Phoenix XXIV: How many twists does the scriptwriter have left?

[RR]

...The league covered itself for this season before it ever started. These people who think the league is somehow "raising the purchase price of a declining asset" have around twenty thousand posts of catching up to do.

Not so sure about that, Ike. We know the COG put $25M in escrow for this year's losses. Now we hear the loss could be $15M higher.

If, as reported, Winnipeg is a valued location (going back to Bettman's e-mail in the spring of 2009), why wouldn't the league insist on the relocation sales place to cover all its losses?

Maybe I'm misreading your post. If I am, please correct me.

 

[RR]

According to the recent article the loss is thus far but could go up to 30 million with a few sellouts and playoffs. To me it doesn't make any sense if everything is so much better than last years numbers but the losses are greater than last year. Something isn't right in my opinion.

Drop in non-hockey event revenues, perhaps?

KILLION! HELP! Approximate stats on concert bookings YTD between 2009 and 2010. Could those be a significant factor in declining Arena revenues at the Job?

If not, WTF? We talking Arthur Anderson, Enron-type accounting?

 

[Killion]

Drop in non-hockey event revenues, perhaps? KILLION! HELP! Approximate stats on concert bookings YTD between 2009 and 2010. Could those be a significant factor in declining Arena revenues at the Job? If not, WTF? We talking Arthur Anderson, Enron-type accounting?

One of the problems obviously is the lack of non-hockey related events that have been booked into the job over the past 9mnths. Not much of anything. As the AzCentral article illustrates, the front office & sales depts' have been trimmed to the bone & the organizations running on a shoestring, yet losses' are purportedly higher than last years when there were in fact a flood of 2-4-1 ticket offers and the like, along with a strong run at the end of the season at the gate. Id wait until the conclusion of the playoff run to start freaking, as the box office should and likely will increase substantially between now & then, ameliorating the losses considerably. That $40M loss announcement was premature & signals other things IMO.

 

[finchster]

So, through 31 home games this year (not including the Prague game, of course), here's what's been reported:

2010-11 attendance is up 6.35% (2009-10 ATD 10,927; 2010-11 ATD 11,621).

And we know from the posts here that the report of current losses being $40M to date includes (to quote the article that referred to the $40M loss-to-date) that the, "number of free tickets doled out this season has dropped by 36 percent from last year, according to the league statistics. The team has sold an average of 1,188 more paid tickets per game this season.

"That has helped the franchise earn 15 percent more money per ticket without raising ticket prices."

So, unless we're only cherry-picking the data reported, that $40M must be the projected combined loss if attendance doesn't get the bump it did last year; the Coyotes don't make the playoffs; and concert and non-hockey event bookings do not increase.

Or am I misreading the data? Since 2009-10 Team and Arena losses (NHL is Arena Manager, so those losses have to be added) combined with the NHLs purchase price pushed the sales price to $160M - $170M.

Is it possible the cost of business went up (salary floor etc), or the loss of other revenue streams (suites not being renewed etc)? This would negate any increased ticket revenue.

 

[MAROONSRoad]

One of the problems obviously is the lack of non-hockey related events that have been booked into the job over the past 9mnths. Not much of anything. As the AzCentral article illustrates, the front office & sales depts' have been trimmed to the bone & the organizations running on a shoestring, yet losses' are purportedly higher than last years when there were in fact a flood of 2-4-1 ticket offers and the like, along with a strong run at the end of the season at the gate. Id wait until the conclusion of the playoff run to start freaking, as the box office should and likely will increase substantially between now & then, ameliorating the losses considerably. That $40M loss announcement was premature & signals other things IMO.

Playoff run, Killion? Good thing they beat the Red Wings tonight, because they were out of the playoffs prior to that win according to the "NHL True Standings" (i.e., based on %).

As it stand, the Coyotes are in 7th place with four teams breathing down their necks according to the "true standings."

http://nhltruestandings.wordpress.com/

GHOST

 

[RR]

Is it possible the cost of business went up (salary floor etc), or the loss of other revenue streams (suites not being renewed etc)? This would negate any increased ticket revenue.

Coyotes budget has been level at ~$50M since the beginning of the 2009-10 season. If you look at last year's deadline additions compared to this year -- and GM Maloney's statement last week that he didn't have the flexibility this year that he had last -- it's very obvious the NHL established an ~$50M roster budget for the Coyotes. Maloney even said as much last week.

Suites revenues were virtually non-existent last year as well as this year. Why would a corporation, unsure of the long-term viability of its corporate partner, invest in that partner?

Purchase of suites is more of a long-term partnership, rather than a simple "advertising" purchase.

 

[OthmarAmmann]

What a game tonight! SRO crowd sees Coyotes, down 4-1 going in to 3rd, score three to tie it and win it shootout, dropping Wings 5-4.

And, yes, there were a lot of Wings fans there (as there are at every arena in the States).

After game Tippett quipped, "I think that's a game even the Goldwater group would like."

I think it's pretty obvious that their issue is with the city and not with the team. That "play with her" email was pretty toxic to their relationship.

Interesting in listening to the Brehn Resnik (can`t remember the correct spelling) interview recently posted. He said GWI is worth about 3 million dollars. So good luck collecting even if the CoG wins.

Assuming the Institute has coverage, it will actually be their insurance company that pays.

Not so sure about that, Ike. We know the COG put $25M in escrow for this year's losses. Now we hear the loss could be $15M higher.

If, as reported, Winnipeg is a valued location (going back to Bettman's e-mail in the spring of 2009), why wouldn't the league insist on the relocation sales place to cover all its losses?

Maybe I'm misreading your post. If I am, please correct me.

One of the advantages to being Plan B is that you know that you've got a motivated seller. Plans C and higher may or not exist or be possible since it's so late in the game and it would considerable take time to hammer out a deal.

If I were TNSE, my starting point would be that there was a price that had been agreed upon last year (if media reports are to be believed) and that it was the NHL's own fault that it lost a pile of cash by not consummating the deal.

 

[Tommy Hawk]

There were calcs in the BK documents, but they were the original $500M LD calculations and the basis for same. I think some of this came from a poster's review of CoG budget documents. I looked at them as well, and concluded that one could not readily calculate the team-and-arena-generated funds, because they were not sufficiently segregated. Other posters decided that they could, in order to build a case that they were way low.

See, there is the begging-the-question fallacy rearing its head right there. You are assuming that Walker is "a reasonable estimate" and Hocking is unreasonable. Says who?

Back when that was discussed during my hiatus, no one came up with a better rationale for rejecting Hocking other than the following irrelevant/incorrect arguments:

- Walker is a better report because it is longer (irrelevant);

- Walker is a better report because they have been doing it longer (incorrect and irrelevant);

- Walker is a better report because hocking has been on retainer to CoG for various projects over the years (irrelevant);

- Walker is a better report because Hocking has been sued on a similar project (irrelevant, and whooooo boy, you should see what I have in hand about THAT issue; it deserves its own post IMO ).

- how the heck can parking generate that much revenue, anyway??!? It's just PARKING!

You can see what I think of the "analysis" that was done on this Board to reach that piece of conventional wisdom. Yet you assume that Walker is the "reasonable report".

I have no connection to the Coyotes, either. Hockey will go on either way. I am interested in the business machinations. Regarding the management fee that has people worked up, which is purely a cost-reimbursable contract anyway, there is no valid comparison to other pure arena management contracts, and I can only assume that people keep raising it because they do not understand that point. This is a transaction with multiple components, many of which have no place in a standard arena management contract. Here, the arena manager is also a rent-paying tenant. The arena manager is also producing 500-600,000 attendees by its own business. The arena manager is committing to run its own business in the arena for thirty years.

Both CF and I are in full agreement that the transaction has to be evaluated on its entirety, rather than being broken down into components as you suggest.

I'm with you there, Tommy. This is not about legalities. This is politics. GWI is a political entity, notwithstanding this nonsense that people want to believe about them being a "watchdog". They are a GOP entity pursuing GOP policies and directives. It may evolve into a lawsuit, but it is about politics, not taxpayer protection And that is fine - let's just stop deluding ourselves about any high-minded motives.

First of all, I am glad we are in agreement about something!!

Second, I am disappointed in you. You should know by now that I do my own research and draw my own conclusions. The reason that I think the Walker is more reasonable report than hocking was my analysis of the assumptions and the figures, not what anyone else said. It appears, to me, that the numbers by walker more properly reflect accurate parking space information concerning the number of spaces available along with a more accurate measurement, based upon historical information, of usage rates and fees.

Now, on to the numbers of estimated losses etc. The CoG filed and has stated several differing numbers associated with what they believe losses will be if the Yotes move. First of all, their numbers make the assumption of the arena going dark, a flawed assumption. In their number they present how much tax revenue they receive from Yotes events and other events at the arena. IIRC it was about a 50-50 split yet they argue they will lose ALL that revenue instead of just the yotes. Secondly, they also have provided differing numbers on the costs to run the arena. They say 19.7 million yet in future years it si not 19.7 million and nowhere in any documents from historical costs was it 19.7 million. UoP doesn't even have 19.7 mil in expenses to run the arena. Basically, I believe CoG is massaging numbers to make a point, which will ultimately backfire when asked to explain in court.

As for a rent paying tenant, that rent has to be balanced against the cost to have that tenant. Sure, let me rent a building out for $3 mil a year but if I have to pay all the utilities and costs (which they would since they are guaranteeing the costs for running the arena) and they cost me $7 million a year in costs associated with their tenancy, I am going to lose $4 mil per year no matter which way you slice the pie. The CoG painted themselves into a corner arguing they will have to shut the arena. A judge should ask them what is the amount specific to the yotes.

I am also not sure that this can be viewed in its entirety. IF any part of the deal breaks the law, the whole deal breaks the law, you can't just say that the whole thing looks OK from an economic standpoint so let's ignore the parts that are inconvenient, which is what you are doing. You are ignoring the stadium can go on without the Yotes. You are ignoring that parts of the agreement MAY be in violation of the gift clause (I am not talking the parking). You are ignoring that the CoG has done all of this in Chicago Politics fashion.

You are also ignoring that if these numbers ($100 million) were truly THAT accurate concerning the parking, MH, being the financial whiz he is, would not give up a revenue stream with the vast potential that the parking could bring if the arena was booked 80% of the time. You are also ignoring the statements by the bond agencies for the reasons they downgraded CoG debt AND placed them on a negative watch. It had less to do with the lawsuit and more to do with the debt level and the change in the subordination of current bond issues with regards to the excise tax income.

seeing my actual name on a lawsuit would be enough for me to run for those cactus covered hills they got there in phoenix.

who will blink first.

Considering that GI is used to litigation, I do not see them running for those cactus covered hills.

What a game tonight! SRO crowd sees Coyotes, down 4-1 going in to 3rd, score three to tie it and win it shootout, dropping Wings 5-4.

And, yes, there were a lot of Wings fans there (as there are at every arena in the States).

After game Tippett quipped, "I think that's a game even the Goldwater group would like."

GI would love to see the yotes stay, but without public money paying them to stay.

Make up symbols like they did for the Cree.

Then that would be a written language.

Im digginit. Warren Zevon. Excitable Boy.


You apparently completely missed the discussion we had on this in the last thread Mork. For shame. You'll find CF, GSC2k2 & others opining on the subject. I initially threw it out there as I thought GW's letters (links to copies a couple of miles back as well, Im just plain lazy) crossed the line into tortious interference; and, I also wanted to know why the COG rather than standing frozen in the headlights didnt take the fight to GW & seek injunctive relief and slam the door with Enforceable Opinions, right on up to the Supremes if neccessary. Now, its likely too little, too late, and quite possibly completely disingenuous posturing.

They opined, but never produced, the AZ law and/or statutes associated with the relevant laws they were arguing.

Source? My understanding is that it was a handshake agreement. I could be wrong.

I think he meant the CoG/NHL agreement,not the TSNE agreement.

 

[RR]

I think it's pretty obvious that their issue is with the city and not with the team. That "play with her" email was pretty toxic to their relationship.

Oh, come on, OA. Certainly you know I shared that only because it was an illustration that the team was very much aware of this fluid ownership situation. And, it's pretty damn funny.

[mod delete]

 

[King Woodballs]

welcome too....

 

[Fugu]

What a game tonight! SRO crowd sees Coyotes, down 4-1 going in to 3rd, score three to tie it and win it shootout, dropping Wings 5-4.

And, yes, there were a lot of Wings fans there (as there are at every arena in the States).

After game Tippett quipped, "I think that's a game even the Goldwater group would like."

Resistance is futile, RR. Come join me on the dark side.

 

[Retail1LO*]

The idea that the league wants someone to pay 40M extra to cover their losses, when there were viable means to sell this team previously, is absolutely Pejorative Slured. What if, hypothetically, the NHL ended up owning this team for another season prior to realizing the team simply HAS to move? Are they going to toss another year's worth of operating cost on top of the potential buyer?

Are you allowed to charge different amounts to different buyers? If they're going to throw in 40M on top of a bid that will move the team to Winnipeg, must they also increase the price on any bid to keep the team in Glendale?

 

[Niagara67]

If $210M is the sales price for that market, you're arguing that an organization that already exists, has organizational structure in place, an NHL roster, a farm system, and has been a playoff caliber team isn't worth $96M?

Apparently it was only worth $70M a week ago - it's the parking lot goldmine that's the big catch of the deal - worth $100M. The parking lot rights aren't portable to Winnipeg.

 

[Dugray]

I don't think there's a chance in hell the NHL owns the team and holds them in Glendale next season. Either this deal gets closed soon or TSNE picks it up.

 

[bleuet]

Guys, stop wasting your time thinking about CoG suing GWI. CoG is responsible for its own damage in this, I would add they should all resigned for setting up a unconstitutional deal.

Is'nt there freedom of speech in your country?

If the bonds dont sell, that's because investors are no stupid guys and believe GWI are right.

Come one count Bettmaninov, move this team elsewhere, stop this circus.

 

[Fugu]

$40MM of losses already? And not according to the evil Canadian media, but according to Hulsizer and reported in a Phoenix paper?



$210MM as the purchase price? Even with the $100MM from COG and the 'management fees' this looks like a bad deal for MH.

GHOST

Were the Coyotes' and Jobing.com operations always considered one loss figure? Hulsizer clearly said the Coyotes and jobing.com combined may lose $40m. [I'm sure he's making making as a broad a statement as possible for other reasons.]

If so, how do you lump in losses from jobing.com and tack those on to a sales price to TNSE? They're not going to get the arena rights with the Yotes.

As an aside, if the NHL is the arena operator, and the arena operator has the parking rights, that should end that quibble about parking rights-- unless there was some default clause that rests with CoG.

Lawyers Guns & Money ... come on mods, get with it

It was LadyStanley. I'm distancing myself from the current title.

You saying TNSE would tell the NHL to go **** themselves if the price was $210M? Seriously? Are you saying that?

Because if you are, a franchise in Winnipeg is DOA.

Not so sure about that, Ike. We know the COG put $25M in escrow for this year's losses. Now we hear the loss could be $15M higher.

If, as reported, Winnipeg is a valued location (going back to Bettman's e-mail in the spring of 2009), why wouldn't the league insist on the relocation sales place to cover all its losses?

Maybe I'm misreading your post. If I am, please correct me.

I think what Ike was saying, which also would address your first post quoted here, is that TNSE and the NHL seem to already have an agreement in principle. [Ike means they've covered this ground already.]

Now, one of the recent reports says there isn't anything in that drawer and that a sales price would still need to be negotiated, but a normal process would valuate a team based on where it's going and that the price is supportable. NHL could ask fro $600m, but that would be pretty stupid since we all know, Thomson or not, that's not a supportable price for a team in Winnipeg. Or any other market for that matter.

They cover the concept of pricing based on cost recovery somewhere in Pricing 101. Basically, it's not a sound business principle.

What's even more ridiculous is the notion that the league could just keep the team there and keep piling on the losses to the price year after year. They should become quite comfy with being a permanent owner then. Or they could sell the parking rights to an arena mgt company (say AEG) for $100m. Then they'd only have to get JR to put up $80m.

There's your solution. JR, AEG and the NHL.

 

[Fugu]

Guys, stop wasting your time thinking about CoG suing GWI. CoG is responsible for its own damage in this, I would add they should all resigned for setting up a unconstitutional deal.

Is'nt there freedom of speech in your country?

If the bonds dont sell, that's because investors are no stupid guys and believe GWI are right.

Come one count Bettmaninov, move this team elsewhere, stop this circus.

Many people here thought it was stupid of Glendale to even consider providing the subsidies/gifts in the first place. That apparently hasn't stopped them from removing all doubt by 'speaking out'.

 

[MountainHawk]

So doing some research into tortious interference with a business relationship (I couldn't find the Arizona specific wording, but it appears to be a pretty standard tort), there are 4 things that COG would have to prove to win:

1) That a business relationship would have existed without the interference
2) That a third party interfered and disrupted the business relationship
3) That financial damages occurred due to the interference
and 4) that the interference was improper.

Looks to be like the first 2 are a lock for COG to prove.

3 is interesting, because one could argue that the financial damages don't happen until the bonds are issued or the team moves. Are they going to sell the bonds on Monday, then file suit? That seems unlikely.

4 likely depends on the eccentricities of Arizona case law, and whether a private actor like GWI has the right to interfere in a business relationship they think is illegal, or if they are only allowed to react in the courts. If I was guessing, I would think the courts are supposed to be the remedy, but I'm not an AZ lawyer, so it would just be a guess.

 

[Fugu]

So doing some research into tortious interference with a business relationship (I couldn't find the Arizona specific wording, but it appears to be a pretty standard tort), there are 4 things that COG would have to prove to win:

1) That a business relationship would have existed without the interference
2) That a third party interfered and disrupted the business relationship
3) That financial damages occurred due to the interference
and 4) that the interference was improper.

Looks to be like the first 2 are a lock for COG to prove.

3 is interesting, because one could argue that the financial damages don't happen until the bonds are issued or the team moves. Are they going to sell the bonds on Monday, then file suit? That seems unlikely.

4 likely depends on the eccentricities of Arizona case law, and whether a private actor like GWI has the right to interfere in a business relationship they think is illegal, or if they are only allowed to react in the courts. If I was guessing, I would think the courts are supposed to be the remedy, but I'm not an AZ lawyer, so it would just be a guess.

If I were a drug lord, I'd sue the governments for messing around with my distribution network and jailing my dealers.


On a serious note, GWI didn't interfere. They gave an opinion on the legal standing of the lease agreement and warned that they were likely to sue. It is up to the investors to garner all information available in order decide how much risk to assume.

I would argue that they offered a public service.


The way this is written, a suit itself could be considered interference if it prevented the the deal from closing. I have a hard time seeing a legal system that prevents a suit from being put forward if there are grounds. (That doesn't mean someone cannot counter-sue, citing some frivolous.)

 

[bleuet]

But this interpretation would be against both fundamentals of capitalism and freedom of commerce and freedom of speech.

Again, EXERCISE OF A RIGHT IS NO FAULT.

GM can sue Ford because Ford think their products are better?

Anybody can sue anybody! Yeehaa!

No case, period.

CoG wont sue, they are acting like teenagers, are doing what Hulsizer tells them to do without thinking. Threatening to sue is their last bullet.

Guys at GWI are in total control. They lead by 6 goals with 2 minutes to play.

 

[C77]

Seems like the politicians in Glendale are looking to pin the blame for the deal's failure on another entity to save face.

 

[OthmarAmmann]

Seems like the politicians in Glendale are looking to pin the blame for the deal's failure on another entity to save face.

Or the failure of Westgate

 

[MountainHawk]

If I were a drug lord, I'd sue the governments for messing around with my distribution network and jailing my dealers.


On a serious note, GWI didn't interfere. They gave an opinion on the legal standing of the lease agreement and warned that they were likely to sue. It is up to the investors to garner all information available in order decide how much risk to assume.

I would argue that they offered a public service.


The way this is written, a suit itself could be considered interference if it prevented the the deal from closing. I have a hard time seeing a legal system that prevents a suit from being put forward if there are grounds. (That doesn't mean someone cannot counter-sue, citing some frivolous.)

On a serious note, GWI definitely interfered. It's just a matter of if they were entitled to do so. They were not a party to the contract, and they acted in a way to disrupt the contract.

As I said, whether they are entitled to send the letter is likely dependent on case law in AZ that no one (or few people) really can comment on here, so we don't really know the answer.

 

[bleuet]

In Quebec, it would not. I don't know AZ case law tough.

 

[MountainHawk]

But this interpretation would be against both fundamentals of capitalism and freedom of commerce and freedom of speech.

Again, EXERCISE OF A RIGHT IS NO FAULT.

GM can sue Ford because Ford think their products are better?

Anybody can sue anybody! Yeehaa!

No case, period.

CoG wont sue, they are acting like teenagers, are doing what Hulsizer tells them to do without thinking. Threatening to sue is their last bullet.

Guys at GWI are in total control. They lead by 6 goals with 2 minutes to play.

This just makes no sense at all. Capitalism has rules. GM can't go to a Ford supplier and make up stories about Ford to get them to switch to being a GM supplier. Freedom of speech really has nothing to do with this at all? It's a well-defined tort, and freedom of speech isn't a defense, just like it's not a defense if you are sued for libel or slander, or if you are arrested for yelling "Fire!" in a theater.