Phoenix LXXV: It's Like Deja Vu All Over Again

[Wheathead]

A lot of people are showing the sold out crowd and saying that "Hockey can work in Phoenix."

My response to that would be two fold... You need that support over 41 games to get anywhere near a profit, and you need your fanbase to be paying more for tickets to get anywhere near a profit.

The Expos had solid crowds when they played their last series in Montreal. That wasn't enough proof that the city could support the Expos anymore, either.

 

[Whileee]

From yesterday... enjoy, those who dare.

Workshop Council Report - http://www.glendaleaz.com/Clerk/agendasandminutes/Workshops/Agendas/042613-SBW01.pdf

Presentation - http://www.glendaleaz.com/clerk/age.../01A-FiscalYear2013-14ThirdBudgetWorkshop.pdf

http://www.glendaleaz.com/clerk/agendasandminutes/

Interesting...

It confirms that the COG has paid $45 million to the NHL for Coyotes' operating losses, and that these are contributing to their fiscal challenges.

As I read it, the COG also has an annual $1.8 million in debt service to repay the inter-fund loan that was used to pay the $45 million to the NHL for FY11 and FY12. So the financial hit for the subsidy to the NHL will extend well beyond the $45 million (not sure what happened to the remaining $5 million).

The COG is feeling the heat of further hits to the rating of their bonds.

They are sensitive to concerns that the citizens of Glendale will see increases in service fees, etc. would go to subsidizing an NHL hockey team.

Confirms that they have allocated $6.5 million for arena management for the Jobing.com.

Altogether, it doesn't look like there is much latitude for increasing the AMF beyond the $6.5 allocated.

 

[CasualFan]

A lot of people are showing the sold out crowd and saying that "Hockey can work in Phoenix."

FWIW: In my experience, the seat counters - both those counting empty seats and those counting occupied seats - are pretty much the least knowledgeable people to opine on the status of this franchise.

Either the teams sold now locally & if so, new uni's. If not, gone

What if the league extended the AMUL; took the $6MM from Glendale (the $.5M is for cap/repair); sub'd management to an AEG-type; rebuilt non-hockey arena revenues to pre-BK levels; plus implemented some form of "grow the game" tax on other franchises in addition to revenue sharing that allowed the Toronto/Montreal's to directly subsidize the Glendale/Florida's?

I know, it's abstract and I understand that MLSE would never go for it but if I am to believe Gary's rhetoric about commitment to emerging US markets, the league might be able to find a way. It sure doesn't appear likely that they can actually sell it and it definitely looks like they've tapped Glendale out, so where are the next deepest pockets? To me, it looks like they're on Bay Street.

 

[Whileee]

FWIW: In my experience, the seat counters - both those counting empty seats and those counting occupied seats - are pretty much the least knowledgeable people to opine on the status of this franchise.



What if the league extended the AMUL; took the $6MM from Glendale (the $.5M is for cap/repair); sub'd management to an AEG-type; rebuilt non-hockey arena revenues to pre-BK levels; plus implemented some form of "grow the game" tax on other franchises in addition to revenue sharing that allowed the Toronto/Montreal's to directly subsidize the Glendale/Florida's?

I know, it's abstract and I understand that MLSE would never go for it but if I am to believe Gary's rhetoric about commitment to emerging US markets, the league might be able to find a way. It sure doesn't appear likely that they can actually sell it and it definitely looks like they've tapped Glendale out, so where are the next deepest pockets? To me, it looks like they're on Bay Street.

I'm sure that fans in Toronto and Montreal that are paying top of the line ticket prices for playoff hockey would be thrilled with a funding pipeline from their franchises to Glendale and Sunrise, FLA. There are plenty of other struggling franchises that would love to get in on this precedent, so I can't see this going anywhere. The politics just won't work.

 

[WildGopher]

What if the league . . . implemented some form of "grow the game" tax on other franchises in addition to revenue sharing that allowed the Toronto/Montreal's to directly subsidize the Glendale/Florida's?

I know, it's abstract and I understand that MLSE would never go for it but if I am to believe Gary's rhetoric about commitment to emerging US markets, the league might be able to find a way. It sure doesn't appear likely that they can actually sell it and it definitely looks like they've tapped Glendale out, so where are the next deepest pockets? To me, it looks like they're on Bay Street.

I've wondered if Bettman doesn't intend to do this in effect, by tapping the extra revenue sharing money in the new CBA. Some of that money was to be set aside for franchise's special needs, and the commissioner was supposed to control that special fund. If Bettman's that committed to those markets, he could try to use the money to prop up Phoenix for a while, but it would probably generate the kind of objections from wealthier teams that Whileee suggests. If fact, it might be the reason Leipold spoke up recently about Phoenix not being a hockey market and maybe having to move - his franchise is one of those that has to pay net into revenue sharing.

 

[wpgallday1960]

I don't know if it has been mentioned in this thread but Daly was on Hustler and Lawless on 1290 here in the 'Peg. He said the NHLmis 100% focused on keeping the Coyotes in Glendale. However, he did say that tough decisions would have to be made if the ownership situation did not work out favourably for Gelndale. He also hedged but seemed to indicate that the NHL had no desire to operate the team one more year in Glendale.

 

[CasualFan]

I'm sure that fans in Toronto and Montreal that are paying top of the line ticket prices for playoff hockey would be thrilled with a funding pipeline from their franchises to Glendale and Sunrise, FLA. There are plenty of other struggling franchises that would love to get in on this precedent, so I can't see this going anywhere. The politics just won't work.

Well, no, of course not. But it might be just enough to distract from another round of attendance posts. Plus, the NHL seems agreeable to taxing others to keep this franchise running; let's discuss the leagues options to tax one of their own to do it.

 

[MarkhamNHL]

Options = none

 

[WildGopher]

I don't know if it has been mentioned in this thread but Daly was on Hustler and Lawless on 1290 here in the 'Peg. He said the NHLmis 100% focused on keeping the Coyotes in Glendale. However, he did say that tough decisions would have to be made if the ownership situation did not work out favourably for Gelndale. He also hedged but seemed to indicate that the NHL had no desire to operate the team one more year in Glendale.

Unfortunately for the fans in Arizona, the first part of that sounds very similar like what the league was saying about Atlanta two years ago.

 

[Whileee]

Well, no, of course not. But it might be just enough to distract from another round of attendance posts. Plus, the NHL seems agreeable to taxing others to keep this franchise running; let's discuss the leagues options to tax one of their own to do it.

I'm for anything that will distract from attendance discussions on this thread.

I agree with the sentiment that if the NHL is so focused on a "grow the game" strategy in Phoenix and other markets, then they should find a way to have the league subsidize this strategy, rather than feckless municipalities like Glendale.

I am still trying to get over the fact that in addition to the $45 million the COG forked over to the NHL, they have an ongoing debt service of $1.8 million a year to repay that inter-fund loan. They are now paying more in interest for that inter-fund loan than they could reasonably claim as the direct sales tax revenues attributable to the Coyotes (and most of Westgate). Astonishing.

 

[GuelphStormer]

I'm for anything that will distract from attendance discussions on this thread.

I agree with the sentiment that if the NHL is so focused on a "grow the game" strategy in Phoenix and other markets, then they should find a way to have the league subsidize this strategy, rather than feckless municipalities like Glendale.

I am still trying to get over the fact that in addition to the $45 million the COG forked over to the NHL, they have an ongoing debt service of $1.8 million a year to repay that inter-fund loan. They are now paying more in interest for that inter-fund loan than they could reasonably claim as the direct sales tax revenues attributable to the Coyotes (and most of Westgate). Astonishing.

sorry, im confused ... to whom is glendale paying this interest?

 

[CasualFan]

I am still trying to get over the fact that in addition to the $45 million the COG forked over to the NHL, they have an ongoing debt service of $1.8 million a year to repay that inter-fund loan. They are now paying more in interest for that inter-fund loan than they could reasonably claim as the direct sales tax revenues attributable to the Coyotes (and most of Westgate). Astonishing.

FYI: I think that is slightly inaccurate. I believe you'll find that the $50MM obligation ($45MM in escrow) was paid by Water/Sewer-or-similar funds. The $1.8MM is the General Fund pay back to the Water/Sewer-or-similar fund, not in addition too.

Glendale is essentially destitute. They didnt have $50MM laying around in their General Fund, so they grabbed the cash from the utility funds that had the means to actually put paper on the table. There are regulations for how those utility-funds operate so the General Fund has to make them whole. The $1.8MM debt service represents that repayment. The budget and actuals do corroborate your assessment that the city has plegded essentially what would have been the next 25 years of JIG revenue for two seasons of NHL programming at the arena.

So, yeah, that is astonishing (or hilarious, if you're empathy averse as I am).

 

[Whileee]

FYI: I think that is slightly inaccurate. I believe you'll find that the $50MM obligation ($45MM in escrow) was paid by Water/Sewer-or-similar funds. The $1.8MM is the General Fund pay back to the Water/Sewer-or-similar fund, not in addition too.

Glendale is essentially destitute. They didnt have $50MM laying around in their General Fund, so they grabbed the cash from the utility funds that had the means to actually put paper on the table. There are regulations for how those utility-funds operate so the General Fund has to make them whole. The $1.8MM debt service represents that repayment. The budget and actuals do corroborate your assessment that the city has plegded essentially what would have been the next 25 years of JIG revenue for two seasons of NHL programming at the arena.

So, yeah, that is astonishing (or hilarious, if you're empathy averse as I am).

Perhaps I misunderstood. It isn't clear how much of the payments are for interest, though they do indicate that they have to pay interest on the inter-fund loan.

Currently, the GF is making annual payments to repay $45M borrowed from the enterprise funds. The $45M in inter-fund loans were established to address the $45M payment to the National Hockey League (NHL) for operation of the Coyotes hockey team and Jobing.com Arena during FY 2011 and FY 2012.

The FY 2013 budget includes $1.8M for the debt service on the inter-fund loans. The current inter-fund repayment terms are 25 years and an interest rate of 3.245% - 3.9%.
The FY 2014 draft GF budget includes $3.0M for repayment of inter-fund loans. This is an increase from the $1.8M in the FY 2013 GF budget because it assumes an accelerated payment plan for the water-sewer portion through a lease financing mechanism.

I am not sure to whom they are paying the interest, but at 3.5% interest a loan of $45 million would incur total interest costs of roughly $22 million if paid back over 25 years.

 

[Whileee]

By the way, this seems to put to rest the speculation that the NHL hadn't made off with the money from the second year. It seems that they took $20 million, and the COG has negotiated with them to leave the additional $5 million since they couldn't afford that. It's not clear to me whether the NHL can or will come back to the COG at a later date to take the remaining $5 million.

 

[madhi19]

By the way, this seems to put to rest the speculation that the NHL hadn't made off with the money from the second year. It seems that they took $20 million, and the COG has negotiated with them to leave the additional $5 million since they couldn't afford that. It's not clear to me whether the NHL can or will come back to the COG at a later date to take the remaining $5 million.

I think Glendale just stopped paying and the NHL did not raise a fuss about it maybe out of some shred of decency. Or more likely they want everybody to forget they blackmailed 45 Million out of these fools ASAP. PR wise taking that money might end up being a disaster for the NHL in the market if they do leave. You can forget a return of the NHL in Arizona in a decade or two it going to take at least one or two generation. I believe that it what got them so spooked out about relocation in the first place. They know that once gone they ain't ever coming back.

 

[Killion]

I know, it's abstract and I understand that MLSE would never go for it but if I am to believe Gary's rhetoric about commitment to emerging US markets, the league might be able to find a way. It sure doesn't appear likely that they can actually sell it and it definitely looks like they've tapped Glendale out, so where are the next deepest pockets? To me, it looks like they're on Bay Street.

Interesting suggestion, and part of the recent CBA as your aware upped the ante' in terms of RS, but certainly far short of what your suggesting. Ideally, I'd like to see something like that, a sort of prop-up co-op program involving the owner, the NHL & its sponsors, serious money thrown around, including contributions towards arena construction, ball hockey pads & ceramic ice surfaces etc, & both financial & intelligence support in the creation & development of amateur programs, camps & clinics in conjunction with and enjoining the NHLPA & its program called Dreams & Goals... if packaged properly, I think you might be surprised to discover that Bay Street, Montreal, Philly, Chicago & elsewhere would be both receptive & enthusiastic in their support. So essentially, if the NHL rather than demanding an all-cash sale & accepts less with a simple transfer of the existing LOC through Citi to the in-bound owner, transfer's the AMUL, Caps the Consent Form & then covers whatever overages occur & so on a deal could be done.

If fact, it might be the reason Leipold spoke up recently about Phoenix not being a hockey market and maybe having to move - his franchise is one of those that has to pay net into revenue sharing.

Its possible. Craig Leipold's living on the edge even when flush. Youd really need a crew of World Class Forensic Accountants to figure out his books, that public statement as you suggest quite possibly a case of posturing...

Plus, the NHL seems agreeable to taxing others to keep this franchise running; let's discuss the leagues options to tax one of their own to do it.

Ya, and therein lies a problem in wait as the Giant Stirs, into the Playoffs, the potential increase in HRR as a result elevating the ceiling by possibly $1M+ per annum (or more) between now & the expiration of the just negotiated CBA, causing further difficulties for teams already crawling to make it into the basement.

I agree with the sentiment that if the NHL is so focused on a "grow the game" strategy in Phoenix and other markets.

Their about as focused on it as a sunbather on a recliner asleep in the sun. All theyve done is plant a seed, expecting Mother Nature & Osmosis to create a World of Plenty for themselves. Its the height of arrogance, empty & facile, plastic rhetoric. Theyve done Diddly. Jack. If thats "focus", were all screwed.

So, yeah, that is astonishing (or hilarious, if you're empathy averse as I am).

.... and honest about it. Admirable quality in and of itself. Nothing worse than fake sympathy. Always know what your dealing with in a person. Saves a lotta grief.

...It seems that they took $20 million...

We now know this for a fact or is it simply that because in escrow and the COG cant touch it they included it in their financials as being gone?... and ya, we all knew they were headed for destitution. The NHL basically replacing their eyeballs with a pair of olives and dont worry about it, another 30 days, Jerry/Anthony/Matt/Greg will have this all wrapped in two weeks. Trust me.

 

[bobbop]

Pastor was at the game last night and very quietly taking everything in. Nice dresser.

 

[Major4Boarding]

Nice to see you back M4B. Infracts & Suspension expired. Nasty.
Did the old school tie proud. Even let you keep the Zebra stripes huh?

Good job...

Nah, I walked into the desert with a bottle of Glenfiddich Rich Oak to rid myself of my distractions... to rediscover myself, find my bearings and threshholds... came back hung over and (as CF stated and you quoted) even more empathy averse than ever.

Interesting...

Giblin tweeted the other day that the Fire Chief asked for an additional $850K for the Dept. and was told no. Hmmmmm

Sorry for the long C&P's

While the City Council has the authority and responsibility to determine the service levels in the community for every service the city provides, the addition of $5.5M in GF ongoing operational costs for the public safety items is, at this point , an enhancement to existing service levels. The $2.1M in one-time costs for public safety and health insurance would require further depletion of the estimated $8M in fund reserves expected at the end of FY 2014.

The ongoing structural operating deficit shown in the chart above is not sustainable or fiscally prudent. The addition of more GF ongoing operating expenses will worsen the ongoing structural operating deficit and will require additional reductions beyond the $14.3M required from FY 2015 through FY 2018 in the preceding chart. The addition of more one-time expenses will further deplete the meager GF reserve level expected at the end of FY 2014.

Further, the rating agencies and bond investors were informed the city would continue to build its GF reserve, the foundation for a solid and sound financial position. Any reduction of the estimated GF fund balance further reduces the GF reserve level from an estimated $8M at the end of FY 2014. Such a step contradicts the message we provided to the Glendale community, rating agencies and the investment community and jeopardizes the city’s ability to address unplanned, but necessary, expenses that may arise during the year.

Last one for now...

Overall, the bottom line recommendation regarding the public safety and health care additional items discussed above is as follows:

• Do not fund any of the additional $5.5M in GF ongoing items at this time.

• Do not fund any of the $2.1M in GF one-time items.

http://www.glendaleaz.com/Clerk/agendasandminutes/Workshops/Agendas/042613-SBW01.pdf

 

[CasualFan]

I think Glendale just stopped paying and the NHL did not raise a fuss about it maybe out of some shred of decency. Or more likely they want everybody to forget they blackmailed 45 Million out of these fools ASAP.

Blackmail seems like a gross misrepresentation of the events. Glendale provided public notice of the item and took a vote in open session. No one was forced. The results do make Glendale appear foolish, perhaps even very foolish, because the results seemed like fairly obvious conclusions from the start - but thats not blackmail.

Also, maybe there's only $45MM because the contracts had a not-to-exceed amount of $25MM and the league simply didnt report losses to the maximum. Or maybe there was a stop-payment; don't-raise-a-fuss thing. Whichever.

 

[Killion]

Nah, I walked into the desert with a bottle of Glenfiddich Rich Oak to rid myself of my distractions... came back hung over and (as CF stated and you quoted) even more empathy averse than ever.

... was discussing just that yesterday with someone right here on hf, posts left standing and way way WAY ot. .
Took up about a half a page. I knew you were off-line. Tito & Trantula. Angry Cockroaches. Crank it. Earbuds required.

www.youtube.com/watch?v=pot-_HJahrM

 

[wildcat48]

AZ Republic writer Paul Giblin had some interesting, if not melodramtic, tweets yesterday.

Paul Giblin @PaulGiblinAriz
#Glendale's fire chief told the city council the department needs $850,000 more to close a funding gap for 2014. The council said no.

#Glendale's fire chief said that without the money, he'll have close a fire station and response times could hit 10 or 12 minutes.

Bottom line: Schedule your heart attacks, car wrecks and house fires for someplace other than #Glendale next year.

#Glendale's fire chief said one option is closing a different fire station every day. A Russian roulette approach to public safety.

 

[Major4Boarding]

... was discussing just that yesterday with someone right here on hf, posts left standing and way way WAY ot. .
Took up about a half a page. I knew you were off-line. Tito & Trantula. Angry Cockroaches. Crank it. Earbuds required.

www.youtube.com/watch?v=pot-_HJahrM

Thank you. But was more like this (not for the faint of heart).

http://www.youtube.com/watch?v=g4FVyHEmhxY

"Howdy, welcome to A&W, my name's Major... Can I take your stinkin' order?"

Have any of us sat down and discussed what it would cost to manage the Arena without an anchor tenant yet?

 

[Fugu]

I'm sure that fans in Toronto and Montreal that are paying top of the line ticket prices for playoff hockey would be thrilled with a funding pipeline from their franchises to Glendale and Sunrise, FLA. There are plenty of other struggling franchises that would love to get in on this precedent, so I can't see this going anywhere. The politics just won't work.

I've wondered if Bettman doesn't intend to do this in effect, by tapping the extra revenue sharing money in the new CBA. Some of that money was to be set aside for franchise's special needs, and the commissioner was supposed to control that special fund. If Bettman's that committed to those markets, he could try to use the money to prop up Phoenix for a while, but it would probably generate the kind of objections from wealthier teams that Whileee suggests. If fact, it might be the reason Leipold spoke up recently about Phoenix not being a hockey market and maybe having to move - his franchise is one of those that has to pay net into revenue sharing.

I agree with the sentiment that if the NHL is so focused on a "grow the game" strategy in Phoenix and other markets, then they should find a way to have the league subsidize this strategy, rather than feckless municipalities like Glendale.

The league's strategy to help the weak markets, again, was the lockout and their idiotic linkage, 50/50 HRR share. Fehr pushed for the special funds for growth, to be used at the commissioner's discretion, iirc. What they'll find is that the big markets will again push the cap higher, ignoring the power of weighted averaging, so teams will continue to turn to cities/govts for bailouts. I like my term from the Toronto ticket thread so much, I'll use it again. Franchise Fever: When the definition of insanity is ignored once too often.

 

[rkp]

you know, the NHL could retreat and put the yotes in a hockey market such as Quebec...eg ., Wpg Jets!!...solidify its base financially support fan wise and attack more pro hockey like markets with expansion as opposed to continually fighting a optically negative situation where no one wants to own a sports franchise which certainly doesn't help promote the sport nationwide to sport media carriers

 

[Killion]

Franchise Fever: When the definition of insanity is ignored once too often.

... so, whatre' ya thinkin? Like a Susan Powter "Stop the Insanity" type dealeo? Road Trip? Kelly? I quite like her actually.