Phoenix bankruptcy/ownership Part XVI: Barbarian at the Gate

[guyincognito]

again, what interference?

you're joking, right? the whole process turned into a ****show. I wonder how much JB has already spent, not counting the bid.

as for the $50M, you'd have to see the lease agreements and figure out what they could potentially make over the life of the building. they need the dates.

this is their booking sheet. youch.

http://www.ticketmaster.com/search?tm_link=tm_homeA_header_search&q=jobing.com+arena

without the Coyotes, they currently have 11 dates booked. this would be okay, but they are on the verge of not having the Coyotes anymore. just from looking, I guess they're an AEG building, which means their chances of replacing the bookings are nil.

 

[Proboscis]

i often said wouldnt it have been fun to see 2 BIDDERs from Hamilton.


Even if they made the same offer it would be great to see how the second "hamilton bidder" was accepted and treated .

i guess it would really show us .

I imagine that a second bid from Hamilton would not be looked upon any more favourably than the first. I doubt that any of this would ever have happened if the NHL was not so steadfast against Hamilton.

 

[ottsens08]

Even if JB wins the auction, the NHL BOG rejected him as an owner, so prepare yourself for the NHL to fight back with a vengeance, this thing is far from over.

 

[Ted Hoffman]

I'll leave a few questions for the legal minds to chew on [and anyone else that wants to opine - whether informed or not]:

1. Can PSE simply favor one unsecured creditor over another [or here, others] and allocate money as is being proposed - or, is this really a sound-good, feel-good move that in reality means nothing because the $40 million is just going to get put into the pot that gets divided among all of the unsecured creditors [or at least potentially could be divided, if enough of the other unsecureds object to this proposal]?

2. PSE's proposal calls for the Coyotes to play "rent free" at Jobing.com this season. How much would COG stand to lose in this event, and to what extent would the $40 million make up for that? [Even better question: how would COG fare with the NHL's 1-year offer and then the 'Yotes moving and having to recoup from Moyes vs. the PSE offer of $40 million later, but a rent-free '09-10?]

3. If COG rejects the PSE offer, then what? [lobs this grenade and quietly walks away]

 

[MAROONSRoad]

Interesting move by Balsillie. Query: will it change CoG's view or in any way influence the court re. the league's right to decide who and who is not an owner?

GHOST

 

[Peter Puck]

This seems like a good move by Balsillie. It could be that his bid is now the best option available to COG.

However, I think the fact that he stirred up the scrutiny of the taxpayers might severely hamper this strategy. I suspect it will be hard for local politicians to step forward and support his bid. After all that would mean explaining to taxpayers why 50 million is better than the 500 million they claim they are owed in the event the team leaves. The 50 million in the bag might be better than what they will end up with from the other bidders but that is awfully hard to explain to angry taxpayers in a few sound bites on the local six o'clock news.

 

[kdb209]

Interesting move by Balsillie. Query: will it change CoG's view or in any way influence the court re. the league's right to decide who and who is not an owner?

GHOST

And would accepting a buyout offer from JB undercut CoG from separately pursuing a tortuous interference claim against JB/Rodier which could potentially net greater than the $40M offer.

 

[guyincognito]

5 of those dates are in September, 3 in October and 1 in November.
May be they have not booked the concerts yet.

For example in Montreal, who has one of the best in NA, there are 10 shows in october but if you remove the 6 days of Walt Disney on Ice, there are only 4 shows.
In November there are only 3 shows beside hockey.

Do you think that there will be only 11 shows during the Yotes season?

they have no other tenants and mostly AEG acts booked. the place will be a ghost town, if they take the money, they might as well buy demolition equipment and come up with a new idea, like an indoor water park or something.

I'm a Devils fan, the Devils have AEG... also in a market with competition. the concert bookings are few are far between. but, they also have another tenant and a boxing deal and apparently one with the WWE now. doesn't look like Jobing has any of this stuff.

on the surface, it looks like they need the Coyotes to operate. otherwise that building is a white elephant. you'd assume it would be in business for maybe 20 more years at the minimum? $2.5M a year doesn't really seem like a good payout for 40 dates they can't replace.

 

[kdb209]

5 of those dates are in September, 3 in October and 1 in November.
May be they have not booked the concerts yet.

For example in Montreal, who has one of the best in NA, there are 10 shows in october but if you remove the 6 days of Walt Disney on Ice, there are only 4 shows.
In November there are only 3 shows beside hockey.

Do you think that there will be only 11 shows during the Yotes season?

Keep in mind though that the Job is also competing with the US Airways Center (formerly America West Arena) in downtown Phoenix - ignoring the Suns (NBA) and the Mercury (WNBA), there are 11 events currently booked at the US Airways Center thru December.

Cut and pasting from Part IX of these threads about the competition between Phoenix area venues.

Here is an interesting aside on the quality of the management of the PHO club under Moyes.

Under Moyes, the jobing.com arena had 46 non-hockey events.

I took a look at the Tampa Bay arena for comparison (in connection with a discussion I was having on Tom Benjamin's blog). They have over 150 non-hockey events per year. By way of example, they are currently in the midst of a lengthy stay of 16 performances by the Cirque du Soleil.

Doing some calculations from figures in old AZ Republic and ESPN articles from 2006, I believe the city of Glendale and Elman jointly projected 100-120 non-hockey events per year when the arena was constructed.

Is there not another 16,000 seat arena (maybe 2 others) in Phoenix that gives Jobing competition for these events. Then you need to factor in all the refrain about how no one wants to drive to Jobing to attend any event which makes it's doubly difficult to book events.

* I'm just going by a radio interview with Jerry Colangelo in which he stated there is numerous venues in Phoenix which makes operating an arena difficult to turn a profit!

Somone posted a lengthy article on one of these boards about the competition for bookings between Jobbing.Com Arena, the US Airways Center (formally America West Arena), and other venues - which had the double whammy of both reducing the numbers of dates and driving down arena revenues as promoters play them off against one another. I don't have time to track down that post now.

From a quick Google on competition between the Phoenix venues:

http://www.bizjournals.com/phoenix/stories/2009/05/25/daily33.html

Thursday, May 28, 2009
Phoenix concert lineup: Beyonce at US Airways Center, U2 at UOP
Phoenix Business Journal

Phoenix-area sports and concert venues are divvying up major acts and events for the summer and early fall as the recession digs into discretionary spending on items such as concerts and sporting events.

US Airways Center in downtown Phoenix will play host to concerts by Beyonce on July 7 and Green Day on Aug. 22. Ringling Brothers Barnum & Bailey Circus will be at the center from June 24 to 28. June also marks the start of the Women’s National Basketball Association 2009 season giving the Phoenix Mercury at string of dates there.

Phoenix’s Dodge Theater concerts range from Jay-Z on July 2 to The Fray and Jack’s Mannequin on July 14.

Across town in Glendale, University of Phoenix Stadium will host U2’s latest U.S. tour on Oct 20.

“American Idol” winner Kris Allen and runner-up Adam Lambert will join other finalists at Jobing.com Arena on July 20. Teen pop idols the Jonas Brothers will play Jobing.com on Aug. 11. Cirque du Soleil will be at the Glendale hockey arena July 29 to Aug. 2.

The summer concert lineup at Cricket Wireless Pavilion in west Phoenix includes the Van’s Warped Tour June 30, Marilyn Manson and Slayer on July 17 and Def Leppard on Aug. 29. Pop band Lifehouse will perform after the June 13 Arizona Diamondbacks game at Chase Field.

http://www.azcentral.com/sports/coyotes/articles/2009/05/17/20090517coyotes0517sidebar-CP.html

If team leaves, what next for arena?

by Rebekah L. Sanders - May. 17, 2009 12:00 AM
The Arizona Republic

If Jobing.com Arena loses the Phoenix Coyotes, its anchor tenant, some in the events industry question the venue's ability to generate enough revenue to be self-sustaining.

"Very, very few big arenas can, without a professional sports team, get enough income to pay the debt service and operate at a profit," said Bob Cavalieri, senior vice president of business development for SMG, which manages event venues worldwide.

Big-league sports lock in as many as 40 confirmed dates per year, while concert calendars can fluctuate, said Ron Woodbridge, former general manager of Jobing.com Arena.

The concert business is "very volatile," he said.

...

Among the possibilities:


• Concerts and events - The arena regularly lands big music acts, like Bruce Springsteen and Fleetwood Mac, and other events, like monster-truck derbies. Downtown Phoenix's U.S. Airways Center is stiff competition. But three out of the five years Glendale's arena has been open, it has outsold its rival, according to "Pollstar," a publication tracking worldwide ticket sales. Last year, Jobing.com sold 200,377 non-sport event seats vs. 135,960 at U.S. Airways.

Notice those Pollstar numbers - even if you assume only 10K per game, the Yotes account for 2x the number of tickets than all of the concerts (and all other non sporting events) at Jobing combined.

 

[gorsk11]

I don't see how. Bottom line is that he's not only still in the game, he is close to becoming the Last Bid Standing.

Seems to me they've played this game quite well, when so many were convinced he'd be drummed out of the process months ago.

Really - I think they have made some serious miscalculations along the way. The original first bid. Basille put a drop dead date on the issues and their offer was thrown out by the judge due to his timeline - which pushed everything closer to the start of the season. That delay hurt just as much as the other delays if not more for a possible move for this season.

Then just before last week's trial - Basille put a drop dead date of Sept 14th. Even the Judge - mentioned in court he thought it was something they should reconsider. He's giving the judge a possible out. How does that help?

I don't see this move helping him. He's now established the very low-end damages to the COG. We knew it wasn't going to be the 3 years as the judge mentioned it didn't apply to this case/tenant but some on here kept mentioning it. The judge was always going to decide...But I don't think CofG will take this offer.

Now he's pulled back about moving the team for next season or for a partial season.
If he really wanted a team - Wouldn't an offer - trying to keep them in PHX for say a season or based on # of attendance hit - or I can move them have worked better...
The bankruptcy filing hurt the team already attendance wise for this year. One season of bad attendance and he could get out. At least it's trying to work with the NHL at least. Take the 20-40-50 Mil loss with the original bid and be on the NHLs good side. Maybe that wouldn't have worked either but it be a better PR for him than the route he has taken.

 

[HockeyScholar]

One season of bad attendance and he could get out. At least it's trying to work with the NHL at least. Take the 20-40-50 Mil loss with the original bid and be on the NHLs good side. Maybe that wouldn't have worked either but it be a better PR for him than the route he has taken.

Are you delusional? Balsillie will never be on the NHL's "good side". He's tried this twice already. This is Balsillies last ditch attempt to get his hands on an NHL team. This is the only way he'll get his team.

Better PR? Jim Balsillie has the entire Canadian media on his side. Balsillie has run away with this PR battle here in Canada.

 

[LostMyGlasses*]

Even if JB wins the auction, the NHL BOG rejected him as an owner, so prepare yourself for the NHL to fight back with a vengeance, this thing is far from over.

imo the harder they fight back the worse they look.

The BoG's gotta learn

Cash Rules Everything Around Me.

 

[Dado]

Really - I think they have made some serious miscalculations along the way.

You and I can think whatever we want - the fact that he is still alive and stronger than ever when he should have been dead and buried months ago makes it clear the Balsillie team has done far more right than it has done wrong.

Existence proofs trump theory.

I don't see this move helping him. He's now established the very low-end damages to the COG.

What he has done is made a firm commitment to pay an amount a little bit higher than the NHL *might* have to pay when they break the lease and resell the team. Point by point he is forcing the NHL to put a $ value on things they don't want to put a $ value on, and then adjusting his bid to be richer than what the NHL can do.

Perfectly logical strategy, and clearly causing no end of headaches for Bettman.

 

[guyincognito]

imo the harder they fight back the worse they look.

The BoG's gotta learn

Cash Rules Everything Around Me.

I don't think Wu-Tang would get too excited about $800K being potentially added to the cap... and the floor.

and from a business perspective, that is basically what we're talking about.
$40-50M more revenue a year than an absolutely eviscerated Coyotes franchise can put out. It's not as much as a bump to a $2B business as people make it out to be.

that is if my calculations are correct new revenue (* 0.57) / 30

 

[MAROONSRoad]

And would accepting a buyout offer from JB undercut CoG from separately pursuing a tortuous interference claim against JB/Rodier which could potentially net greater than the $40M offer.

You have got to be kidding? Good luck on that.

GHOST

 

[LostMyGlasses*]

I don't think Wu-Tang would get too excited about $800K being potentially added to the cap... and the floor.

and from a business perspective, that is basically what we're talking about.
$40-50M more revenue a year than an absolutely eviscerated Coyotes franchise can put out. It's not as much as a bump to a $2B business as people make it out to be.

that is if my calculations are correct new revenue (* 0.57) / 30

Are you being sarcastic?

 

[Wetcoaster]

Are you delusional? Balsillie will never be on the NHL's "good side". He's tried this twice already. This is Balsillies last ditch attempt to get his hands on an NHL team. This is the only way he'll get his team.

Better PR? Jim Balsillie has the entire Canadian media on his side. Balsillie has run away with this PR battle here in Canada.

However he has lost the battle in the Phoenix media.

 

[bcrt2000]

There are logical reasons why the NHL did not want to accept JB's conditions for purchase and relocation:

1. The NHL wanted to protect the Phoenix Coyotes and make it work in Phoenix

2. The NHL wanted to protect the potential amount of money they could get via an Expansion into the GTA

3. The NHL wanted to protect future relations with cities they are currently located in or potentially want to be located in by protected the interests of Glendale

4. The NHL wanted to protect the Toronto Maple Leafs territorial rights and their right to a indemnification fee

As we've gone through the process, we've seen that with the NHL's own bid suggests that they may be relocated beyond the 2009-2010 season and Jim Balsillie now has also conceded that he has to play next season in Phoenix, so I don't think issue #1 is on anyone's minds except the employees of the Phoenix Coyotes/Glendale Arena who are in limbo right now and the hardcore fans of hockey within Arizona who would like to see their team stay.

Initially it seemed as though there was no room for a relocation fee which would satisfy the NHL, but Balsillie is willing to pay a court ordered amount. This would resolve issue #2 assuming the number is big enough to satisfy the NHL. I am under no impression that Balsillie is going to walk away from this deal even if the fee is in excess of $100 Million. I have a hard time seeing how Balsillie couldn't either raise money through loans, through RIM or through partnerships with others who may not want to get involved in the legal battle but would get involved once everything is settled.

Now the Reinsdorf offer tried to satisfy Glendale by vowing to keep the team within Glendale for 5 years before deciding whether or not to relocate the team, but on the other hand they wanted millions of dollars in concessions per year to go along with that, and that was something that Glendale did not want to do. So I'm not sure how this new Balsillie offer will play out with them. It ensures that they get their money for the 2009-10 season (as does the NHL's offer) and also ensures that overall (from the time the team started playing in Glendale until the end of 2009-10) that Glendale will have recouped most of the money that they put into building the arena (from lease fees, building generated revenues, taxes from the Coyotes over the time they've been in Glendale and the $50 Million from Balsillie). That is $50 Million that the NHL offer does not give Glendale currently. In fact, as of late, the NHL has been overt in saying that the team will likely be sold for relocation after 2009-10. So its possible that Glendale will support Balsillie's bid seeing that the alternative is they are left with the money for the 2009-10 season and thats it. Its also possible that they reject it and go for a stance which tries to keep the team in Glendale.

I think the final issue is the most contentious. The NHL won't say that they rejected Balsillie because of the Leafs, but they also are in a little bit of a battle with the Leafs in terms of whether or not the Leafs have a veto. There is a very real possibility they could be sued by the Maple Leafs for hundreds of millions of dollars if they approve Balsillie's relocation bid. Unless Balsillie throws in a relocation fee for the Leafs thats a very large amount ($150-$200 Million) its going to be a long legal battle if the judge forces the NHL to accept Balsillie as an owner.

I think the latest bid is closer than ever to satisfying the conditions that would allow the NHL to accept him as owner, but the remaining issues are still big issues. I do think they are close enough that if Bettman really wanted to get something done they could sit down in a room and do it, but there just might be too much bad blood at this point which is unfortunate. The NHL has a lot of fires burning and plus with the NHLPA shakeup and possible players strike in a few years they really could use an owner who has money.

 

[billy blaze]

morning meeting in Glendale is to discuss the Balsillie offer

http://www.bizjournals.com/phoenix/stories/2009/09/07/daily6.html

 

[CGG]

Well, if Balsillie's bid is thrown out by the courts (at whatever level) then the team would probably go to the NHL under its bid. Their bid already has the approval of the creditors. So I doubt that would happen.

The NHL bid has the approval of two creditors, one of whom is the NHL itself. As far as I know, COG hasn't officially thrown their support behind the NHL while Moyes and Gretzky, slated to get $0 from the NHL bid, probably don't support it either. As of now they are both creditors, and Moyes is the single biggest creditor.

If COG now throws their support behind PSE, I don't think the NHL bid has any support from creditors any longer.

 

[Grabovski]

http://tsn.ca/nhl/story/?id=290348

Jim Balsillie bumps his bid $30M more, and $50M of his offer is going to the city of Glendale. His offer is now $242.5M.

 

[eliostar]

Judging from a lot of comments you would think that the City of Glendale was making the final decision. It still comes down to whether the judge can force relocation on the NHL, I say no.
He can award JB the team, but the move will not be part of that decision.

 

[GSC2k2*]

morning meeting in Glendale is to discuss the Balsillie offer

http://www.bizjournals.com/phoenix/stories/2009/09/07/daily6.html

Funny - it was set before JB submitted his offer. The meeting was set to discuss things with Ice Edge, although clearly this development will also be discussed.

 

[seanlinden]

How is Glendale supposed to get $50million out of Balsillies new bid? His proposal of relocation requires that all additional funds provided by relocating go to the NHL.

Money doesn't come from nowhere.

 

[Fourier]

I'll leave a few questions for the legal minds to chew on [and anyone else that wants to opine - whether informed or not]:

1. Can PSE simply favor one unsecured creditor over another [or here, others] and allocate money as is being proposed - or, is this really a sound-good, feel-good move that in reality means nothing because the $40 million is just going to get put into the pot that gets divided among all of the unsecured creditors [or at least potentially could be divided, if enough of the other unsecureds object to this proposal]?

2. PSE's proposal calls for the Coyotes to play "rent free" at Jobing.com this season. How much would COG stand to lose in this event, and to what extent would the $40 million make up for that? [Even better question: how would COG fare with the NHL's 1-year offer and then the 'Yotes moving and having to recoup from Moyes vs. the PSE offer of $40 million later, but a rent-free '09-10?]

3. If COG rejects the PSE offer, then what? [lobs this grenade and quietly walks away]

Interesting questions, particularly #1.

Suppose that they could not simply pick one creditor over the others, if the CoG was awarded a large damage, say $500M, they would still get by far the largest share of any additional money thrown into the pot so either way they could well benefit substantially if JB were to up his bid. But would this be enough to sway them? I have my doubts.

I still have no idea how much JB would really be willing to put on the line for a team in Hamilton.