Part XVII: Phoenix -- This Thread Title Available For Lease

mouser · Dec 20, 2010

On with the next installment.

billycanuck · Dec 20, 2010

Arizona Coyotes

Team name to be changed to Arizona Coyotes. New logo maybe?
http://slapshot.blogs.nytimes.com/2010/12/18/take-coyotes-off-list-of-teams-likely-to-move/

ALA YotesPhan · Dec 20, 2010

Thread Title:
Glendale approves new Lease Thread Title

tarheelhockey · Dec 20, 2010

billycanuck said:
Team name to be changed to Arizona Coyotes. New logo maybe?
http://slapshot.blogs.nytimes.com/2010/12/18/take-coyotes-off-list-of-teams-likely-to-move/

Why?

MHX · Dec 20, 2010

Money for Nothing was short lived...

mouser · Dec 20, 2010

tarheelhockey said:
Why?

Probably more a nod to Glendale than anything else on the name change. The local NFL team did the same change a few years back and the MLB team has always been Arizona.

Coach · Dec 20, 2010

ALA YotesPhan said:
Thread Title:
Glendale approves new Lease Thread Title

Goldwater asks for paperwork regarding Lease to new thread. Wondering if COG tax money was involved.

AllByDesign · Dec 20, 2010

billycanuck said:
Team name to be changed to Arizona Coyotes. New logo maybe?
http://slapshot.blogs.nytimes.com/2010/12/18/take-coyotes-off-list-of-teams-likely-to-move/

Quote from the article

â€œI donâ€™t expect Goldwater will sue and win,â€ Hulsizer told The Arizona Republic.

So he expects them to sue?

tarheelhockey · Dec 20, 2010

mouser said:
Probably more a nod to Glendale than anything else on the name change. The local NFL team did the same change a few years back and the MLB team has always been Arizona.

Got it. After digging a bit, the rationale does make sense. Both appeasing Glendale and offering an opportunity to re-brand.

kdb209 · Dec 20, 2010

Kismet · Dec 20, 2010

I am in agreement with those in agreement that the biggest legal hurdle in the agreement is the funnelling of operating expenses charading as â€œArena Management Feesâ€. But I am hoping someone here can clear up a question I have on the parking arrangement. I asked a few days ago, but I havenâ€™t had a response. So, now that Iâ€™ve stuffed myself with enough cookies to fill the crushing loneliness and despair, I am willing to try again!

Section 8.1.2 of the draft agreement lists the not less than 5,500 parking spaces as the â€œCity Parking Areaâ€

Section 8.1.5 designates â€œnot less than 500 parking spaces of the City Parking Area as the Team Parking Area, which shall be reserved only for the Team, the Arena Manager and their designees.â€

Section 8.1.1 seems to exclude the Team Parking Area from the Arena Parking Rights

Section 9.9.1 shows that the $100,000,000 payment is for the Arena Parking Rights

So, here it is...are they paying for the rights to 5,500 spots or 5,000?

CGG · Dec 20, 2010

Kismet said:
Section 8.1.2 of the draft agreement lists the not less than 5,500 parking spaces as the â€œCity Parking Areaâ€

Section 8.1.5 designates â€œnot less than 500 parking spaces of the City Parking Area as the Team Parking Area, which shall be reserved only for the Team, the Arena Manager and their designees.â€

Section 8.1.1 seems to exclude the Team Parking Area from the Arena Parking Rights

Section 9.9.1 shows that the $100,000,000 payment is for the Arena Parking Rights

So, here it is...are they paying for the rights to 5,500 spots or 5,000?

Sounds a lot like the city only gets 5,000 spaces. 500 parking spots for the team? So every player and front office staff person gets about 7 spots each. Good deal. In theory that amount of parking spaces at a suburbuan Glendale mall is worth about $11 million. Sweet deal for Hulzy to get that for free!!!

Coach · Dec 20, 2010

Kismet said:
I am in agreement with those in agreement that the biggest legal hurdle in the agreement is the funnelling of operating expenses charading as â€œArena Management Feesâ€. But I am hoping someone here can clear up a question I have on the parking arrangement. I asked a few days ago, but I havenâ€™t had a response. So, now that Iâ€™ve stuffed myself with enough cookies to fill the crushing loneliness and despair, I am willing to try again!

Section 8.1.2 of the draft agreement lists the not less than 5,500 parking spaces as the â€œCity Parking Areaâ€

Section 8.1.5 designates â€œnot less than 500 parking spaces of the City Parking Area as the Team Parking Area, which shall be reserved only for the Team, the Arena Manager and their designees.â€

Section 8.1.1 seems to exclude the Team Parking Area from the Arena Parking Rights

Section 9.9.1 shows that the $100,000,000 payment is for the Arena Parking Rights

So, here it is...are they paying for the rights to 5,500 spots or 5,000?

Good Question, it reads like 5,000 arena spots + 500 team spots = 5500 total spots but i'm not sure.

goyotes · Dec 20, 2010

Please correct me if I am wrong, but isn't the $17M going to the ownership group for operating the arena offset by the operating costs? If my understanding is correct, does anyone know what the operating costs are annually?

My point is that the $17M may be more defensible if it is offset with the risks undertaken that would include the operating expenses. Am I totally off base here, or is it just not clear from the lease documents? I have read media reports that could be interpreted as including the operating expenses as a leasee responsibility, and media reports making the $17M sound like a pure payment for providing arena operation managment but the costs all still fall on the arena owner Glendale.

CGG · Dec 20, 2010

goyotes said:
Please correct me if I am wrong, but isn't the $17M going to the ownership group for operating the arena offset by the operating costs? If my understanding is correct, does anyone know what the operating costs are annually?

My point is that the $17M may be more defensible if it is offset with the risks undertaken that would include the operating expenses. Am I totally off base here, or is it just not clear from the lease documents? I have read media reports that could be interpreted as including the operating expenses as a leasee responsibility, and media reports making the $17M sound like a pure payment for providing arena operation managment but the costs all still fall on the arena owner Glendale.

I believe you are wrong, so I will correct you. Let's assume for a second that Scruggy is correct and the operating costs on the arena are $17 million. Let's ignore the basic idea that those costs will decrease if and when the Coyotes go away.

This lease calls for the city to:
- pay $17 million a year for "arena management" to Hulzy
- not pay the operating costs on the arena of (let's assume for now) $17 million
- give up all rights to revenue from non-hockey events at the arena

So, MH gets to book acts at the arena, pocket the revenue, pay the operating cost, and pocket a $17 million fee.

If the Coyotes left, they could:

(a) manage the arena themselves and keep all non-hockey revenue, then pay for the operating costs themselves, or
(b) pay someone a nominal fee (around $1 million) to manage the arena and that firm would keep most of the revenue while covering most of the operating costs

The city is not only paying $17 million to Hulzy, they are also giving up rights to any and all revenues from non-hockey events (with a few exceptions that I'm sure someone will point out). In a sense they are double-paying Hulzy to manage the arena - he keeps revenue generated, and he keeps $17 million in management fees. It is quite easy to prove that outside parties would be willing to manage the arena for much less, and/or keep the revenues and cover the operating costs themselves.

The comments about the $17 million fee offsetting the operating costs of the arena are disingenuous at best, and deliberately misleading. Attempting to confuse people. Remember when MH put up $25 million and the city announced it had somehow escaped from having to pay $25 million in losses? Yeah, that wasn't exactly accurate either. The COG is grasping at straws. They can't actually explain how this benefits them, so they throw a whole bunch of numbers into their fact sheets hoping everyone will fall for it. I don't think it worked for Goldwater.

goyotes · Dec 20, 2010

CGG said:
I believe you are wrong, so I will correct you. Let's assume for a second that Scruggy is correct and the operating costs on the arena are $17 million. Let's ignore the basic idea that those costs will decrease if and when the Coyotes go away.

This lease calls for the city to:
- pay $17 million a year for "arena management" to Hulzy
- not pay the operating costs on the arena of (let's assume for now) $17 million
- give up all rights to revenue from non-hockey events at the arena

So, MH gets to book acts at the arena, pocket the revenue, pay the operating cost, and pocket a $17 million fee.

If the Coyotes left, they could:

(a) manage the arena themselves and keep all non-hockey revenue, then pay for the operating costs themselves, or
(b) pay someone a nominal fee (around $1 million) to manage the arena and that firm would keep most of the revenue while covering most of the operating costs

The city is not only paying $17 million to Hulzy, they are also giving up rights to any and all revenues from non-hockey events (with a few exceptions that I'm sure someone will point out). In a sense they are double-paying Hulzy to manage the arena - he keeps revenue generated, and he keeps $17 million in management fees. It is quite easy to prove that outside parties would be willing to manage the arena for much less, and/or keep the revenues and cover the operating costs themselves.

The comments about the $17 million fee offsetting the operating costs of the arena are disingenuous at best, and deliberately misleading. Attempting to confuse people. Remember when MH put up $25 million and the city announced it had somehow escaped from having to pay $25 million in losses? Yeah, that wasn't exactly accurate either. The COG is grasping at straws. They can't actually explain how this benefits them, so they throw a whole bunch of numbers into their fact sheets hoping everyone will fall for it. I don't think it worked for Goldwater.

So the operating costs do offset what the Owner gets as a "fee". That was my question. Thanks for answering it. The Goldwater Institutes potential concerns aside, my only point was that the owner doesn't pocket a fee AND the city still pays the operating expenses. He gets a fee, and takes the risk the fee will more than offset the expenses of arena management. With every new event the operating costs increase marginally. I wonder if anyone knows what the "nut" is just to keep the building operational. I have heard wide ranging numbers from less than $10M up to $18M. If we are talking about less than $5 - $10M a year, I'm not so sure this is the GI's best argument. It seems buying the right to sell parking for $100M is what people are focused on down here.

Faltorvo · Dec 20, 2010

CGG said:
Sounds a lot like the city only gets 5,000 spaces. 500 parking spots for the team? So every player and front office staff person gets about 7 spots each. Good deal. In theory that amount of parking spaces at a suburbuan Glendale mall is worth about $11 million. Sweet deal for Hulzy to get that for free!!!

This should give hulz about 300/350 premium spots to lease out or package in with suites. Dirty.

Interesting 500 spots x 60 events a year over the 30 years for the term of the Bond,

WOW!!! 900,000 lost opportunities to charge and you gotta believe these would have been in the premium $20 range in the lots.

CGG · Dec 20, 2010

goyotes said:
So the operating costs do offset what the Owner gets as a "fee". That was my question. Thanks for answering it. The Goldwater Institutes potential concerns aside, my only point was that the owner doesn't pocket a fee AND the city still pays the operating expenses. He gets a fee, and takes the risk the fee will more than offset the expenses of arena management. With every new event the operating costs increase marginally. I wonder if anyone knows what the "nut" is just to keep the building operational. I have heard wide ranging numbers from less than $10M up to $18M. If we are talking about less than $5 - $10M a year, I'm not so sure this is the GI's best argument. It seems buying the right to sell parking for $100M is what people are focused on down here.

The real barometer should be what someone else would be willing to sign up for to manage the arena. $1 million a year and the city keeps revenue? Do it for free but the manager keeps the revenues and assumes the operating cost? Does COG know what the going rate is for an arena like this? Places like Tulsa and Kansas City would be good benchmarks. But of course they just volunteered to pay MH $17 million for this. I'd love to see how they try to defend it.

Kismet · Dec 20, 2010

CGG said:
Sounds a lot like the city only gets 5,000 spaces. 500 parking spots for the team? So every player and front office staff person gets about 7 spots each. Good deal. In theory that amount of parking spaces at a suburbuan Glendale mall is worth about $11 million. Sweet deal for Hulzy to get that for free!!!

It sounds like 5,000 to me, too...which doesn't make any of this prettier!

The "Fact" sheet informs us "Glendale will purchase the right to charge for parking from the demand created by the new arena manager and the Coyotes. The fee associated with this demand will generate more than $200 million over the term of the agreement."

At the Meeting, Beasley also suggested they had to show revenues of double the amount to get the bonds.

What is required to prove that the parking payment is not disproportionate...that they can break even or that they will see a 100% profit?

Jesus Christ Horburn · Dec 20, 2010

AllByDesign said:
Quote from the article

So he expects them to sue?

Personally, I'm more interested in seeing what happens if Goldwater decides to sue/challenge/injunct/whatever at all.

What is the timeline like for these kinds of things? Days, weeks, months?

If this thing goes past January 1st and and there's still no end in sight (or at least not a guaranteed end - meaning there's a relatively good chance Goldwater might win), what would the NHL's course of action be?

My feeling is that after Jan. 1st, the rules of the game will have have changed. Given that the NHL will finally be allowed to talk to out-of-town interested desiring to relocate the team, we'll be able to finally be able to gauge how committed they are to keeping them in Glendale.

Kismet · Dec 20, 2010

Faltorvo said:
This should give hulz about 300/350 premium spots to lease out or package in with suites. Dirty.

Ah, but 8.1.1 does attempt to shuttle that money back to the City..."All revenues, if any, received by the Arena Manager or the Team arising out of the use of the Team Parking Area shall be retained by or remitted to the City in accordance with procedures mutually agreed to by the Team and the City."

But, if they're suite/parking bundles, I s'pose Hulzy can argue the parking was thrown in for free.

Faltorvo · Dec 20, 2010

Kismet said:
Ah, but 8.1.1 does attempt to shuttle that money back to the City..."All revenues, if any, received by the Arena Manager or the Team arising out of the use of the Team Parking Area shall be retained by or remitted to the City in accordance with procedures mutually agreed to by the Team and the City."

But, if they're suite/parking bundles, I s'pose Hulzy can argue the parking was thrown in for free.

Procedures mutually agreed to by the team and city

Anyone know what those are?

goyotes · Dec 20, 2010

Running Riot said:
Personally, I'm more interested in seeing what happens if Goldwater decides to sue/challenge/injunct/whatever at all.

What is the timeline like for these kinds of things? Days, weeks, months?

If this thing goes past January 1st and and there's still no end in sight (or at least not a guaranteed end - meaning there's a relatively good chance Goldwater might win), what would the NHL's course of action be?

My feeling is that after Jan. 1st, the rules of the game will have have changed. Given that the NHL will finally be allowed to talk to out-of-town interested desiring to relocate the team, we'll be able to finally be able to gauge how committed they are to keeping them in Glendale.

I could be proven wrong, but from what I hear, this is low on the list for the GI. I believe if they were serious, they would move to stop the City from selling the bonds which means they will move quickly. Otherwise, most people will look at a GI suit after the bonds are sold are more grandstanding since they took no real effort to avoid the "tax" that will be imposed by repayment of the bond obligations. I'm not saying there will not be more sabre rattling before the ink dries on a sale of the team, but the GI has their hands pretty full right now with immigration issues, and Obamacare.

Kismet · Dec 20, 2010

Faltorvo said:
Procedures mutually agreed to by the team and city

Anyone know what those are?

Envelopes of cash left in the City's free suite(s)?

kdb209 · Dec 20, 2010

Faltorvo said:
Procedures mutually agreed to by the team and city

Anyone know what those are?

No - but it would just depend on who is actually collecting the revenue.

If it is collected by CoG parking operations, it is retained by the City.

If it is collected by the team or the Arena Manager, it is remitted to the City.

Either way, if there is any explicit charge for the use of those spots, the revenues go back to CoG.

They just haven't formally spelled out the process - but the obligation is there.

If there is any dispute over what the revenue is, it goes to arbitration.

Part XVII: Phoenix -- This Thread Title Available For Lease

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