So, you really think that Hulsizer might just have pushed Glendale into issuing a $100 million bond, under threat of litigation and revision of their bond rating as just a negotiating position? Is that how you negotiate?
Huh? Where do you get that? To recap: MH and CoG negotiated a purchase price as part of a complex negotiation. Tinalera suggests that MH simply cough up $10M or more, presumably just to move the transaction along. Hence my question.
If he is open to renegotiation, do you think he might be willing to exclude Coyotes Team expenses from Eligible Operating Expenses for determining the "arena management fee"?
I have no idea whether he is open to renegotiation or not. How would any of us know? Maybe, maybe not.
If he is, perhaps he will want to renegotiate various aspects, up to and including what constitutes an Eligible Operating Expense. Or maybe something else.
NOW ...
... since you waited so patiently
for a response from me in connection with the definition of Eligible Operating Expenses, here you go.
1. You are correct that the applicable definition for purposes of the Arena Management Fee is the consolidated "Eligible Operating Expenses" of the arena manager and the team.
2. You are also correct that "Eligible Operating Expenses" means "Consolidated Non-Hockey Related Expenses".
3. I direct your attention to the definition of "Consolidated Non-Hockey Related Expenses" and point out that, before it gets to the itemized list, it refers to "the non-hockey related expenses of the Arena Manager and the team on a consolidated [sic]
in accordance with GAAP".
4. I am sure that you are familiar with GAAP, a key principle of which is the matching principle (you match expenses with the associated revenues). As such, GAAP requires that non-hockey expenses are only those associated with non-hockey revenues.
5. I assume that your response to #4 would be that the definition states, as it does, that those expenses are "comprised of all arena manager and team expenses other than ... [the listed expenses that you identified]", and therefore the expenses are everything with the sole exception of those specifically enumerated in the list.
6. My response to that is that the GAAP requirement is a prerequisite that must be complied with BEFORE you get to the enumerated list part of the definition cited in #5. In other words, for something to be a Consolidated Non-Hockey Related Expense, it must pass
both of two tests within the definition:
- they must be non-hockey related expenses
in accordance with GAAP; and
- within
those expenses, they are comprised of all of
those arena and team expenses other than the enumerated list.
7. As such, your examples (IIRC, they included team GM, AGM, scouting) would fail under the first test, as they are not "non-hockey related expenses ... in accordance with GAAP". They are clearly associated with the generation of hockey revenues, and accordingly do not qualify for consideration as non-hockey related expenses in the first instance. You then do not get to the second part of the test.
As an aside, I should note that, looking at the Coyotes financial statements under Moyes, even if I am incorrect, those expenses are relatively minimal - a couple of million, perhaps, at most. However, as noted above, I do not think that your view on this issue is correct IMO.
That said, I do not want to diminish the strength of your position on its face. You absolutely raise the right question. I would not characterize my own position as a 100% certainty, although I would characterize it as a much-better-than even chance of success (if it was disputed). Given that the clause is a bit jumbled and omits the word "basis", and the phrase "in accordance with GAAP" seems to be inserted as a product of negotiation (a sure sign of a specifically negotiated point), the parties probably have a record of the negotiations, so they mutually know and agree as to what is eligible. I doubt we will ever know the true intent.
If you elect to respond, please recall ABD's concerns about the thread getting too "legalish".
We are deep in the weeds here.
