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

[Whileee]

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 have a feeling though that they might get to keep the $25mm in escrow, considering they're conveniently paying enough to cover the purchase price and this year's loss.

Not so sure about that. Aren't they getting a bond issue for $125 million?

 

[kingbrutis]

I bought my season tix and spend money @ every game. Hopefully there will be some marketing to get others to the game. There has been ZERO. There are a ton of things to do here in the winter so there has to be advertising and marketing to remind people that the $$$ they are spending is going to give them a great experience. Do you want to pay to watch the suns, cards, nascar, winter baseball or drop $100 for a round of golf? We are very lucky we have all those choices. People just need to be reminded that the best team here is the Coyotes and the $$$ you are going to spend will give you the best experience.

 

[cbcwpg]

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.

Even though we all know this is just gonna be rubber stamped, it would be reasonable to expect to have ONE person on council to go on record as voting against this, but I doubt it. Bring out the 8 year old in the Coyotes jersey and Phil will cave.

 

[peter sullivan]

- 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.

am i right in understanding that the team owners previously ran the arena for free and now glendale will pay them $17m a year for that privelidge?

what happens after the 5 years if he decides not to buy the arena?....will he just continue to operate it and recieve the profits without being paid that money?.....why would he buy the arena if that is the case?

 

[roccerfeller]

it certainly seems like the lease will be approved on tuesday, so the surprise would only be if no lease was approved (surprise + shocker)

but the real question I think is post lease approval...didn't JR and IEH both have leases get approved in the past? I guess we could count IEH out, but what about JR?

I recall the sentiment was once JR got the lease approved, it was a "done deal" back then too

 

[Whileee]

it certainly seems like the lease will be approved on tuesday, so the surprise would only be if no lease was approved (surprise + shocker)

but the real question I think is post lease approval...didn't JR and IEH both have leases get approved in the past? I guess we could count IEH out, but what about JR?

I recall the sentiment was once JR got the lease approved, it was a "done deal" back then too

JR and IEH only had MOU's approved. Once this lease is approved and signed it is a "done deal". The only thing that might derail it would be a legal challenge. At least that is how I understand things.

 

[roccerfeller]

JR and IEH only had MOU's approved. Once this lease is approved and signed it is a "done deal". The only thing that might derail it might be a legal challenge. At least that is how I understand things.

Ah I see, I was under the impression this was akin to the April whatever meeting back in the Spring.

I think that makes more sense, as this is the actual lease agreement rather than an MOU.

I still think however, given the amount of twists that have happened since last year, this isn't quite done yet.

on the other hand...at least Glendale city council is trying whatever they can do to keep the yotes there, even if it does seem ridiculous

when this whole thing is over and done with we all gotta reward ourselves with some nice cold beer

 

[leafs4cup]

JR and IEH only had MOU's approved. Once this lease is approved and signed it is a "done deal". The only thing that might derail it would be a legal challenge. At least that is how I understand things.

What about the NHL and its lawyers,are we to assume that they will not go over this whole agreement. They may have a concern or two with it as well.The NHL has taken a hit IMO from this whole ordeal and I beleive they will be very involved to ensure all the I,s are dotted and T,s are crossed.

 

[OthmarAmmann]

What about the NHL and its lawyers,are we to assume that they will not go over this whole agreement. They may have a concern or two with it as well.The NHL has taken a hit IMO from this whole ordeal and I beleive they will be very involved to ensure all the I,s are dotted and T,s are crossed.

Why would the NHL care? They're getting paid. All the debt the league incurred is to buy the Coyotes is essentially getting shifted to the CoG.

 

[peter sullivan]

a parking lot that was a liability to the previous owner is suddenly a $125m asset.

a lease management fee that was provided for free now suddenly has a value of $100m....he is getting paid for the right to make a profit off the arena....

sounds great.....but

in 5 years he is running a team with no more revenue opportunities than the last 2 owners who felt that charging for parking would be a detriment to their operations, yet he will be a slave to the whims of glendale who can charge whatever they want no matter how it affects attendance...without a cent going to the team....and this will go on for 2 decades.

first 5 years, glendale is insane.

next 15 years matty is insane.

its a lose lose in my opinion.

 

[JetFan4Ever]

Accoriding to AZ central " Glendale would pay Hulsizer $97 million over the next 5 1/2 years to manage the arena, schedule concerts and other non-hockey events."

So Glendale will rely on the revenues generated from parking at all the events (5, 500spots) yet they will pay Coyote's to manage the arena and scheduling all non-hockey events. What recourse will the city have if Hulsizer's group does a poor job at this. Is there a benefit to Hulsizer to work hard at booking non-hockey events?

 

[elvisisdead]

I think MH has found a way to almost eliminate his risk and get enough breathing room to make some good money at the end of 6 years. That is some stellar negotiating...

First off, he is only paying $70 million for the team, with the $100 million parking and naming rights thing from the COG. If he can expand only a small part of the fan base and reduce his losses to between $10 million to $15 million a year (which, in my opinion is easily doable), he could have between $10 million to $35 million in his pocket after the six years.

With his max outlay at between $35-$60 million after 6 years (if he can reduce the losses as above), his upside is huge, and he certainly won't lose any money, if he decides to firesale the asset.

However, if I were a Coyotes fan, I definitely would not be celebrating yet. This deal is manna from heaven for Goldwater. Just re-read Turken v. Phoenix, and the similarities are striking.

At the very least, Goldwater has the opportunity to file suit in court and delay this thing indefinitely - looking at this objectively, there are enough merits to the case where it will go the distance.

One clause stuck out for me in re-reading the case (page 20):

In contrast, our Gift Clause
jurisprudence quite appropriately focuses on adequacy of
consideration because paying far too much for something
effectively creates a subsidy from the public to the seller.
See Wistuber, 141 Ariz. at 349-50, 687 P.2d at 357-58; Kromko,
149 Ariz. at 321-22, 718 P.2d at 480-81.

When the court in Turken says paying $97.5 million for parking spaces is too much, I find it difficult to see the following as "fair consideration":

1) naming rights and parking lot rights for $100 million, especially when naming rights for arenas are going for about $1 million per year on average (here is a link to what the naming rights are going for across the U.S. http://espn.go.com/sportsbusiness/s/stadiumnames.html)

2)management contract for $17.5 million for an arena that doesn't even generate that much rental income in a year.

This thing is far from over...

 

[knich]

Frankly, I could care less if they move or not. In the grand scheme of things, it pretty much has zero effect on my life. I just don't understand how a group of elected officials can sell their own constituents down the river and try to tell them it's a cruise.

As an aside, I notice that most of the people who are Coyote fans don't live within Glendale proper and as such don't seem to care that the city will be paying out obscene amounts of money to subsidize professional sports. I guess as long as some other city that I don't care about was willing to kill itself off for my entertainment, I'd be pretty happy too...

Like you..the difference is that I actually pay for season tickets (unlike you) and spend my money in Glendale (unlike you). That argument is like someone from Hamilton, ONT saying "most of the people who are [Leafs] fans don't live within [Toronto] proper and as such don't seem to care that the city will be paying out obscene amounts of money to subsidize [a s****y team]. I guess as long as some other city that I don't care about was willing to kill itself off for my entertainment, I'd be pretty happy too..." The reality is that most of you in this thread selfishly want another team in Canada...at any cost and justify it by finding everything negative you can think about a situation. I'm sure if I searched the thread when it looked like the PENS might move, I'd find you in there too making the same stale arguments. And I'm sure to find you in the ATL thread as well. Just curious...when OTT could not pay its players, where where you suggesting the team that plays in the capital of the land of hockey be relocated? Get over it!

 

[OthmarAmmann]

Sure, but the city is pretty much going to argue that if the Coyotes leave that a giant purple dragon will disembowel and eat every resident of Glendale. Thus the consideration is fair.

 

[NHLfan4life]

Sure, but the city is pretty much going to argue that if the Coyotes leave that a giant purple dragon will disembowel and eat every resident of Glendale. Thus the consideration is fair.

Correction: the giant purple dragon was deported back to Mexico under SB 1070under Sheriff Joe's orders...I'll try to find the article

Until then, we will continue to celebrate in AZ. 78 degrees today, perfect for a BBQ.

 

[AllByDesign]

I guess as long as some other city that I don't care about was willing to kill itself off for my entertainment, I'd be pretty happy too..." The reality is that most of you in this thread selfishly want another team in Canada...at any cost and justify it by finding everything negative you can think about a situation.

That coin has two sides, no? There are many that I have read that selfishly want another team(s) in Canada. There are some that also selfishly want to keep a team located in Phoenix. I say selfishly because the financial responsibilty for the lease falls not on your shoulders.

I can appreciate you not caring if the COG is leaving itself in a financialy vulnerable situation as long as you can watch your Coyotes. I'm not even saying you are wrong for taking that stance. It is selfish though, right?

The state that you reside in has gone through a lot of hardships on an economic level. Many have lost their jobs and their homes that they put their life into. Would this new lease agreement and the blatent subsidies provided to a multi-millionaire not be like pouring Frank's Hotsauce on their still bleeding wounds? But hey... I'm sure you are doing just fine.

Ohh, just as a heads up, I'm not drinking today so I will be more keen on my debating skills. yesterday was a freebee

 

[RECCE]

Thanks for the link elvisisdead, although I'm defiantly not a legal beagle by any stretch, this seems awfully close to what we're dealing with here.

Turken v Gordon
P.21-22

A hypothetical illustrates the point. Assume that a
municipality must repair a sewer line. If the line is not
repaired, disease will likely break out and spread quickly,
causing deaths and significant public health care expenditures.
Several competent contractors are willing to do the repair for
$5,000. Under the City’s reasoning, the municipality could pay
a contractor $5 million without violating the Gift Clause
because the indirect benefits from the repair — saved lives and
avoided health care costs — exceed the $5 million payment.
22
¶35 We disagree that this should be the result. The Gift
Clause prohibits subsidies to private entities, and paying far
more than the fair market value for the repair plainly would be
a subsidy to the contractor. Similarly, if the City’s payments
to NPP under the Parking Agreement are grossly disproportionate
to the objective value of what NPP has promised to provide in
return, the consideration prong of the Wistuber test has not
been satisfied.

 

[aj8000]

Like you..the difference is that I actually pay for season tickets (unlike you) and spend my money in Glendale (unlike you).

Unless you live pay taxes in Glendale your argument is also weak.

 

[knich]

That coin has two sides, no? There are many that I have read that selfishly want another team(s) in Canada. There are some that also selfishly want to keep a team located in Phoenix. I say selfishly because the financial responsibilty for the lease falls not on your shoulders.

I can appreciate you not caring if the COG is leaving itself in a financialy vulnerable situation as long as you can watch your Coyotes. I'm not even saying you are wrong for taking that stance. It is selfish though, right?

The state that you reside in has gone through a lot of hardships on an economic level. Many have lost their jobs and their homes that they put their life into. Would this new lease agreement and the blatent subsidies provided to a multi-millionaire not be like pouring Frank's Hotsauce on their still bleeding wounds? But hey... I'm sure you are doing just fine.

My friend...that is not my quote it is your mate's quote. I just modified it to show its ridiculousness...it was sarcasm. I cannot truly say whether this agreement puts COG in a financially vulnerable position because (1) I have not poured thru the lease agreement and (2) Only time will tell whether this agreement was successful for both Hulsizer and the COG.

I choose not to look at this agreement as the COG or MH getting hosed as the reality is both are going to spend lots of money. I choose to see the opportunity. COG has spent lots of money building the arena and is faced with spending lots of money if it has no tenant. MH has already spent lots of money in legal fees getting to this point. And even if he purchases the team at a discount, if you believe him [He says I'm going to lose money for quite a while], he's going to spend lots and lots of money to make this team work in Glendale...a lot more than the money the COG is giving him. If everything goes as MH and the COG envisions then both will benefit immensely. Only time will tell.

I put my money in to the COG because the Yotes are there. Would I put my money in to the COG if the Yotes weren't there, unlikely. Why...because the Cardinals suck and because, as a poster has already indicated, the COG doesn't have much to offer beyond the Yotes and the Cardinals. So...the way I see it is I want to spend my money in the COG but I likely won't if the Yotes aren't there. Is that selfish...yes...but in a good way.

 

[knich]

Unless you live pay taxes in Glendale your argument is also weak.

Why?

 

[elvisisdead]

The COG has at least a plausible argument when they say the $100 million for parking and naming rights is fair consideration. Jobing.com is paying $3 million a year for the naming rates (for another 6 years), so if you take that amount over the term of the lease (I think it terminates in 2033), that is about $66 million. Are the parking spots worth $34 million over 22 years? Possibly.

But $17.5 million a year for management of the arena with its current schedule and without putting it out to tender? Not a hope, in my opinion. There would be dozens of reputable management companies lining up for a deal half this good.

 

[aj8000]

Why?

You want the Yotes to stay in Glendale. I would guess you do not care how much it costs the City of Glendale since you do not live there.

Therefore, you are no better than the people calling for the moving of the franchise who do not live in Glendale

So unless you live in Glendale and pay taxes in Glendale, I discount your arguments as much as I discount the arguments from the individuals showing concern for the ratepayers of Glendale who wanted the Yotes to leave.

 

[gollybass]

The COG has at least a plausible argument when they say the $100 million for parking and naming rights is fair consideration. Jobing.com is paying $3 million a year for the naming rates (for another 6 years), so if you take that amount over the term of the lease (I think it terminates in 2033), that is about $66 million. Are the parking spots worth $34 million over 22 years? Possibly.

But $17.5 million a year for management of the arena with its current schedule and without putting it out to tender? Not a hope, in my opinion. There would be dozens of reputable management companies lining up for a deal half this good.

an analyst already posted the costs for running the arena at around 20 million a year, so 17 is plausible. COG didnt just pull this out of there *****, they made the whole deal with GWI in mind.

 

[knich]

You want the Yotes to stay in Glendale. I would guess you do not care how much it costs the City of Glendale since you do not live there.

Therefore, you are no better than the people calling for the moving of the franchise who do not live in Glendale

So unless you live in Glendale and pay taxes in Glendale, I discount your arguments as much as I discount the arguments from the individuals showing concern for the ratepayers of Glendale who wanted the Yotes to leave.

See my posts above..and if you did, read them again.

 

[peter sullivan]

Accoriding to AZ central " Glendale would pay Hulsizer $97 million over the next 5 1/2 years to manage the arena, schedule concerts and other non-hockey events."

So Glendale will rely on the revenues generated from parking at all the events (5, 500spots) yet they will pay Coyote's to manage the arena and scheduling all non-hockey events. What recourse will the city have if Hulsizer's group does a poor job at this. Is there a benefit to Hulsizer to work hard at booking non-hockey events?

Is he not also recieving the profits from non hockey events? They are paying him to operate the arena and also pocket the profits from it.