Part XVI: Phoenix -- Money for Nothing

[MAROONSRoad]

The point I was trying to make is this: you typically don't pay a third party to manage their own business enterprise, where they are entitled to all of the profits (and or losses). You pay them to manage your business, where you are entitled to all of the profits (and or losses).

GHOST

 

[gollybass]

I think you are confusing Consolidated Net Earnings distributions with a legitimate Arena Management Service fee.

but dont any monies from that arena management fee that arent used go back to glendale?

Thing is, any profits that they make go back to COG

 

[Whileee]

but dont any monies from that arena management fee that arent used go back to glendale?

Thing is, any profits that they make go back to COG

And if you think Hulsizer is going to leave any money on the table for the COG, then I think you are mistaken.

The point of this "arena management fee" is obviously to replace the "operating loss reserve" in previous MOU's with Reinsdorf and IEH to subsidize Hulsizer and cover his losses up to $17 million (average) per year. Only in this case, instead of relying on a CFD to cover the losses, Glendale has agreed to do so directly. Disguising it as an "arena management fee" doesn't really pass the laugh test. A good lawyer would bring in evidence from previous negotiations and MOUs to show the obvious connection, including the absence of any "arena management fee" in previous MOUs with Reinsdorf or IEH. If it actually costs $18 million to manage the arena, why wasn't that included in previous MOUs, like the one with IEH? Doesn't IEH know that it costs $18 million to manage the arena? The answer is obvious... IEH had an "operating reserve account" to be funded by the CFD instead of the "arena management fee".

 

[OthmarAmmann]

The Coyotes put more bums in the seats than the combination of all non-sporting events at Jobbing AND US Airways.

Although the Coyotes numbers may be padded to a certain extent.

FWIW.... When the arena opened the free parking was used as a selling point to lure fans from the east side. Thinking was it would midigate the extra cost for fans driving that much farther rather than going downtown. It was always presumed by many the free parking would go away once Westgate development began (ie the parking garages).

The team did begin charging $10 per car midway into last season in the one lot east of the arena.

Also note that the when the lease was negotiated, the Arena and Westgate were all one combined entity. The lease, and all it's goodies was based on that. When Ellman and Moyes separated the two, that is when the lease suddenly became the subject of who was getting the raw end of it.

Thanks.

 

[MaskedSonja]

And if you think Hulsizer is going to leave any money on the table for the COG, then I think you are mistaken. The point of this "arena management fee" is obviously to replace the "operating loss reserve" in previous MOU's with Reinsdorf and IEH to subsidize Hulsizer and cover his losses up to $17 million (average) per year. Only in this case, instead of relying on a CFD to cover the losses, Glendale has agreed to do so directly. Disguising it as an "arena management fee" doesn't really pass the laugh test. A good lawyer would bring in evidence from previous negotiations and MOUs to show the obvious connection, including the absence of any "arena management fee" in previous MOUs with Reinsdorf or IEH. If it actually costs $18 million to manage the arena, why wasn't that included in previous MOUs, like the one with IEH? Doesn't IEH know that it costs $18 million to manage the arena? The answer is obvious... IEH had an "operating reserve account" to be funded by the CFD instead of the "arena management fee".

I agree.

A building where the annual amounts, already said by Scuggs to be in the 17 mil a year range, isn't going to suddenly drop to 10 or 12 million a year and 5 mil going back to CoG-that isn't happening. If anything it will probably be more than that on a yearly basis.

They are doing this with the feverent hope that in 5 years MH buys the building for 130 million, thus getting back 100 million up front payment-even though they've actually paid 197 million after 5 years-so after 5 years they are STILL 60 mil in the hole (and I'm have doubts whether he does it)

MH didn't get where he is in his business by "being nice"-MH knows this is a no lose situation for him.

 

[RR]

Although the Coyotes numbers may be padded to a certain extent.

Coyotes VP of Ticket Sales and Service David Burke participated in a roundtable Saturday and talked specifically about what the team is doing now and its future plans to get fans back. Listen to Part 2 of the broadcast for the Burke segment.

http://coyotes.azvibe.com/2010/12/18/kxxt-coyotes-roundtable/

Some highlights:
--Revenues up 38% over last year
--Deep discount and significant giveaway tickets have been scrapped this year.
--STH are receiving better price protection this year than last.
--Sales department grew its database by ~15,000 as a result of the Dale Earnhardt Jr. promotion.
--Been working with the Hulsizer Group for 2 months.
--Difference between Hulsizer and the other groups is it is going to be a "family" business.
--Hulsizer bringing in marketing experts.
--Team will cross-promote Coyotes with White Sox and Dodgers this spring.

 

[JetFan4Ever]

Coyotes VP of Ticket Sales and Service David Burke participated in a roundtable Saturday and talked specifically about the team is doing now and its future plans to get fans back. Listen to Part 2 of the broadcast for the Burke segment.

http://coyotes.azvibe.com/2010/12/18/kxxt-coyotes-roundtable/

Thanks for the link RR, I had to chuckle when I heard one of my favorite Canadian bands playing in the opening of part 2.

 

[Faltorvo]

As far as how they will pay the 17 million a year, is it not irrelevant if they can prove they would have to pay it anyway if the Coyotes left?

You could not be farther from the truth.

If those 43 hockey events disappear so will the associated costs of running those events, like hydro,ice making and maintenance and gawd knows what else I'm missing.

Insuring those events.

The so called $17 million cost will surely plummet.

 

[Killion]

Killion, this is the thing that gets me; as I mentioned in a previous post, they hardly even tried to disguise this deal. My long-held theory is that they have been trying to set the subsidies up through a CFD and Ellman and the Westgate folks said "we like having the Coyotes around, but you are out of your mind if you think we're going to pay that much to subsidize Hulsizer to keep them here." (No wonder Ellman sent a supportive letter... he's thinking "good to keep the Coyotes, even better that we don't have to pay for it; thanks Glendale.") When the CFD cratered, Hulsizer and Glendale tried to get the NHL to lower the purchase price as one option. "Nope", says Bettman. Finally, with the clock winding down they said "screw it", we'll just try to disguise the subsidies (the amounts of which were probably already part of the "oral conceptual agreement") as parking rights and arena management.

I agree....

I wonder what Gary Bettman's real agenda for keeping the Coyotes in Glendale? After the council meeting he looked like" what the f@#k just went on" look on his face.

Who holds the Arena Bonds?. It simply has to be an NHL insider and or friends of the National Hockey League, and it wasnt confusion on his face, it was consternation, a panic attack that the leagues mechanizations are becoming far too transparent for their own liking let alone good. This is one Canary he was unable to Swallow in the Coal Mine before it broke into an alarming & embarrassing song.

To me, it is all really distasteful, but I guess that's all part of the "Business of Hockey".

The BOH is far more entertaining than the on-ice activities by a country mile, always have been & promise to be so for decades to come, the tickets free (or as Mark Knopfler coined & Fugu was having fun with, "Money for Nothing & your Team for Free").

The right to realize arena revenues is consideration for the payment operational expenses. The additional city payment of $17MM per year for "Arena Management Services" is indefensible. Refunding the city when the Arena Management Fee is greater than the Operational Expenses does not constitute legitimacy of the grossly disproportionate payment of $17MM on average per year.

Hudsucker Proxy.

 

[AllByDesign]

Hudsucker Proxy.

Nice reference!

I have one idea..... O

 

[MaskedSonja]

Coyotes VP of Ticket Sales and Service David Burke participated in a roundtable Saturday and talked specifically about what the team is doing now and its future plans to get fans back. Listen to Part 2 of the broadcast for the Burke segment.

http://coyotes.azvibe.com/2010/12/18/kxxt-coyotes-roundtable/

Some highlights:
--Revenues up 38% over last year
--Deep discount and significant giveaway tickets have been scrapped this year.
--STH are receiving better price protection this year than last.
--Sales department grew its database by ~15,000 as a result of the Dale Earnhardt Jr. promotion.
--Been working with the Hulsizer Group for 2 months.
--Difference between Hulsizer and the other groups is it is going to be a "family" business.
--Hulsizer bringing in marketing experts.
--Team will cross-promote Coyotes with White Sox and Dodgers this spring.

Not to be a Debbie Downer....but A couple of guestions....


What were it's Revenues last year (and more imporantly, what "constitutes" the revenues)

Sales Dept-grew by 15,000 what?, is it people who bought tickets, or people who expressed interest in buying tickets, packages, whatever and asked for information (IE were there 15000 more seats sold because of the Jr Promotion-which I'll admit on this one got some good press, good for them )

Hulz-"family" I really get the heebie jeebies on that.....(wonder if IEH is considered "family, and yes I'm still holding onto that theory )

Cross Promote with White Sox/Dodgers? A Chicago and an LA Team? Why not cross promote with the Cards, Suns, Diamondbacks?


EDIT: Also, colour me confused, but wayyy back in Sept wasn't it announced/revealed about Hulz that he had been working with the Yotes since Mid Summer? 2 Months, since Late October? That doesnt' seem to wash....

Just want some clarification(I don't have a horse in this race)

 

[RR]

Not to be a Debbie Downer....but A couple of guestions....


What were it's Revenues last year (and more imporantly, what "constitutes" the revenues)

Assume ticket revenues.

Sales Dept-grew by 15,000 what?, is it people who bought tickets, or people who expressed interest in buying tickets, packages, whatever and asked for information (IE were there 15000 more seats sold because of the Jr Promotion-which I'll admit on this one got some good press, good for them )

Potential sales database grew by 15,000 from Earnhardt promotion. Sales department was able to capture names and e-mail addresses of folks they can now market to.

Hulz-"family" I really get the heebie jeebies on that.....(wonder if IEH is considered "family, and yes I'm still holding onto that theory )

Look around sports and you find lots of families that own sports teams.

Cross Promote with White Sox/Dodgers? A Chicago and an LA Team? Why not cross promote with the Cards, Suns, Diamondbacks?

Sox and Dodgers spring training facilities in Glendale.

EDIT: Also, colour me confused, but wayyy back in Sept wasn't it announced/revealed about Hulz that he had been working with the Yotes since Mid Summer? 2 Months, since Late October? That doesnt' seem to wash....

Just want some clarification(I don't have a horse in this race)

Not sure when Hulsizer entered the picture, but sounds like he started working closely with sale and marketing in October.

 

[Fugu]

Ruh Roh. Almost time for another thread.


Hudsucker Proxy?

I think TL had a good one earlier. 19th thread is name is reserved for kdb.

 

[LadyStanley]

Ruh Roh. Almost time for another thread.


Hudsucker Proxy?

I think TL had a good one earlier. 19th thread is name is reserved for kdb.

Inmates running the asylum

 

[RR]

Inmates running the asylum

"$0 down, $0 a month, 0% interest"

 

[armpit]

someone smarter than me who watched 60 minutes tonight please chime in...

in essence, city's and states are in massive debt...bond markets potential for default...big wakeup call coming in next twelve months...

how the bleep does this pass in glendale?

 

[WpgJets]

I'm wondering not just money issues but the people in glendale.

1) how many in that meeting were actually from glendale ? Afew were from scottsdale and phoenix and even further away as Edmonton to support the team and i really didn't hear anyone that was actually from the city itself

2) Is it even right for Glendale to support a millionaire ? from SBNation: http://sbn.to/hCmrio it appears that the city is having budget issues and are laying people off to save money so how does keeping a hockey franchise in Glendale help out when people are losing jobs ?

Wouldn't putting that 197million into helping people out improve the economy in Glendale better ?

I've been talking to afew people in glendale for the last couple of days and they say its best for the long term and i cannot in my mind believe it'll be best for the city when the team hasn't made profit in 15yrs. Talk of Moyes screwing the team has come up but i cannot see that being a factor of 15years of losses.

 

[WpgJets]

someone smarter than me who watched 60 minutes tonight please chime in...

in essence, city's and states are in massive debt...bond markets potential for default...big wakeup call coming in next twelve months...

how the bleep does this pass in glendale?

Thats a good question for a city's mayor that admitted the city had near a billion in debt.
You'd think they'd allow the team to relocate to save money then give a big handout to keep it.

 

[Coach]

"Time for Goldwater to join the Party"

 

[Lorenzo1000]

Just watched the 60 minutes story online. The analyst says that within 12 months there will be 100's of BILLIONS of dollars in municipal bonds being defaulted on. Many states are on life support.

AZ sold it's capitol building, supreme court building amongst others to private investors and is leasing the buildings back. Scary stuff indeed.

 

[OthmarAmmann]

someone smarter than me who watched 60 minutes tonight please chime in...

in essence, city's and states are in massive debt...bond markets potential for default...big wakeup call coming in next twelve months...

how the bleep does this pass in glendale?

Glendale is in better shape than the worst cities and states in the nation. For now anyway.

 

[TheLegend]

"Time for Goldwater to join the Party"

If they end up being the wallflower would anyone care?

 

[WpgJets]

Just watched the 60 minutes story online. The analyst says that within 12 months there will be 100's of BILLIONS of dollars in municipal bonds being defaulted on. Many states are on life support.

AZ sold it's capitol building, supreme court building amongst others to private investors and is leasing the buildings back. Scary stuff indeed.

Link ? i'd love to read that article.

 

[Whileee]

Glendale is in better shape than the worst cities and states in the nation. For now anyway.

Are they trying to join the club?

 

[Coach]

If they end up being the wallflower would anyone care?

Well based on attendance figures not many. However, isn't it the low attendance figures and poor fan support that has brought us to this point.