Phoenix CXXXVII - and the band plays on

[MNNumbers]

You think Quebec is suddenly gonna pay 800m US dollars for a relocated team? I doubt that.

Tommy,
No, but I KNOW that Houston won't pay that for a relocated team.


I think that Quebec will pay more than Houston.

But, note that I did NOT say I think that will happen. What I said was that, in the event the losses in the Phoenix market become untenable, AND Fertitta won't pay enough to satisfy the BOG, then Quebec becomes the next best financial solution...In other words, financially, it's better than losing lots in Phoenix, and it's better than giving Houston an even deeper cut.

I happen to think that
Quebec will pay about 500M USD
Fertitta will pay about 350M USD (this is a bigger guess)

But what will happen is anyone's guess, because we don't know how the BOG would order their priorities. So far, we know that continuing to hope for an arena solution in Phoenix market is the top priority.

 

[gstommylee]

There's currently no "mess" in Glendale..... the franchise is chugging along reasonably well in Glendale under the circumstances (sold out game versus the Leafs tonight, thanks to homeboy Auston Matthews)

And absolutely nobody would ever pay $650 million for an expansion franchise, and then build an ($800 million) arena on top of that...... right??

Leave Seattle out of this. The 800m arena cost for Seattle is unique to Seattle given they are restricted to the confinements of the existing roof line and is forced to dig down. Nevermind the cost of labor is high and the cost of material has gone up And the cost of the arena and cost of the team involve two different groups.

Regarding the coyotes, the suggestion, its someone buying the team and building the new arena. We are talking about a billion dollars + for what is to be a NHL only facility for a franchise that is in a total financial mess.

 

[gstommylee]

Tommy,
No, but I KNOW that Houston won't pay that for a relocated team.


I think that Quebec will pay more than Houston.

But, note that I did NOT say I think that will happen. What I said was that, in the event the losses in the Phoenix market become untenable, AND Fertitta won't pay enough to satisfy the BOG, then Quebec becomes the next best financial solution...In other words, financially, it's better than losing lots in Phoenix, and it's better than giving Houston an even deeper cut.

I happen to think that
Quebec will pay about 500M USD
Fertitta will pay about 350M USD (this is a bigger guess)

But what will happen is anyone's guess, because we don't know how the BOG would order their priorities. So far, we know that continuing to hope for an arena solution in Phoenix market is the top priority.

I doubt Quebec will even pay 500m. And even then the NHL does not want to create an unbalance league again when they just final balanced it. 15/17 alignment will not happen at all. So lets leave quebec out of this.

 

[Bookie21]

It's been no secret, that Quebecor got gun shy. Last reports were they were looking for investors in regards to an NHL team. I don't think anyone in Quebec is currently on the radar to pull the trigger on a $650 million USD franchise

 

[MNNumbers]

I doubt Quebec will even pay 500m. And even then the NHL does not want to create an unbalance league again when they just final balanced it. 15/17 alignment will not happen at all. So lets leave quebec out of this.

You are missing the point, Tommy. The point is not that anyone directly thinks they are going to Quebec, nor that they want to ignore the imbalance....

The point is:

Stay in Glendale with NO new arena: Big losses every year
Move to Houston: Fertitta doesn't want to pay the price
Move to Quebec: BOTH geographic imbalance and the question of whether Quebec has ability to pay any more....

There is the point. Right there...

If the situation in Phoenix is as we think it is, THERE IS NO GOOD ANSWER.

That's the point.

Watching Bettman and the BOG squirm is fun....

 

[gstommylee]

You are missing the point, Tommy. The point is not that anyone directly thinks they are going to Quebec, nor that they want to ignore the imbalance....

The point is:

Stay in Glendale with NO new arena: Big losses every year
Move to Houston: Fertitta doesn't want to pay the price
Move to Quebec: BOTH geographic imbalance and the question of whether Quebec has ability to pay any more....

There is the point. Right there...

If the situation in Phoenix is as we think it is, THERE IS NO GOOD ANSWER.

That's the point.

Watching Bettman and the BOG squirm is fun....

And doing nothign isn't the answer either. If the NHL wants to deal with the franchise to where its no longer a problem then they need to pull the plug on it and take what ever Fertitta is willing to offer. Waiting and waiting someone to show up buy the franchise then pay 100% of the cost of the arena where there is so far no such person willing isn't solution either.

 

[MNNumbers]

And doing nothign isn't the answer either. If the NHL wants to deal with the franchise to where its no longer a problem then they need to pull the plug on it and take what ever Fertitta is willing to offer. Waiting and waiting someone to show up buy the franchise then pay 100% of the cost of the arena where there is so far no such person willing isn't solution either.

This is what I am saying....

There is NO good answer. That's why watching them try to figure it out is so much fun. They were less than honest about the situation in Phoenix for a long time. They have taken advantage of people there for a long time. But, since the COG voted to cancel the lease subsidy, the tables have turned, and it is the league which has the problem. There is a certain kind of justice involved there which is satisfying.

I don't really care what happens. I just like watching the NHL and Bettman sit in a situation from which it is not easy to extricate themselves.

 

[GuelphStormer]

And doing nothign isn't the answer either. If the NHL wants to deal with the franchise to where its no longer a problem then they need to pull the plug on it and take what ever Fertitta is willing to offer. Waiting and waiting someone to show up buy the franchise then pay 100% of the cost of the arena where there is so far no such person willing isn't solution either.

and yet it has been for going on ten years now

 

[TheLegend]

Leave Seattle out of this. The 800m arena cost for Seattle is unique to Seattle given they are restricted to the confinements of the existing roof line and is forced to dig down. Nevermind the cost of labor is high and the cost of material has gone up And the cost of the arena and cost of the team involve two different groups.

Regarding the coyotes, the suggestion, its someone buying the team and building the new arena. We are talking about a billion dollars + for what is to be a NHL only facility for a franchise that is in a total financial mess.

Sorry Tommy....

You wouldn’t leave the Coyotes out for a major portion of the Seattle megathread... so the shoe is on the other foot now and you don’t get to choose the playing field.

I’m fully aware of the differences in Seattle. But you were making the same arguments there as you trying to now.

If there’s one thing anyone who’s followed how the NHL has operated for the past decade should learn..... is to never play Nostradamus.

 

[JelloPuddyPops]

Leave Seattle out of this. The 800m arena cost for Seattle is unique to Seattle given they are restricted to the confinements of the existing roof line and is forced to dig down. Nevermind the cost of labor is high and the cost of material has gone up And the cost of the arena and cost of the team involve two different groups.

Regarding the coyotes, the suggestion, its someone buying the team and building the new arena. We are talking about a billion dollars + for what is to be a NHL only facility for a franchise that is in a total financial mess.

So... leave out all the things that weaken your argument? Got it. Seems about par for the course.

 

[gstommylee]

Sorry Tommy....

You wouldn’t leave the Coyotes out for a major portion of the Seattle megathread... so the shoe is on the other foot now and you don’t get to choose the playing field.

I’m fully aware of the differences in Seattle. But you were making the same arguments there as you trying to now.

If there’s one thing anyone who’s followed how the NHL has operated for the past decade should learn..... is to never play Nostradamus.

So... leave out all the things that weaken your argument? Got it. Seems about par for the course.

What is going on with Seattle is an exemption not the normal. Everyone knew the arena had to be 100% privately funded and everyone knew it was going to be very very expensive more so than building from ground up to redo the key with the current shell. It would been cheaper to build the arena ground up than redo a current building.



If OVG never showed up, there would be no new arena under construction and NHL would never awarded Seattle an expansion franchise.

Only reason why coyotes were even brought up in the Seattle thread cause of what bettman said he couldn't guarantee that the team would be expansion or relocation back in dec 2017. Its not being brought up anymore cause Seattle is expansion.

Difference is between coyotes and Seattle is Coyotes is essentially an NHL only building.

The Suns wants nothing to do with the coyotes which is making it difficult to get things done. Seattle is new building within the current shell for both the NHL and the NBA.

Coyotes is basically a billion dollars + for team and a new arena to remain in Arizona not a billion for team and a new arena where the suns are playing in that arena as well. Easier to pencil out when you are including the NBA team as well.

 

[Tom ServoMST3K]

Since this thread seems to be staying, it's important to note that if this team sells in-market, a big chunk of the $650 million purchase price will be taking on debt responsibility.

 

[gstommylee]

Since this thread seems to be staying, it's important to note that if this team sells in-market, a big chunk of the $650 million purchase price will be taking on debt responsibility.

As well as the additional cost of a new building with it more likely being all private.

 

[TheLegend]

Since this thread seems to be staying, it's important to note that if this team sells in-market, a big chunk of the $650 million purchase price will be taking on debt responsibility.

That is a very fair assessment.

However last we heard Barroway was reportedly looking at a $500 million valuation within the Arizona market.

Then you can tack on the potential arena costs.............. if any.

The sale and “move out of market” price would depend upon where the new market was, and what value the league perceives it to be.

 

[Glacial]

Since this thread seems to be staying, it's important to note that if this team sells in-market, a big chunk of the $650 million purchase price will be taking on debt responsibility.

You're assuming an actual sale, not a sale. I expect the revolving door of owners to continue for at least another spin before the team goes flying out the door into a blindfolded dart throw landing spot or the league stops the doors and vomits from spinning around too much. It's hard to see a traditional sale occur without some of the wizard's act behind the curtain getting revealed and the league showing signs of cutting their losses/breaking from their holding pattern. And it's hard to see any legit prospective owner who will own the team lock stock & barrel, not as the NHL's regional franchise manager of the team, paying that high a price/a team with that much debt as part of its 'value'. Now, if the league accepts some of the losses to knock down the price (probably in a behind the scenes deal with such an owner to complete the illusion of the full asking price for franchise value averages to be maintained/rise), then it becomes more probable.

 

[canuckfan75]

all we know is the Coyotes will be in Arizona for the 2019 /2020 season

so it is one season at a time for now

 

[TheLegend]

all we know is the Coyotes will be in Arizona for the 2019 /2020 season

so it is one season at a time for now

Careful..... you’ve entered that area of HF known as “The Assumption Zone”

 

[mouser]

Since this thread seems to be staying, it's important to note that if this team sells in-market, a big chunk of the $650 million purchase price will be taking on debt responsibility.

So what? Debt is always factored into the sale of any asset, especially very expensive professional sports teams.

It just means the seller receives less real dollars. The buyer can then decide whether to pay off or refinance the debt in whatever way they want to.

 

[Tom ServoMST3K]

So what? Debt is always factored into the sale of any asset, especially very expensive professional sports teams.

It just means the seller receives less real dollars. The buyer can then decide whether to pay off or refinance the debt in whatever way they want to.

Any potential new owner will be able to put less money down to buy the team.

 

[BattleBorn]

You are missing the point, Tommy. The point is not that anyone directly thinks they are going to Quebec, nor that they want to ignore the imbalance....

The point is:

Stay in Glendale with NO new arena: Big losses every year
Move to Houston: Fertitta doesn't want to pay the price
Move to Quebec: BOTH geographic imbalance and the question of whether Quebec has ability to pay any more....

There is the point. Right there...

If the situation in Phoenix is as we think it is, THERE IS NO GOOD ANSWER.

That's the point.

Watching Bettman and the BOG squirm is fun....

Stay in Glendale with no new arena isn't as huge a negative as most people seem to think it is. A lot of the long time BoHers remember the $30MM+ loss season and try to move that forward to each passing year like it's the norm. Forbes is what it is, but we seem to all agree their figures are worth considering, and Forbes has Arizona as taking a $10.6MM loss last year. While it's not optimal, it's a team that's $20/ticket in additional revenue away from breaking even annually even while maintaining their 76.2% home attendance capacity they had last season. Rough math, they can theoretically make double-digit millions of dollars in profit just selling out the place they've already got in Glendale. This is all while sitting with a team in the 12th largest US TV market, a market that will likely care a little more about them if they do what they need to do to sell tickets, which is win.

While losing ten million a year isn't optimal, it's likely safe to assume the asset itself has appreciated more than $10MM/year in the past however many years. Las Vegas and Seattle have helped with that blue-sky type of valuation.

This isn't a pressing issue for anyone now that we know there's not any real lease issues outside of the year to year thing and there's no news when it comes to arenas or new ownership partners. That's why the megathread keeps getting put on ice.

 

[mouser]

Any potential new owner will be able to put less money down to buy the team.

It doesn't make a big difference. Suppose the current owner of a team fully owned it and the next guy buying the team decided to put less money down and finance a major portion of the purchase via borrowing.

 

[PredsHead]

Stay in Glendale with no new arena isn't as huge a negative as most people seem to think it is. A lot of the long time BoHers remember the $30MM+ loss season and try to move that forward to each passing year like it's the norm. Forbes is what it is, but we seem to all agree their figures are worth considering, and Forbes has Arizona as taking a $10.6MM loss last year. While it's not optimal, it's a team that's $20/ticket in additional revenue away from breaking even annually even while maintaining their 76.2% home attendance capacity they had last season. Rough math, they can theoretically make double-digit millions of dollars in profit just selling out the place they've already got in Glendale. This is all while sitting with a team in the 12th largest US TV market, a market that will likely care a little more about them if they do what they need to do to sell tickets, which is win.

While losing ten million a year isn't optimal, it's likely safe to assume the asset itself has appreciated more than $10MM/year in the past however many years. Las Vegas and Seattle have helped with that blue-sky type of valuation.

This isn't a pressing issue for anyone now that we know there's not any real lease issues outside of the year to year thing and there's no news when it comes to arenas or new ownership partners. That's why the megathread keeps getting put on ice.

Well a couple of things, is that $10.6M loss including the Vegas expansion money or any debt servicing? If it includes the Vegas payout and doesn't count any debt servicing, then its not quite a full picture of the financial situation in Arizona. If those are missing and have to be accounted for, then the loses this year could be well over $30M. That is a much tougher situation, and one that does not seem tenable. Barroway needs a partner, but no one wants half of those loses or the accompanying debt. And that is completely ignoring the arena issue.

 

[MNNumbers]

Stay in Glendale with no new arena isn't as huge a negative as most people seem to think it is. A lot of the long time BoHers remember the $30MM+ loss season and try to move that forward to each passing year like it's the norm. Forbes is what it is, but we seem to all agree their figures are worth considering, and Forbes has Arizona as taking a $10.6MM loss last year. While it's not optimal, it's a team that's $20/ticket in additional revenue away from breaking even annually even while maintaining their 76.2% home attendance capacity they had last season. Rough math, they can theoretically make double-digit millions of dollars in profit just selling out the place they've already got in Glendale. This is all while sitting with a team in the 12th largest US TV market, a market that will likely care a little more about them if they do what they need to do to sell tickets, which is win.

While losing ten million a year isn't optimal, it's likely safe to assume the asset itself has appreciated more than $10MM/year in the past however many years. Las Vegas and Seattle have helped with that blue-sky type of valuation.

This isn't a pressing issue for anyone now that we know there's not any real lease issues outside of the year to year thing and there's no news when it comes to arenas or new ownership partners. That's why the megathread keeps getting put on ice.

Well a couple of things, is that $10.6M loss including the Vegas expansion money or any debt servicing? If it includes the Vegas payout and doesn't count any debt servicing, then its not quite a full picture of the financial situation in Arizona. If those are missing and have to be accounted for, then the loses this year could be well over $30M. That is a much tougher situation, and one that does not seem tenable. Barroway needs a partner, but no one wants half of those loses or the accompanying debt. And that is completely ignoring the arena issue.

Sorry to take this the land of "We don't know for sure, but......"
Barroway has been connected to the ownership for about 4 years. If, in that time, the average losses, including interest payments and neglecting the Vegas and Seattle expansions, has only been 10M/yr, then I find it difficult to believe he can be out of money.

So, while I respect BB and his analysis, I disagree on that count, and on the count that I can't figure out how it's possible that a franchise went from admitting a 20M/yr loss (year 1 of IA) to only having 10M in losses, when attendance hasn't changed, the salary cap floor has gone up, and the subsidy from Glendale has been lost.

In any case, it sure is the easiest thing to do to stay in Glendale indefinitely and try to ride it out, hoping for better days.

Cheers everyone... It's snowing in Chicago....

 

[CHRDANHUTCH]

Sorry to take this the land of "We don't know for sure, but......"
Barroway has been connected to the ownership for about 4 years. If, in that time, the average losses, including interest payments and neglecting the Vegas and Seattle expansions, has only been 10M/yr, then I find it difficult to believe he can be out of money.

So, while I respect BB and his analysis, I disagree on that count, and on the count that I can't figure out how it's possible that a franchise went from admitting a 20M/yr loss (year 1 of IA) to only having 10M in losses, when attendance hasn't changed, the salary cap floor has gone up, and the subsidy from Glendale has been lost.

In any case, it sure is the easiest thing to do to stay in Glendale indefinitely and try to ride it out, hoping for better days.

Cheers everyone... It's snowing in Chicago....

Part of the 2015/16 profits and losses is how much were IA/Barroway paying the owners of the Falcons to operate the affiliation which dates back to the previous season 2013/14..... remember, at the time, the Coyotes then entered into a purchase to buy and relocate the AHL Franchise within a 2 year window if they elected to, so there's that expense, and that cost of setting the franchise up in Tucson, which negates the affiliation fee, not the fee, the Roadrunners pay to the AHL as a member franchise, if we knew that piece of the equation might help determine what the actual profit /loss is since the Coyotes outright own their AHL Affiliate....

yes, MNN, it's been spitting snow here as well

 

[mesamonster]

BB, two financial facts argue against the pro forma you have suggested. 1) The accumulated debt is very costly which adds another layer of expense most other franchises are not having to pay. 2) Salary expense has risen steadily over the years such that even at the bottom end it is significantly more than the years the team was losing $30MM. Seat revenue has remained stagnant and I don`t believe the team has been the beneficiary of an improving ad revenue stream. Without expansion monies and RS, this team would have been moved long ago. I too am very skeptical of the $10MM per year loss figure, something triple that is more likely. Of course only a portion of that is AB`s responsibility, his brother in crime(GB) has been more than happy to front the differences and tack on the amount owing to the already outsized debt load.