Phoenix LXXX: Is there another way out?

[cheswick]

These done deals that are pending some kind of concil approval of a yearly payment always come at the same time very year don't they.

 

[Donwood]

I wonder who leaked the details to Forbes? That deal is so ridiculous you got to wonder if it not an owner who did it.

I would, other owners I would think would be livid such a deal would even be considered for a moment.

So what's the feeling on this articles release.
Does this speed up the NHL's exit or.......

 

[JimAnchower]

I wonder who leaked the details to Forbes? That deal is so ridiculous you got to wonder if it not an owner who did it.

And why is it being leaked? Is it because the deal is dead or is Forttress, somehow, still considering it?

 

[CGG]

Explain the new developments to me like I'm 5, please.

George wants to buy a candy bar. It costs $1.70. He offers $0.45 of his own hard-earned allowance. The seller of the candy bar loans him $0.85 and says that George doesn't have to pay him back for at least 5 years. Still not enough. A hedge fund loans $1.20 for the venutre, and the municipality in which the candy bar store operates is on the hook to pay back that $1.20 to the hedge fund at a rate of about $0.15 per year.

 

[gyom999]

If this deal is true.. It feels like a nice "finger" to all of us here.. Gary really has no love for Québec city.

 

[Donwood]

George wants to buy a candy bar. It costs $1.70. He offers $0.45 of his own hard-earned allowance. The seller of the candy bar loans him $0.85 and says that George doesn't have to pay him back for at least 5 years. Still not enough. A hedge fund loans $1.20 for the venutre, and the municipality in which the candy bar store operates is on the hook to pay back that $1.20 to the hedge fund at a rate of about $0.15 per year.

That candy bar is packed with nuts

 

[Wheathead]

George wants to buy a candy bar. It costs $1.70. He offers $0.45 of his own hard-earned allowance. The seller of the candy bar loans him $0.85 and says that George doesn't have to pay him back for at least 5 years. Still not enough. A hedge fund loans $1.20 for the venutre, and the municipality in which the candy bar store operates is on the hook to pay back that $1.20 to the hedge fund at a rate of about $0.15 per year.

That doesn't sound like a good deal for Glendale.

 

[Fugu]

Explain the new developments to me like I'm 5, please.

Whoever buys the team isn't going to much of their own money. COG's money will service the hedge fund loan, and the NHL will take less than its usually 50% cash down on purchases of franchises, loan them another $85 MM w/no payment required for 5 yrs (so no cash calls or guarantees to cover operations) and the NHL will guarantee max revenue sharing/transfer monies for this period.

 

[Nordskull]

If this deal is true.. It feels like a nice "finger" to all of us here.. Gary really have no love for Québec city.

He never wanted to win any popularity contest.

 

[CGG]

If this deal is true.. It feels like a nice "finger" to all of us here.. Gary really have no love for Québec city.

Balsillie offered more as a walk-away bribe to Glendale ($50 million) than Renaissance is actually spending on the Coyotes ($45 million).

The City of Glendale spent more on 2 years of arena management fees for the Coyotes ($50 million) than Renaissance is actually spending on the Coyotes ($45 million).

The City of Glendale agreed to spend twice as much on a parking lot that they already owned ($100 million) than Renaissance is actually spending on the Coyotes ($45 million).

 

[nelina]

Is next step is to create new sister entity corp called NHLAC.
''Hey! You want to buy an NHL franchise ? Not sure you can afford it ? No problem we can help you !''

For me it is a very bad move from NHL that may affect the whole concept of to determine franchise values.

 

[Grzkid]

If this deal is true.. It feels like a nice "finger" to all of us here.. Gary really have no love for Québec city.

As others have said this just might be for optics. "Hey we (the NHL) tried to give Gosbee a sweetheart deal but the CoG wouldn't close a few more police stations and fire depts in order to give us the 15 mill a year we need to make it work." Hello QC

 

[rt]

Nothing has changed from yesterday. It's still all about what Glendale is willing to give up. We now know that RSE wants 120M from them. Until we find out in what manner they'd like to collect that money, we don't really know anything about this situation at all. If it's 6M per year for 20 years than this thing will close. If it's 16M per year for the first five years and 4M per year for the subsequent ten years, than this all means nothing. If it's 5M in year one, 10M in years two through five and 7.5M for the ten years following, then maybe there is a deal to be struck somehow.

Who knows?

 

[CGG]

Nothing has changed from yesterday. It's still all about what Glendale is willing to give up. We now know that RSE wants 120M from them. Until we find out in what manner they'd like to collect that money, we don't really know anything about this situation at all. If it's 6M per year for 20 years than this thing will close. If it's 16M per year for the first five years and 4M per year for the subsequent ten years, than this all means nothing. If it's 5M in year one, 10M in years two through five and 7.5M for the ten years following, then maybe there is a deal to be struck somehow.

Who knows?

There is not a deal to be struck somehow. Hedge funds typically don't invest money to just get paid back over the course of 10 or 20 years. They don't want $120 million back, they probably want $300 million back over the course of 20 years so they can turn a profit.

It's over. Sorry, but this garbage offer is the end of the line. There is no way to make this work. I'm embarassed that the NHL even considered this.

 

[rt]

George wants to buy a candy bar. It costs $1.70. He offers $0.45 of his own hard-earned allowance. The seller of the candy bar loans him $0.85 and says that George doesn't have to pay him back for at least 5 years. Still not enough. A hedge fund loans $1.20 for the venutre, and the municipality in which the candy bar store operates is on the hook to pay back that $1.20 to the hedge fund at a rate of about $0.15 per year.

Where are you getting the 15M/yr. rate? Does it say it's an eight year deal? Maybe it's 20 years.

 

[GuelphStormer]

isnt Fortress the company that got its clock cleaned during the vancouver olympics?

 

[Whileee]

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).

Ahem.... I think the annual arena management fee is meant to, you know, pay for the costs of arena management. I'm pretty sure that having the COG pay an AMF to pay down a loan for a private business to help it purchase a sports franchise is not really in keeping with the spirit of the gift clause.

 

[Wheathead]

Nothing has changed from yesterday. It's still all about what Glendale is willing to give up. We now know that RSE wants 120M from them. Until we find out in what manner they'd like to collect that money, we don't really know anything about this situation at all. If it's 6M per year for 20 years than this thing will close. If it's 16M per year for the first five years and 4M per year for the subsequent ten years, than this all means nothing. If it's 5M in year one, 10M in years two through five and 7.5M for the ten years following, then maybe there is a deal to be struck somehow.

Who knows?

I understand that every civic government has to kick in SOME money to pro sports teams... but has any city been required to commit as much as Glendale? Jeez.

 

[cbcwpg]

Again, I wonder-what is it about the Yotes franchise that has the NHL doing financial backflips and contortions to keep the team there?

I've heard all the arguments ( #1 being the NHL doesn't want to leave a place that built them an arena ) and although they have merit, by themselves they don't make sense. There has to be something more....

One thing I can think of is maybe this is related to the health of other franchises. Maybe some other teams have throw the keys on Bettmans desk or have threatened to walk away, and Bettman has to keep the team in Glendale because he needs QC or Seattle or where ever to be a landing spot for some other team(s). I know that if the Coyotes had been relocated to Winnipeg 3 years ago, that really would have put Bettman in a bind when he had to deal with the Thrashers.

Just speculating... And I don't want people naming franchises and getting in trouble from the mods, this is just a general comment.

 

[Donwood]

Ahem.... I think the annual arena management fee is meant to, you know, pay for the costs of arena management. I'm pretty sure that having the COG pay an AMF to pay down a loan for a private business to help it purchase a sports franchise is not really in keeping with the spirit of the gift clause.

Exactly and with the tightening of city regulations, this would never pass.

 

[OthmarAmmann]

Nothing has changed from yesterday. It's still all about what Glendale is willing to give up. We now know that RSE wants 120M from them. Until we find out in what manner they'd like to collect that money, we don't really know anything about this situation at all. If it's 6M per year for 20 years than this thing will close. If it's 16M per year for the first five years and 4M per year for the subsequent ten years, than this all means nothing. If it's 5M in year one, 10M in years two through five and 7.5M for the ten years following, then maybe there is a deal to be struck somehow.

Who knows?

They will have to be well north of $10 million every year in order to hit the rent Fortress will charge. $6 million per year for 20 years is interest free.

At $6 million per year they have a gap of about $50 million on purchase price, give or take.

 

[Northern Fan]

If the whole thing is true and Fortress pays themself with the AMF, isn't an explicit violation of the Gift Clause?

 

[JimAnchower]

isnt Fortress the company that got its clock cleaned during the vancouver olympics?

Indeed they were, for the construction of the Athletes Village.

http://www.cbc.ca/news/canada/british-columbia/story/2009/01/09/bc-council-olympic-village.html

 

[CGG]

Where are you getting the 15M/yr. rate? Does it say it's an eight year deal? Maybe it's 20 years.

You're still missing the point that the hedge fund will want a return on their money. What kind of astute money manager would loan $120 million today with the expectation that they'll be paid back a total of $120 million at some point in the future?

I completely pulled the $15 million number out of left field. But not 8 years. I'm thinking $15 million a year for 20 years. $300 million total. That would be an IRR of about 10.92%, which is still probably way too low for a hedge fund investor when there's far less risky options out there that would offer similar investment returns.

 

[viper0220]

With NHL being so quiet, Who released this information and why?