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

[Faltorvo]

Something that popped into my mind.

This whole gift clause and past precedent.

Would the COG not have to create a list of how many spots at price X.

Pre establish the % rate on the bonds for the purpose of debt servicing.

To be able to justify in court that there is even a remote possibility of this passing the sniff test?

I mean $5 or $20 per spot changes the game completely.

at $5 max sales = 1,130,000 at $20 per it's 4,500,000 per


1% or 9% debt servicing on a 100,000,000 changes the game also.

at 1% it's 1 million per and at 9% it's 9 million per for debt servicing.

Are these the Grey areas, the vagaries that the COG and lawyers put in there to try and pass the sniff test?

All indicators hint that most of the parking will be set at $5 a spot.

And the % on the bond will need to be up-wards of 5%.

Here is a question that i have, because i don't know exactly how your bonds work down there.

If the parking fees fall short on the debt servicing end, where does the money come from to make up the difference?

When the 100,000,000 matures and there is not enough money set aside, where does it come from?

 

[Veinless]

It seems like it would be cheaper for CoG to just buy the Coyotes themselves. This way they could either sell the parking lot rights to someone else for $100M, or have the parking fees pay for the bonds required to purchase the team.

 

[Faltorvo]

As somebody pointed out, this does not include debt service. At 6% (the 30 year Treasury is 4.3% right now, so it could easily be higher) that comes to $8,127,848. Of course, the amortization pattern will figure prominently in the true cost (I just did it like a mortgage)



There's a lot of uncertainty about the revenue number obviously, and varying assumptions will result in very different results:

$15 per spot is very high. Spots may range between $5 and $20, so if we assume parking may be priced at $5 lots, $10 lots, $15 lots, and $20 lots, the distribution we need to get to $15 is

20	2200		40%
15	1500		27%
10	1500		27%
5	300		5%

Which may or may not be likely.

This also assumes that all 5500 spots are used for all 50 events. The Coyotes attendance the last two years would suggest that this is very optimistic, at least for the next two to three years. I'd suggest at least a 10% to 20% haircut.

Finally, this is of course just the revenue number and ignores costs to run the parking lots (employees, etc). Let's assume though that the lots are very profitable and have an 80% profit margin. At a more reasonable $10 per spot, that results in $8 profit)

Let's also bump the number of events up to 60, so that it's 1/3 non-NHL events (God, what was Glendale thinking?).

($8 per spot) * (4400 spots per event) * (60 events) = $2,112,000

That means naming rights have to be about $6 mm per year to break even, and the parking lots don't exactly get national billing (i.e. the "Jobing.com arena with parking presented by Wells Fargo")

Wait a minute. Am i missing something here?

If, after all these years, no one saw it as a viable option to charge for parking , for what ever reasons.

Maybe to much free parking near the area that can't be controlled combined with the fear that parkings fees will drive away fans.

Is it not safe to assume that the vast majority of those parking spots will be charged at $5 a shot? How does one separate/segregate $5 ,$10,$15,$20 dollar spots? And what is the cost of doing so?

If Hulz does not own the team, would those extra 20 events not be owned and controlled by the COG by default?

Does one not have to exclude those?

Lets say the yotes leave.

COG can charge parking on those 20 events to offset the lost yote rent $, no?

How about the possibility of now being able to fill some of those blocked nights, if the yotes are gone.

Frankly I'm utterly shocked that everyone over looked this obvious cash cow know as parking fees.

Oh wait , what was i thinking, the folks that are pledging this money are not risking one red cent of their own money.

 

[cbcwpg]

You have no idea who really approached who.

Sure I do. Mark Chipman made his plans public a long time ago. The whole last 2 years of the Coyotes fiasco has nothing to do with TNSE and its efforts to land a team, its just this issue brought TNSE to the public light. TNSE went to the NHL years before Phoenix claimed BK and let them know they would be interested in buying and relocating any NHL team that was to become available. Again this was done years ago with no promises from the NHL, but the cheque has been put on Bettman's desk. Its up to Bettman when he cashes it.

 

[OthmarAmmann]

If the parking fees fall short on the debt servicing end, where does the money come from to make up the difference?

When the 100,000,000 matures and there is not enough money set aside, where does it come from?

The bonds are secured by excise tax revenues.

 

[Faltorvo]

The bonds are secured by excise tax revenues.

Does that money normally get funneled into general revenue?

In other words money that would normally go to-wards tax payer use will be redirected?

 

[OthmarAmmann]

Does that money normally get funneled into general revenue?

In other words money that would normally go to-wards tax payer use will be redirected?

That's probably accurate. The amortization pattern will have a lot to do with this though. If all the bonds mature in 23 years for example, inflation should have eroded the size of the debt relative to tax revenues. Most of city council will probably be deceased or not far off from deceased at that time too.

I don't know if there's much information about that debt in any of the documents that Glendale has released to this point, but I'd say it's a safe bet that they're long dated maturities though.

 

[Faltorvo]

That's probably accurate. The amortization pattern will have a lot to do with this though. If all the bonds mature in 23 years for example, inflation should have eroded the size of the debt relative to tax revenues. Most of city council will probably be deceased or not far off from deceased at that time too.

I don't know if there's much information about that debt in any of the documents that Glendale has released to this point, but I'd say it's a safe bet that they're long dated maturities though.

Understood.

Ok so if this/these bonds are set at say 7% the COG would have to pay out $7,000,000 a year to the holders?

And if the lot fees run short , the money needed to make up the difference would have to come out of general revenue?

 

[Niagara67]

I've been scanning the posts...but I don't see one basic question answered. If the COG is buying the parking spots for $100,000,000 from Hulsizer - where is his receipt - i.e.- is he buying the parking spots from the NHL first? For how much?

If the parking spots come with the team, then of the purchase price of $170,000,000 - are the parking spots really the MAIN asset - $100,000,000 or 59% of the team? Or going by Forbes $134m valuation - 75% of the team? Doesn't this sound a bit ridiculous?

Sounds like Hulsizer is buying a parking lot that just happens to have an NHL team thrown in with it - and then flipping the parking lot for a huge profit.

 

[OthmarAmmann]

Understood.

Ok so if this/these bonds are set at say 7% the COG would have to pay out $7,000,000 a year to the holders?

If they were issued at 7% fixed, yeah, it would be around there somewhere.

Interest rates really popped up this past week so right now it could be $1,000,000 more than than it would have been last week.

And if the lot fees run short , the money needed to make up the difference would have to come out of general revenue?

It would have to come from somewhere. That seems a likely candidate. The devil is in the details of course.

Either way, the city could be facing a pretty nice budget deficit next year. Bigger than this year's I believe.

 

[Snarky Coyote]

I did not see the post, however, it must have been related to Turken v. Gordon (aka CityNorth). The only similarity in these cases is the fact that it involved parking.

- In Turken, the funds were being spent to construct the lot. In Glendale, the funds are spent to control the revenue at a lot that's already built.

- In Turken, the city argued that the expense of building the lot was valid because it would create the indirect benefit of sales tax receipts at the mall the garage supported. In Glendale, the city receives the direct benefit of parking fees and advertisements (again, the court and I are not here to judge if you can really sell advertising, we're merely accounting the value of the right to sell ads)

Or put simply, if Glendale wanted to spend $100,000,000 to build parking lots that they city received no revenue from (aside from "taxes generated by the parkers") then you'd have a case against.

In this deal, Glendale pays $100,000,000 to receive direct revenud from 5,500 existing parking spots in a location that can reasonably expect to generate 50 events per year.

Apple, meet orange.

Best explanation ever. Odd since it seems invisible to people who support relocation

Mod: deleted.

Guess what - the fat lady sings once and for all Tuesday night- 7pm ish

Mod: deleted.

Also would love to see expansion teams in Peg and Quebec announced, or if an owner can not be found for troubled franchises, maybe even a move or two. If I was Charles Wang - i would seriously be looking at the GTA. Nonetheless please also remember that it isnt Betteman that is stopping this it is the 30 owners that employ him. Just something to think about

 

[pucka lucka]

Guess what - the fat lady sings once and for all Tuesday night- 7pm ish

Why don't you hold off gloating until MH owns the team and the lease is signed? If i had a nickel for every time i've read premature gloating on an internet forum, I'd have way too many nickels.

 

[cbcwpg]

What Glendale does in this situation will set a new precedence and high water mark for how far a municipality will go to subsidize an NHL team that few other cities can ever hope to match without having a taxpayer revolt.

Exactly. The next time a city is debating to financially help a team stay, all Bettman is going to do is say "See what Glendale did. " Its community blackmail by the NHL, nothing more.

Then on the otherhand I would hope most other places would not sell the farm, the house, the kitchen sink, and thier financial future, to keep a team that the vast majority of people don't care about.

 

[TheLegend]

To help me understand, from whom will the city of Glendale be purchasing the parking lots? They paid for the construction of the arena and the parking lots, received nothing from Hulsizer towards the arena or the parking lots, but are now being sold the rights to them by Hulsizer. Interesting...

Why are you making this more difficult than it is?

The team owned the rights to charge for parking as a separate revenue stream. Glendale owned the lots and was getting the $2.70 or so per ticket as per the original AMULA.

Now... Glendale is buying up those rights to charge for parking. They still get the original charge per ticket because that cannot be changed (or else GWI would be jumping all over it.)

Therefore Glendale is NOT buying back the lots.... they're buying up the revenue stream which was held by the team.

I think of it as a front-loaded CFD. Team gets the parking money up front and then Glendale will have to work to get their investment back.

 

[TheLegend]

Why don't you hold off gloating until MH owns the team and the lease is signed? If i had a nickel for every time i've read premature gloating on an internet forum, I'd have way too many nickels.

Same could be said for the opposite position that the team was gone. It's our turn now.

 

[peter sullivan]

let them gloat....if the announcement was that the team was moving to winnipeg there would be so much gloating, the forum would implode....nobody is going to challenge it in court, council will never vote against it, there is no CFD to be created...its done.

good for the few real fans of the coyotes....they dodged a bullet....congratulations....it was an interesting ride....now we jump on the next car as it whizzes by in the opposite direction...

i still think matty is nuts to sign this deal but its his problem alone.

our turn will come....then we can beat that lunchbucket team where it counts....on the ice.

 

[NHLfan4life]

Same could be said for the opposite position that the team was gone. It's our turn now.

/start gloat

Go 'Yotes



/end gloat

See everyone on the 14!

 

[dandeneau44]

I'm not saying that GWI is going to be able to do anything and I'm not saying that this lease (as ridiculous as it is) won't work.

However it is my understanding that the 100 mill for the parking spaces is to be covered by sponsorship. They are supposed to be able to get 125million in bonds guaranteed, now what happens if this falls short and they can't get all of the 100 million dollars, plus all debt servicing charges,then would this money not have to come directly from the city (tax payers) and in turn is that not violating the Arizona Gift clause. I can't understand how this can be legal unless that $100 million is guaranteed in bonds. And seriously who wants to pay for advertising on a parking spot. I'm sure people park their car and then look underneath it to check for any great offers that may be painted on the pavement

So all i'm really wondering is how this can't violate the gift clause unless all subsidies, every single penny of them is not coming directly from taxpayers pockets because that is what the gift clause prevents, public money going towards the private sector and if the taxpayers are paying for the parking spots that people don't want then they are directly paying for the Coyotes out of their own pocket.

 

[Whileee]

Why are you making this more difficult than it is?

The team owned the rights to charge for parking as a separate revenue stream. Glendale owned the lots and was getting the $2.70 or so per ticket as per the original AMULA.

Now... Glendale is buying up those rights to charge for parking. They still get the original charge per ticket because that cannot be changed (or else GWI would be jumping all over it.)

Therefore Glendale is NOT buying back the lots.... they're buying up the revenue stream which was held by the team.

I think of it as a front-loaded CFD. Team gets the parking money up front and then Glendale will have to work to get their investment back.

Interesting analysis.

Honestly speaking, can you say with a straight face that this deal is not a "gift" from the City of Glendale to Hulsizer? Just wondering.

 

[pucka lucka]

let them gloat....if the announcement was that the team was moving to winnipeg there would be so much gloating, the forum would implode....nobody is going to challenge it in court, council will never vote against it, there is no CFD to be created...its done.

good for the few real fans of the coyotes....they dodged a bullet....congratulations....it was an interesting ride....now we jump on the next car as it whizzes by in the opposite direction...

i still think matty is nuts to sign this deal but its his problem alone.

our turn will come....then we can beat that lunchbucket team where it counts....on the ice.

I didn't say not to gloat. I said why not wait until its actually complete.

Edit: Can someone fill me on as to why someone would gloat about something that have absolutely nothing to do with? Doesn't seem healthy.

 

[pucka lucka]

Interesting analysis.

Honestly speaking, can you say with a straight face that this deal is not a "gift" from the City of Glendale to Hulsizer? Just wondering.

Wouldn't CoG have to demonstrate they will and can in fact charge X for parking? Paying a huge sum for something you were already getting paid for with no demonstrated value seems a bit of a stretch. I really don't care if the Coyotes move or not, but this all so wacky. I think CasualFan's analysis is the angle CoG is hoping for.

 

[Jesus Christ Horburn]

Not that I necessarily think it will happen, but what would be the repercussions if Goldwater filed an injunction?

I think it would hold up the sale for a few weeks/months, taking us past December 31st. Would the NHL stay committed to Hulsizer/COG at that point, or would they start exploring their options?

Conspiracy theory alert: perhaps COG expected Goldwater to file an injunction and throw a wrench into the plan. If the latter scenario took place and the team did leave, Goldwater would be considered the "bad guy" in all this and COG, Hulsizer and the NHL would been seen as doing everything they could have done to keep this team in Glendale.

 

[Faltorvo]

Why are you making this more difficult than it is?

The team owned the rights to charge for parking as a separate revenue stream. Glendale owned the lots and was getting the $2.70 or so per ticket as per the original AMULA.

Now... Glendale is buying up those rights to charge for parking. They still get the original charge per ticket because that cannot be changed (or else GWI would be jumping all over it.)

Therefore Glendale is NOT buying back the lots.... they're buying up the revenue stream which was held by the team.

I think of it as a front-loaded CFD. Team gets the parking money up front and then Glendale will have to work to get their investment back.

Look i don't expect you to look at this objectively , your team is staying and if the COG takes a bath it's no skin off your nose.

But can we suspend fantasy land for just a minute.

Are we to believe after all these years , the feasibility of the parking being worth a 100 million dollar win fall had been over looked?

Come on now .

 

[RR]

Wouldn't CoG have to demonstrate they will and can in fact charge X for parking? Paying a huge sum for something you were already getting paid for with no demonstrated value seems a bit of a stretch. I really don't care if the Coyotes move or not, but this all so wacky. I think CasualFan's analysis is the angle CoG is hoping for.

Not that I think it matters, but it does currently cost to park at all concerts, and in the premium and valet lots for Coyotes games. That revenue now goes to Arena Management. Under the new lease those revenues will go to the City.

 

[Veinless]

With the Coyotes losing the lucrative parking rights, do we have estimates of how much their revenues will drop?