Speculation: Ownership Saga: Coyote's Renaissance (Read Post #1)

[RABBIT]

Who are the for sure NAY votes besides Alvarez....

Martinez is on the fence
Chavira --- stadium is in his district
Hugh -- who knows

 

[OOEEL]

Who are the for sure NAY votes besides Alvarez....

Martinez is on the fence
Chavira --- stadium is in his district
Hugh -- who knows

I'm pretty sure Chavira is a nay, didn't he unseat Joyce Clarke, who got the boot for being too pro-Coyotes? I thought he and Weiers basically got in by opposing the Jamison deal.

 

[rt]

It could pass. If it were going to, why wouldn't they say so?

 

[OOEEL]

Four years in and we're still asking why and trying to justify things? C'mon rt, we're past that

One thing that I didn't think about because we were so wrapped up in the forced vote today. The NHL have their BoG meeting tomorrow morning, obviously they're not going to vote on relocation with this specter of a vote hanging around, but you figure they'll have something to say about the situation.

 

[RABBIT]

....

 

[RABBIT]

If I was Maloney and was given the news that my team was about to relocate and put myself out of a job....all hell would break loose.

I would walk into my office wearing nothing but a smile holding a screamo CD to play while I fire Dave Tippett, trade Yandle, Doan, Ekman-Larsson and the rights to Mike Smith to Columbus for their broadcaster. Followed by a call to the Florida Panthers in which I would trade Vermette, all of our prospects and draft picks for Peter Mueller and a fine tip Sharpie. I would tell Vrbata, Hanzal, Korpikoski, Boedker and Moss that Gary Bettman called their mothers ugly and that he wants them to join me on my exit out of the NHL, forming a group of pissed off investors to help me purchase the arena in Seattle as our informal Man-Cave/Bachelor pad. I would then go to Jobing.com area and steal all of their AA batteries and hide all of their remote controls in the nearest desert. I would then make my escape via the infamous Flying Taco Bell Chalupa, leaving the NHL with a roster consisting of:


Bissonette- Beer Vendor -Intel Guy
Security Guard- Gordon -Klinkhammer
Ticket Scanner- Howler -Janitor
Chipchura- Tyson Nash- Sarah McLellan

Michalek-Time Keeper
Guy who opens penalty box- Schlemko
Morris- Arena DJ

LOLbarbera
Door Lady




Solid.

 

[rt]

I like that Mueller is still a healthy scratch, apparently.

 

[OOEEL]

And that you managed to resign Boyd in the middle of all that wheeling and dealing

 

[RABBIT]

I like that Mueller is still a healthy scratch, apparently.

Finally decided to leave hockey and follow his religious views. Tough call between him and the Sharpie, however.

 

[RABBIT]

And that you managed to resign Boyd in the middle of all that wheeling and dealing

Boyd stuck to his guns and tried to block a car in the parking lot wearing nothing but shinpads and a helmet, he will remain with the team out of pure loyalty.

 

[rt]

Interesting article.

http://www.azcentral.com/community/glendale/articles/20130626vote-sought-arena-contract.html

Sherwood calls current offer the "least crappy". Surcharge rumors are downplayed. "Found" revenue projections supposedly based on crappy attendance. A lot of good and bad in this one.

50/50?

 

[RABBIT]

Interesting article.

http://www.azcentral.com/community/glendale/articles/20130626vote-sought-arena-contract.html

Sherwood calls current offer the "least crappy". Surcharge rumors are downplayed. "Found" revenue projections supposedly based on crappy attendance. A lot of good and bad in this one.

50/50?

Funny, Coyotes fans are probably the only fans that can find optimism from the term "least crappy."

Here's to hoping.

 

[XX]

Sherwood said he understands Bowers’ frustrations. He said that he also would prefer that Renaissance executives take the $6.5 million offer and retain all the proposed shared revenue streams for themselves, but he said Renaissance executives never showed an interest in that arrangement.

I wonder why...

 

[yotesreign]

I like that Mueller is still a healthy scratch, apparently.

that made me laugh, right there.

 

[Sinurgy]

I wonder why...

Well in all fairness unless SMG was guaranteeing 41+ event per year (several of which are not on weekends), with similar overall attendance and demographics it doesn't make sense to compare their AMF.

 

[XX]

Well in all fairness unless SMG was guaranteeing 41+ event per year (several of which are not on weekends), with similar overall attendance and demographics it doesn't make sense to compare their AMF.

I don't think you are following. There's a fixed cost associated with the arena, and the contract is roughly worth $6.5m based on comparables in other cities. Many teams get less or no payment at all just for the chance to run a lucrative arena. The idea that Glendale should go above industry norms for '41+ dates' is laughable but not the main problem here.

RSE apparently needs $15m or so to get the Fortress loan. They can't just 'keep the revenue streams' because they have zero credit worthiness. They need the city to guarantee that money ($15m AMF), but they themselves refuse to guarantee it ('new revenue streams') to the city. It's pathetic. RSE wants the city to take on all of the risk associated with unicorn fart revenue projections. Several posters here flat out denied this to be true or tried to downplay it. That quote, straight from Sherwood, puts it to bed.

 

[Sinurgy]

I don't think you are following. There's a fixed cost associated with the arena, and the contract is roughly worth $6.5m based on comparables in other cities. Many teams get less or no payment at all just for the chance to run a lucrative arena. The idea that Glendale should go above industry norms for '41+ dates' is laughable but not the main problem here.

RSE apparently needs $15m or so to get the Fortress loan. They can't just 'keep the revenue streams' because they have zero credit worthiness. They need the city to guarantee that money ($15m AMF), but they themselves refuse to guarantee it ('new revenue streams') to the city. It's pathetic. RSE wants the city to take on all of the risk associated with unicorn fart revenue projections. Several posters here flat out denied this to be true or tried to downplay it. That quote, straight from Sherwood, puts it to bed.

You apparently did not understood my post. The $6.5 million figure that is thrown around is based on the SMG bid, yet we do not know what SMG promised to provide for that $6.5 million dollars. If it's not on par with what the Coyotes bring by themselves, then it's not an accurate figure to use.

Yes I'm aware of what RSE wants to do, that doesn't change what I said above.

 

[XX]

Yes I'm aware of what RSE wants to do, that doesn't change what I said above.

It doesn't make what you are saying any less silly. The Coyotes are not special. The revenue they provide to the city isn't hard to project or track. There are intangible benefits, but not enough to bridge such a monstrous gap. 41 events is less than one per week. A professional management company with performance clauses can't do that? It's not like the NHL has set the bar very high. KDB has posted a compelling argument that shows the league being harmful to the area and mismanaging (either on accident or purposefully) the arena via decreased bookings. Something that can't be explained or solely attributed to the recession.

==========================================

Let's take a trip down the numbers rabbit hole, with CF as our guide:

Why $6m for an AMF?

Everyone in the room knows that a legitimate arena management agreement will not exceed $6MM. In fact, the bids by professional management companies will likely be well under $6MM net. The BoH archive contains several actual examples of arena management agreements from places like Seattle, Stockton, Oakland, etc. That's the thing about arenas, they exist pretty much everywhere. It's not like some alien spacecraft dropped off Jobing.com Arena and now everyone has to guess how to operate it.

The AMF discussion was skewed by the steaming piles of Beasley that came out of Glendale City Hall; reinforced by complete imbeciles like Joyce Clark; then promoted by various reporters and bloggers who have a collective IQ of about 20.

Even with the Coyotes capturing most revenue streams, the true net cost of operation was around $5.5MM. The numbers published in the newspaper were taken directly from the Arena Newco documents as provided by Glendale on their Bid Opportunities site. Only the most ardent of idiots would suggest that the AMF could possibly be more than the budgeted figure of $6MM.

Why the shell game with the city's credit?

AMF Budget = $6MM

Budget figure is the net of revenue and expense.

AMF Expense to Team Gosbee = $15MM

AMF Revenue from Team Gosbee = ?


The ? is what Sherwood and Friends have been working on. Based on the FoxSports report, they claim to have identified $8MM-$11MM per year. If that is true, then they're pretty much within budget. However, the devil is always in the details on these things.

- Are the revenue projections legitimate -or- are the revenue projections Hockingized?
- If the revenues fall short of projections, does the city pay the load or is it distributed equitably between RSE and the City?

The only known fact is the Revenue the Coyotes/Arena produced in previous years. This is the sum of rent and the per ticket surcharges:

FY13 (Partial): $1,681,303.33
FY12: $2,493,248.39
FY 11: $2,182,158.03

They have quite a shortage to fill in. If Team Gosbee is sharing meaningful revenues (ie- naming rights, concessions, parking, increased surcharges, etc) then it probably works. I have a hunch that's not what they're doing though. I suspect that the "found" revenues are going to be wild exaggerations along the lines of:

- Parking Structure Advertising Revenues: $3MM per year
- Unicorn Horn Sales Revenues: $3MM per year

Or they'll be tied to unrealistic attendance projections, or any number of other moon beam scenarios.

Why are they insisting on guaranteed revenue from RSE?

Thanks for the summary. Interesting tidbit there (emphasis added). http://www.glendaleaz.com/Clerk/agen.../052813-11.pdf

Page 15 of the PDF

City Council’s Financial Policies: Capital Asset and Debt Management

@ para.2
The city will not give or loan its credit in aid of, nor make any donation, grant or payment of any public funds, by subsidy or otherwise,to any individual, association, or corporation, except where there is a clearly identified public purpose and the city either receives direct consideration substantially equal to its expenditure or provides direct assistance to those in need.
They didn't just cap the AMF at $6MM, they wrote the Gift Clause into their financial policies.

There's more:
5. Non‐voter approved debt such as Municipal Property Corporation [MPC] bonds, lease obligations and inter‐fund loans will be used only when a dedicated ongoing revenue source is identified to pay the associated debt service obligations. This type of debt service will not exceed 10% of the 5‐year average of the General Fund’s ongoing operating revenue.
a. For FY 2014, debt service is 15% of the FY 2014 General Fund ongoing operating
revenue.
Lease obligations debt will only be used when a dedicated ongoing revenue source is identified to pay the service obligations. Sounds like the end of Clarkonomics.

There's even more in the City Council’s Financial Policies: Fiscal Planning and Budgeting as related to balancing special revenue funds when all projected ongoing revenue sources does not exceed all ongoing expenses. This is an outright evisceration of the sports subsidies at the baseball complex and arena.

Also, a return shout out to Casual Kenneth. The most concise way to make that point is from the Follow Your Money Budget Book Schedules.

Here's how the Glendale website describes budget schedules:
"The Schedules section is the heart of the budget document as an operating and financial plan. These schedules summarize the city's financial activities in a comprehensive, financial format."


Fund 1780 is on Page 3 of the PDF. It's a roll up of the City Sales Tax from Westgate and the Arena; the base rent (referred to as "Arena Base Team Fees"); and the per ticket surcharge (referred to as "Arena Parking Fees"); rental income; and miscellaneous revenue. FY 2011 Actual in column 2 must be an especially proud moment for the city. That's when they paid a $25MM Arena Management Fee to the NHL while the city collected a whopping $4.5MM in revenue. Columns 3 and 4 are an estimate and a budget amount, respectively. You can use the Follow Your Money revenue tool for FY12 to demonstrate that the estimated $4.75MM in "miscellaneous revenue" never actually appeared. Lastly, to study the issue comprehensively, you also have to account for the partially reimbursed expenses (EMS/Fire/Security) from Fund 1282.

Why is bending over backwards for the Coyotes stupid?

I think anyone would know different if they just looked at the figures. None of this is complicated or classified. Anyone with 15 minutes and a high school equivalency education can perform the calculations.

That's the thing about Westgate and the Arena, when the construction was funded by the Municipal Property Corp, a Special Revenue Fund was created to capture all sales taxes at the center to repay the bond debt. Here's how the city defines it in their budget:
Arena Special Revenue (Fund 1780): The Arena Special Revenue Fund tracks the revenues generated from Jobing.com Arena events and the surrounding Westgate City Center. It also tracks the operating expenditures associated with the arena renewal and replacement agreement that helps ensure the Jobing.com Arena stays modernized. Revenue collected in the fund includes team fees, parking fees and sales taxes. There is a transfer from this fund to the MPC debt service fund to pay the debt service related to the construction costs associated with the arena. Westgate City Center which opened in November 2006 already includes 2.8 million square feet of retail, lodging, restaurants, entertainment and office uses. Jobing.com Arena is home to the National Hockey League’s Phoenix Coyotes and also serves as a first-class venue for concerts, trade shows and other events.

That means no one has to guess how the arena and center are performing. The revenues generated are already separated. All you have to do is look them up. Glendale has something called "Follow Your Money" that makes it pretty easy to do.

From there, you can view Revenue by Fiscal Year; Budget Books; and Quarterly Financial Reports. For example, FY12 Revenue for Fund 1780: $2,001,914.17. From July 1, 2011-June 30, 2012, Jobing.com Arena and the Westgate center generated $2MM in sales tax revenue for the city. That's it.

You can run the same report for FY11. From July 1, 2010-June 30, 2011, Jobing.com Arena and the Westgate center generated $2,107,334.99 in sales tax revenue for the city. That's it.

Now, how about if we look at FY13 Year-to-Date numbers? That's July 1, 2012-Present. The NHL was locked out until January, so if the Coyotes were essential to sales activity at Westgate, we should see a decline in revenue. Here's the report: $3,738,393.40

Almost twice the sales tax activity from the previous two years when the Coyotes played a full season and playoffs. *NOTE* A portion of this increase is directly attributable to the sales tax increase implemented by the city. However, the .7% increase cannot account for the doubling of revenue. I posted a link to the Quarterly Financial Report the other day. There as a 53% increase in Fund 1780 revenues in the first half of FY13. That means during the lockout, Westgate and Jobing.com revenues went up considerably from the previous year when the team was playing.

In a vacuum, it is desirable to have an anchor tenant for an arena. In practice, the Phoenix Coyotes franchise doesn't move the needle at all. It is highly probable that the franchise ceasing to operate at the arena would have no measurable negative impact on sales activity in the center. In fact, based on FY13 actuals, Westgate may perform better without the team.

So does the team actually help the area?

"It would be devastating to our Westgate sector losing team" - Gary Sherwood

Really? Then why did the Westgate/Arena special revenue district have a 53% increase during the lockout? Page 5
And that didn't even include December receipts.

While we're at it, why was the arena able to post an operational profit in excess of $1MM without the team, even though the NHL was doing a poor job of programming the facility?

There is no direct evidence to support the suggestion that Coyotes have any positive impact on the economy. There is a mountain of direct evidence to support the suggestion that the Westgate Center and the Arena would provide an exponentially higher yield for the city without an NHL anchor tenant that requires a substantial subsidy to operate.

To justify any payment to the team, the city will either have to once again misrepresent essentially all actual data on the subject or attempt to replace actual data with Hockingesque forecasts.

There is literally no legitimate economic argument for the city to persist funding the Coyotes at any amount above $0. The team has provided nothing but losses for the city and it's not even an effective loss leader as the franchise fails to generate any significant indirect revenue.

Any prudent government body would listen to the NHL offer; subsequently analyze the RFPs; then provide the NHL an opportunity to match or exceed the best response. We'll see what Glendale does.

But the Hocking report said...

At a 53% increase, the evidence suggests that the Coyotes operate to the determent of the city's revenues. When there are hockey activities at the arena, it is displacing more valuable business. This is not uncharted territory. It's pretty much Econ 101 - Substitution/Displacement.

I realize this may be a shock to the system of those who have been bombarded with reports by the like of Thomas L Hocking (who again, it should be noted, is being sued for intentionally misrepresenting the economic benefits of sports operations at an arena).

I guess it comes down to some people will analyze the actual numbers and draw sound conclusions while others will prefer the moon beam projections provided by Hocking. Sports fanatics like to be told that the home team is making champagne flow from the facets of every home within a 100 mile radius of the arena or stadium. Pro sports teams are happy to oblige that fantasy by hiring consultants to produce inaccurate reports on benefits. Municipalities join in by holding up the report as gospel and then transferring large amounts of public funds to the franchise owner. This exists essentially everywhere. Glendale is a fascinating case because the numbers are so obvious and the losses so substantial that only a really ignorant or really dishonest person would suggest the team has any net benefit to the city.

 

[pacdunes]

what's he gonna post about when the coyotes leave?

 

[IPreferPi]

Finally decided to leave hockey and follow his religious views. Tough call between him and the Sharpie, however.

Nah, too busy making questionable decisions at the tattoo parlor:

 

[Howler Scores]

I am told that Renaissance Sports & Entertainment is hoping to work with the city in making the deal points public today.

However, if the city refuses to be transparent, RSE is prepared to take on that responsibility, i.e., they'll go public with the deal anyway

Can't help wondering how or if the Mayor's connection to John Kaites factors in all of this.

https://twitter.com/cmorganfoxaz

 

[Howler Scores]

@cmorganfoxaz

Here is an official release from RSE:*RENAISSANCE REQUESTS ARENA LEASE PROPOSAL BE SENT TO GLENDALE CITY COUNCIL; JULY 2ND “YES” VOTE WOULD KEEP COYOTES IN ARIZONAGLENDALE, ARIZ.

– The four-year saga surrounding Jobing.com Arena and the Phoenix Coyotes appears poised to reach a conclusion on July 2nd. Last night, Renaissance Sports & Entertainment Group (RSE) formally requested that the City of Glendale put to a vote of its City Council a 15-year arena management agreement between RSE and the City. Additionally, three Glendale members have reportedly asked for the agreement to be put to a vote.

The management agreement – which RSE requested be agendized for a special Council meeting set for July 2nd or 3rd – is a prerequisite of RSE’s purchase of the Phoenix Coyotes hockey team from the National Hockey League. The proposed deal takes into account the City’s financial challenges as well as RSE’s need to satisfy the NHL, financial institutions and its investors. Thus, the agreement balances an annual $15 million arena management fee with a series of revenue streams directed back to Glendale to defray the city’s costs. Just as importantly, the agreement keeps the Coyotes – the arena’s anchor tenant 41 nights a year – playing in Glendale.

Anthony LeBlanc, managing partner of the Renaissance group, emphasized the agreement’s comparative value against previous offers to buy the Coyotes and operate the arena. “The proposed agreement respects the City and Glendale’s taxpayers and creates a path to financial success for the arena, the team and our investors,” said LeBlanc. “Our deal represents the best value Glendale has had in an offer, and the most equity anyone has brought to the table in four years.

The sooner this deal comes before Council for approval, the sooner we can aim for the Coyotes winning a Stanley Cup and get the arena headed toward profitability. ”The revenue streams for Glendale negotiated within the RSE proposal include ticket surcharges on hockey and non-hockey events, parking proceeds, shared proceeds from naming rights and rent paid to the City for the Coyotes’ use of the arena 41 nights a year. Projections estimate that revenues back to the City should total between $8.5 and $11 million annually. That leaves the net financial impact of the arena on the City between $4 and $6.5 million annually. Glendale has budgeted $6.5 million to manage the arena this fiscal year. “There have been a series of suitors trying to buy the team and manage the arena during the past four years.

The Renaissance agreement is exponentially better than the two previous deals that nearly came to pass,” said LeBlanc. “The total cost of the arena management lease is tens of millions of dollars less than previous proposals. The net annual cost to the City is millions of dollars less. “I believe in this team, I believe in this deal and I believe in this City,” said LeBlanc. “That’s why Renaissance is willing to take on the risk of managing the Coyotes franchise and the Glendale arena. They’ve been money-losers in the past. But with leaner, smarter management, we have tremendous upside for the team, the City and the Westgate region. We absolutely will be successful here.”

tl.gd/n_1rl26fc

 

[Howler Scores]

Hey, Glendale: Please finish deal for Coyotes

If I’m tired of this story, I can’t imagine how the Coyotes’ players, staff and fans are feeling. They’ve been teased and tormented for four years now. They’ve endured court hearings and potential lawsuits and premature Gary Bettman news conferences.

They’ve put up with a cast of characters unlike anything we’ve seen in Arizona sports history: Jim Balsillie and Jerry Moyes, Jerry Reinsdorf, Elaine Scruggs and Ed Beasley, Matthew Hulsizer and the Goldwater Institute, Greg Jamison and Ice Edge Holdings, Darin Pastor and, of course, Bettman and his sidekick, Bill Daly.

All that’s missing is Gilligan and the Skipper. (The Goldwater Institute would play the part of Thurston Howell III, naturally).

http://www.azcentral.com/sports/coy...6hey-glendale-please-finish-deal-coyotes.html

 

[cobra427]

It could pass. If it were going to, why wouldn't they say so?

RT, I have been in many meetings with board members over issues that companies have to deal with where there is never agreement. But, when it comes time to vote, most people take the path of least resistance. I think the pro coyote members are forcing the fence sitters to step up and say no, in effect, squarely placing the blame and thus being responsible for the team leaving. People in general don't want to be blamed, and don't have enough guts to say "no" in a vote. Because of that, I think enough votes can be had for this to pass. Forget everything else, it is just human nature...

 

[rt]

Nah, too busy making questionable decisions at the tattoo parlor:

Head injuries are a heck of a thing. Yikes. Poor guy. Pudding for brains can't be fun.