Dallas Stars: Gaglardi's Stalking Horse Bid: $265 MM for Stars, AAC (50%)

Kritter471

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Feb 17, 2005
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Dado - it's impossible to separate the team from the arena. They both increase each other's value by an unknown amount and the books are ridiculously intertwined. Who's to say that the team isn't worth $150 mm and the arena $100 mm or the team $180 mm and the arena $70 mm? They're not going to be separated in the bid except for the specific numbers with regard to debt assumption.

Remember, the AAC profit/value may actually drop significantly next season if the NBA lockout comes to fruition, and it's carrying significantly more debt than the team to begin with. It's not necessarily the more valuable asset in the deal. Honestly, it's one of those situations where owning both increases the values of both properties owned. And the Stars have also always been valued as high as they were because of the way they were tied to the arena, just like the arena has been more valued highly because of the presence of two big four tenants.
 

Kritter471

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Feb 17, 2005
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Couple of updates from the DMN today.

First of all, the Stars released their lease terms in response to a local professor bringing up relocation as a possibility.

The contractual facts: The Dallas Stars have a contractual obligation (Non-Relocation Agreement) with the AAC lenders that would prevent the team from being moved until at least 2023. The Stars also have a Location Agreement with the City of Dallas that the team could not be moved until at least 2031. After that, there is a series of 10 one-year lease options that are designed to be attractive enough financially as to avert the movement of the team to a new facility during that period.

And then the DMN quotes the Globe & Mail while adding a second paragraph of additional context.

``There was some good news for NHL commissioner Gary Bettman on Thursday - a source close to the sale of the Dallas Stars said it is expected Vancouver businessman Tom Gaglardi will have a purchase agreement with the team's creditors within the next two weeks. The sale will then be packaged to go through U.S. bankruptcy court as quickly as possible and, if no new bids emerge, which is not expected, Gaglardi could take over by the end of the month.''

While Gaglardi is in a 30-day negotiating window and probably will have an official offer before the end of the month, two sources said that the organized bankruptcy hearing that is expected to clear the team of potential future lawsuits will have a window of 30-60 days in which other bidders will be allowed to beat his offer. So while the hearing itself might only take three days, the sources said the earliest Gaglardi (or another owner) could take over the team would be late June. It could also be late July if the bankruptcy judge chooses to leave the window open for 60 days.

http://starsblog.dallasnews.com/archives/2011/05/just-so-you-know-stars-are-not-moving.html
 

Shawa666

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Two weeks.
tumblr_ldp3jukzHo1qb9a2wo1_500.png
 

Dado

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Dado - it's impossible to separate the team from the arena.

It can't be that impossible if someone is selling only half the arena. Somewhere is written down how much is for the arena and how much is for the team - it would be interesting to know what the numbers actually are.
 

vofty

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Mar 2, 2008
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Heika says there could be a bid by the end of the week:
http://www.dallasnews.com/sports/da...oving-forward-possible-bid-by-end-of-week.ece
Stars interim president Tony Tavares confirmed this morning that discussions in the sale of the team are moving forward in a positive direction and that the team could have definitive news by the end of the week.
...
Tavares would not confirm any of the details, but several sources said that Vancouver businessman Tom Gaglardi is moving forward with his bid and that the exclusive 30-day negotiating window has been extended.
...
According to sources, Dallas businessman Doug Miller and Dallas businessman Billy Quinn would still be interested in looking at the offer and possibly trying to better it in hopes of getting the team. Mavericks owner Mark Cuban is working with Quinn, accourding to sources. Sources also confirm that at least one other interested party has been studying the Stars' finances and could be open to making a bid that would exceed Gaglardi's.
 

LadyStanley

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Pipe dream. A person familiar with the negotiations tells me Gaglardi’s offer is just about $115 million. That’s it. The $115 million enterprise value is all debt assumption, no equity, and includes control of half of the arena (Dallas Mavericks owner Mark Cuban owns the other half).

Here is are the numbers behind the deal: HSG currently owes creditors $260 million and has $70 million of cash from the sale of the Texas Rangers to a group led by Nolan Ryan and Chuck Greenberg last August. Netting out the cash leaves $190 million of debt. HSG thinks creditors would accept about 60 cents on the dollar.

http://blogs.forbes.com/mikeozanian/2011/06/07/inside-the-latest-offer-to-buy-the-dallas-stars/
 

MetalGodAOD*

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Seems like bologna.

From a poster on Defending Big D:

This seems really fishy to me. This guy has written three articles about this sale since the beginning of March.

March 3rd he said …

What I can tell you is that a banker from Texas representing a potential buyer contacted me not long ago inquiring about our valuation of the Stars. From this conversation I can also tell you that the $225 million price is very close to what is being offered.

Then April 29th he said….

Tom Gaglardi has offered to buy the NHL’s Dallas Stars and 50% of American Airlines Center from the bankers who took over the team from Tom Hicks for $100 million of assumed debt, according to a person familiar with the deal.

Then today we get this…

A person familiar with the negotiations tells me Gaglardi’s offer is just about $115 million. That’s it. The $115 million enterprise value is all debt assumption, no equity, and includes control of half of the arena (Dallas Mavericks owner Mark Cuban owns the other half).

So the price went from $225 mil that seems to be more than what was left of the HSG debt down to $115 million in just over 3 months. Does missing the playoffs really make that much difference.

I understand his first number was a banker and the others were supposed to be insiders, but could he have this many sources close to the deal and could their information be that different month to month.

If Doug Miller was willing to pay $225 mil in March then it would seem to me that he would have been the front runner. It also seems to me that the comments made by Heika about them structuring the deal so there would be no counter offers wouldn’t make sense if Miller was willing to pay that high.

I just don’t trust what this guy has to say. I also find it funny that this would basically value the Stars (gem of the sunbelt hockey teams) and the 50% of the arena a mere $5 mil higher than the value of the Thrashers.
 

vofty

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While normally Forbes seems like a pretty accurate source, from the get go all of their reports regarding the sale of the Stars have just been "off" from all other reports out there. When it comes to Stars information Heika or Mark Stepneski at ESPN-Dallas (who hasn't reported hardly anything about the sale) are hands down the most accurate source of information you will find. In regards to the sale of the Stars I'll believe Heika over this extremely inconsistent Forbes reporter.
 

Dado

Guest
Seems consistent to me. The first numbers I recall seeing got to $200M range by baking in "future losses".

This is basically what the Thrashers fetched, without the relo fee.
 

vofty

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im new to this discussion, but is there any reason that cuban hasn't expressed interest? or has he?

Cuban is obviously a very passionate basketball owner, but he really has no passion about hockey nor is he really interested in running the Stars. He has expressed a desire to possibly be a minority owner for the sole purpose of giving him a majority ownership of the AAC.
 

vofty

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Well son of a gun Forbes admits they were wrong about the $110 million valuation
http://blogs.forbes.com/mikeozanian...sale-price-of-dallas-stars-up-to-230-million/
About two weeks ago I wrote that, based on a conversation with someone familiar with the negotiations on the sale of the Dallas Stars by Hicks Sports Group to Vancouver businessman Tom Gaglardi, the deal valued the National Hockey League team and half of the American Airlines Center at $110 million.

I was wrong. I should have done more reporting. The value of the deal is $230 million.
 

Dado

Guest
That article reads like he's buying the team for zero cash - all debt assumption - as reported earlier.

Interesting...

Why is the arena so cheap? That now reads like he's taking the whole arena, and debt holders are taking a 50% haircut.
 

kdb209

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Jan 26, 2005
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That article reads like he's buying the team for zero cash - all debt assumption - as reported earlier.

Interesting...

Why is the arena so cheap? That now reads like he's taking the whole arena, and debt holders are taking a 50% haircut.

No - he is getting Hicks' 50% ownership of the arena. Mark Cuban owns the other 50%.

The American Airlines Center is owned by Center Operating Company L.P - a partnership between Hicks and Cuban.
 

Fugu

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Nov 26, 2004
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That article reads like he's buying the team for zero cash - all debt assumption - as reported earlier.

Interesting...

Why is the arena so cheap? That now reads like he's taking the whole arena, and debt holders are taking a 50% haircut.


Is half the arena debt just what Hicks owes (thus half since Cuban owns half), $80MM.... or does Hicks owe someone $160 MM, and Gaglardi would assume half?

How on earth do you get creditors to give you $150 MM for a team that isn't worth $300MM? Does the NHL's rule about credit only apply to new sales, and thereafter owners can hock the entire value?

And yes, Dado, does seem like the earlier report of a No Cash deal being accurate. Who needs cash when the debt is higher than the actual values?
 

Dado

Guest
No - he is getting Hicks' 50% ownership of the arena. Mark Cuban owns the other 50%.

That makes sense to me, but the wording in the article, yeeesh.

The American Airlines Center is owned by Center Operating Company L.P - a partnership between Hicks and Cuban.

Is it correct that the team itself does not the arena share?
 

vofty

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Mar 2, 2008
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That makes sense to me, but the wording in the article, yeeesh.



Is it correct that the team itself does not the arena share?

That is correct, they are separate entities but owned by the same person. So for example when Hicks was crying that he was losing money left and right from the Stars, that was not entirely true since ownership of the Stars also came with 50% ownership of the very lucrative AAC, so while for the past several years Stars ticket sales have been in the crapper and the actual balance sheets of the Stars looked bad, he has certainly been making plenty of money off of the other revenue that the arena generates.
 

Fugu

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That is correct, they are separate entities but owned by the same person. So for example when Hicks was crying that he was losing money left and right from the Stars, that was not entirely true since ownership of the Stars also came with 50% ownership of the very lucrative AAC, so while for the past several years Stars ticket sales have been in the crapper and the actual balance sheets of the Stars looked bad, he has certainly been making plenty of money off of the other revenue that the arena generates.

In spite of that, he had $80 MM of debt on the arena, or as I asked above, is the arena debt $160MM, half of which is Cuban's responsibility? Was this the remaining debt from financing the arena construction?
 

kdb209

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Jan 26, 2005
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In spite of that, he had $80 MM of debt on the arena, or as I asked above, is the arena debt $160MM, half of which is Cuban's responsibility? Was this the remaining debt from financing the arena construction?

I haven't seen any definitive numbers on the private flnancing.

I have seen conflicting numbers of $325M and $420M for the total cost - with financing split between the City and Hicks/Cuban.

The City's $140M in bonds will be paid off early.

http://www.dallasnews.com/news/comm...614-Dallas-debt-on-American-Airlines-4075.ece

Dallas' debt on American Airlines Center could be paid off by 2011, officials say
By RUDOLPH BUSH / The Dallas Morning News [email protected]

Published 14 June 2010 10:51 AM


The city of Dallas expects to pay off its debt on American Airlines Center in late 2011 and years ahead of schedule, city financial officers told City Council members Monday.

In 1998, the city issued $140 million in bonds to pay its $125 million contribution to the arena's construction. The last of those bonds were scheduled to be paid off in 2027.

But higher-than-expected tax receipts over the years allowed the city to redeem the bonds much more quickly than anticipated.

When the arena was conceived, the city's plan to take a financial stake in the project was highly contentious and continues to rankle some opponents today.

But council members Monday praised the early payoff as a signal that the city made the right choice.

Dallas pledged two tax sources to pay off the bonds - a 2 percent addition to the hotel occupancy tax and a 5 percent rental car tax.

Those taxes - particularly the rental car tax - brought in more revenue than anticipated, allowing the city to redeem bonds more quickly than expected, city officials said.

The city is planning on retiring the remaining $10M in bonds in August.

http://www.scribd.com/doc/57756655/BFA-ArenaProjectBondsRedemption-061311

1-f8aad9bf30.jpg
 

vofty

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In spite of that, he had $80 MM of debt on the arena, or as I asked above, is the arena debt $160MM, half of which is Cuban's responsibility? Was this the remaining debt from financing the arena construction?

It appears from that article that the total debt on the arena is $160 MM with Cuban responsible for half of it. From what I could find it looks like the arena originally cost $230 MM to build with the city of Dallas picking up $125 MM and the two teams responsible for $105 MM and any overages. Both teams co-lease from the city for $3.4 MM/year for 30 years. The teams get to keep all revenue and are responsible for all operating expenses.
http://hockey.ballparks.com/NHL/DallasStars/articles.htm
 

Fugu

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Wiki has the total cost at $420 MM.

Also, Center Operating Company LP

http://www.hoovers.com/company/Center_Operating_Company_LP/rfkjrri-1.html

Dallas does everything big, and the Center Operating Company is no exception. The company owns and operates the American Airlines Center, a $420 million sports and entertainment arena, built partially with public funds, that opened in 2001. The venue is the home of the Dallas Mavericks pro basketball team, pro hockey's Dallas Stars, and AFL's Dallas Desperados. Center Operating Company charges the teams rent and gets additional revenue from sponsorships, concerts, concessions, and other events, including touring entertainment shows such as Disney on Ice and Ringling Bros. and Barnum & Bailey Circus. The company is a partnership owned by Mavericks owner Mark Cuban and Dallas Stars owner Tom Hicks.

$295 MM would have remained after the city's $125 MM contribution.

Assuming no other investors, Hicks would have been responsible for $147.5 MM. That seems eerily close to the 50% that is being picked up in Gaglardi's offer.
 

VanIslander

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The Gaglardi family got rich on speculation. They will flip the franchise within 3 years. Mark my words.
 

ps241

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The Gaglardi family got rich on speculation. They will flip the franchise within 3 years. Mark my words.

actually they got rich by buying land, owning a construction company, building hotels at 65 cents on the dollar compared to their competitors, and owning their own hotel brand and retaining the 9% royalties that would otherwise be paid if you were part of a large chain. if you look at their portfolio and their properties there has been nice, steady, aggressive growth with very little flipping. over the past 15 years the Sandman hotel chain has grown, they have acquired Moxie's and it has tripled in size, they developed Chop and are growing it into a national chain, they acquired Shark Club and are slowly growing it....their commercial building portfolio is growing, and they bought out their partners in the Revelstoke development and will be developing it in phases.

now they might have speculated on some of their locations but i have never known them to flip even if they got the said speculation right.

in my opinion the intension will not be to purchase the Stars and flip them in three years for a profit and they will not relocate this team. Tom is acquiring the stars because he loves hockey.....and he will absolutely buy it for the best deal he can drive but the only way he flips it is if their empire crumbles and i just don't see that happening since they are diversified and incredibly well capitalized.....they are around for 7 years at a minimum and most likely allot longer than that.
 

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