Phoenix CXXXIII: Colonel Shuffle's Last 'Ownership' Hill To Die On

[powerstuck]

A few points before the usual suspects derail this thread completely with their schadenfreude and relocation thirst:

1) Saying that the Coyotes are staying because of the broadcast contract is pretty naive. Houston is a bigger market and would do a bang-up job of taking Phoenix's place in the pitch meeting. In fact, having Tilman Fertitta, a guy with no money problems, and a city that might actually pay attention to a pro hockey team might be an asset in new broadcast negotiations.

2) Barroway is going to have a very hard time finding someone to bankroll him - unless, of course, the NHL's dance with China is bearing some unexpected fruit. I can see a scenario where China would want to invest in some prime real estate in Arizona in return for concessions from the NHL - I'm not sure what those would be, but speculating I think that helping develop their national hockey program might be one avenue. I'm not entirely sure, though, why Chinese investment would be so much more preferable to Native American investment.

3) I have never understood why the Coyotes have felt that expending nine figures' worth of capital - and trying to strong-arm public subsidy into the picture - to build a new arena in an already-saturated market is the road of least resistance, rather than just marketing and building a fan base where their arena is. But then, Arizona is a pretty stupid state overall, so I guess it's #OnBrand.

There. Sorry to have interrupted the unending horse-corpse beatings.

Great points TFP !

About Chinese investment, I would guess NHL is trying to get into the trend that Chinese businessmen are sitting on a lot of money and are looking for ideas what to do with it.

But from experiences I've seen about Chinese investors, they are not like investors here in NA or even Europe or even Middle East. What I mean by that is that it's much harder, while not impossible, to find a Chinese guy who will blindly drop $2B on a sports team à la Steve Ballmer.

They wanna invest, but they wanna invest in something that will guarantee a positive return, which we all know, sports franchises often do not.

 

[Llama19]

FWIW...on yesterday's (03/13) NHL Game Day with Steve Kouleas, Craig Morgan was on.

Morgan did bring up that Barroway was looking at new investors and the impact, due to the franchise's financial instability, including having a better (?) plan on a new arena...as it relates to the signing extensions for two key players in particular...Oliver Ekman-Larsson (he mentioned that OEL was not happy in not being named Captain at the beginning of the season) and Antti Raanta...

Per Morgan, this financial instability and inability in settling on a new arena location...which will likely not be settled before July 1st (duh!)...could impact theirs and other players re-signing long term...because they like it here...versus the possibility of not being here...in Arizona...

 

[TheLegend]

^^^^ Just so we’re clear on this.

I’ll presume this is your own interpretation of what Morgan said and not what he said word for word.

 

[Llama19]

^^^
I am not an official transcriptionist...but Mr Morgan's comments are accurate...

 

[The Feckless Puck]

Great points TFP !

About Chinese investment, I would guess NHL is trying to get into the trend that Chinese businessmen are sitting on a lot of money and are looking for ideas what to do with it.

But from experiences I've seen about Chinese investors, they are not like investors here in NA or even Europe or even Middle East. What I mean by that is that it's much harder, while not impossible, to find a Chinese guy who will blindly drop $2B on a sports team à la Steve Ballmer.

They wanna invest, but they wanna invest in something that will guarantee a positive return, which we all know, sports franchises often do not.

Here's the tricky issue for me in terms of Chinese investment - politics. With apologies to the mods, there's no getting around the guy in the Oval Office and his terrible, awful, no good, very bad takes on international diplomacy and trade. In other words, we don't know from hour to hour what Trump is going to do regarding trade and political relations with China. So any approach to heavy Chinese investment in Arizona by the NHL is going to be like trying to walk on the edge of a skyscraper's roof in a windstorm.

There is a ton of Chinese investment money, of course - largely because of the bluntly shameful working conditions there and how many businesses are so flush with wealth because they don't have to pay their workers a living wage. And I have no doubt that they would be open to dropping some major coin on something like the NHL and, specifically, Arizona... as long as they have something substantial coming back the other way. It's why I brought up their national hockey programs - China invests a great deal into their national sports programs and they want nothing more to be considered part of the top echelon. With the KHL struggling with both money and politics right now, there is an opening for China if they can get their ducks in a row. So maybe that's the NHL's long game.

I really don't think, if Chinese investors decide to throw money at the NHL, that they're going to care about the kinds of topics we discuss around here in terms of the Phoenix market. It will never be that granular of a situation for them if they decide to spend the money. It will be a higher-level game for them with a whole set of ulterior motives. Which is why I would be a bit nervous about the whole thing if I were the NHL - more nervous than I'd be about one of the tribes stepping up in a similar fashion. The uncertainty around the political tradewinds and the implications of getting ensnared in them are gambles that I think the league would be loathe to take... if there wasn't so much money on the line.

 

[TheLegend]

^^^
I am not an official transcriptionist...but Mr Morgan's comments are accurate...

IOW.... we're supposed to just take your word for it.

 

[Fairview]

IOW.... we're supposed to just take your word for it.

Anything that Coyote Morgan says is just Coyote/NHL approved propaganda. Good for a light amusing read and not much else

 

[TheLegend]

Anything that Coyote Morgan says is just Coyote/NHL approved propaganda. Good for a light amusing read and not much else

Yeah..... that's always a good excuse.

 

[mesamonster]

Yeah..... that's always a good excuse.

Coyote Morgan is just as good or bad as all of the others who cover the team. None of them seem to know anything more than the rest of us, nothing is coming from AB, so he is left with broad guesses, just like the rest of us.

 

[Killion]

Here's the tricky issue for me in terms of Chinese investment - politics. With apologies to the mods, there's no getting around the guy in the Oval Office and his terrible, awful, no good, very bad takes on international diplomacy and trade. In other words, we don't know from hour to hour what Trump is going to do regarding trade and political relations with China. So any approach to heavy Chinese investment in Arizona by the NHL is going to be like trying to walk on the edge of a skyscraper's roof in a windstorm.

There is a ton of Chinese investment money, of course - largely because of the bluntly shameful working conditions there and how many businesses are so flush with wealth because they don't have to pay their workers a living wage. And I have no doubt that they would be open to dropping some major coin on something like the NHL and, specifically, Arizona... as long as they have something substantial coming back the other way. It's why I brought up their national hockey programs - China invests a great deal into their national sports programs and they want nothing more to be considered part of the top echelon. With the KHL struggling with both money and politics right now, there is an opening for China if they can get their ducks in a row. So maybe that's the NHL's long game.

I really don't think, if Chinese investors decide to throw money at the NHL, that they're going to care about the kinds of topics we discuss around here in terms of the Phoenix market. It will never be that granular of a situation for them if they decide to spend the money. It will be a higher-level game for them with a whole set of ulterior motives. Which is why I would be a bit nervous about the whole thing if I were the NHL - more nervous than I'd be about one of the tribes stepping up in a similar fashion. The uncertainty around the political tradewinds and the implications of getting ensnared in them are gambles that I think the league would be loathe to take... if there wasn't so much money on the line.

Im just not seeing that at all, Chinese investment, the purchase of the Coyotes, investment in an arena & everything else that would go with it in Phoenix or the EV.... that some Hong Kong Billionaire comes along & maybe alternatively just buys up Westgate & GRA.... If it were to happen though I doubt very much that the current regime in Washington would actually object at all & instead very likely tout such as being good for the city & state, for the country in forging closer & friendlier relations. Be taking a much more pragmatic view of it than what you suggest. Trump's an opportunist, he'd try & ride that wave, capitalize on it..... The rest of what your mentioning is bang on, conditions for the everyman & woman deplorable but thats just swept under the rug whenever investments & trade is being discussed, deals brokered.... Quite the rabbit hole to be diving down, way out there possibility IMO, Balkan like theory really.

 

[The Feckless Puck]

Quite the rabbit hole to be diving down, way out there possibility IMO, Balkan like theory really.

I dunno, K - there is actually precedent here with Tampa Bay back when Phil Esposito was trying to get that team off the ground (not Chinese investment, but Japanese). And there's no question that the NHL - like basically every other pro sport out there these days - covets Chinese money and is desperately trying to make inroads.

That said, I don't believe that any potential Chinese investment would have anything to do with the team's equity itself - just the arena build. If the NHL can swing a bunch of Chinese money into the arena without asking a subsidy from any potential site, then that would grease the wheels for the team. Maybe not a strong possibility, but one nonetheless.

 

[WildGopher]

Per Morgan, this financial instability and inability in settling on a new arena location...which will likely not be settled before July 1st

We can maybe take two things from that reference to "not be settled before July 1st":

1) That timing suggests he knows a solution is not going to come from the legislature, because if it did, it would have to occur well before then; and

2) He's learned from Anthony LeBlanc's constant mistake of suggesting some kind of solution was always close at hand (two weeks, to be exact).

 

[Mightygoose]

I dunno, K - there is actually precedent here with Tampa Bay back when Phil Esposito was trying to get that team off the ground (not Chinese investment, but Japanese). And there's no question that the NHL - like basically every other pro sport out there these days - covets Chinese money and is desperately trying to make inroads.

That said, I don't believe that any potential Chinese investment would have anything to do with the team's equity itself - just the arena build. If the NHL can swing a bunch of Chinese money into the arena without asking a subsidy from any potential site, then that would grease the wheels for the team. Maybe not a strong possibility, but one nonetheless.

I don't see how Chinese money going into the arena could be separate from having equity in the team.

Otherwise, I think the same problem will arise wether a city, a tribe or any other party not called the Coyotes are paying for it. The team would still need to get the lion's share of the building revenues to make it work. They would be better off trying to make it work at GRA with real owners.

 

[Mightygoose]

FWIW...on yesterday's (03/13) NHL Game Day with Steve Kouleas, Craig Morgan was on.

Morgan did bring up that Barroway was looking at new investors and the impact, due to the franchise's financial instability, including having a better (?) plan on a new arena...as it relates to the signing extensions for two key players in particular...Oliver Ekman-Larsson (he mentioned that OEL was not happy in not being named Captain at the beginning of the season) and Antti Raanta...

Per Morgan, this financial instability and inability in settling on a new arena location...which will likely not be settled before July 1st (duh!)...could impact theirs and other players re-signing long term...because they like it here...versus the possibility of not being here...in Arizona...

So if Morgan is saying that the reason he's looking for new investors is due to the financial instability, then that shows Barroway doesn't have the financial ability to stay on as sole owner.

Timing of this coming towards the end of the season is interesting because from what I recall it was Kypreos that said earlier that there some in the league was questioning if he could last to the end of the season. Something that was discarded by many here. Yet it lingers.

 

[TheLegend]

We can maybe take two things from that reference to "not be settled before July 1st":

1) That timing suggests he knows a solution is not going to come from the legislature, because if it did, it would have to occur well before then; and

2) He's learned from Anthony LeBlanc's constant mistake of suggesting some kind of solution was always close at hand (two weeks, to be exact).

Window for the legislature had already passed. July 1 is when the window opens on OEL's contract extension period. There's been a lot of speculation whether or not getting the arena issue resolved would play a part in that. OEL is already on record that money won't be biggest factor involved, even though he wants to stay in AZ.

LeBlanc wasn't a factor either, other than Morgan had to report his comments like everyone else did.

 

[cbcwpg]

So if Morgan is saying that the reason he's looking for new investors is due to the financial instability, then that shows Barroway doesn't have the financial ability to stay on as sole owner.

It looks like the dream didn't last too long....

Barroway: “I wouldn’t say it wasn’t working, it was just a lot of voices. We had 10 different limited partners. Anyone who has been in business, with 10 partners there’s going to be some different opinions sometimes, but it was always my dream to own the entire thing and that’s why I doubled down on my investment.”

 

[Fairview]

It looks like the dream didn't last too long....

Barroway: “I wouldn’t say it wasn’t working, it was just a lot of voices. We had 10 different limited partners. Anyone who has been in business, with 10 partners there’s going to be some different opinions sometimes, but it was always my dream to own the entire thing and that’s why I doubled down on my investment.”

You gotta wonder if he is playing with a full deck? I mean, you are leveraged way over your head to buy this money pit. The team owes more than 3 or 4 times your net worth and is likely losing money at close to 50% of your reported net worth per year and you still jump in with both feet?

 

[Killion]

It looks like the dream didn't last too long....

Barroway: “I wouldn’t say it wasn’t working, it was just a lot of voices. We had 10 different limited partners. Anyone who has been in business, with 10 partners there’s going to be some different opinions sometimes, but it was always my dream to own the entire thing and that’s why I doubled down on my investment.”

Right. I think most of us remember him saying that.... I remember at the time there werent any hardball questions being asked, no followups, no hard details of anykind, LeBlanc just vanishing.... No one asked Barroway exactly what the buyout cost him, how he was going to come up with the money for a new building, about the loan from a private investment bank in NY & how he was situated otherwise in covering losses moving forward & for how long SPECIFICALLY & so on & so forth. It was all nothing but soft balls & pablum.... and now here we are... not even a year later.... and ya Fairview... I have wondered, still wonder that there could be something seriously wrong going on with this guy. Like he's got a problem. Means well but c'mon here. If he's just gambling, rolling the dice well...

 

[Llama19]

It looks like the dream didn't last too long....

Barroway: “I wouldn’t say it wasn’t working, it was just a lot of voices. We had 10 different limited partners. Anyone who has been in business, with 10 partners there’s going to be some different opinions sometimes, but it was always my dream to own the entire thing and that’s why I doubled down on my investment.”

His dream of owning the entire thing...and his deeply leveraged pockets...could be turning his dream into a financial nightmare...

So...it appears that the NHL's LOC payment call is possibly coming sooner rather than later...

Note: That quote of Barroway's came from this Craig Morgan Q&A article from July 2017...

 

[MNNumbers]

^^^^^
There are 2 possibilities, of course...

One is that Barroway actually put his own, unguaranteed money, up to this business. In that case, he might be looking for investors now, but those investors are investing in a scheme which would be WORSE off that the one Barroway got in on himself.

Two is that the league actually guaranteed Barroway that he wouldn't bust on the deal. In that case, the agreement goes:
NHL: You do everything you can to right the ship, get a new arena, etc. If you can't, you try to sell shares to spread the losses around and keep trying. If that's a no-go, then we sell out-of-market and you get made whole.

If it's the latter, it just means that the debts are running close to the value of a portable franchise, and we are going to see some news starting to leak more and more in the coming months.

 

[The Feckless Puck]

I don't see how Chinese money going into the arena could be separate from having equity in the team.

Very easily - they'd own the facility and the real estate and would get all non-hockey revenue from it. You don't have to buy a hockey team to build a hockey rink, y'know... I think, if the NHL is trying to wrangle foreign investment money into this situation, that that would be the way they'd want to do it - a big financial investment that can't be made by their existing Governor to build a new facility, without all the attending complications of having them buy into the team itself.

Again, I don't think the NHL wants to open a Pandora's Box by having any sort of foreign investors buy equity in an existing NHL franchise. At least not at this early stage of the game.

 

[Killion]

^^^^^
There are 2 possibilities, of course...

One is that Barroway actually put his own, unguaranteed money, up to this business. In that case, he might be looking for investors now, but those investors are investing in a scheme which would be WORSE off that the one Barroway got in on himself.

Two is that the league actually guaranteed Barroway that he wouldn't bust on the deal. In that case, the agreement goes:
NHL: You do everything you can to right the ship, get a new arena, etc. If you can't, you try to sell shares to spread the losses around and keep trying. If that's a no-go, then we sell out-of-market and you get made whole.

If it's the latter, it just means that the debts are running close to the value of a portable franchise, and we are going to see some news starting to leak more and more in the coming months.

I'll take Door #2 there MNN.... I dont think the NHL wants to go through another epic ownership meltdown in Arizona, has his back but I do think theres been some movement behind the scenes here since last July. That the search for minority partners to replace LeBlanc & Co actually began at that time though on the QT... and that their not getting anywhere... clocks ticking, Barroway beginning to feel the heat from HQ in NY who likewise arent turning up any trumps in possible investors.

 

[Fairview]

Very easily - they'd own the facility and the real estate and would get all non-hockey revenue from it. You don't have to buy a hockey team to build a hockey rink, y'know... I think, if the NHL is trying to wrangle foreign investment money into this situation, that that would be the way they'd want to do it - a big financial investment that can't be made by their existing Governor to build a new facility, without all the attending complications of having them buy into the team itself.

Again, I don't think the NHL wants to open a Pandora's Box by having any sort of foreign investors buy equity in an existing NHL franchise. At least not at this early stage of the game.

I am not sure that I understand what you are saying. My understanding is that you suggest that the investing entity keeps all the money for revenue generated by the arena outside of hockey. But isn't it a given that the team would need all the revenue generated..not just their hockey portion. The deal would be the same as in Glendale..a non-starter.

 

[cbcwpg]

^^^^^
There are 2 possibilities, of course...

One is that Barroway actually put his own, unguaranteed money, up to this business. In that case, he might be looking for investors now, but those investors are investing in a scheme which would be WORSE off that the one Barroway got in on himself.

Two is that the league actually guaranteed Barroway that he wouldn't bust on the deal. In that case, the agreement goes:
NHL: You do everything you can to right the ship, get a new arena, etc. If you can't, you try to sell shares to spread the losses around and keep trying. If that's a no-go, then we sell out-of-market and you get made whole.

If it's the latter, it just means that the debts are running close to the value of a portable franchise, and we are going to see some news starting to leak more and more in the coming months.

Two is the only possible way I could see Barroway going all in on this. Which would basically mean give it your best shot with no risk. He may not walk away with a payday, but he will walk away with the clothes on his back that he came to the dance with. Which in my books would be way better than holding the whole bag for this.

I just can't see anyone taking Barroway up on investing with him on this, more so if they are to be "silent" partners, as having talking partners seems to be one of his big issues. If I'm investing in something like Apple that is going to make me a tidy return... I'll be silent all you want. But if I'm investing in something that has never turned a profit, I think I'm going to want to have a say at the table as to how things are run. JMO.

 

[MNNumbers]

I'll take Door #2 there MNN.... I dont think the NHL wants to go through another epic ownership meltdown in Arizona, has his back but I do think theres been some movement behind the scenes here since last July. That the search for minority partners to replace LeBlanc & Co actually began at that time though on the QT... and that their not getting anywhere... clocks ticking, Barroway beginning to feel the heat from HQ in NY who likewise arent turning up any trumps in possible investors.

I think I agree with you on this one, Killion. I can't see AB being foolish enough to put his own $$ on the line there. If NHL made a promise to him, then he's playing with free money, and that works for him. Likewise, I don't think the NHL would want another BK, so I don't ascribe to mesa's idea about Bettman taking vengeance on AB.

I think the NHL has the whole thing bankrolled, and as I have discussed here before, I think there is at most one year left before a relocation will have to happen.

I am still not sure if Houston is a viable landing spot, though, because I find Fertitta's comments to be neutral more than excited. And, Bettman's off-handed slip about Seattle and relocation can't be dismissed either. The thing I can't figure about that is how NHL could pull it off without a bad lame duck season somewhere...

Here's why:
Assume NewKey won't be ready until 2020-21. Obviously, that means the Yotes couldn't move there until after 19-20 season. But, by April of 2020, the new Seattle team SHOULD have a large organization in place. So, how do you work around that?
I suppose you could move a year early, which fits the Yotes time line, but if so, where do you play in 19-20?

So, then what?

I'm sure Bettman has contingencies in his mind, but I don't know that he bothers to think too far ahead. Evidence suggests that NHL BOG and Bettman move according to: What makes us the most money NOW?