Phoenix LXXX: Is there another way out?

[Undertakerqc]

No press conferences scheduled for today eh?

hmm, very uneventful.

Slasher guaranteed us an announcement for today

 

[RandR]

The only thing that makes any sense regarding the TV contract is when you get to the semi finals and finals. NBC will show the Stanley Cup finals, regardless of who is in it. They no longer get to pick the teams. So if Phoenix moves to Quebec, that means there's less of a chance of an all-American final, and more of a chance of a Winnipeg-Quebec final.

I'm not sure how many Phoenecians would watch the Coyotes if they ever made it to the Cup finals, but it's probably (slightly) higher than the number of Phoenecians that would watch Quebec in the Cup finals.

OK but the contrary is true.

I did not watch Stanley cup finals since 1995.

Thank you!

And when the Ottawa franchise in the CFL (Canadian Football League for our U.S. friends) folded, I lost interest in the CFL. I rarely watch a game on TV now, including the Grey Cup final itself.

I doubt Canadians, French or English, are much different than Americans when it comes to sports and TV habits.

And you can bet there are some numbers showing the loss of a franchise impacts TV ratings in that market. Imagine what major league baseball TV ratings are in the province of Quebec now compared to when the Expos were in the league.

The CFL had in at least one of its contracts a clause that would kick in if the number of teams in the league fell below its current 8. (There were 9 teams before Ottawa folded.)

 

[Major4Boarding]

If Fortress funds everything up front, it looks like this:

Assets
Cash $80M
Investment in Team $170M

Liabilities / Equity
Loan from NHL $85M
Loan from Fortress $120M
RSE Equity $45M

The most "optimistic" scenario is this - Fortress only puts in money as needed, i.e. as the hockey team loses money. So they put up $40M upfront, then pledge $80M more over the next 5 years to absorb the losses, say $16M a year. The $80M will get paid back by the COG AMF, the $40M portion eventually gets converted to equity.

At close:

Assets
Cash $16M (for Year 1 losses)
Investment in Team $170M

Liabilities / Equity
Loan from NHL $85M
Loan from Fortress $16M - to cover Year 1 losses
Loan from Fortress $40M - eventually to be converted to equity
RSE Equity $45M

If Fortress really only "loans" $80M, they don't need $15M a year, maybe $10M a year for 20 years does it, and they count on the other $40M being rolled over into equity at some point.

Still, that would require a $10 million AMF, not a $6 million AMF. Good luck to Councillor Sherwood in his attempts to "close the gap".

The other major hurdle is the $85 million loan from the NHL. Take it at face value, that it doesn't need to be paid back for at least 5 years. I'm also going to assume that the $80 million in working capital funding is gone after 5 years due to continued losses. That's only $16 million a year, and we're assuming the entire AMF just goes through Renaissance to Fortress, so only $16 million a year in cash losses is very optimistic when there's basically no AMF to offset any of it.

Then what - starting in Year 6 Renaissance has no more cash to cover losses. Presumably they don't have to worry about the Fortress loan because that would cotinue to be serviced by the AMF. But they do have to cover losses themselves....and start paying back the $85 million loan from the NHL.

Which leads me to the conclusion that there has to be an out clause after 5 years, with the NHL getting paid off from the proceeds of a sale or relocation. Perhaps that's why Daly claims the article isn't "fully accurate" because it doesn't mention the out clause?

I'm still convinced that the NHL "Loan" is an earmarked figure of 5 years worth of the Coyotes Revenue Sharing allocation/IGF. Be it advanced or in installments. They won't be paying it back. Again, my opinion.

 

[HamiltonFan]

The NBC deal includes their affiliated stations, particularly NBC Sports. Why a top 15-market like Phoenix matters is not because NBC intends to broadcast Coyote games; it's because Phoenix makes up part of the market for broadcasts of any game.

I've linked to this story at least twice before in the past 2 years of these Phoenix threads, but here goes again... written just before it became known that Atlanta would have to be moved first.

TV market could prevent Coyotes' move to Winnipeg





Now that Atlanta has moved, having Phoenix move to QC would be the loss of 2 of the top 12 TV markets in the U.S. Seattle would have been a fine replacement (same size market as Phoenix) but that isn't going to be viable just yet.

Doesn't mean that the league can't move to QC, but I suspect it is part of the calculation.

Another quote from the globe and mail article, from an nhl governor:

One governor said Canadians may not like it, but the NHL is a U.S.-based league, with only six Canadian teams, so the 24 American franchises are more interested in developing markets at home.

"That started with the original expansion, when they didn't add any Canadian teams in 1967," he said. "That never really changed, right or wrong. The hope was they could make the game national in the USA and, eventually, there would be some television dollars there.

This isn't rocket science, folks. It's been going on for decades, and it isn't about to change anytime soon.

 

[Mungman]

Anybody else get the idea that the NHL leaked it themselves?

No press conferences scheduled for today eh?

hmm, very uneventful.

That's the great lesson learned: "dont expect anything"

Slasher guaranteed us an announcement for today

This bears repeating at this time.... always remember much like the Hotel California

 

[Nordskull]

Why Seattle's Hansen is not buying the team himself?

I know the plan is somebody else buys the NHL team but, this would at least settle the NHL thing for Seattle, moving the team there in, say 4 years or something.

 

[Puckschmuck*]

Do you think the new 18K seat arena currently being constructed in QC is for the exclusive use of the cirque du soleil?

Are you going to ask that same question regarding Markham?

 

[Mungman]

Are you going to ask that same question regarding Markham?

Shouldn't it be for Monster Trucks in Markham?

 

[Skidooboy]

withdrawn.

 

[nelina]

Why Seattle's Hansen is not buying the team himself?

I know the plan is somebody else buys the NHL team but, this would at least settle the NHL thing for Seattle, moving the team there in, say 4 years or something.

Interesting. Maybe GB already suggested this to him and received a negative response.

 

[rj]

Hey, you're preaching to the choir here. I don't approve of the way the nhl runs their league, but I'm just stating the obvious that their business plan, in a nutshell, is to maintain the USA footprint at all costs to appease NBC. As long as bettman, daly, jacobs, snider etc are still around, nothing is going to change. They're a stubborn, old school bunch who can do whatever they want, and nobody can do a damn thing about it. The Canadian teams are essentially a giant cash register used to fund the American TV contract pipedream.

There is no American demand for NHL franchises!

If you're an NHL owner of a run-of-the-mill middle team, you're not the Rangers but you're not the Coyotes either, that has to scare you because once all the Canadian markets are filled, you have nowhere to threaten your city for a new arena and your franchise value (which is why the NHL is lending $85 million for a $170 million purchase price and the loan is not getting paid back for 5 years instead of just selling the team at market value) is going to be depressed.

And this league of dumbasses wants to actually expand? That is the dumbest thing they can do. I doubt Bettman wants the Nordiques to return and he's forced to talk to them because THERE'S NOWHERE ELSE TO GO! The owner of Quebecor knows this and he can then play hardball negotiating, which lowers the buying price, because THERE'S NOWHERE ELSE TO GO! And then if you do expand by 2 teams, you're splitting the TV revenues by 32 instead of by 30, so the amount each team gets goes down...making every team in the league even more dependant on live gates and locally-created revenues.

I don't understand why Gary is still employed. His job is to the owners, not the players or the fans. But if you're an owner, how can the last few years make you feel good about the direction of the league?

 

[King_Stannis]

I think that point will come very soon.
The NBC deal is only worth 20 million a year. the 'Yotes loose almost that much or more a season.
.

$2 billion over 10 years is $200 million/year, not $20 million.

 

[rj]

Interesting. Maybe GB already suggested this to him and received a negative response.

I was listening to a show last week, maybe Hockey Central. And they were talking about how the Portland WinterHawks made the Memorial Cup and were owned by a billionaire. Some media member asked him if with his money he'd ever like to own an NHL team and he said yes, he loved to. Someone then asked him if he'd like to own an NHL team in Portland and he bluntly said "no".

 

[GF]

I kinda feel that the general mood is that the deal goes through.

I don't understand as the CoG doesn't have the money to pay the 15m$ bill for AMF. They also already voted on the 6m$ budget. They're opening the bids today, meaning the chances that RSE gets their 15m$ is virtually zero.

Even if they voted for the deal, the COG will likely have to face petition and GWI, again meaning that the chances for RSE to get their 15m$ is again virtually zero.

So why does people have the feeling this is a done deal for the NHL and RSE? To the contrary I think the chances of RSE owning the Coyotes are virually zero.

But what will happen when everything is said and done is the NHL is still gonna operate the Coyotes next season and they will be held accountable for all losses.

Why are people thinking this is a done deal?

 

[Slashers98]

I kinda feel that the general mood is that the deal goes through.

I don't understand as the CoG doesn't have the money to pay the 15m$ bill for AMF. They also already voted on the 6m$ budget. They're opening the bids today, meaning the chances that RSE gets their 15m$ is virtually zero.

Even if they voted for the deal, the COG will likely have to face petition and GWI, again meaning that the chances for RSE to get their 15m$ is again virtually zero.

So why does people have the feeling this is a done deal for the NHL and RSE? To the contrary I think the chances of RSE owning the Coyotes are virually zero.

But what will happen when everything is said and done is the NHL is still gonna operate the Coyotes next season and they will be held accountable for all losses.

Why are people thinking this is a done deal?

It's simple, mainstream media are so lazy they don't bother to come here or dig up information on the Coyotes' saga. Even here in Quebec City, journalists do a crap job covering this whole mess.

Fans do a better job unveiled the truth than paid journalists.

 

[Pilky01]

I kinda feel that the general mood is that the deal goes through.

I don't understand as the CoG doesn't have the money to pay the 15m$ bill for AMF. They also already voted on the 6m$ budget. They're opening the bids today, meaning the chances that RSE gets their 15m$ is virtually zero.

Even if they voted for the deal, the COG will likely have to face petition and GWI, again meaning that the chances for RSE to get their 15m$ is again virtually zero.

So why does people have the feeling this is a done deal for the NHL and RSE? To the contrary I think the chances of RSE owning the Coyotes are virually zero.

But what will happen when everything is said and done is the NHL is still gonna operate the Coyotes next season and they will be held accountable for all losses.

Why are people thinking this is a done deal?

Because I think deep down most people genuinely believe that the NHL is happier to lose money in Phoenix than make money in Quebec.

We all saw the Atlanta-to-Winnipeg press conference. The disappointment on Bettman's face was palpable and the words he used made it very clear that he was not excited about returning to Winnipeg. "If we don't sell out this building, this isn't going to work". Can you even imagine him making that sort of suggestion/threat to a struggling American market? Of course not. He just wouldn't do it.

I think people have every reason to suspect Bettman will do everything he possibly can to avoid relocation to Canada.

 

[nelina]

I was listening to a show last week, maybe Hockey Central. And they were talking about how the Portland WinterHawks made the Memorial Cup and were owned by a billionaire. Some media member asked him if with his money he'd ever like to own an NHL team and he said yes, he loved to. Someone then asked him if he'd like to own an NHL team in Portland and he bluntly said "no".

This is logic. Hockey is interesting but not to the point to loose big money owning an NHL team in a poor market (like Phoenix). Those type of guys likes race horses as long as they ride them. Not cleaning the paddocks !!!

 

[Evil Doctor]

I take a vacation from the internet and nothing much happens, I go to work for one day, and find out the NHL had really flipped their lid...

One thing that I find curious is the contention that receiving $6m AMF would be essentially "found money" that can be used towards repayment of the loans, when in fact that money is supposed to go towards capital costs, electricity, maintenance, staff wages that sort of thing. It's doubtful they would have anything left over to pay any loans back.

Likewise, if RSE is so cash poor, how does the NHL actually expect them to run a team?

Perhaps this is the problem with Pastor's bid: he offered too much money...

 

[Nordskull]

I take a vacation from the internet and nothing much happens, I go to work for one day, and find out the NHL had really flipped their lid...

One thing that I find curious is the contention that receiving $6m AMF would be essentially "found money" that can be used towards repayment of the loans, when in fact that money is supposed to go towards capital costs, electricity, maintenance, staff wages that sort of thing. It's doubtful they would have anything left over to pay any loans back.

Likewise, if RSE is so cash poor, how does the NHL actually expect them to run a team?

Perhaps this is the problem with Pastor's bid: he offered too much money...

They don't expect them to run past 5 years.

Its a "rent" disguised as a "sale".

If this go through, Seattle can begin designing logos and jerseys to replace the red and white jerseys: on the road to Seattle.

 

[cbcwpg]

Because I think deep down most people genuinely believe that the NHL is happier to lose money in Phoenix than make money in Quebec.

Because the salary cap is related to HRR, having a team like Phoenix that doesn't contribute all that much to HRR VS. a team in QC that IMO would contribute more to HRR, the salary cap is lower by having the Coyotes around. Insane to think it, but I wonder if some of the owners don't totally mind having teams like Phoenix losing money?

 

[CGG]

I'm still convinced that the NHL "Loan" is an earmarked figure of 5 years worth of the Coyotes Revenue Sharing allocation/IGF. Be it advanced or in installments. They won't be paying it back. Again, my opinion.

That makes an awful lot of sense. Not a loan from the NHL, just an advancement of 5 years worth of revenue sharing. Hence the need to write it down that the Coyotes get max revenue sharing regardless of what happens.

So now Renaissance would have access to $80 million to get them through the first 5 years. And two of their major revenue streams would be pledged elsewhere - the AMF goes to pay off Fortress and the revenue sharing is held by the NHL to reimburse them for the $85 million "loan".

How much cash would they lose each year with no revenue sharing and no AMF? I'm guessing a whole lot more than $16 million, but that's just me.

 

[cbcwpg]

They don't expect them to run past 5 years.

Its a "rent" disguised as a "sale".

If this go through, Seattle can begin designing logos and jerseys to replace the red and white jerseys: on the road to Seattle.

The more I think about it the more this sounds plausible.

Although in an absolute necessity the NHL "could" relocate the Coyotes today, I honestly believe that Bettman doesn't want to go down the relocation road because, contrarily to what people in those cities think, Bettman does not think they are IDEAL situations to relocate to. (and it's only his opinion that counts ) Can it be done? Sure if it has to. Is it the preference? No.

If Bettman can figure out some way to "rent" Glendale for another 5 years, then the relocation options 5 years from now will be much better than they are today. New ( remember, Bettman likes new over old ) buildings to relocate to will be finished and operational.

It's a shame that the hockey fans in Phoenix might be asked to support as best they can, a temporary situation, while being told its permanent.

 

[Pilky01]

Because the salary cap is related to HRR, having a team like Phoenix that doesn't contribute all that much to HRR VS. a team in QC that IMO would contribute more to HRR, the salary cap is lower by having the Coyotes around. Insane to think it, but I wonder if some of the owners don't totally mind having teams like Phoenix losing money?

I don't think its insane at all. We know from the two most recent lockouts that this league is run by, and for the benefit of, the poorest franchises, so keeping money losers around to Pejorative Slur revenue growth (and the correlative player expenses) is really just a shrewd business decision.

 

[cutchemist42]

The more I think about it the more this sounds plausible.

Although in an absolute necessity the NHL "could" relocate the Coyotes today, I honestly believe that Bettman doesn't want to go down the relocation road because, contrarily to what people in those cities think, Bettman does not think they are IDEAL situations to relocate to. (and it's only his opinion that counts ) Can it be done? Sure if it has to. Is it the preference? No.

If Bettman can figure out some way to "rent" Glendale for another 5 years, then the relocation options 5 years from now will be much better than they are today. New ( remember, Bettman likes new over old ) buildings to relocate to will be finished and operational.

It's a shame that the hockey fans in Phoenix might be asked to support as best they can, a temporary situation, while being told its permanent.

Would they fall for it?

 

[halligan10]

At this point no one can tell what is going to happen. We can have a breaking news anytime that they are moving or not....Who knows! Perhaps I am sure that Bettman has a plan to move the team quick an easy...Glendale could tell the NHL anytime that the Coyotes have no room to play in JOB.com arena next year....I think thats what Bettman is waiting for. Like in Atlanta...he moved them because he had no choice....I dont know if they will play in Quebec next year but is it safe to say that they wont be in Glendale?? I feel like the NHL leaked the info yeasterday to accelerate the whole thing....now they are waiting on cog to make the last final call