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

[JetFan4Ever]

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.

Instead of the current situation, substitute two parties planning on robbing a bank. However, instead of GWI sending a letter to the banks warning them of a potential illegal bond offering they warn them of a potential bank robbery. As a result of the letter the robbery never occurs. In the bank robbery scenario you still might have a case for the first three requirements.

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

However the whole idea of the bank robbers suing would be ridiculous as they were planning to break the law. As far as the fourth point I'm sure the bank robbers would have thought the interference was improper as well.

 

[The Pouzar]

I was curious if the letter that GWI sent to the various parties was unsolicited or solicited.

[mod delete]

 

[MountainHawk]

Instead of the current situation, substitute two parties planning on robbing a bank. However, instead of GWI sending a letter to the banks warning them of a potential illegal bond offering they warn them of a potential bank robbery. As a result of the letter the robbery never occurs. In the bank robbery scenario you still might have a case for the first three requirements.

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

However the whole idea of the bank robbers suing would be ridiculous as they were planning to break the law. As far as the fourth point I'm sure the bank robbers would have thought the interference was improper as well.

You'd have a great analogy there if there were ever an situation where robbing a bank is legal.

 

[MountainHawk]

I haven't heard about the Diamondbacks connection until this. Man, if the COG gets documents that shows this is driven by the director with connection with the Diamondbacks, the GWI is in for a world of hurt.

 

[billy blaze]

Not even close. Nothing will ever touch the foolish and doomed-to-fail scheme hatched in the first place by Messrs. Balsillie and Rodier.

He who laughs last and all that

 

[GSC2k2*]

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?

Well, of course it does not make any sense. Here is why:

There is a difference between CASH losses and ACCOUNTING losses.

The NHL's deal with CoG, and indeed its only concern as a not-for-profit entity who is planning to sell the team, relates only to CASH losses.

It is not in the least bit surprising that the team's accounting losses would be substantial. They were a huge component of Moyes' alleged cumulative losses as well.

As an aside, if suite and premium seat revenue went down to absolutely ZERO, that would have been a revenue reduction of only $8.4M from Moyes' time (and it was not zero last year and is not zero this year).

THe major sources of the Coyotes' revenue in Moyes' time was:

Tickets - $13.3M
Suites/Premium Rev - $8.4M
Corporate/Naming Rights Rev - $8M
NHL Central Revs - $8.4M
NHL Revenue sharing - $13.5M
Local Broadcast - $4.5M

THe NHL portions have gone up.

The naming rights deal is in place still

THe NHL signed a new local broadcast deal last year. Ratings are up in PHO, so no loss there YOY for certain.

If ticket revenues are up as well, how can the NHL be losing $15M more this year than last year?

They can't, that's how.

The $40M is IMO an accounting loss (including depreciation and amortization).

 

[cbcwpg]

I haven't heard about the Diamondbacks connection until this. Man, if the COG gets documents that shows this is driven by the director with connection with the Diamondbacks, the GWI is in for a world of hurt.

http://www.bizjournals.com/phoenix/news/2011/02/10/randy-kendrick-no-involvement-coyotes.html

Randy Kendrick — wife of Arizona Diamondbacks owner Ken Kendrick — strongly asserts that she has no involvement or interaction with Goldwater Institute attorneys over whether it should sue Glendale over the city’s $197 million deal for the Phoenix Coyotes.

“I’m not involved with that decision,” said Kendrick.

Goldwater CEO Darcy Olsen also said she’s had no talks with the Kendricks about the Coyotes lawsuit and that decision will be made by the group’ attorneys based on legal arguments.

I'm sure the GWI kept any people with the potential of "conflict of interest" out of this process. The CoG is just trying to scare people at the GWI by threatening them with legal action even though they were never involved. Just hot air from the CoG.

 

[Killion]

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

Coming back from a 3 goal deficit in the 3rd against Detroit shows Grit and Character GHOST, and as you know, that'll take you deep in the playoffs.

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
4) that the interference was improper.

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

Thx for finding & writing that up. Ive always thought the COG actually had/has a "lock" on all 4.

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.

Ok. And I would argue they offered unsolicited legal advice as they were/are in fact unsure of their legal position but completely comfortable in their far right leanings & sanctimoniously & maliciously interfered in a commercial transaction by casting doubts on its validity. Investors can find that kind of inf. in the papers, where it belongs. There are numerous market watchdogs as we all know that play the role of "incoming danger" Wardens, Policeman, Judge, Jury & Executioner. What right does a right wing "think tank" with Tea Party leanings think its doing on Wall Street waving its arms & basically making empty threats in order to derail a transaction?.

What "public service" did they & have they performed in usurping the right of duly elected officials right to decide?. How is it a public service to engage in subterfuge with hollow threats that have spiked the interest rates into gamma & out of site, potentially costing the very taxpayers they profess to protect 10's of millions, delaying & freezing the deal solid where it stands?. For weeks they have had enough inf. to form a legal opinion & either drop the writ if they felt it was illegal or not. No, instead they seem to simply disagree with the "philosophical nature" of this proposal. Who elected these people to decide?.

The question is, whether or not it's legal for a group of individuals to look out for the best interest of the tax payers?

I have no problem with that whatsoever. We have similar organizations here in Canada, many of them as right wing as GW. By all means disagree with policy & expenditures. Issue annual reports, press releases, protest, whatever. But if a transaction between government & private interests is legal & you've set yourself up as a watchdog, interference with that transaction is not permitted on the market between brokers, underwriters, issuers, whomever. Has nasty legal reprecussions for the authors. Very expensive ones. I have seen many an ill conceived missive of this nature backfire on the sender/detractor in business dealings over the years. What GW did & has been doing in my book simply isnt Kosher.

Sorry, Killion. Most of these posts are pretty interesting, but I normally only read them when my sinus is acting up and I can't do much else.....As for too little, too late: yes, I think so too.

Thanks Mork. Its nice to know were nothing more than a panacea, a distraction for your deviated septum.... I too suffer from the same malady, the source for which Im sure I have "no earthly idea".... And ya, too little too late me thinks....

When or where did Scruggs allege that Clint Bolick assured the COG that they were ok with the deal?

Recently, both she & Hulsizer claimed they had conversations with Bollocks in December pre-vote of Dec 14 & he was fine with the deal from a conceptual perspective.

 

[GSC2k2*]

He who laughs last and all that

Indeed. I doubt Mr. Balsillie is laughing much these days, either in relation to his aborted NHL ownership efforts or his day job. I doubt that Mr. Rodier was much amused by what happened to him afterwards.

On the other hand, I suspect the NHL heads still chuckle inwardly at the inept machinations of those two (albeit cursing at the impact of their wrecking ball approach that has caused a waste of time).

 

[Harry22]

Even if the CoG does have a case against GWI (which I am not sure they do), this process would take more weeks to complete and I sure hope the NHL won't stay patient.

 

[billy blaze]

Indeed. I doubt Mr. Balsillie is laughing much these days, either in relation to his aborted NHL ownership efforts or his day job. I doubt that Mr. Rodier was much amused by what happened to him afterwards.

On the other hand, I suspect the NHL heads still chuckle inwardly at the inept machinations of those two (albeit cursing at the impact of their wrecking ball approach that has caused a waste of time).

as you often point out- how could you possibly know what either of these individuals is feeling or doing

 

[Krautso]

That 210 million is assuming that the NHL will walk away from the 25 million that is in escrow. I would consider the new selling price to be 185 million if we are to assume the NHL would pass additional losses on to the new purchaser. To think that the reward for being quiet and a safe relocation destination would be 15 million more than you would have had to pay last year. Chipman is on record saying he would be willing to purchase an NHL team at the right cost, not any cost. An elevated purchase price could very well eliminate TNSE from a safe haven for the Yotes.

I agree. I'd be shocked if the NHL actually feels that their asking price can rise with every year PHX loses money and no other credible owners step forward.

 

[GSC2k2*]

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

That is about the most irrelevant statement made to date (although the bank robbery one gives it a run for its money).

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.)

I have a hard time believing that one can put forward a position that GWI was not interfering and in fact intending to do so.

LEt me ask you (and anyone else) a question:

Where is it written in the GWI website or other documentation that their mandate is to protect the interests of bond investors, including those who may not only not be in AZ, but who may be on the other side of the world?

I will save you the trouble. They have no such mandate.

Let's try another one:

Where have they asserted that the bond transaction (the one that they are interfering with) is itself illegal?

Again, I can helpfully provide the answer. They have made no such allegation.

The clear reality is that, if they wanted to prevent the alleged gift, they would do so by either filing a claim or applying for an injunction, both of which (as Ms. Sitren confirmed) are available to them.

Making the statements (and inaccurate ones, as they were) to the investment community do not ensure that the transaction will not complete. CoG has $100M available (in their infrastructure fund) that they could spend to give to MH, if they wanted to do so. THey could also accept the interest rate that the market imposes. They are instead choosing what they perceive to be a more prudent financing choice. Sending the letters to a group who they have no self-imposed duty to protect prevents nothing except that it raises CoG's cost of borrowing.

And that, dear friend, is what in my view the law calls an actionable tort. it is intentional interference with economic relations on its face.

 

[cbcwpg]

I agree. I'd be shocked if the NHL actually feels that their asking price can rise with every year PHX loses money and no other credible owners step forward.

Its like me buying a super-car and trying to sell it year after year with no takers because I keep tacking my maintenance costs and how much I spent on gas each year on to the asking price.

The value of a franchise is a perceived value and only has that value when someone wants to purchase it. I'm sure last year TNSE and the NHL came to a basic understanding on price of say $175M and now that that price is $210M, the NHL may ask and get $210M from TNSE but maybe they will ask for less on the relocation fee. So the net effect to TNSE will be the same.

 

[OthmarAmmann]

Well, of course it does not make any sense. Here is why:

There is a difference between CASH losses and ACCOUNTING losses.

The NHL's deal with CoG, and indeed its only concern as a not-for-profit entity who is planning to sell the team, relates only to CASH losses.

It is not in the least bit surprising that the team's accounting losses would be substantial. They were a huge component of Moyes' alleged cumulative losses as well.

As an aside, if suite and premium seat revenue went down to absolutely ZERO, that would have been a revenue reduction of only $8.4M from Moyes' time (and it was not zero last year and is not zero this year).

THe major sources of the Coyotes' revenue in Moyes' time was:

Tickets - $13.3M
Suites/Premium Rev - $8.4M
Corporate/Naming Rights Rev - $8M
NHL Central Revs - $8.4M
NHL Revenue sharing - $13.5M
Local Broadcast - $4.5M

THe NHL portions have gone up.

The naming rights deal is in place still

THe NHL signed a new local broadcast deal last year. Ratings are up in PHO, so no loss there YOY for certain.

If ticket revenues are up as well, how can the NHL be losing $15M more this year than last year?

They can't, that's how.

The $40M is IMO an accounting loss (including depreciation and amortization).

Any thoughts as to what those non-cash items might be? Are there really that significant amount of capital or intangible assets on the balance sheet? What revenue could they be deferring in that amount? If it is depreciation or amortization that's driving the difference, it would represent a significant deviation in amortization pattern from previous periods and thus probably an impairment... any thoughts on what that could be?

That is the most straightforward part of their action (should one proceed). The range of interest rates for A1 issues in the bond market is well established, particularly when the potential plaintiff CoG is a wsell0-established issuer with a history of rates achieved in the market that can be compared to other issuers.

That ignores the high degree of likelihood that CoG has indications of the interest rates that the issue will cost at this time (otherwise, MH would have no basis of suggesting the incremental interest cost, as he stated last week).

My reading of a Lawless article a few weeks ago was that investors are also concerned that the use of the funds could result in the bonds losing their tax-exempt status. That obviously would result in significant losses for the bonds holders so would raise their required return. It's possible that the GWI could counter with that.

 

[pepty]

I haven't heard about the Diamondbacks connection until this. Man, if the COG gets documents that shows this is driven by the director with connection with the Diamondbacks, the GWI is in for a world of hurt.[/QUOTE

Perhaps there might be questions regarding their silence with the Diamondbacks
loans and their very activist,interventionist stance regarding the Coyotes..
The optics are not good.

http://arizona.sbnation.com/phoenix...water-institute-shilling-for-the-diamondbacks

Is The Goldwater Institute Shilling For The Diamondbacks In Their Coyote-Killing Efforts?by Seth Pollack • Mar 4, 2011 2:55 PM MST

Recently we wondered out loud (you know what we mean) about the motives of the conservative Goldwater Institute in it's obvious mean-spirited bid to sink the city of Glendale's attempts to keep the Phoenix Coyotes from moving back to Canada
.....................................................................................................................
It seems there's a potential connection here that we didn't explore but ESPN.com's Scott Burnside explained in great detail today.

Questionable motives in Phoenix Coyotes ownership saga - ESPN

Politics? Personal profile? How about the tight connection between Goldwater Institute board members and the Arizona Diamondbacks? Does it somehow help the Diamondbacks in a hardscrabble economy if the Coyotes leave town?

The tie that Burnside is talking about it is Randy Kendrick, wife of Diamondback owner Ken Kendrick, who sits on the board of the Goldwater Institute Of Hockey-Hating Hypocrites.

The Diamondbacks, for their part, deny any involvement despite the appearance of a Kendrick connection.
................................................................................................

 

[cbcwpg]

Let me ask you (and anyone else) a question:

Where is it written in the GWI website or other documentation that their mandate is to protect the interests of bond investors, including those who may not only not be in AZ, but who may be on the other side of the world?

I will save you the trouble. They have no such mandate.

Let's try another one:

Where have they asserted that the bond transaction (the one that they are interfering with) is itself illegal?

Again, I can helpfully provide the answer. They have made no such allegation.

There is also a third question: Who is responsible for covering the bond if the parking revenue falls short? The taxpayer. And that's one of the reasons why the GWI is involved.

 

[LeftCoast]

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

This is pretty much a given. The relationship here is between CoG and prospective bond investors. I think institutional investors (the primary market for the bonds) are sophisticated enough to have their own questions about the City's parking revenue projections, and would therefore raise the risk premium, but there would still be a market. The constitutional question pretty much kills the market.

2) That a third party interfered and disrupted the business relationship

It would not be difficult to show that the uncertainty created by GWI questioning the legality of the city's intended use of these funds has cooled if not killed the bond market.

However my question is - are we certain that GWI is a third party? What if they have collected a number of Glendale residents and are acting as legal counsel? That is, they are contemplating a law suit on behalf of specific Glendale residents, whose constitutional right to good governance is allegedly being violated. That wouldn't make them a third party, but counsel for an affected party.

3) That financial damages occurred due to the interference

Even if legal - if the bond issue present too high a risk to taxpayers, then killing the deal would avert, not cause damages.

and 4) that the interference was improper.

Also - if the court declares that the CoG deal is not Constitutional, then the interference is legal.

 

[GSC2k2*]

Try this one on for size:

Walker is a better report because... even those ignorant buffoons at the COG were too embarassed to include the Hocking report in their prospectus for the bond sale.
The fact that you would even attempt to defend such an utterly preposterous position should perhaps cause one to wonder about..... well, I won't say it.

I addressed that previously in a response to another poster a while back, and did so pretty thoroughly at that. Since you appear to watch for my posts like a hawk, I am surprised you have not already read it. Feel free to go read it.

You already said it. Your relentless personal attacks are noted.

 

[Faltorvo]

Coming back from a 3 goal deficit in the 3rd against Detroit shows Grit and Character GHOST, and as you know, that'll take you deep in the playoffs.



Thx for finding & writing that up. Ive always thought the COG actually had/has a "lock" on all 4.



Ok. And I would argue they offered unsolicited legal advice as they were/are in fact unsure of their legal position but completely comfortable in their far right leanings & sanctimoniously & maliciously interfered in a commercial transaction by casting doubts on its validity. Investors can find that kind of inf. in the papers, where it belongs. There are numerous market watchdogs as we all know that play the role of "incoming danger" Wardens, Policeman, Judge, Jury & Executioner. What right does a right wing "think tank" with Tea Party leanings think its doing on Wall Street waving its arms & basically making empty threats in order to derail a transaction?.

What "public service" did they & have they performed in usurping the right of duly elected officials right to decide?. How is it a public service to engage in subterfuge with hollow threats that have spiked the interest rates into gamma & out of site, potentially costing the very taxpayers they profess to protect 10's of millions, delaying & freezing the deal solid where it stands?. For weeks they have had enough inf. to form a legal opinion & either drop the writ if they felt it was illegal or not. No, instead they seem to simply disagree with the "philosophical nature" of this proposal. Who elected these people to decide?.



I have no problem with that whatsoever. We have similar organizations here in Canada, many of them as right wing as GW. By all means disagree with policy & expenditures. Issue annual reports, press releases, protest, whatever. But if a transaction between government & private interests is legal & you've set yourself up as a watchdog, interference with that transaction is not permitted on the market between brokers, underwriters, issuers, whomever. Has nasty legal reprecussions for the authors. Very expensive ones. I have seen many an ill conceived missive of this nature backfire on the sender/detractor in business dealings over the years. What GW did & has been doing in my book simply isnt Kosher.



Thanks Mork. Its nice to know were nothing more than a panacea, a distraction for your deviated septum.... I too suffer from the same malady, the source for which Im sure I have "no earthly idea".... And ya, too little too late me thinks....



Recently, both she & Hulsizer claimed they had conversations with Bollocks in December pre-vote of Dec 14 & he was fine with the deal from a conceptual perspective.

Sorry Killion, i have been following this as closely as anyone, either provide the link to back that statement up (re Scruggs/Hulz- Bollocks) or I'm going have to call this a load of Bull sht that you and GSC2 are spreading to back your case.

I very rarely ask for links and the likes, but on this one i feel compelled to.

This claim is not a trivial matter, to say that Bollock said the deal was good is a very serious issue that needs to be addressed.

Aren't you being a little presumptuous to state that GWI had all the necessary documents and that they feel the deal is actually legal? All their actions seem to argue to the contrary?

 

[Dado]

The information thats been available in the public domain for quite some time now is sufficient enough for most Lawyers to determine whether or not the deal struck is legal or illegal.

I'm having trouble following ya, K. First, in our society only judges have the power to decide what is legal or illegal, no amount/lack of evidence can give GWI that ability, all they can do is offer an opinion, and if it comes to it, argue that opinion before a judge.

And they *have* repeatedly offered their opinion, verbally and on their own letterhead, that in their opinion this deal as it is understood is illegal.

There is nothing else for them to do until someone actually signs a lease or tries to move money around.

 

[Killion]

Maybe, but ask yourself this: If CoG plans to request a declaration that their lease transaction is legal, why would they do that unless they plan to sign the lease? What good would such a declaration be if they were not going to sign, and the NHL were backing away?

A question Ive been asking myself since this broke yesterday. Why leave it so late in the game to seek this remedy?. IMO it shouldve' been done about 5 weeks ago. As per your earlier post, I agree, perhaps the COG felt confident that common ground was being trodden with GW, things were looking up. We just dont know. Certainly publicly, quite the reverse has been the common thread between these 2 protagonists, pre-dating Moyes' BK, tensions ratcheting up ever since. Somewhere somehow the wheels fell off between Hulsizers' convo's with Bolicks in December post vote on the 14th & mid-January. You also speculated earlier with 3 possible scenarios;

1) The deal is dead
2) COG is Posturing
3) COG is Serious

Lets just wait & see what tomorrow brings....

I haven't heard about the Diamondbacks connection until this. Man, if the COG gets documents that shows this is driven by the director with connection with the Diamondbacks, the GWI is in for a world of hurt.

As far as Conspiracy Theories go, I like that one. No question as it appeals to my sense's of the surreal & fanciful. Utter nonsense of course, but an entertaining flight of fancy....

Have the actual letters that GWI sent to the bond agencies ever been released to the public?

Ya. We have em here, in the library, on pdf. Go on back to the last thread, Seek & ye' shall find. Fill yer boots...

 

[GSC2k2*]

Any thoughts as to what those non-cash items might be? Are there really that significant amount of capital or intangible assets on the balance sheet? What revenue could they be deferring in that amount? If it is depreciation or amortization that's driving the difference, it would represent a significant deviation in amortization pattern from previous periods and thus probably an impairment... any thoughts on what that could be?

Most of it would be D&A. In Moyes' last year, D&A was an enormous (for an enterprise of this size) $17.6M. In and of itself that would move a ~$20M cash loss to a near $40M accounting loss. On top of that, it would not be hard to argue that the franchise asset has sustained a significant impairment over the past year.

My reading of a Lawless article a few weeks ago was that investors are also concerned that the use of the funds could result in the bonds losing their tax-exempt status. That obviously would result in significant losses for the bonds holders so would raise their required return. It's possible that the GWI could counter with that.

If accurate, that could be a counter, yes.

 

[Whileee]

A question Ive been asking myself since this broke yesterday. Why leave it so late in the game to seek this remedy?. IMO it shouldve' been done about 5 weeks ago. As per your earlier post, I agree, perhaps the COG felt confident that common ground was being trodden with GW, things were looking up. We just dont know. Certainly publicly, quite the reverse has been the common thread between these 2 protagonists, pre-dating Moyes' BK, tensions ratcheting up ever since. Somewhere somehow the wheels fell off between Hulsizers' convo's with Bolicks in December post vote on the 14th & mid-January. You also speculated earlier with 3 possible scenarios;

1) The deal is dead
2) COG is Posturing
3) COG is Serious

Lets just wait & see what tomorrow brings....

Given their apparent disdain and dismissive approach to the GWI previously, another plausible explanation is that they could not believe that the threat of a lawsuit by the GWI would have put their bond sale so comprehensively on ice, and when they discovered that nobody was interested in the bonds they realized that they might have underestimated the impact of the legal uncertainty.

 

[Dado]

Seems the most likely explanation is the one that has been put forward since Day 1 - they're just flat-out incompetent. Looking for "reasons" will be as productive as looking for a pattern in the random flailing of duck wings.

Forest, trees, etc...