Coyotes still owe rent for 2019/2020 UPD - Post #217 (Reconciled)

[Ernie]

Aren't they paying just a couple million in rent? Doubt that they can re-furbish another arena up to NHL standards for less than that. And at some point next season they are going to want to bring fans back into the building but maintain social distancing. Where are they going to do that?

 

[Fairview]

They either kiss and make up while they wait for a permanent solution, or Houston.
Both sides have a reason to make something work.

The team and league have told everyone that they intend to leave GRA as soon as possible. Why would Glendale bend over for the Coyotes for maybe 2 years ? It would be in their best interest to get as much for those 2 years as possible.

 

[Mightygoose]

The team and league have told everyone that they intend to leave GRA as soon as possible. Why would Glendale bend over for the Coyotes for maybe 2 years ? It would be in their best interest to get as much for those 2 years as possible.

In addition, Glendale didn't bend when the team annouced the ASU plan. The team would have left the city anyways plus they would have another competing arena.

The fact the city didn't come to new terms then, they will be far less likely to now knowing their 'empty' arena will only have downtown to compete with.

 

[TheLegend]

In addition, Glendale didn't bend when the team annouced the ASU plan. The team would have left the city anyways plus they would have another competing arena.

The fact the city didn't come to new terms then, they will be far less likely to now knowing their 'empty' arena will only have downtown to compete with.

True.... but when the talk of the Coyotes going downtown to a joint arena with the Suns came up the mayor of Glendale wasted no time leaking to the public his letter, and the city manager's letter, to their counterparts in Phoenix about "interfering".

Besides.... there was no way they were going to go toe-to-toe with ASU had that gone down. Same if Meruelo were to make a deal with either of the two Native American tribes, OR if he manages to build one privately anywhere else.

So all this renewed fondness of Glendale is somewhat irrelevant.

 

[Fairview]

True.... but when the talk of the Coyotes going downtown to a joint arena with the Suns came up the mayor of Glendale wasted no time leaking to the public his letter, and the city manager's letter, to their counterparts in Phoenix about "interfering".

Besides.... there was no way they were going to go toe-to-toe with ASU had that gone down. Same if Meruelo were to make a deal with either of the two Native American tribes, OR if he manages to build one privately anywhere else.

So all this renewed fondness of Glendale is somewhat irrelevant.

Supports the notion that Glendale should not be giving out any free passes.

 

[TheLegend]

Supports the notion that Glendale should not be giving out any free passes.

More like..... just the usual faux concern for Glendale because it helps the "whack the Coyotes" narrative along.

 

[Major4Boarding]

True.... but when the talk of the Coyotes going downtown to a joint arena with the Suns came up the mayor of Glendale wasted no time leaking to the public his letter, and the city manager's letter, to their counterparts in Phoenix about "interfering".

Besides.... there was no way they were going to go toe-to-toe with ASU had that gone down. Same if Meruelo were to make a deal with either of the two Native American tribes, OR if he manages to build one privately anywhere else.

So all this renewed fondness of Glendale is somewhat irrelevant.

See, to me though, the pissing match between Weiers and Stanton came out in the open literally on the heals of Glendale signing the contract with AEG. We'd most likely agree that it started well before that. With the opt out clause in the AEG agreement sans no Coyotes, back then there was cause to stand guard with a "Hands off!" approach. What I mean is, obviously if the Coyotes headed downtown on the heals of the Arena Management Agreement and AEG opted out shortly after, I'd be on guard as well because we seemingly did this for nothing and now they're both gone.

However, regarding ASU, I don't think there's anyone in the Valley willing to go toe-to-toe with the region's shot-caller right?

I think what 'Goose is trying to say (and jump in anytime MG) is that Glendale still holds all the cards here. Something I said before years ago as well. I posted upthread about AEG acknowledging (post-extension) the opt-out provision remained but it didn't factor in their decision to extend. I believe that gives Glendale a measure of negotiating power. Meruelo working the Tribal lands angle or building one privately I don't see as a negotiating power piece on their end. Glendale's not going to be in a position to have to beg for them to say is what I believe 'Goose is saying. And I agree.

I said it way back when and I'll say it again. The end game was never to leave Glendale after Sarver said no. Unless its a nuclear last resort. No matter who owns this franchise.

 

[TheLegend]

See, to me though, the pissing match between Weiers and Stanton came out in the open literally on the heals of Glendale signing the contract with AEG. We'd most likely agree that it started well before that. With the opt out clause in the AEG agreement sans no Coyotes, back then there was cause to stand guard with a "Hands off!" approach. What I mean is, obviously if the Coyotes headed downtown on the heals of the Arena Management Agreement and AEG opted out shortly after, I'd be on guard as well because we seemingly did this for nothing and now they're both gone.

However, regarding ASU, I don't think there's anyone in the Valley willing to go toe-to-toe with the region's shot-caller right?

I think what 'Goose is trying to say (and jump in anytime MG) is that Glendale still holds all the cards here. Something I said before years ago as well. I posted upthread about AEG acknowledging (post-extension) the opt-out provision remained but it didn't factor in their decision to extend. I believe that gives Glendale a measure of negotiating power. Meruelo working the Tribal lands angle or building one privately I don't see as a negotiating power piece on their end. Glendale's not going to be in a position to have to beg for them to say is what I believe 'Goose is saying. And I agree.

I said it way back when and I'll say it again. The end game was never to leave Glendale after Sarver said no. Unless its a nuclear last resort. No matter who owns this franchise.

Glendale definitely has a position they have to hold. I was just explaining to Feckless in the team forum that Glendale has been hit by the pandemic over the arena just as hard. They're currently paying AGM $5.8 million per year to run an arena that currently has zero events scheduled, so no income from it...... and no end in sight yet. So what other "concessions" to the current lease could they give the Coyotes other than cutting out the costs for concessions and in-game staff if the season returns without fans?? Everything else is fixed.

AND..... what are the Coyotes actually asking for?? We don't know.

 

[MNNumbers]

Glendale definitely has a position they have to hold. I was just explaining to Feckless in the team forum that Glendale has been hit by the pandemic over the arena just as hard. They're currently paying AGM $5.8 million per year to run an arena that currently has zero events scheduled, so no income from it...... and no end in sight yet. So what other "concessions" to the current lease could they give the Coyotes other than cutting out the costs for concessions and in-game staff if the season returns without fans?? Everything else is fixed.

AND..... what are the Coyotes actually asking for?? We don't know.

I think I agree with this. From my perspective, the situation for Glendale is something like this:
1) We're paying, usually, about 3-4M for the arena management every year, plus the bond servicing costs.
2) The Coyotes are paying us about 1M (Figures vary, it seems. We don't know exactly the conditions of the rent and the concessions and so forth.)
3) What we get from that is that the Coyotes drive business to Westgate when they are playing.
4) During the pandemic, we are losing about 5.6M in AMF, a net loss of 2M. We are probably losing a lot in taxes in Westgate because of little traffic with no events in the arena (although we don't know what 'a lot' really is).

However, all of that being said, we expect things to return to normal post pandemic.

Now, what do the Coyotes actually want if they are going to play in an empty arena? They are still using our electrical power for the ice plant. That doesn't change. Perhaps some staffing and concessions are unnecessary, but part of that depends not on us, but on the arena manager (Global ASM). They could ask for some leeway in the staffing and concessions, but the space they are using, and the ice plant....all of that is fixed cost.

And.....hmmmm.....if they try to leave us and not renew the agreement for 2021, where are they going to go? We would expect that Sarver at TSRA will charge them more. And, anywhere else, there are going to so many upgrades that it will cost much more than 500K, especially since it will only be a one year change (likely).

So, we the COG have a position of strength. They can ask, but they don't really have options.

That seems to be the situation to me.

As for the team, I think this is just one more in a series of terribly unlucky events to strike. Who know what Meruelo is going to do? He obviously has some cash flow issues, but how bad they are, we don't know. And, we have no idea about the discussion between he and Bettman and the BOG.

 

[Fairview]

More like..... just the usual faux concern for Glendale because it helps the "whack the Coyotes" narrative along.

Not any more faux concern than your constant defending of any of the past owner’s mess ups. I was just wondering how someone could take the position that Glendale would welcome the team back if they decided to leave GRA because of a lease dispute for a bubble season?

 

[TheLegend]

Not any more faux concern than your constant defending of any of the past owner’s mess ups. I was just wondering how someone could take the position that Glendale would welcome the team back if they decided to leave GRA because of a lease dispute for a bubble season?

As in?? I defend what I feel is right at that moment. There were instances where I changed my initial stance on several things once more information came out.

BTW..... while I'm here...... I did just learned something newand was coming to post it before I left for work.

Meruelo has a clause in his purchase agreement which takes effect after Dec 31st allowing him to explore relocation. As in the league did NOT pin him to a 7-year stay in the market.

 

[Mightygoose]

I had a feeling there was no 7 year commitment. IIRC Bettman was asked about it the day the sale was approved and he never confirmed it (nor did he say say it was longer).

Does the Dec 31 date apply effective this year or any year on that date? I take it it coincides with the auto renewal should he decline to take it.

 

[TheLegend]

I had a feeling there was no 7 year commitment. IIRC Bettman was asked about it the day the sale was approved and he never confirmed it (nor did he say say it was longer).

Does the Dec 31 date apply effective this year or any year on that date? I take it it coincides with the auto renewal should he decline to take it.

It’s in Craig Morgan’s latest article posted a short time ago. Can’t readily access it from my phone atm otherwise I’d cut and paste the clip, but as I read it he meant this year.

(edit... got it)

I also asked Gutierrez about the ever-present specter of relocation. Multiple sources have told me that, per his purchase agreement, Meruelo is allowed to explore relocation after Dec. 31. It’s a clause that likely would have been a part of any group’s agreement to purchase this franchise, given its historical financial issues.

Gutierrez responded with a basic canned answer. “Committed to AZ” etc etc....

 

[Rob]

If this was a team in the NBA or NFL they would have moved long ago.

 

[Pandemonia]

It’s in Craig Morgan’s latest article posted a short time ago. Can’t readily access it from my phone atm otherwise I’d cut and paste the clip, but as I read it he meant this year.

I keep reading Morgan not to be trusted but there's a 7 year non=relocate clause when guys buy into the NHL and if this owner just took over the team from the previous guys then the 7 years are up at Dec from the original purchase which is also that stadium lease has to be renewed or cancelled in Dec. U don't wanna announce any reloc cause u lose all your fans but if ur playing games with no fans anyway it might not be so bad.

 

[Stumbledore]

I keep reading Morgan not to be trusted but there's a 7 year non=relocate clause when guys buy into the NHL and if this owner just took over the team from the previous guys then the 7 years are up at Dec from the original purchase which is also that stadium lease has to be renewed or cancelled in Dec. U don't wanna announce any reloc cause u lose all your fans but if ur playing games with no fans anyway it might not be so bad.

Very perceptive, if not complete illiterate.

 

[Mightygoose]

I keep reading Morgan not to be trusted but there's a 7 year non=relocate clause when guys buy into the NHL and if this owner just took over the team from the previous guys then the 7 years are up at Dec from the original purchase which is also that stadium lease has to be renewed or cancelled in Dec. U don't wanna announce any reloc cause u lose all your fans but if ur playing games with no fans anyway it might not be so bad.

That's definitely a way to look at it which to me shows Meruelo didn't want to enter into a new 7 year agreement and very likely bought it well under value.

As others have stated Barroway was nearing the end of how much longer he could hang on for. Signs that this sale was a 'buyer's market' transaction.

End of the year will be interesting days. Even Meruelo stated he would like to have something to say on the arena front (which could also mean the existing one) by then too. If he opts yes playing in front of no fans (if a season happens at all) minimizes the lame duck feel.

 

[Acesolid]

I think what some people do not understand is that many multi-millionaires/billionaires are very illiquid and very leveraged:

For exemple, you may owe a large number of Car Dealerships with a total paper worth of... say 400 000 000 dollars... but you cant exacly exchange these for cold hard cash tomorrow morning at a pawn shop! Selling them would be a very long and complex process to close... even more if the dealerships are in areas under lockdown and have questionnable value. Plus, if you already borrowed massively from the bank to buy said dealerships... and now they are bleeding cash because of Covid.... ouch...


And if all your businesses are suddenly losing cash... and you are leveraged... and a hockey team you happen to owe is also bleeding money..... you can very quickly burn through your (little amount of) cash on hand AND your liquid assets you can quickly sell for money. And relatively fast you are then UNDERWATER even if you are on paper worth a lot because you only have money-bleeding illiquid assets... and NO CASH. (A cash crisis)

Go ask Enron what happens when you run out of cash and the banks start feeling worried about your future and wont lend you more money... you fall quickly.

 

[Ernie]

If this was a team in the NBA or NFL they would have moved long ago.

LOL no.

Many teams in weaker markets compared to the NHL. But they are all propped up by shared league revenues. Each team in the NBA gets nearly $100m per year just from their national tv deal. Each team in the NFL gets about $150m from national tv each year. National TV alone pays for the lion's share of player salaries in both leagues.

 

[Ernie]

And this “bleeding money” is why the Coyotes’ owner should move his team to Quebec City. That would stop the bleeding.

No it wouldn't. Let's pretend that the team was bought with 100% debt. Servicing that alone would cost $42m CAD per year at the going rate for franchises right now. No way revenues could cover that, likely that the team would have an operating loss even after being subsidized by the other owners with revenue sharing.

Even if the team was bought with cash, you still have to account for the opportunity cost of that money.

 

[TheLegend]

That's definitely a way to look at it which to me shows Meruelo didn't want to enter into a new 7 year agreement and very likely bought it well under value.

As others have stated Barroway was nearing the end of how much longer he could hang on for. Signs that this sale was a 'buyer's market' transaction.

End of the year will be interesting days. Even Meruelo stated he would like to have something to say on the arena front (which could also mean the existing one) by then too. If he opts yes playing in front of no fans (if a season happens at all) minimizes the lame duck feel.

We were all presuming Barroway was heavily leveraged after buying off the original IA partners (At least $300 million if you take Mike Ozanian at Forbes for his word).

What isn't known is if Meruelo paid off that debt for the 95% equity in the franchise, assumed it, or refinanced it.

 

[Rob]

LOL no.

Many teams in weaker markets compared to the NHL. But they are all propped up by shared league revenues. Each team in the NBA gets nearly $100m per year just from their national tv deal. Each team in the NFL gets about $150m from national tv each year. National TV alone pays for the lion's share of player salaries in both leagues.

NFL has had 7 teams move in the last two decades. NBA recently had the Supersonics move due to financial issues. The Grizzlies before that.

 

[Rob]

And this “bleeding money” is why the Coyotes’ owner should move his team to Quebec City. That would stop the bleeding.

Houston would make the most sense.

 

[Dirty Old Man]

NFL has had 7 teams move in the last two decades.

Between markets? Rams, Raiders, Chargers....Texans were expansion.....???

This thread, like allll the others, is another ploy in an endless line of them, to tie a minor event to the eventual relocation of the Coyotes. This one isn't a sign of it either. Eventually the thread will degrade and get locked as the same dozen or so relocationistas run out of rotten tomatoes to throw at Arizona, again. (to the new guy, @Venial Cyn, this has been going on for a loooong time. Same ole same ole. The cast of characters for the coyotes has completely changed - different owners, coaches, players, management, donut vendors, the only thing that hasn't changed is the location - so that's apparently the thing they really dislike. Notice it's never framed as an academic discussion on business: "how they are still in Arizona", but rather "HOW are THEY still in ARIZONA?!!!"...and yet, there they remain.)

Especially as a former resident of central Florida, if an NHL team can be successful in Tampa, or Nashville, or Vegas, there's no reason it can't be successful in Arizona. There's nothing inherent in the latitude, or the climate, or the demographics. To believe otherwise, is simply incorrect. Full stop. But there are only so many teams to go around, so the people here who want one where there isn't one will hammer endlessly at any flimsy excuse to relocate. Hence, the Arizona threads.

 

[GordonGraham]

Especially as a former resident of central Florida, if an NHL team can be successful in Tampa, or Nashville, or Vegas, there's no reason it can't be successful in Arizona.

The last 20 years say otherwise, attendance/tv ratings/ are still abysmal 4-5 different owners not a single one could make it work, they got a new arena it made no impact..... You dont need a gazillion fans to make it work you just need 20000 willing to pay 100$ a game forty times a year and they still dont have that after so many years