is a done deal, and its going to give the coyotes time to develop and reclaim its fanbase. If it doesnt happen then at that point I am not going to be suprised if they bail. Honestly I think with a little luck the coytes can be sustainable for the next 10 years and then will bloom as the kids buy tickets and bring thier kids ect ect play youth hockey and build the team up.

I agree, many folks pick and choose their "facts" on this issue. Suffice to say that the Mayor and council are hoping that the citizens of Glendale accept theirs, as outlined in their "Fact Sheet". If you and others don't read that as "spin", then so be it.

 

[MAROONSRoad]

Summary of terms of this absurd deal by Rebekah L. Sanders:

Glendale has struck a deal that would pay the Phoenix Coyotes' prospective buyer $197 million over the next five years, more than the city spent to build an arena for the team seven years ago.

Chicago businessman Matthew Hulsizer would get $100 million, which Glendale will raise from a bond issue, as soon as the deal is signed.

The city would then pay the Coyotes organization $97 million over five years to operate the arena during concerts and other non-hockey events, a cost that had previously been borne by the team.

The city says it will charge parking fees at arena lots to help cover the cost of the $100 million in bonds, although it is not clear whether those fees will cover all the debt...

Now, Hulsizer plans to pay $170 million to buy the team from the NHL as soon as next week and is expected to use the $100 million payment to offset the cost.

In exchange for the up-front payment, Glendale will take over rights to 5,500 parking spaces in lots surrounding the arena. Use of those lots had previously been controlled by the arena's tenant, the Coyotes. The city plans to repay the debt by implementing arena-parking fees of $5 to $20 during hockey games, concerts and other events, as well as selling advertising and naming rights on the lots...

- The city has done preliminary work to find investors to purchase $100 million in bonds to cover the up-front payment to Hulsizer. The bonds would likely be paid over 30 years, although the terms, including annual debt payment are not yet known. Another way of paying that debt could be the formation of a special taxing district near the arena, although that is not outlined in the agreement.

- Glendale would pay Hulsizer $97 million over the next 5 ½ years to manage the arena, schedule concerts and other non-hockey events. That cost previously has been picked up by the team. Glendale's annual payments would range from $10 million to $20 million through fiscal 2016.

- After 5 ½ years, Glendale could sell the arena to Hulsizer for no more than $130 million. If he isn't interested, the city could sell the arena to another buyer or renegotiate payments to Hulsizer to continue to operate the arena. The Coyotes would remain at the arena, even if the arena were sold.

- At the end of the lease, in 2033, Hulsizer could purchase the arena, as well as the rights to charge for arena parking, for $40 million...

In return, Hulsizer agrees to:

- Keep the team in Glendale for the next 23 years, the remaining time the city has on its lease with the team. That's also the length of time the city still owes on its borrowing to build the arena.

- Pay the same amount of arena rent and fees to Glendale as previous owners, roughly $6 million to $8 million per year.

http://www.azcentral.com/community/...nix-coyotes-glendale-lease.html#ixzz17mYNuOLK

GHOST

 

[MAROONSRoad]

It seems at least one council member is against the deal. From the same article:

But Councilman Phil Lieberman blasted the deal as "ridiculous" Friday night. He said Glendale cannot afford the terms of the agreement.

GHOST

 

[Motown Beatdown]

i just dont see how the city of Glendale can afford this deal. IMO they are cutting of their nose to spite their face.

 

[Evil Doctor]

13.2.3. name change to Arizona Coyotes.

I wonder if this is as soon the deal is finalized or will it wait to the start of next season? Somehow it would be fitting with this circus if it's right away...

 

[Motown Beatdown]

I wonder if this is as soon the deal is finalized or will it wait to the start of next season? Somehow it would be fitting with this circus if it's right away...

The Phoenix Coyotes of Glendale, has a nice ring to it. Works for the angels of MLB

 

[Wham City]

It seems at least one council member is against the deal. From the same article:



GHOST

I think I know an adorable puppy in a Coyotes jersey that could change his mind.

 

[RAgIn]

So Hulsizer has the option to buy the arena after 5 years? Is that the out-clause. hmm...

Article 19. Right of First Refusal and Purchase option. Intriguing.

http://www.azcentral.com/ic/pdf/1210glendale_lease.pdf

page 101.

 

[RAgIn]

I wonder if this is as soon the deal is finalized or will it wait to the start of next season? Somehow it would be fitting with this circus if it's right away...

Definitely not this year.

 

[gollybass]

Definitely not this year.

I would imagine itll be to start the new season, along with new jerseys in some form, its been 2 years since even a slight change so it wouldnt surprise me

 

[kdb209]

So Hulsizer has the option to buy the arena after 5 years? Is that the out-clause. hmm...

Article 19. Right of First Refusal and Purchase option. Intriguing.

http://www.azcentral.com/ic/pdf/1210glendale_lease.pdf

page 101.

The purchase price can be no more than $130M, but no less than the outstanding balance of the Arena Bonds (currently ~$145M on the MPC 2003A & B bonds) - so this is moot until the bond principal drops below $130M.

Also, at first glance it appears that exercising this option does not effect the second agreement - USE AND NON-RELOCATION AGREEMENT - which requires the team play in Glendale until either 2040 or the maturity dates of the Arena and Parking bonds or pay the new Liquidated Damages in Exhibit B:

EXHIBIT B
LIQUIDATED DAMAGES
From the Effective Date and until _________, 2021: $350,000,000
From __________, 2021 and until _________, 2031 $250,000,000
From _______, 2031 and until ____________, 2041 $150,000,000

So, no - the Arena purchase option is not an out clause.

 

[peter sullivan]

Wow. Just wow.

I expected crazy but that deal is crazy. Congratulations coyote fans. I would say now let's get out and show the world you deserve it but that doesn't even matter. Your team will be there for 23 more years even if they continue to play infront of desert tumbleweeds.

I believed that Glendale were buffoons but clearly not.

The no out clause is staggering. I will give Matty props for that. He must honestly believe that he can make hockey work in Phoenix. After 5 years he'll be on his own and the patrons that he will need to attract will now be paying for parking at the mercy of Glendale and he won't see a nickel of it. And this with 2 decades left on his noose. I don't know who is crazier, Matty or Glendale. To me they are both getting screwed.

All of this and he doesn't even have the assurance that he is simply having to restore the market. He will have to build a market that is willing to choke up a lot more money in a lot greater numbers than they have in the past 15 years.

Good luck to him. He had better pray that this team of plumbers that gave found a way to win keep doing it.

Naming rights on the parking lot? Seriously?

 

[RR]

Nice Avatar... I was hoping you weren't going to bring back that creepy Numminen one..

I have to admit I'm a little surprised that you are completely convinced this is going to end the way you've hoped it will. Maybe the COG could be talked into buying a bridge I have for sale?

Not at all. Just some positive thinking...finally.

 

[MAROONSRoad]

He's getting $100 million for the parking and $85 million over the next 5 years for arena management. That should help.

This is actually very interesting. What seems to have happened is that Glendale wanted the subsidies to be paid by Westgate businesses (who we have been told were desperate to keep the Coyotes). Westgate said "thanks but no thanks, we'll just have to take our chances without the Coyotes".

There were no owners willing to purchase the team at the NHL's price without massive subsidies. Since Glendale cannot legally directly subsidize a private business due to the gift law, they instead grossly overpay the owners for parking rights and arena management. Even they know that they are overpaying which is why they put a "Fact Sheet" together to tell their citizens that the Super Bowl came to Glendale because of the Coyotes.

It seems to me that if this passes legal muster, it essentially eviscerates the gift law. Any municipality could tell a prospective business owner "well, we can't give you incentives directly, but we'll pay if you $100 million if you let us run the parking lots". It seems pretty transparent. It will be interesting to see how the Phoenix media interprets this, and whether the Goldwater Institute takes an interest. I think this might be a tough sell on both fronts.

Still, hats off to the City of Glendale. Nobody can accuse them of not putting their money where their mouth is...

You know your bolded comments are actually kind of funny in a most ironic sense. Why? Because in the recent gift clause case, Turken v Gordon, the essential issue was whether an agreement by the City of Phoenix to pay almost $100 million to a private developer for certain parking rights violated the gift clause.The court held that it likely did because the amount was a gross overpayment. The court went on to clarify the test going forward. It would look at the adequacy of consideration when considering public expenditures to private entities. See here:

http://www.ssd.com/pdf/publicfinance/Turken_v_Gordon.pdf

GHOST

 

[CGG]

Apparently the city still doesn't know what's going on with the $25 million. From the Rebekah Sanders article:

http://www.azcentral.com/community/glendale/articles/2010/12/10/20101210phoenix-coyotes-glendale-lease.html#ixzz17mYNuOLK

- A point not addressed in the lease is $25 million the city put up earlier this year to cover team losses and arena expenses. Glendale officials believe the NHL may allow the city to keep the $25 million, which has so far gone untapped.

Wow these people are dense. Why do you think the league was insisting on a $25 million escrow and a $170 million sale price? So they wouldn't lose any money. Now they think the league will do them a solid and just eat the losses themselves?

I actually think they're lying through their teeth with that comment, of course they're covering this year's losses. Why else raise $125 million from bond sales when you only need to fork over $100 million?

From the same article, we're talking $100,000,000 for 5,500 parking spaces on land owned by the city. That's $18,181 per space. 41 home games per year, assuming they're always full, $10 per parking space, that's 44 years of parking at Coyotes games.

How is that going to pass the gift clause test? And before anyone says anything about non-Coyotes events, those non-Coyotes events will still be there if the Coyotes left and the arena and parking lots are both owned by the city. Viability of Westgate and theoretical tax income? Not valid arguments for the gift clause.

We also thought naming rights (and a bunch of other stuff) were going to go to the city, well that's only partially right. Not naming rights to the arena, but naming rights to the parking lot. Seriously. From the same article:

The city plans to repay the debt by implementing arena-parking fees of $5 to $20 during hockey games, concerts and other events, as well as selling advertising and naming rights on the lots.

I can hear it now. "We're gonna so make money from our $100 million investment because Whattaburger offered us $1,000 to rename it the Whattaburger parking lot and Pepsi wants to put banners up on the light poles."

 

[MAROONSRoad]

Gary Lawless, WFP:

Chicago businessman Matthew Hulsizer will likely purchase the Phoenix Coyotes in the coming weeks for $170 million, with the City of Glendale picking up the majority of that cost.

Under terms of a proposed lease agreement for Jobing.com Arena, Hulsizer would receive $100 million from the City of Glendale for parking rights.

This is a thinly veiled gift from Glendale to Hulsizer to grease the wheels of a purchase.

Hulsizer originally balked at the NHL's asking price of $170 million and when commissioner Gary Bettman wouldn't budge, Glendale came to the rescue with their portion of the sale price.

Hulsizer will also receive $97 million over six years to cover losses incurred by the Coyotes under an agreement that will see his ownership group manage Jobing.com for the City of Glendale...

NHL commissioner Gary Bettman has stated failure to meet the deadline would allow the league to explore other sale opportunities, including those involving relocation.

True North Sports and Entertainment worked out a deal with the NHL last spring to buy the Coyotes and bring them to Winnipeg's MTS Centre. It's understood that deal could easily have been reactivated and finalized without much difficulty.

http://www.winnipegfreepress.com/opinion/columnists/coyotes-suitor-may-get-100m-111715169.html

GHOST

 

[OthmarAmmann]

The no out clause is staggering. I will give Matty props for that. He must honestly believe that he can make hockey work in Phoenix. After 5 years he'll be on his own with what appears to be even fewer revenue generating opportunities than the long list of failed previous owners. Unless he pays a hefty price for the arena, those revenues are gone. The patrons that he will need to attract will now be paying for parking at the mercy of Glendale and he won't see a nickel of it. And this with 2 decades left on his noose. I don't know who is crazier, Matty or Glendale. To me they are both getting screwed.

Considering he's not really paying anything for the team, how hard of a decision will it be for him to put the team into bankruptcy if it's a real dud? It's reminiscent of a zero-down mortgage.

Not at all. Just some positive thinking...finally.

Well now I understand - and appreciate - your other avatar.

From the same article, we're talking $100,000,000 for 5,500 parking spaces on land owned by the city. That's $18,181 per space. 41 home games per year, assuming they're always full, $10 per parking space, that's 44 years of parking at Coyotes games.

Doesn't look that expensive to me, but I've got an NYC perspective.

I seem to recall hearing that a parking space at a condo in Osborne Village in Winnipeg was $10,000.

 

[Faltorvo]

Apparently the city still doesn't know what's going on with the $25 million. From the Rebekah Sanders article:

http://www.azcentral.com/community/glendale/articles/2010/12/10/20101210phoenix-coyotes-glendale-lease.html#ixzz17mYNuOLK



Wow these people are dense. Why do you think the league was insisting on a $25 million escrow and a $170 million sale price? So they wouldn't lose any money. Now they think the league will do them a solid and just eat the losses themselves?

I actually think they're lying through their teeth with that comment, of course they're covering this year's losses. Why else raise $125 million from bond sales when you only need to fork over $100 million?

From the same article, we're talking $100,000,000 for 5,500 parking spaces on land owned by the city. That's $18,181 per space. 41 home games per year, assuming they're always full, $10 per parking space, that's 44 years of parking at Coyotes games.

How is that going to pass the gift clause test? And before anyone says anything about non-Coyotes events, those non-Coyotes events will still be there if the Coyotes left and the arena and parking lots are both owned by the city. Viability of Westgate and theoretical tax income? Not valid arguments for the gift clause.

We also thought naming rights (and a bunch of other stuff) were going to go to the city, well that's only partially right. Not naming rights to the arena, but naming rights to the parking lot. Seriously. From the same article:



I can hear it now. "We're gonna so make money from our $100 million investment because Whattaburger offered us $1,000 to rename it the Whattaburger parking lot and Pepsi wants to put banners up on the light poles."

For starters would the 17m a year cost of running the arena not plummet if there was not 41 hockey games there to service?

Secondly this 100m bond , will there not be interest payed on those bonds?

5,500 spots at $10 a shot for 41 games equals




$2,255,000 , minus whatever it will cost to segregate these parking spots off and the employees needed to charge and control it.

If this bond pays out 3% interest per annum your looking at 3m a year in dept servicing no?

Look i have no vested interest if this goes through or not, i'm just fascinated with the politics and mechanics involved.

 

[AllByDesign]

Quote:
But Councilman Phil Lieberman blasted the deal as "ridiculous" Friday night. He said Glendale cannot afford the terms of the agreement.

Hehe... Phil 'tough-stance' Lieberman. He emits a 25 minute diatribe, berating the JR lease deal. Then he still votes for it.

This deal is the financial equivilent of prison ****, and every councillor will vote to approve it.

 

[Ciao]

Glendale gets an "E" for effort, which is something I always admire in every sporting venture. I wish the Leafs players would try as hard just to win a few games!

 

[berklon]

As long as it's not my money being used, the more power to them.

Congrats Coyotes fans - you've got your team.

 

[NHLfan4life]

As long as it's not my money being used, the more power to them.

Congrats Coyotes fans - you've got your team.

Thank you! Awooooooooooooo!!!!!!!!

 

[ps241]

Ed Beasley........The Wizard of Glendale

where was this council and city manager in 1995 during the save the Jets drive!!

 

[Whileee]

Hehe... Phil 'tough-stance' Lieberman. He emits a 25 minute diatribe, berating the JR lease deal. Then he still votes for it.

This deal is the financial equivilent of prison ****, and every councillor will vote to approve it.

Actually, I won't be surprised if a number of city councilors have some chilly feet on this one. If this was funded by a voluntary CFD, I think it would sail through city council, as Reinsdorf's MOU did. However, this deal looks and feels like a direct handout. As the reality of the deal is digested by the media and local citizens, and especially if the GWI makes a public stink, I think that the economic and political climate is not conducive to this sort of deal. It will be interesting to see how the Glendale councilors feel about this if there is a backlash. I do recall a rather vigorous debate in Winnipeg when the government was considering options for public support, before they realized that they could not justify the cost to taxpayers to retain the team. In that sense, kudos to Glendale City. They really have laid it all out for Hulsizer and the NHL.

 

[OthmarAmmann]

Actually, I won't be surprised if a number of city councilors have some chilly feet on this one. If this was funded by a voluntary CFD, I think it would sail through city council, as Reinsdorf's MOU did. However, this deal looks and feels like a direct handout. As the reality of the deal is digested by the media and local citizens, and especially if the GWI makes a public stink, I think that the economic and political climate is not conducive to this sort of deal. It will be interesting to see how the Glendale councilors feel about this if there is a backlash. I do recall a rather vigorous debate in Winnipeg when the government was considering options for public support, before they realized that they could not justify the cost to taxpayers to retain the team. In that sense, kudos to Glendale City. They really have laid it all out for Hulsizer and the NHL.

And it will result in an immediate budget deficit for the city in the $17mm per year. The additional debt service will sting too. More service cuts or tax increases for the ppl of Glendale... I guess they were getting there anyway.