New Houston Rockets Owner Open To NHL Team

[MNNumbers]

I seem to have seen a twitter quote somewhere here that either Bettman or Daly said they didn't have anything concrete with Houston. The quote was in the same period as they said Seattle can submit a bit.

I remember this, too, and it is part of my skepticism about the circumstance in Houston.

This is a long range putting the pieces of the puzzle together, for sure, but...

1- Seattle is in. NHL has given permission for a ticket drive, etc.
2- There were some rumblings from league approved sources (LeBrun, Dreger, etc) that the way in might yet be a relocation.
3- You have a weird situation in Calgary, and the ongoing saga in Houston(Edit: I mean Arizona).

Now, if Houston were available as a relocation landing spot, there would be NO NEED for a mention of Seattle in the same breath.

Couple all of that with:
Fertitta: "At the right price"
Daly: "nothing happening in Houston" (which I know he has to say something like that, but a more simple "Yes we met with Fertitta. It's the start of a relationship...." which is not as firm in any way and leaves an expansion situation open there as well.... coupled with a 'we are excited about the possibilities there'....which was completely absent)

Leads to the possible conclusion that there really isn't anything shingin happening at Toyota Center.

So, maybe we all need to back away a little from the Houston assumptions.

 

[powerstuck]

I'm sometimes a bit thick so bare with me: Why did OVG and why would Fertitta pay the full expansion fee? It seems to me they have quite a bit of leverage as they control the only NHL quality buildings in the two best non-NHL serviced markets, and have a floundering franchise that they could surely muscle into their city like Thomson did in Winnipeg. What's the reason here?

They control the two out of 4 arenas (3 of which are currently up and running, Quebec, Kansas, Houston).

But :
a) NHL can prevent a relocation with a vote
b) NHL can prevent a sale with a vote
c) Only Arizona is in real difficulty and it's not clear if the owner (Barroway) wants to sell
d) Calgary is need of an arena but not really for sale

So...in other words do those guys want to OWN or to RENT their arena ?

I think they wanna be owners, at least partially.

 

[powerstuck]

I remember this, too, and it is part of my skepticism about the circumstance in Houston.

This is a long range putting the pieces of the puzzle together, for sure, but...

1- Seattle is in. NHL has given permission for a ticket drive, etc.
2- There were some rumblings from league approved sources (LeBrun, Dreger, etc) that the way in might yet be a relocation.
3- You have a weird situation in Calgary, and the ongoing saga in Houston.

Now, if Houston were available as a relocation landing spot, there would be NO NEED for a mention of Seattle in the same breath.

Couple all of that with:
Fertitta: "At the right price"
Daly: "nothing happening in Houston" (which I know he has to say something like that, but a more simple "Yes we met with Fertitta. It's the start of a relationship...." which is not as firm in any way and leaves an expansion situation open there as well.... coupled with a 'we are excited about the possibilities there'....which was completely absent)

Leads to the possible conclusion that there really isn't anything shingin happening at Toyota Center.

So, maybe we all need to back away a little from the Houston assumptions.

Agree completely.

And the league has history on record where they mention a city just for the sake of putting pressure on other cities.

They may mention Houston for the sole purpose of a) An argument so Seattle group understands they are not the only ones in the run and if they do not want to pay the asked price, they may not be considered, and b) Do same with City of Calgary, build the arena or you risk seeing your dear Flames move out to Houston.

You name one city, and you scramble a bunch of eggs with it.

 

[MNNumbers]

I'm sometimes a bit thick so bare with me: Why did OVG and why would Fertitta pay the full expansion fee? It seems to me they have quite a bit of leverage as they control the only NHL quality buildings in the two best non-NHL serviced markets, and have a floundering franchise that they could surely muscle into their city like Thomson did in Winnipeg. What's the reason here?

Finite number of NHL (and NBA) franchises, the League in the drivers seat, will not brook hostile relocation attempts of floundering franchises, back doors & windows sealed. You can only come in through the front door, by way of Expansion however if a team absolutely does have to move & you play the NHL's game (as Winnipeg did) then potentially you could be rewarded, be first in line for a Relo if and only if Expansion off the table as it was during the fiasco in Atlanta, ongoing in Arizona.

Seattle & OVG need the NHL more than the NHL needs it, investing $650M+ to renovate Key Arena, they need an anchor tenant, no idea if the NBA returns or not, so ya, their going to follow the NHL's rules, policies & dictates and that means you only get in by way of Expansion. A one-off at that. OVG has capital costs in completing the renovations and without an anchor tenant, NHL or NBA, theres no way they start making much of a dint in those costs with concerts, events, consumer & trade shows, boutique type sports like pro lacrosse, WNBA etc. On the hook now Baby. In for a penny in for a pound & you play along with the leagues or your screwed.

Same dynamic we saw with Las Vegas. It would have made far more practical sense to have moved the troubled Coyotes franchise to Nevada however the NHL was unwilling to do that, the Expansion process & fee charged boosting franchise values league wide whereas a fire sale, getting in on the cheap in acquiring the Coyotes, the NHL at a disadvantage in negotiating a sale price would have been counter-productive to increasing franchise valuations. And franchise valuations/value is what all of the owners league wide really care about. Finite # of franchises, exclusive, you pay our asking price or you can go whistle up a dark alley.

Whole new paradigm going on now. You'll pay $500M, $650M even for the Coyotes if & when they decide to pull the plug & sell out of market, or if they allow Barroway to move it himself & take on a Minority Partner like Fertitta that franchise the minute it lands in Houston automatically worth $650M or whatever the going rate is for an Expansion Team in terms of that set price, what it will cost Fertitta to buy in be it 49% ($325M) or 100% ($650M). Highly debatable whether the franchise is worth that market-market of course. The Coyotes where is as is worth actually less than zero, money pit, so there you go. Hell of a price to pay, artificially inflated, saddled with major debt before the pucks even dropped. Add the costs of a new facility in some cases, talking serious money.

To add a little more, I like to think of it like this:

NHL doesn't HAVE to expand. They hold the cards, so you can't negotiate a cheaper price from them in an expansion.

NHL has to approve every sale of every team. Try to use leverage? You don't have much. These guys are patient.

Winnipeg, as stated by Killion, was a situation in which the league had NO leverage because the team literally had NO place to play. There is no parallel in the present universe. Calgary and Glendale are not what the teams want, but they are still useful. Hence, there is no crisis.

And, that's why the NHL sets the price. Prospective owners have no leverage.

 

[Killion]

I seem to have seen a twitter quote somewhere here that either Bettman or Daly said they didn't have anything concrete with Houston. The quote was in the same period as they said Seattle can submit a bit.

Right. So either they already know Fertitta isnt prepared to pay $500M or $650M or if he is then their holding on to that, keeping it in their vest pocket & he'll be buying the Coyotes either in whole or in part (maybe he only wants to drop $325M & is good with 49% to start). Seattle announced as a "one-off". A change from the last open invitation to apply from wherever & with that last round I'm absolutely convinced Vegas was a foregone conclusion. Merely rubber stamped it. Now the NHL's not even bothering with the pretense of "open to all & yes you'll get full consideration, all applicants treated equally". Should by some miracle occur & the Coyotes get their act together in Arizona, and Fertitta still wants in then there will probably be another "one-off" Expansion to Houston announced thereafter.

 

[MNNumbers]

They control the two out of 4 arenas (3 of which are currently up and running, Quebec, Kansas, Houston).

But :
a) NHL can prevent a relocation with a vote
b) NHL can prevent a sale with a vote
c) Only Arizona is in real difficulty and it's not clear if the owner (Barroway) wants to sell
d) Calgary is need of an arena but not really for sale

So...in other words do those guys want to OWN or to RENT their arena ?

I think they wanna be owners, at least partially.

More detail:
KC is really controlled by the city. And, really, at these prices? Forget it. City is adamant that there will be no sweetheart lease deals. Market not large enough or secure enough for these prices.

As far as I know, Centre Videotron is controlled by only Quebecor (with perhaps QC city oversight).
Houston is obviously controlled by Fertitta.

And, NHL cannot prevent a single-owner relocation with a vote. Anti-trust law supports that.
NHL can prevent a sale, especially a sale for relocation, with a vote.

 

[bam09]

To add a little more, I like to think of it like this:

NHL doesn't HAVE to expand. They hold the cards, so you can't negotiate a cheaper price from them in an expansion.

NHL has to approve every sale of every team. Try to use leverage? You don't have much. These guys are patient.

Winnipeg, as stated by Killion, was a situation in which the league had NO leverage because the team literally had NO place to play. There is no parallel in the present universe. Calgary and Glendale are not what the teams want, but they are still useful. Hence, there is no crisis.

And, that's why the NHL sets the price. Prospective owners have no leverage.

I realize the league doesn't *have* to expand, but there's only so many ways Bettman can grow the pie. Accordingly I assumed that a negotiation of sorts would ensue since unlike with Alexander, there's now a party that will play ball in Houston, and it's likely not a door the NHL wants to keep shut indefinitely. But, I suppose that NHL owners are willing to pass on slightly less "free" cash in the form of a decreased expansion or relo fee if it indeed protects the value of their own team.

Thanks for the explanation guys!

 

[Headshot77]

Should by some miracle occur & the Coyotes get their act together in Arizona, and Fertitta still wants in then there will probably be another "one-off" Expansion to Houston announced thereafter.

2- There were some rumblings from league approved sources (LeBrun, Dreger, etc) that the way in might yet be a relocation.
3- You have a weird situation in Calgary, and the ongoing saga in Arizona (sic).

Now, if Houston were available as a relocation landing spot, there would be NO NEED for a mention of Seattle in the same breath.

Couple all of that with:
Fertitta: "At the right price"
Daly: "nothing happening in Houston" (which I know he has to say something like that, but a more simple "Yes we met with Fertitta. It's the start of a relationship...." which is not as firm in any way and leaves an expansion situation open there as well.... coupled with a 'we are excited about the possibilities there'....which was completely absent)

Leads to the possible conclusion that there really isn't anything shingin happening at Toyota Center.

So, maybe we all need to back away a little from the Houston assumptions.

Amongst all of the news that came out of the December meeting, there was one Bettman quote which displayed his classical denial tactics regarding relocation. The impression I've gotten is that there are mixed signals from multiple sources. Some were saying a relocation might happen, others were denying. Some were hinting to Houston, some were not. The only clear message that came across to me was that Seattle is basically team #32; that's happening. However, where there is smoke, there tends to be fire. And as you mentioned in point #2, some important mouthpieces of the league did hint at relocation. IMO, things are happening at Toyota Center, but the announcement of this (or "leak", whatever), was poorly coordinated.

 

[MNNumbers]

Amongst all of the news that came out of the December meeting, there was one Bettman quote which displayed his classical denial tactics regarding relocation. The impression I've gotten is that there are mixed signals from multiple sources. Some were saying a relocation might happen, others were denying. Some were hinting to Houston, some were not. The only clear message that came across to me was that Seattle is basically team #32; that's happening. However, where there is smoke, there tends to be fire. And as you mentioned in point #2, some important mouthpieces of the league did hint at relocation. IMO, things are happening at Toyota Center, but the announcement of this (or "leak", whatever), was poorly coordinated.

Thanks for the heads-up about my Houston/Arizona typo. I am going to edit that.

And, concerning Houston, I am of the opinion that we don't know how much Fertitta is willing to put in, so we would all be wiser to wait before jumping to conclusions. I'm not saying "He won't pay that." I don't mean that. I simply mean.... WE DON'T KNOW

 

[Killion]

However, where there is smoke, there tends to be fire. And as you mentioned in point #2, some important mouthpieces of the league did hint at relocation. IMO, things are happening at Toyota Center, but the announcement of this (or "leak", whatever), was poorly coordinated.

Yeah, it just makes to much sense for there not to be fires lit & burning on that front, possibility. Indeed, when Andrew Barroway hired Steve Patterson who has some serious roots & connections in Texas followed shortly thereafter with Alexander announcing the sale of the Rockets... well, a whole bunch of pieces of the puzzle thats Arizona started to fall into place. Of course its still all speculation but I'd say more in the realms of conspiracy fact than fiction or just blind theory.

I believe the NHL was aware of the fact that Les Alexander was about to be an obstacle removed long before it was announced, made public, Pstterson brought in from the cold, hired by the Coyotes, ideally positioned as he also has ties in Arizona & would be a plausible & totally believable actor to play the part of Disinformation & Transition Officer, chasing the nonsense of a new arena in the East Valley or Phoenix proper. Castle in the Sky. No idea what happens with Barroway but I suspect he "comes with" the franchise along with Steve Patterson of course, and his reward maybe 51% majority in the Houston franchise. Not bad considering he bought into the team & bought out IceArizona using nothing but credit & very little of his own money, net worth estimated to be around $50M if that. Sittin pretty in Houston if this is what happens. Owns 51% of an asset with a valuation of $650M? You kiddin me? Pretty shrewd. Like winning the Powerball.

 

[Headshot77]

Yeah, it just makes to much sense for there not to be fires lit & burning on that front, possibility. Indeed, when Andrew Barroway hired Steve Patterson who has some serious roots & connections in Texas followed shortly thereafter with Alexander announcing the sale of the Rockets... well, a whole bunch of pieces of the puzzle thats Arizona started to fall into place. Of course its still all speculation but I'd say more in the realms of conspiracy fact than fiction or just blind theory.

I believe the NHL was aware of the fact that Les Alexander was about to be an obstacle removed long before it was announced, made public, Pstterson brought in from the cold, hired by the Coyotes, ideally positioned as he also has ties in Arizona & would be a plausible & totally believable actor to play the part of Disinformation & Transition Officer, chasing the nonsense of a new arena in the East Valley or Phoenix proper. Castle in the Sky. No idea what happens with Barroway but I suspect he "comes with" the franchise along with Steve Patterson of course, and his reward maybe 51% majority in the Houston franchise. Not bad considering he bought into the team & bought out IceArizona using nothing but credit & very little of his own money, net worth estimated to be around $50M if that. Sittin pretty in Houston if this is what happens. Owns 51% of an asset with a valuation of $650M? You kiddin me? Pretty shrewd. Like winning the Powerball.

I agree with everything postulated here, except I doubt that Barroway will have majority ownership of the franchise if it moves to Houston. Since you did mention that this will significantly increase Barroway's net worth, I don't see him as being able to run a franchise as a majority owner. He can barely keep the Coyotes afloat as it is. But, let's say he acquired the Coyotes franchise by simply taking on the personal liability of the $250,000,000 in debt that Forbes believes the Coyotes have. If he sells a 51% stake to Ferrita at a price of $331.5 million dollars, he just paid off the debt he is responsible for, made a cool ~81.5 million dollars, he still owns 49% of a franchise worth 650 million dollars, AND he no longer has the task of being the chief financing officer of a dying team that he can't afford. Win, Win, Win, Win.

 

[Killion]

Win, Win, Win, Win.

.... yeah, and thats another possibility, twist to the theory, sure. Maybe he retains 49% or less but regardless, makes out like an absolute Bandit. I mean Hell, this guy's guy got a pair huh? Threatens Charles Wang & the NHL with a messy lawsuit for breach of an MOU when he was trying to buy the Islanders when he didnt even have the money to close the deal & God only knows where he was gonna get it....

People familiar with him shocked that he'd even be attempting such a thing as variously they knew his net worth only a fraction of the price he'd have to pay... not to mention the fact that he was lead plaintiff & Attorney who'd taken down Wang & Computer Associates a decade earlier, settling with Charles Wang early & for a lotta Samolis for which he was criticized by the legal community & shareholders, total opportunist Ambulance Chaser.... Went after the NBA 76'rs, looked at the Devils...

So to make his threatened lawsuit go away they offer him the Coyotes, and all he has to do to acquire 51% of the club is cough up a few million bux & sign a loan agreement with the NHL backed LOC at Citi-Bank or whatever & BINGO, member of the club!.... Then he goes to a bank of last resort in NYC, re-finances using the club itself as collateral, buys out the IceArizona Gang.... I mean, you cant make this stuff up. And now he's potentially looking at a massive payday, winfall. Really, its just too hysterical for words, and good for him.

 

[Headshot77]

Really, its just too hysterical for words, and good for him.

Yeah, this guy is a real shark alright. It just goes to show that having a brilliant business sense and poor business ethics tend to go hand-in-hand.

 

[Killion]

Yeah, this guy is a real shark alright. It just goes to show that having a brilliant business sense and poor business ethics tend to go hand-in-hand.

Yeah, and I'm sure youve heard the term Philadelphia Lawyer... even has its own wiki page.... entry in Websters Dictionary.... Was originally a compliment stemming from Andrew Hamilton's victory of 1735 arguing freedom of the press however into the 20th century, no, no not so much, quite the opposite in fact. As in notoriously corrupt, devious, encyclopedic knowledge of the law... Andrew Barroway based in Philly, believe he went to Law School there as well. The real deal.

 

[KevFu]

Daly: "nothing happening in Houston" (which I know he has to say something like that, but a more simple "Yes we met with Fertitta. It's the start of a relationship...." which is not as firm in any way and leaves an expansion situation open there as well.... coupled with a 'we are excited about the possibilities there'....which was completely absent)

The difficulty in using the comments of key people is that when those people are engaged in negotiations behind closed doors, their comments need to be taken with the right amount of grains of salt. And that's hard to hit exactly.

 

[Headshot77]

Yeah, and I'm sure youve heard the term Philadelphia Lawyer... even has its own wiki page.... entry in Websters Dictionary.... Was originally a compliment stemming from Andrew Hamilton's victory of 1735 arguing freedom of the press however into the 20th century, no, no not so much, quite the opposite in fact. As in notoriously corrupt, devious... Andrew Barroway based in Philly, believe he went to Law School there as well. The real deal.

Oh, I did not know that!

 

[KevFu]

From the Francis article

"the Flames wouldn’t sell for a dime less than the newly-pegged cost of starting a franchise from scratch. (Minus sizeable NHL transfer fees, of course.)"

That's exactly what I said:
"Newly Pegged Cost" is currently $650 million.
"sizeable NHL transfer fees, of course" I estimated at $200 million. $650 - $200 = $450.

Maybe that's a little high on the transfer free compared to sale price. It could be $475/$175 or $500/$150. And by the time this happens, those prices will both go up, obviously.

But that's still money on the table, which is why Houston Flames is a very, very, very, unbelievably bad idea for everyone who even knows what the letters NHL stands for.

The craziest thing about this conversation, is that virtually everyone agrees with me that the NHL would be inciting a new round of bad PR Canadian rage at the league if they allowed the Flames to be sold and moved, thus making this a very stupid idea.

Houston expansion = Quebec expansion.
Flames relocation to Houston means 6 Canadian teams instead of 8.

If you're going to allow a Flames relocation, it's not going to be to Houston. It would be to Portland or Kansas City. Markets not as valuable as Houston.

 

[powerstuck]

I realize the league doesn't *have* to expand, but there's only so many ways Bettman can grow the pie. Accordingly I assumed that a negotiation of sorts would ensue since unlike with Alexander, there's now a party that will play ball in Houston, and it's likely not a door the NHL wants to keep shut indefinitely. But, I suppose that NHL owners are willing to pass on slightly less "free" cash in the form of a decreased expansion or relo fee if it indeed protects the value of their own team.

Thanks for the explanation guys!

Only problem with that is when people strongly believe the league won't expand beyond 32.

I agree, expansion is a big contributor to growing the revenue pie (most of the times anyway) but if they have room for only one more team...then yep, they are at the end of their cycle.

 

[Voight]

But that's still money on the table, which is why Houston Flames is a very, very, very, unbelievably bad idea for everyone who even knows what the letters NHL stands for.

The craziest thing about this conversation, is that virtually everyone agrees with me that the NHL would be inciting a new round of bad PR Canadian rage at the league if they allowed the Flames to be sold and moved, thus making this a very stupid idea.

Houston expansion = Quebec expansion.
Flames relocation to Houston means 6 Canadian teams instead of 8.

If you're going to allow a Flames relocation, it's not going to be to Houston. It would be to Portland or Kansas City. Markets not as valuable as Houston.

It would be insanely dumb to relocate to KC/Portland before Houston.

If the Flames can't get a new arena, Bettman wont have an issue with letting them move to Houston. He's long said the two pillars of a team are good ownership and a suitable venue.

 

[Bixby Snyder]

It would be insanely dumb to relocate to KC/Portland before Houston.

If the Flames can't get a new arena, Bettman wont have an issue with letting them move to Houston. He's long said the two pillars of a team are good ownership and a suitable venue.

Flames to Houston would be perfect, the league gains a much-desired market and there is no need to go beyond 32 teams.

 

[blueandgoldguy]

Phoenix to Houston would be perfect. Moving a team that is at the bottom of the league in revenues and has no hopes of a new arena after being given one 14 years ago courtesy of the taxpayer to a market that actually has a chance at being mid-revenue team in the NHL...makes a whole lot more sense than moving a mid-revenue team in Calgary to Houston. The NHL experiences a far great gain in revenue in scenario A vs. Scenario B.

I'm sure the if and when Fertitta purchases the team the sale price will officially be $500 - $650 million but it will include a significant chunk of the Coyotes' debt ($250 million). The real selling price will probably be in the range of $300 - $350 million...still grossly overpriced.

 

[KevFu]

It would be insanely dumb to relocate to KC/Portland before Houston.

If the Flames can't get a new arena, Bettman wont have an issue with letting them move to Houston. He's long said the two pillars of a team are good ownership and a suitable venue.

You're viewing that from a Flames perspective, not an NHL/BOG perspective.

 

[Big Z Man 1990]

Houston should be an expansion team. So next time NHL expands it could be Seattle, Houston and QC all at once.

A Houston team would definitely push a rivalry with the Preds, given that Nashville took away Houston's original football team 20 years ago.

 

[CHRDANHUTCH]

Houston should be an expansion team. So next time NHL expands it could be Seattle, Houston and QC all at once.

A Houston team would definitely push a rivalry with the Preds, given that Nashville took away Houston's original football team 20 years ago.

no it didn't, Z, NEED TO REFRESH why The Wild replaced the Stars in Minneapolis, and why was Memphis used for the Titans in the interim

 

[KevFu]

Houston should be an expansion team. So next time NHL expands it could be Seattle, Houston and QC all at once.

A Houston team would definitely push a rivalry with the Preds, given that Nashville took away Houston's original football team 20 years ago.

I don't think they'll do it all at once. They'll do Seattle first (2020-21 or 2021-22) and then Houston three or four years later. Then Quebec two years after that.