Phoenix CII: Oh, the pain the pain

[Fugu]

well yes, technically, they never had 50% cash in unless you count FIG money as cash in, and then you have to consider LOC usage as a replacement for FIG. Or maybe you discount the 85M deferred loan, and then they did in fact have 50% cash (barely) against the remaining 85M purchase price, and the FIG loan was funding the other 50% of the purchase and operating costs on paper.

wait, do they still owe 85M to the NHL?

Yes. That's a five year deferred note.

50%? I'm thinking 10% or less.... so how is that an acquisition?

Even if it's an assumption of debt as some have postulated, you have to have enough net worth to "assume" debt, and then a way to pay it back.

So maybe that's where COG money comes in. That's what they're using to pay their debt; NHL throwing in that $18 MM per year in revenue sharing, and then whatever actual revenues they can garner.

This is what I mean by IA not being willing to renegotiate because they cannot renegotiate. They don't have any other source of money.

 

[Howler Scores]

The schedules aren't made overnight. They take several weeks, perhaps even months, to do. While there may be 41 days open for the Coyotes, they won't all work for them. There is a knock-on effect for almost every other team if you change just a few dates. This is because you have check that all their schedules still work and follow the rules, like a team can't play three days in a row.

The article suggested that arena football fills in potential dates. The season ends a month before the NHL preseason. It's already rare when the Suns and Coyotes play on the same night. Arenas like Staples can have an NHL and NBA game on the same day. I am sure the Suns can do it. Their willingness will depend if it helps them get a new arena down the road.

I don't believe it's too late to play downtown.

http://mobile.nytimes.com/2012/05/1...ers-and-kings-in-playoffs.html?referrer=&_r=0

 

[danishh]

Yes. That's a five year deferred note.

50%? I'm thinking 10% or less.... so how is that an acquisition?

Even if it's an assumption of debt as some have postulated, you have to have enough net worth to "assume" debt, and then a way to pay it back.

So maybe that's where COG money comes in. That's what they're using to pay their debt; NHL throwing in that $18 MM per year in revenue sharing, and then whatever actual revenues they can garner.

This is what I mean by IA not being willing to renegotiate because they cannot renegotiate. They don't have any other source of money.

what i'm saying is that if you disregard the 85M note, the 'purchase price' that needs 50% cash to be met is 85M, so it's plausible that gosbee + friends put in 42.5M. If that's not how they did it, then the FIG money counted as part of the 50%, so in effect FIG owned the team, but the NHL allowed IA to restructure with the LOC, after the purchase, so while IA never had 50% in the game, at purchase time IA + FIG did.


Whether they have any money to run the team with a renegotiated AMF, i have no clue. It really depends what the city is looking for, how much they're actually losing on operations, etc. While it's true that the CoG money was going straight to FIG to satisfy their loan, FIG is gone now, so maybe they can work it. Leblanc has been crowing about how well everything is going (at least he was before last week).

 

[JimAnchower]

The article suggested that arena football fills in potential dates. The season ends a month before the NHL preseason. It's already rare when the Suns and Coyotes play on the same night. Arenas like Staples can have an NHL and NBA game on the same day. I am sure the Suns can do it. Their willingness will depend if it helps them get a new arena down the road.

I don't believe it's too late to play downtown.

http://mobile.nytimes.com/2012/05/1...ers-and-kings-in-playoffs.html?referrer=&_r=0

The Rattlers fit their around available dates after the Suns and other events get first dibs. Before starting a schedule where more than one NHL/NBA team is in the same arena, each team will figure out what 50-60 days they want their league to schedule their games. So they have to work with their co-tenant to figure how those dates will fall. Plus they have to work around already scheduled events, like concerts, ice shows, etc. So now the Coyotes would have work around the remaining available dates. Even if the Suns and Coyotes don't play at home on the same night, there could be other events either booked or reserved. Maybe it is an issue for 10-12 days, but that would cause issues all over the place.

 

[Whileee]

As many on this board have predicted, the Coyotes have now decided to throw up the "save us from ourselves" defense. According to Bailey, aside from the spurious "conflict of interest" issue, the city is claiming that the Coyotes are "bad actors" and so, therefore, the deal should be voided. Is the City's allegation fraud in the inducement, material misrepresentation, or some criminal conduct???? No, it is basically that the Coyotes got too good a deal so that the deal is not in the "public's interest".

Gee, I thought that City Council members and city staff, like the manager and city attorney for example, are the individuals charged with the fiduciary duty to protect the City's interest. I didn't know a private business needed to consider what is allegedly in the public's interest when doing a business deal with a municipality.

It sort of rings of :

Bailey: "You see judge...um...we're really stupid. We have a stupid group of city council members, who got really stupid advice from our paid professional staff, and made a really stupid deal which means the Coyotes got too good a deal, which isn't in the public's best interest. So....throw us bone okay? Save us from ourselves. Let us terminate this 15 year deal 13 years early because we all know if we hadn't been smoking something illegal, none of this would have ever happened. Come on judge, here's even a case not on point but kinda, sorta, stands for the proposition that contracts can be terminated because bad things happened during the negotiations."

Court: "So you want me to enter an order terminating a $225M deal after 2 years because its a bad deal and the city council was stupid for voting in favor?"

Bailey: "Bingo!"

Note to the world...never, ever do business with the City of Glendale if this is their official position on government contracts they enter in to.

To get to the back end quickly on this. If the court enters and injunction and maintains the status quo, which I personally feel is the most likely outcome, the City of Glendale must continue to pay until the matter is resolved on the merits. Under that scenario, the Coyotes have won, it is just a matter of how much more they win.

I see relocation of the Coyotes in 3 years. I think it is 50/50 whether the relocation is within, or outside of Arizona, however.

The argument is that the deal was approved by 4 council members who were influenced with advice from City of Glendale employs who subsequently received employment by the firm that got the $225 million contract.

If this gets to court, I think a decent lawyer could build a fairly compelling narrative.

 

[Howler Scores]

The Rattlers fit their around available dates after the Suns and other events get first dibs. Before starting a schedule where more than one NHL/NBA team is in the same arena, each team will figure out what 50-60 days they want their league to schedule their games. So they have to work with their co-tenant to figure how those dates will fall. Plus they have to work around already scheduled events, like concerts, ice shows, etc. So now the Coyotes would have work around the remaining available dates. Even if the Suns and Coyotes don't play at home on the same night, there could be other events either booked or reserved. Maybe it is an issue for 10-12 days, but that would cause issues all over the place.

Agree to disagree. The AFL schedule came out last December. Plenty of time to work them in. Just thought it was unusual to mention them as an issue. Staples has 3 pro teams plus concerts and events. They work it out alright.

 

[Glacial]

So did anyone put any cash into this acquisition?

The NHL basically suspended any and all limits and requirements they've had in place for acquisitions (<50% financed).

That only means one thing. They still own the team.

If this is true, it means Leblanc is just putting on a show for the public and nothing he says is relevant and the NHL's decision come the BoG meeting (well, they may decide on the courses of action then, to be put in play post-hearing) and after the court hearing will be the real forces directing the Coyotes' course from here on.

 

[knorthern knight]

The argument is that the deal was approved by 4 council members who were influenced with advice from City of Glendale employs who subsequently received employment by the firm that got the $225 million contract.

If this gets to court, I think a decent lawyer could build a fairly compelling narrative.

I remember Yukon Joe's anecdote about merely getting the case into court, and then stuff happens. I think that Glendale's biggest club over the NHL is the threat of discovery of the inner workings of the Coyotes+NHL over the past few years. While Glendale might not have a winning case, the NHL might prefer caving and relocating versus having their dirty laundry hung out for public display.

 

[Whileee]

I remember Yukon Joe's anecdote about merely getting the case into court, and then stuff happens. I think that Glendale's biggest club over the NHL is the threat of discovery of the inner workings of the Coyotes+NHL over the past few years. While Glendale might not have a winning case, the NHL might prefer caving and relocating versus having their dirty laundry hung out for public display.

That, plus the fact that the Coyotes and the NHL probably don't know how strong their legal case is, and probably can't afford the risk and time to find out.

I'm not sure why anyone would take seriously the suggestion that the Ice Idiots would have a vapor of a hope of owning the Coyotes in another lucrative market. They will be pushed out in any relocation by the NHL in favor of a serious owner.

 

[Fugu]

what i'm saying is that if you disregard the 85M note, the 'purchase price' that needs 50% cash to be met is 85M, so it's plausible that gosbee + friends put in 42.5M. If that's not how they did it, then the FIG money counted as part of the 50%, so in effect FIG owned the team, but the NHL allowed IA to restructure with the LOC, after the purchase, so while IA never had 50% in the game, at purchase time IA + FIG did.


Whether they have any money to run the team with a renegotiated AMF, i have no clue. It really depends what the city is looking for, how much they're actually losing on operations, etc. While it's true that the CoG money was going straight to FIG to satisfy their loan, FIG is gone now, so maybe they can work it. Leblanc has been crowing about how well everything is going (at least he was before last week).

The team had as debt both the NHL's $85 MM, and then the other $80 MM from FIG (though that figure was claimed to be as high as $120 MM initially).

So the NHL swapped out its ownership of the Coyotes (acquired for $140 MM from BK), plus its losses by getting FIG money, and "lending" the buyers $85 MM of NHL money.

That puts us at roughly $165 MM of outright debt, plus closing costs (if any).

The Gosbee et al money, whatever the actual figure, was their first year working capital-- their stake.

They assumed $170 MM of debt (100% of team value), and put in maybe $40 MM of cash towards operating costs. (If that figure is true.)

They need every penny of the COG money to finance that debt (LOC vs FIG now), even without needing to touch the NHL's loan.

They've lost nearly $35 MM to-date, so they're in the red on the operating costs side too.

 

[goyotes]

The argument is that the deal was approved by 4 council members who were influenced with advice from City of Glendale employs who subsequently received employment by the firm that got the $225 million contract.

If this gets to court, I think a decent lawyer could build a fairly compelling narrative.

I understand that is the 38-511 argument. Of course, the current city manager said two days ago that Frasoni had nothing to do with the arena deal, so that would be an amazing turn of affairs, but we will see I suppose. My comment was directed towards the new theory that the deal was not in the public's interest. The basis has seemed to morph even this week. I will wait to see the smoking gun that puts any former city, now Coyote employee, as "substsntially" involved in negotiations. I have seen nothing thus far, but Glendale says they have more evidence. Time will tell.

 

[goyotes]

I remember Yukon Joe's anecdote about merely getting the case into court, and then stuff happens. I think that Glendale's biggest club over the NHL is the threat of discovery of the inner workings of the Coyotes+NHL over the past few years. While Glendale might not have a winning case, the NHL might prefer caving and relocating versus having their dirty laundry hung out for public display.

Do you really think Glendale wants its inter workings, with all the executive sessions and backroom dealings, exposed through discovery? I think that sword cuts both ways my friend.

 

[danishh]

Do you really think Glendale wants its inter workings, with all the executive sessions and backroom dealings, exposed through discovery? I think that sword cuts both ways my friend.

that would seem to hurt the pro-yotes council members and departed councilors and staff more than the current iteration, would it not?

 

[Whileee]

I understand that is the 38-511 argument. Of course, the current city manager said two days ago that Frasoni had nothing to do with the arena deal, so that would be an amazing turn of affairs, but we will see I suppose. My comment was directed towards the new theory that the deal was not in the public's interest. The basis has seemed to morph even this week. I will wait to see the smoking gun that puts any former city, now Coyote employee, as "substsntially" involved in negotiations. I have seen nothing thus far, but Glendale says they have more evidence. Time will tell.

38-511 doesn't require staff to be "involved in negotiations", but rather they could have been substantially involved in "securing" the contract. At least that is how I understand it. Without much case law, I suppose it would be open to some interpretation, which is likely where a pattern of behavior, linkages, communications, blocs, etc. would come into the narrative.

As has been pointed out by others, just as the Coyotes have used a bit of a "shot gun" approach to their suit, I would think that the CoG is going to prepare a full-throated defense that brings in a range of issues and evidence for the court to consider.

 

[CasualFan]

That, plus the fact that the Coyotes and the NHL probably don't know how strong their legal case is, and probably can't afford the risk and time to find out.

That doesn't sound right. The team and league doesn't need to wait for the filings. I'm sure Tindall didn't withhold any details. They already know if there is something potentially problematic out there. Or potentially more problematic than what's already occurred, I should say.

 

[Killion]

that would seem to hurt the pro-yotes council members and departed councilors and staff more than the current iteration, would it not?

It would indeed, and with recalled Council Member Sherwood, the guy who drove this bus over the cliff in pushing the deal through in 2013 thinking of running for Mayor..... well, not hard to assign motive to Weiers and the rest of them in making sure the people of Glendale know who's responsible for their increase in taxes & decrease in essential services. The political hay that can be made without really saying much at all & getting into mudslinging, letting it all play out in court beyond damning of the former Mayor & Council, of those who voted for the deal 2yrs ago & in particular Gary Sherwood... and absolutely, will give IceArizona, LeBlanc & the NHL, Bettman & Daly the biggest sets of black eyes they'll have ever received. And the latter have already received more than a few of those throughout this episode thats been ongoing since 2008.

 

[goyotes]

that would seem to hurt the pro-yotes council members and departed councilors and staff more than the current iteration, would it not?

That is not an assumption I am prepared to accept. Let's just suppose Bailey suggested council get an outside legal opinion on the 38-511 issue but two council members wanted to push forward with this gambit. I would not assume going against the deal is prima facial evidence of good conduct.

 

[goyotes]

38-511 doesn't require staff to be "involved in negotiations", but rather they could have been substantially involved in "securing" the contract. At least that is how I understand it. Without much case law, I suppose it would be open to some interpretation, which is likely where a pattern of behavior, linkages, communications, blocs, etc. would come into the narrative.

As has been pointed out by others, just as the Coyotes have used a bit of a "shot gun" approach to their suit, I would think that the CoG is going to prepare a full-throated defense that brings in a range of issues and evidence for the court to consider.

You could be right but that is not how I read it, nor is it how some well regarded legal experts read the statute. I know Barr's tweets were over the top, but trust me when I say is probably one of the most well regarded government affairs experts in Arizona. His opinion carries some weight with me. I'm not suggesting you should accept that position.

I happen to be local and know some of the people involved around the edges. I've practiced here for 25 years. I practiced with Nick Wood ages ago. So that does color my perspective I will admit

 

[Whileee]

Do you really think Glendale wants its inter workings, with all the executive sessions and backroom dealings, exposed through discovery? I think that sword cuts both ways my friend.

The financial stakes are high. The "new" team of council members and city staff probably feel that they'll come out looking not too bad, all things considered.

I still expect that IA and the NHL can't afford to take this forward without a negotiated settlement. It will be tied up in courts for a couple of years, at least.

 

[CasualFan]

Do you really think Glendale wants its inter workings, with all the executive sessions and backroom dealings, exposed through discovery? I think that sword cuts both ways my friend.

In the instant case, yes. I think they might. They may have managed to turn their inter workings and backroom dealings into a sword and a shield. As for gambits go, this looks pretty clever. But of course what looks clever now might turn out to be not so clever later. We'll see if the NHL wants to tangle with them on this.

 

[Killion]

If this is true, it means Leblanc is just putting on a show for the public and nothing he says is relevant and the NHL's decision come the BoG meeting (well, they may decide on the courses of action then, to be put in play post-hearing) and after the court hearing will be the real forces directing the Coyotes' course from here on.

Exactly.... I also suspect Weiers & Hugh at least smell a Rat, have seen through the Charade, LeBlanc in "playing" to his audience of the Council lost that audience at some point in time. Is no longer believable. Bad actor. Hasnt come close to delivering much of anything. City continues to circle the drain. The fans, they dont really have a choice. They want to & "have to believe". Its too diabolical to even contemplate for most. That these guys are playing everybody. Yet Im quite thoroughly convinced thats exactly what theyve done.

 

[aqib]

Exactly.... I also suspect Weiers & Hugh at least smell a Rat, have seen through the Charade, LeBlanc in "playing" to his audience of the Council lost that audience at some point in time. Is no longer believable. Bad actor. Hasnt come close to delivering much of anything. City continues to circle the drain. The fans, they dont really have a choice. They want to & "have to believe". Its too diabolical to even contemplate for most. That these guys are playing everybody. Yet Im quite thoroughly convinced thats exactly what theyve done.

I think after Knaack and Martinez were out, Weiers and Hugh saw that they could get the votes to get out of the deal if they could find a loophole. So they dispatched the staff to find the loophole and the chance came together. Savvy and persistent if you agree with them. Petty and vindictive if you don't.

 

[Whileee]

You could be right but that is not how I read it, nor is it how some well regarded legal experts read the statute. I know Barr's tweets were over the top, but trust me when I say is probably one of the most well regarded government affairs experts in Arizona. His opinion carries some weight with me. I'm not suggesting you should accept that position.

I happen to be local and know some of the people involved around the edges. I've practiced here for 25 years. I practiced with Nick Wood ages ago. So that does color my perspective I will admit

You have a much better read on the situation than I could, for many reasons.

I am trying to read the gestalt of the situation. I just can't see the NHL wanting to take the risk of letting this play out through the courts.

 

[Whileee]

Exactly.... I also suspect Weiers & Hugh at least smell a Rat, have seen through the Charade, LeBlanc in "playing" to his audience of the Council lost that audience at some point in time. Is no longer believable. Bad actor. Hasnt come close to delivering much of anything. City continues to circle the drain. The fans, they dont really have a choice. They want to & "have to believe". Its too diabolical to even contemplate for most. That these guys are playing everybody. Yet Im quite thoroughly convinced thats exactly what theyve done.

Maybe if LeBlanc and co. had done anything pro-active on the arena management front to show that they were serious partners, this wouldn't look so bad. But they have basically confirmed all of the worst fears of the city in their apathetic work on filling the arena with patrons, showing a pretty clear reason why they rejected any notion of a performance clause, or an out clause for the CoG should the financial performance lag.

 

[awfulwaffle]

The Rattlers fit their around available dates after the Suns and other events get first dibs. Before starting a schedule where more than one NHL/NBA team is in the same arena, each team will figure out what 50-60 days they want their league to schedule their games. So they have to work with their co-tenant to figure how those dates will fall. Plus they have to work around already scheduled events, like concerts, ice shows, etc. So now the Coyotes would have work around the remaining available dates. Even if the Suns and Coyotes don't play at home on the same night, there could be other events either booked or reserved. Maybe it is an issue for 10-12 days, but that would cause issues all over the place.

The Rattlers play once a week. They have 9 home dates. What the heck is the issue?!

http://www.usairwayscenter.com/events/all

There is 1 event in October, 2 in December, then Disney on Ice for 5 days. I think you are grasping at some straws with this one currently. Staples Center has no issue with 2 basketball teams and a hockey team(that's 123 days out of 365 if they didn't do any double headers).

Mercury are done by the time hockey starts, I don't really see too much of an issue here.