Phoenix LXXX: Is there another way out?

[cbcwpg]

The NHL has no obligation whatsoever to hold to that "deadline". Good faith testimony four years ago is not a legally binding drop dead date. In no way, shape or form does the NHL need to heed a 5/31 deadline. The NHL can also point to the fact that a relocation has occurred in the interim, giving them more insight as to what can be done and how far it can be pushed. There is no perjury or falsehood. It was a good faith estimate of the amount of time the NHL needed. And unless the NHL somehow shows that it can move a team within a week of the season starting, that estimate would hold up under any legal scrutiny.

Additionally, I'm not even sure how or by whom that statement would be contested. The team has no lease with the city, so the city cannot prevent them from going. There may be legal wrangling over past payments and economic performance, but those are separate from any issue of relocation.

Regardless of what the NHL said in court, in their own constitution...

http://www.bizofhockey.com/docs/NHLConsitution.pdf

it does mention that a sale of a franchise, to purchase on its on accord, or liquidate a franchise, needs to be completed prior to June 1. Of course the NHL could be flexible with its own constitution I guess....

 

[King_Stannis]

Regardless of what the NHL said in court, in their own constitution...

http://www.bizofhockey.com/docs/NHLConsitution.pdf

it does mention that a sale of a franchise, to purchase on its on accord, or liquidate a franchise, needs to be completed prior to June 1. Of course the NHL code be flexible with its own constitution I guess....

Well, I don't know that answer for sure but I'll take a stab at it. Yes, they can deviate from their own internal rules. We run again into the situation of "who is going to try and get them to legally enforce that provision?". I suppose member teams could raise a fuss and essentially take themselves to court, but given the dire situation in Phoenix I'm not sure why any one of the member teams would even think of doing that.

 

[CGG]

Seems that was the deal, financed in part by the NHL

http://www.forbes.com/sites/mikeoza...0-million-sale-to-be-partially-funded-by-nhl/

Holy crap. $250 million to be raised as follows:

$45 million cash put in by Renaissance
$85 million loan from the NHL - no repayments necessary for at least 5 years
$120 million loan from Fortress Investment Group to be paid down by the annual AMF provided by Glendale.

Sweet deal. Never gonna fly, but sweet deal.

That's less cash in the deal than even Reinsdorf was condsidering way back when. Someone hit the gong, show's over, team is moving, this is a ridiculous farce of a "deal". Owner only puts in 26% of the purchase price in equity? It's shameful that anyone even considered this. Move the team already.

Edit - purchase price would be $170 million, plus $80 million in working capital (i.e. future year losses).

 

[GuelphStormer]

The NHL did not have any trouble getting to Winnipeg and opening by saying, we tried everything we could to keep the team in Atlanta, but we were unsuccessful and here we are moving the Trashers to Winnipeg where they will become Jets.

You guys gotta understand that it is possible that NHL did drag this past year 1 or year 2 mark to simply make an easier blame onto Glendale. Now they do have it.

They could very well get in Quebec or Seattle and open with, for 4 years we have been doing everything we could to find a serious owner who would have kept the Coyotes in Glendale, but we could not find such person. The city of Glendale was not willing to cooperate in negotiations with potential owners and here we are, the Coyotes are moving to Quebec to become the Quebec Nordiques.

the more i think about it, they more i figure there is nothing to be gained by gary pointing fingers. not only does he risk the ire of a strong mayor's stinging rebuttal, he would also open up the whole saga to review in the sporting press, and he surely would not come out on the winning side of that. i dunno, but i just dont think he's that shallow a guy. "we all tried, didnt work out, here we are"

 

[wildcat48]

Holy crap. $250 million to be raised as follows:

$45 million cash put in by Renaissance
$85 million loan from the NHL - no repayments necessary for at least 5 years
$120 million loan from Fortress Investment Group to be paid down by the annual AMF provided by Glendale.

Sweet deal. Never gonna fly, but sweet deal.

That's less cash in the deal than even Reinsdorf was condsidering way back when. Someone hit the gong, show's over, team is moving, this is a ridiculous farce of a "deal". Owner only puts in 26% of the purchase price in equity? It's shameful that anyone even considered this. Move the team already.

That is a red flag in my eyes....

 

[wunderpanda]

Holy crap. $250 million to be raised as follows:

$45 million cash put in by Renaissance
$85 million loan from the NHL - no repayments necessary for at least 5 years
$120 million loan from Fortress Investment Group to be paid down by the annual AMF provided by Glendale.

Sweet deal. Never gonna fly, but sweet deal.

That's less cash in the deal than even Reinsdorf was condsidering way back when. Someone hit the gong, show's over, team is moving, this is a ridiculous farce of a "deal". Owner only puts in 26% of the purchase price in equity? It's shameful that anyone even considered this. Move the team already.

So the owners haven't enough money and someone is on the hook for 40 year loan repayment? We could create a KickStarter and buy the Coyotes with that deal. BoH Inc.

 

[CGG]

That is a red flag in my eyes....

They should have just flown a white flag. Instead this whole thing is one big red flag.

The NHL wants 50% of the price (minimum) to be funded by equity. This deal would allow for $205 million in loans to be put on the team that is being purchased for only $170 million.

I would imagine the team would need far more than $6 million a year in AMF if that's going to secure a $120 million line of credit. We already know anything beyond $6 million is in violation of the gift clause, but when using a subsidy from a government to secure financing, that's an even more egregious violation of the gift clause, is it not?

I assume Gosbee's plan was to run the thing for 5 years, when the cash runs out, sell the team to be moved elsewhere, then pay back the NHL and Fortress.

Sham.

Game over.

 

[nelina]

Only 45M of cash coming from RSE !!?????
Can understand now why they did not made the smoke show that Killion was well describing they should have done to the CoG the other day.

 

[Mightygoose]

Holy crap. $250 million to be raised as follows:

$45 million cash put in by Renaissance
$85 million loan from the NHL - no repayments necessary for at least 5 years
$120 million loan from Fortress Investment Group to be paid down by the annual AMF provided by Glendale.

Sweet deal. Never gonna fly, but sweet deal.

That's less cash in the deal than even Reinsdorf was condsidering way back when. Someone hit the gong, show's over, team is moving, this is a ridiculous farce of a "deal". Owner only puts in 26% of the purchase price in equity? It's shameful that anyone even considered this. Move the team already.

Edit - purchase price would be $170 million, plus $80 million in working capital (i.e. future year losses).

Now I can see why Dreger mention on his podcast on Monday why the NHL wasn't overly excited by the RSE bid.

In the back of their minds, they could be hoping CoG gets enough good offers from teh RPF, Gosbee and Co. go away and they just sell to PKP. Don't think any 85 million load would be required.

 

[MaskedSonja]

Holy crap. $250 million to be raised as follows:

$45 million cash put in by Renaissance
$85 million loan from the NHL - no repayments necessary for at least 5 years
$120 million loan from Fortress Investment Group to be paid down by the annual AMF provided by Glendale.

Sweet deal. Never gonna fly, but sweet deal.

That's less cash in the deal than even Reinsdorf was condsidering way back when. Someone hit the gong, show's over, team is moving, this is a ridiculous farce of a "deal". Owner only puts in 26% of the purchase price in equity? It's shameful that anyone even considered this. Move the team already.

Edit - purchase price would be $170 million, plus $80 million in working capital (i.e. future year losses).

Wow....

So, if I'm reading this right, RES is basically only paying 45 million dollars for the team, the rest is coming from an Investment group AND the NHL? Fortress gets the 6 mill a year (for what, 20 years plus, not including interest)? And if they get the 6 mil, where does the money come from to pay the NHL back?


Yea, no wonder the NHL "didn't like parts of the deal" if that's the case. So paying back Investment group and then after 5 years paying back the NHL, so after year five paying two groups? And was there a relo clause? Because if not, I really don't see why RES would essentially be giving up money to own a franchise, heck it sounds like the Investment group will be the REAL owners, with RES just being a "front" group.

Or am I reading all this wrong?

 

[Kebekoi]

That is a red flag in my eyes....

So, 120/6=20 years to pay the loan with the AMF.

I'm sure they will go through that NHL 80M$ loan fast enough.

 

[MaskedSonja]

Now I can see why Dreger mention on his podcast on Monday why the NHL wasn't overly excited by the RSE bid.

In the back of their minds, they could be hoping CoG gets enough good offers from teh RPF, Gosbee and Co. go away and they just sell to PKP. Don't think any 85 million load would be required.

Yes, it also explains why the NHL was very quick to pretty much just dust RES saying "you're on your own now, we're done with this".

Wow.....

My question then: Why didn't Fortress simply put the money up themselves to buy the team with RES a "minority" investor?

 

[WildGopher]

The NHL has no obligation whatsoever to hold to that "deadline". Good faith testimony four years ago is not a legally binding drop dead date. In no way, shape or form does the NHL need to heed a 5/31 deadline. The league can also point to the fact that a relocation has occurred in the interim, giving them more insight as to what can be done and how far it can be pushed. There is no perjury or falsehood proven should the relocation happen after that date. It was simply a good faith estimate of the amount of time the NHL felt it needed back then. And unless the league somehow shows that it can move a team within a week of the season starting, that estimate would hold up under any legal scrutiny.

Additionally, I'm not even sure how or by whom that statement would be contested. The team has no lease with the city, so the city cannot prevent them from going. There may be legal wrangling over past payments and economic performance, but those are separate from any issue of relocation.

Agreed, and I mentioned in my post that they're not held to that statement now. But as mentioned in some earlier posts, there are maybe some optics involved here. Even the NHL, as disengenuous as they sometimes can be, probably would like to avoid the inconsistency of saying one thing to a court, and then doing another. I don't think it's coincidence they announced the move to Winnipeg on May 31st. But things are moving slowly this time around, so maybe they won't have a choice - we could see an announcement in early June, mid-June, maybe no move at all.

 

[OthmarAmmann]

That is a red flag in my eyes....

Yes, I had heard that was going to be a substantial piece of the financing. Expensive capital there. The whole thing would have just fallen apart in a few years anyway.

At $120 million the AMF would have to have been around to $13 million to $15 million per year to get close to what Fortress' target return probably would have been. Even that's only a 10% to 12% IRR over 30 years.

$6 million per year is 3% IRR - not going to happen.

 

[CasualFan]

That is a red flag in my eyes....

What, you don't think they'll put up a 20-year interest free loan to comply with the Glendale budget and financial policy?

 

[GuelphStormer]

Wow....

So, if I'm reading this right, RES is basically only paying 45 million dollars for the team, the rest is coming from an Investment group AND the NHL? Fortress gets the 6 mill a year (for what, 20 years plus, not including interest)? And if they get the 6 mil, where does the money come from to pay the NHL back?


Yea, no wonder the NHL "didn't like parts of the deal" if that's the case. So paying back Investment group and then after 5 years paying back the NHL, so after year five paying two groups? And was there a relo clause? Because if not, I really don't see why RES would essentially be giving up money to own a franchise, heck it sounds like the Investment group will be the REAL owners, with RES just being a "front" group.

Or am I reading all this wrong?

your problem is that you actually spent time reading it

 

[cbcwpg]

Holy crap. $250 million to be raised as follows:

$45 million cash put in by Renaissance
$85 million loan from the NHL - no repayments necessary for at least 5 years
$120 million loan from Fortress Investment Group to be paid down by the annual AMF provided by Glendale.

Sweet deal. Never gonna fly, but sweet deal.

That's less cash in the deal than even Reinsdorf was condsidering way back when. Someone hit the gong, show's over, team is moving, this is a ridiculous farce of a "deal". Owner only puts in 26% of the purchase price in equity? It's shameful that anyone even considered this. Move the team already.

Edit - purchase price would be $170 million, plus $80 million in working capital (i.e. future year losses).

So in other-words, the CoG is buying themselves a hockey team that they will actually never own. $120M ( plus the $50M the CoG has already put in ) would get you owning the team yourself.

Also shows that , NOBODY is willing to put their own money into this team. You want it? Then pay for it out of your own pocket.

 

[Mungman]

Seems that was/is the deal, financed in part by the NHL

http://www.forbes.com/sites/mikeoza...0-million-sale-to-be-partially-funded-by-nhl/

Holy crap. $250 million to be raised as follows:

$45 million cash put in by Renaissance
$85 million loan from the NHL - no repayments necessary for at least 5 years
$120 million loan from Fortress Investment Group to be paid down by the annual AMF provided by Glendale.

Sweet deal. Never gonna fly, but sweet deal.

That's less cash in the deal than even Reinsdorf was condsidering way back when. Someone hit the gong, show's over, team is moving, this is a ridiculous farce of a "deal". Owner only puts in 26% of the purchase price in equity? It's shameful that anyone even considered this. Move the team already.

Edit - purchase price would be $170 million, plus $80 million in working capital (i.e. future year losses).

Wow, and fortress can only swap the loan for 20% equity , gotta be some big details missing there. That values the team at $600 million.....

 

[Brodie]

I looked back at the Atlanta saga a couple of days ago... it was obvious and sort of an open secret in the press that the Thrashers were going to Winnipeg.

this doesn't feel at all similar.

 

[King_Stannis]

Agreed, and I mentioned in my post that they're not held to that statement now. But as mentioned in some earlier posts, there are maybe some optics involved here. Even the NHL, as disengenuous as they sometimes can be, probably would like to avoid the inconsistency of saying one thing to a court, and then doing another. I don't think it's coincidence they announced the move to Winnipeg on May 31st. But things are moving slowly this time around, so maybe they won't have a choice - we could see an announcement in early June, mid-June, maybe no move at all.

I think what it ultimately comes down to is this:

Will the NHL look worse by pulling the rug out from RSE and CoG without even a warning that things are going south simply to adhere to an estimate that only BoH nerds like us are interested in?

My answer to that is a resounding "yes". They can afford to wait a week and most likely will if the team is on the move.

 

[MaskedSonja]

Wow, and fortress can only swap the loan for 20% equity , gotta be some big details missing there. That values the team at $600 million.....

600 million value and asking price to PKP-I a little undervalued, but a fair deal....

 

[Mightygoose]

Only 45M of cash coming from RSE !!?????
Can understand now why they did not made the smoke show that Killion was well describing they should have done to the CoG the other day.

Yup! From what I recall, even Hulsizer were willing to put more cash down back in the day. The gong show keeps on beating away.

BTW..great new Avatar

 

[ajmidd12]

I looked back at the Atlanta saga a couple of days ago... it was obvious and sort of an open secret in the press that the Thrashers were going to Winnipeg.

this doesn't feel at all similar.

Of course not, the NHL learned from their mistakes.

Besides, PKP doesn't have the cojones that Thomson had in releasing the details to the public through his media outfit. Now whether its true or not (appears to be believable) he basically gave the NHL the finger when doing this telling them you won't get any more out of me.

If PKP did this, it would be awesome. Won't happen though.

 

[CGG]

The Great Gosbee is basically offering $45 million for the hockey team, plus a boatload of debt that the COG will have to pay down, plus the NHL has to loan $85 million with no hope of getting any of that back for at least 5 years.

Pastor apparently offered $250 million for the team and couldn't get his calls returned. Bet he feels great now that the details are coming out.

How screwed up is Pastor's offer to be deemed worse than the piece of vomit deal that Gosbee cobbled together?

 

[JimAnchower]

What, you don't think they'll put up a 20-year interest free loan to comply with the Glendale budget and financial policy?

So LeBlanc was being truthful all along; they were looking for a repeat of the Jamison deal. $15 mil a year AMF gives Fortress $90 million after 6 years. At that point, they could swap the AMF for their 20% equity if they wanted to. Not anymore.