Phoenix CXI: Awaiting CoG arena manager decision [UPD: AEG new Arena Manager?]

[The Feckless Puck]

The notion of pro sports benefitting from casinos when they are so anti-sports gambling irks me in general.

The hypocrisy irks me too, but being potentially financed by a casino operator is really no different than the multi-million-dollar sponsorship deals made by DraftKings/FanDuel.

If teams in Arizona and Vegas can benefit from the incredible liquidity that casino operators enjoy, then more power to them. The time to really complain will be if the hockey arenas themselves have slot machines or betting windows - and if that happens, the NHL will probably threaten to contract the teams or withdraw their franchise rights unless they relocate.

 

[CasualFan]

Thus, my final answer is in the neighborhood of 7.5M/yr was their profit since they were managing the arena.

I get what you're saying but you seem to have left out essentially all of the Arena Manager revenues. The arena doesn't run at Net Loss $5.5MM; the arena has fixed costs of approximately $5.5MM. The great BarneyG once posted a compressive analysis of various arenas that further corroborated the estimated fixed expenses. There really isn't much mystery on how arena economics work:

The manager has to layout about $5.5MM in fixed expenses; then they attempt to generate revenues by monetizing things like naming rights and suites/premium seats while booking events that generate profits above the variable expenses associated with putting on the event.

Most arena operators have no problem generating revenues far above the fixed and variable expenses and therefore they are profitable. Most arena owners (municipalities that fund construction) struggle to generate revenues from their buildings that equal their debt service obligations because they sign away most of the revenues to the manager. The public partner instead uses tax revenues from unrelated areas to fill in the deficit.

 

[GuelphStormer]

The hypocrisy irks me too, but being potentially financed by a casino operator is really no different than the multi-million-dollar sponsorship deals made by DraftKings/FanDuel.

If teams in Arizona and Vegas can benefit from the incredible liquidity that casino operators enjoy, then more power to them. The time to really complain will be if the hockey arenas themselves have slot machines or betting windows - and if that happens, the NHL will probably threaten to contract the teams or withdraw their franchise rights unless they relocate.

im trying to better understand how the tribe would have so much money to spend on this new arena. googling it, i see they own a cement company and the casinos, hotel/resort, and a golf course, but do they also have massive cash reserves? (no pun intended)

paying to build a casino, even a resort attached to that casino, would naturally suggest there is a great deal of expected revenue from those projects ... but can someone explain to me what the financial motivation of the tribe would be to spend a few hundred million dollars on this new arena?

surely they would not make back the money on that facility alone, so is it just a case of one more draw to the general area where all the cash is actually generated ... ie., the casino?

is this a casino-based, native american version of a westgate sort of development?

 

[mesamonster]

Misleading? From Aug 2013 to Jan 2015, the entire $15MM (or prorata thereof) was paid directly to Fortress. The only misleading part was calling it an "arena management" fee. It was a franchise acquisition fee. Several corrupt members of Glendale staff and council agreed to let IA use public funds to secure a loan so IA could buy the team. Glendale routed the quarterly payments direct to FIG. Literally every penny of it. Keep fighting the good fight against misrepresentation though

Misleading to say the least! However, do we know for a fact that the $15MM subsidy went straight to FIG? The reallocation of debt to entities associated with the NHL also has a cost? Does anyone have any knowledge of how much the new debt costs IA? Was it retired by Barroway? (very doubtful) Or, is the NHl paying the new domestic debt on behalf of the ice clowns?

 

[cbcwpg]

The hypocrisy irks me too, but being potentially financed by a casino operator is really no different than the multi-million-dollar sponsorship deals made by DraftKings/FanDuel.

If teams in Arizona and Vegas can benefit from the incredible liquidity that casino operators enjoy, then more power to them. The time to really complain will be if the hockey arenas themselves have slot machines or betting windows - and if that happens, the NHL will probably threaten to contract the teams or withdraw their franchise rights unless they relocate.

The NHL wants to put a team in Las Vegas, the gambling capital of the world. You can bet your bottom dollar that you will be able to attend an NHL game in Las Vegas, and bet your bottom dollar in the arena ( or at the very least right next to it ), and the NHL will look the other way and not care. Being Vegas where slots are everywhere, I would not be surprised to see them in the arena.

In Winnipeg, just 50 feet from the MTS Centre, you have the Shark Club Gaming Centre. Owned and operated by TNSE with gov't backing. Sure it's not in the arena technically, but it might as well be. You can leave and return to the game anytime you want if you so desire to gamble.

http://www.winnipegsun.com/2013/06/18/true-north-opens-its-shark-club-gaming-centre-at-cityplace

 

[JimAnchower]

im trying to better understand how the tribe would have so much money to spend on this new arena. googling it, i see they own a cement company and the casinos, hotel/resort, and a golf course, but do they also have massive cash reserves? (no pun intended)

paying to build a casino, even a resort attached to that casino, would naturally suggest there is a great deal of expected revenue from those projects ... but can someone explain to me what the financial motivation of the tribe would be to spend a few hundred million dollars on this new arena?

surely they would not make back the money on that facility alone, so is it just a case of one more draw to the general area where all the cash is actually generated ... ie., the casino?

is this a casino-based, native american version of a westgate sort of development?

It would be a Westgate-like development where the Native Americans collect all revenue from the casino and other establishments, not just on the taxes like Glendale gets. There are some potential legal and other hoops to jump thru (would leagues allow this to happen and face potential backlash from public), but it is a possibility. Talking Stick already hosts two MLB spring training teams. WNBA has a team, Connecticut Sun, who plays in an arena on native lands.

The NHL wants to put a team in Las Vegas, the gambling capital of the world. You can bet your bottom dollar that you will be able to attend an NHL game in Las Vegas, and bet your bottom dollar in the arena ( or at the very least right next to it ), and the NHL will look the other way and not care. Being Vegas where slots are everywhere, I would not be surprised to see them in the arena.

In Winnipeg, just 50 feet from the MTS Centre, you have the Shark Club Gaming Centre. Owned and operated by TNSE with gov't backing. Sure it's not in the arena technically, but it might as well be. You can leave and return to the game anytime you want if you so desire to gamble.

http://www.winnipegsun.com/2013/06/18/true-north-opens-its-shark-club-gaming-centre-at-cityplace

At most European soccer stadiums I have been to, you can place bets on the match being played. IIRC, there were limits to how much you can bet, but it was completely legal. It may be a while until this can happen in US and Canada, but I do think sports gambling is going to be legalized more in the US soon.

 

[MNNumbers]

I get what you're saying but you seem to have left out essentially all of the Arena Manager revenues. The arena doesn't run at Net Loss $5.5MM; the arena has fixed costs of approximately $5.5MM. The great BarneyG once posted a compressive analysis of various arenas that further corroborated the estimated fixed expenses. There really isn't much mystery on how arena economics work:

The manager has to layout about $5.5MM in fixed expenses; then they attempt to generate revenues by monetizing things like naming rights and suites/premium seats while booking events that generate profits above the variable expenses associated with putting on the event.

Most arena operators have no problem generating revenues far above the fixed and variable expenses and therefore they are profitable. Most arena owners (municipalities that fund construction) struggle to generate revenues from their buildings that equal their debt service obligations because they sign away most of the revenues to the manager. The public partner instead uses tax revenues from unrelated areas to fill in the deficit.

I agree in total with this, CF. However, as a WORST case scenario, IA was 7.5M to the good. That's revenue that will have to be replaced by greater ticket sales, in house merchandise, and concessions if they move to a new location where they are not the manager. It is more likely that the actual figure is higher. I was pointing this out as a way to measure the benefit of their AMF. And, this calculation shows me that, even if IA is able to procure a new arena, with ASU or Phoenix or the Salt River Tribe financing all of the arena, and giving IA a nice AMF in the new place, there are still at least 3 years of rental arrangements between now and then, and that equates to at least 23M or so more of losses acrued....... So, the hole will get deeper and deeper.

Misleading to say the least! However, do we know for a fact that the $15MM subsidy went straight to FIG? The reallocation of debt to entities associated with the NHL also has a cost? Does anyone have any knowledge of how much the new debt costs IA? Was it retired by Barroway? (very doubtful) Or, is the NHl paying the new domestic debt on behalf of the ice clowns?

Don't have time to dig it up, but yes, there was a document here that showed that, yes, the 15M was going DIRECTLY to FIG. The FIG debt has now been retired, although we do not know exactly how.

And, I don't know where IA asked CoG to end their 6.5 AMF this year. That might tell us something.

 

[GuelphStormer]

I get what you're saying but you seem to have left out essentially all of the Arena Manager revenues. The arena doesn't run at Net Loss $5.5MM; the arena has fixed costs of approximately $5.5MM. The great BarneyG once posted a compressive analysis of various arenas that further corroborated the estimated fixed expenses. There really isn't much mystery on how arena economics work:

The manager has to layout about $5.5MM in fixed expenses; then they attempt to generate revenues by monetizing things like naming rights and suites/premium seats while booking events that generate profits above the variable expenses associated with putting on the event.

Most arena operators have no problem generating revenues far above the fixed and variable expenses and therefore they are profitable. Most arena owners (municipalities that fund construction) struggle to generate revenues from their buildings that equal their debt service obligations because they sign away most of the revenues to the manager. The public partner instead uses tax revenues from unrelated areas to fill in the deficit.

yes, but to be fair to Tony and the boys, it's very difficult for NHL arena operators to expect to sell more than 86,300 to 88,300 total tickets over 30 to 32 non-hockey event per year.

no wait, it's not that difficult.

 

[GuelphStormer]

It would be a Westgate-like development where the Native Americans collect all revenue from the casino and other establishments, not just on the taxes like Glendale gets. There are some potential legal and other hoops to jump thru (would leagues allow this to happen and face potential backlash from public), but it is a possibility. Talking Stick already hosts two MLB spring training teams. WNBA has a team, Connecticut Sun, who plays in an arena on native lands.

Thanks Jim. I didnt mean to suggest there was city-tribe revenue sharing - I was more loosely typing it as a multi-faceted development, with components that draw and provide indirect benefits to other components. Yes, the tribe (and presumably the team) would reap the benefits of the arena and the city would be largely shut out (which I sense a jilted Leblanc would love to see happen and is perhaps why he is attracted to the idea).

But Im wondering if total benefits from the arena to the tribe - both direct (via event revenues) and indirect (via spill-over at the casino and resort) - would surpass the cost of actually building that arena and adding it to the whole development. Ie., is it a good investment?

 

[The Feckless Puck]

is this a casino-based, native american version of a westgate sort of development?

The key differentiator is the reservation land. The US government stipulates that reservations are essentially sovereign territory. Therefore, a state cannot govern or tax American Indians within reservation boundaries. It's why these casinos can exist in the first place - gambling is actually illegal in the state of Arizona unless by specific exemption (i.e. lottery), but reservations are not subject to those laws.

It would end up as an "entertainment district" like Westgate, but unlike Westgate there would be one owner of the entire concern reaping all of the benefits, and the only fiduciary responsibility they would have is to the tribe, not the state or federal government.

Being Vegas where slots are everywhere, I would not be surprised to see them in the arena.

I think I would be - like you mentioned about TNSE and their gambling ops outside of MTS Centre, proximity is fine so long as the actual gambling does not take place within the actual arena confines. Vegas will likely be the same - the new arena is right on the Strip, so if you want to gamble you can do it next door. I would guess that the NHL would encourage a potential Salt River arena operator to let patrons just get their gambling fix at the very close-by casino as they do the Spring Training fans that show up at their ball field.

It may be a while until this can happen in US and Canada, but I do think sports gambling is going to be legalized more in the US soon.

I think you're right, but I also think that opening up betting windows in the actual arenas and ballparks are much further down the road, if it ever happens. Too much stigma connected to sports betting, particularly with MLB.

But Im wondering if total benefits from the arena to the tribe - both direct (via event revenues) and indirect (via spill-over at the casino and resort) - would surpass the cost of actually building that arena and adding it to the whole development. Ie., is it a good investment?

Personally, I think it is. Very few other business ventures are more profitable than operating a casino; but with that being said, there is still a seediness connected to casinos and legal gambling that turns a lot of people off. It's why Vegas has shows, roller coasters, and other distractions to "spruce up" that seediness. In Arizona, it's even worse - because gambling and casinos can only be found on reservation land, people need to have more motivation to go out there unless they're gambling/gaming addicts. The Spring Training facility is a fantastic investment because the Arizona League is one of the biggest sporting draws of the year - but it only happens for a couple of months a year.

A multipurpose arena with a professional sport as the anchor tenant immediately gives a whole lot of people reasons to be out at the reservation that otherwise they'd never consider. So to me, a half-billion-dollar investment to create what could end up being the most state-of-the-art entertainment venue in the entire Valley - including downtown - is definitely worth pursuing. I would bet they have the nest egg to fund it, too.

 

[Llama19]

...Don't have time to dig it up, but yes, there was a document here that showed that, yes, the 15M was going DIRECTLY to FIG. The FIG debt has now been retired, although we do not know exactly how.

And, I don't know where IA asked CoG to end their 6.5 AMF this year. That might tell us something.

Here is the link to the 'retired' Fortress loan where the 'arena management fee' was now being deposited in the IceArizona Manager Co LLC bank account...

And, these are the links to the 'unofficial' Fortress documents...

http://156.42.40.50/UnOfficialDocs2/pdf/20130712890.pdf

http://156.42.40.50/UnOfficialDocs2/pdf/20130712892.pdf

And, this document transfers all rights to Fortress and the NHL...

http://www.glendaleaz.com/Clerk/Contracts/8584.pdf

 

[TheLegend]

Misleading? From Aug 2013 to Jan 2015, the entire $15MM (or prorata thereof) was paid directly to Fortress. The only misleading part was calling it an "arena management" fee. It was a franchise acquisition fee. Several corrupt members of Glendale staff and council agreed to let IA use public funds to secure a loan so IA could buy the team. Glendale routed the quarterly payments direct to FIG. Literally every penny of it. Keep fighting the good fight against misrepresentation though

If you want to play the semantics game CF I'm quite versed in it.

Yes the original money's went directly to FIG,... Then how did IA pay for the costs of operating the arena after that???

Oh I know.... They pulled it out of thin air.

If you want to convince me and everyone else that businesses never ever simplify accounting this way I'm all ears.

 

[Fugu]

The notion of pro sports benefitting from casinos when they are so anti-sports gambling irks me in general.

The hypocrisy irks me too, but being potentially financed by a casino operator is really no different than the multi-million-dollar sponsorship deals made by DraftKings/FanDuel.

If teams in Arizona and Vegas can benefit from the incredible liquidity that casino operators enjoy, then more power to them. The time to really complain will be if the hockey arenas themselves have slot machines or betting windows - and if that happens, the NHL will probably threaten to contract the teams or withdraw their franchise rights unless they relocate.

I'm not sure I follow rj's objection. Major League Baseball has very strict rules about ownership, if an owner also has gambling properties or businesses. Mike Ilitch had to divest himself of involvement with Olympic Holdings' gambling facility. He transferred the property to his wife, and the Tigers are thus owned only in his name. (I have wondered how this gets around property laws in some states whereby marriage means all holdings, regardless of name/title, are 50/50-- unless there's a prenup. Maybe the spouse cedes this in some other legal instrument...anyhoo...).

And Marian Ilitch owns the gambling facility.

The NHL has no such requirement, so the two are co-owners of the the Wings.

Now, if you mean that the leagues are wary of sports gambling, especially if officials, execs, players, etc., can participate -- someone who can affect the outcome? I certainly see why they should be worried and thus diligent. Their entire empires can come crumbling down if people believe the games are fixed.

 

[Fugu]

Misleading to say the least! However, do we know for a fact that the $15MM subsidy went straight to FIG? The reallocation of debt to entities associated with the NHL also has a cost? Does anyone have any knowledge of how much the new debt costs IA? Was it retired by Barroway? (very doubtful) Or, is the NHl paying the new domestic debt on behalf of the ice clowns?

The FIG debt was transferred to the LOC. Reports were that the interest rate was reduced by at least half, from upwards of 9% to 4.5% (or thereabouts). The FIG debt amount was somewhere between $80 - 120 MM; the LOC is capped by the lenders' requirements at $100 MM per team.

CF may remember, but I think debt servicing was reduced to ~$5-7 MM/year from around $9 MM+?

im trying to better understand how the tribe would have so much money to spend on this new arena. googling it, i see they own a cement company and the casinos, hotel/resort, and a golf course, but do they also have massive cash reserves? (no pun intended)

paying to build a casino, even a resort attached to that casino, would naturally suggest there is a great deal of expected revenue from those projects ... but can someone explain to me what the financial motivation of the tribe would be to spend a few hundred million dollars on this new arena?

surely they would not make back the money on that facility alone, so is it just a case of one more draw to the general area where all the cash is actually generated ... ie., the casino?

is this a casino-based, native american version of a westgate sort of development?

Native American businesses are tax exempt at the federal and state tax level. Individuals are considered US citizens, and thus individuals have to pay federal taxes. The money that is disbursed to individuals by the nation is subject to federal taxes. As FP notes, if an individual does not live on reservation land, they are subject to state taxes.

Thus I can see why they might wish to hang on to native businesses' monies and reinvest or find new investments, balancing that out against payments that go to individuals. They can even choose to build and fund other facilities or programs for the nation over individual disbursements.

http://www.forbes.com/sites/robertw...tax-rules-that-may-surprise-you/#23e23ea511fe

 

[CasualFan]

Yes the original money's went directly to FIG,... Then how did IA pay for the costs of operating the arena after that??? Oh I know.... They pulled it out of thin air.

Thin air? Wouldn't they just use the revenues from the arena to pay the costs, like every other arena manager does? I mean this is all so obvious it's hard to believe it has to be explained. There's two sides to the ledger - one has expenses, the other has revenues.

If you want to convince me and everyone else that businesses never ever simplify accounting this way I'm all ears.

I'm not trying to convince anyone of anything. The forum determines which comments have merit - and which don't

Re: FIG/LOC
That transaction doesn't include a public entity- there's no way to know what the terms were but I also recall seeing reports in the $7MM range

 

[GuelphStormer]

Native American businesses are tax exempt at the federal and state tax level. Individuals are considered US citizens, and thus individuals have to pay federal taxes. The money that is disbursed to individuals by the nation is subject to federal taxes. As FP notes, if an individual does not live on reservation land, they are subject to state taxes.

Thus I can see why they might wish to hang on to native businesses' monies and reinvest or find new investments, balancing that out against payments that go to individuals. They can even choose to build and fund other facilities or programs for the nation over individual disbursements.

http://www.forbes.com/sites/robertw...tax-rules-that-may-surprise-you/#23e23ea511fe

thanks, Fugu. so, to be over-simplistic, the tribe has a big pile of casino profits burning a hole in their pocket and they would use that to pay for the new arena? and at the risk of being laughed at ... is it reasonable to assume that big pile in the half billion dollar range?

so, given that distinct source of the money, normal considerations for return on investment in a new arena, become less relevant here?

 

[Whileee]

If you want to play the semantics game CF I'm quite versed in it.

Yes the original money's went directly to FIG,... Then how did IA pay for the costs of operating the arena after that???

Oh I know.... They pulled it out of thin air.

If you want to convince me and everyone else that businesses never ever simplify accounting this way I'm all ears.

The "Arena Management Fee" went to the bank that financed the bulk of the purchase of the Coyotes. IA had no latitude to access those funds to "manage" the arena.

Just like any other arena operator, they used revenues from hockey and non-hockey events (parking, ticket surcharges, concessions, naming rights, etc.) to pay the actual cost of managing the arena, while sending a portion of the revenue from arena events (parking, surcharges, etc.) to the arena's owner (Glendale). Now, I suppose you could say that IA shouldn't have been expected to transfer any arena-related revenues to the City of Glendale for events at the arena they owned, so the revenues they received should be deducted from the $15 million. By the same argument, you could add all of the revenues accrued to IA (other than direct hockey-related) from the arena should be "added" to the $15 million management fee. If IA's portion of the arena revenues allowed them to break even or earn a profit on the management of the arena, then the $15 million "management fee" would be free and clear profit. What might be helpful to sort this out would be an audited financial statement related the the arena management. I understand that there were some "issues" with IA reluctant to provide that, but perhaps I am missing something.

 

[Fugu]

I agree in total with this, CF. However, as a WORST case scenario, IA was 7.5M to the good. That's revenue that will have to be replaced by greater ticket sales, in house merchandise, and concessions if they move to a new location where they are not the manager. It is more likely that the actual figure is higher. I was pointing this out as a way to measure the benefit of their AMF. And, this calculation shows me that, even if IA is able to procure a new arena, with ASU or Phoenix or the Salt River Tribe financing all of the arena, and giving IA a nice AMF in the new place, there are still at least 3 years of rental arrangements between now and then, and that equates to at least 23M or so more of losses acrued....... So, the hole will get deeper and deeper.

MNN, I take the position that the reason the franchise needed that much of a subsidy didn't just come from what they could (or could not garner) on the arena side, but is more indicative of a failure to derive revenues from the hockey business. Consider that bigger teams are getting $20-30 MM per year in just local TV money. Far more revenue from sponsors and, of course, higher ticket prices @ higher attendance numbers.

thanks, Fugu. so, to be over-simplistic, the tribe has a big pile of casino profits burning a hole in their pocket and they would use that to pay for the new arena? and at the risk of being laughed at ... is it reasonable to assume that big pile in the half billion dollar range?

so, given that distinct source of the money, normal considerations for return on investment in a new arena, become less relevant here?

They probably have enough cash to back a loan, and who knows? Maybe they are clever enough to loan themselves the money. As a sovereign entity, they may have access to the bond market too. I'm not really up-to-speed on the tax and legal structures, but with few costs and mostly just profit, as gambling businesses tend to be, I think they could easily finance an arena. Fairly sure they own enough land outright.

 

[Llama19]

thanks, Fugu. so, to be over-simplistic, the tribe has a big pile of casino profits burning a hole in their pocket and they would use that to pay for the new arena? and at the risk of being laughed at ... is it reasonable to assume that big pile in the half billion dollar range?

so, given that distinct source of the money, normal considerations for return on investment in a new arena, become less relevant here?

How tribal gaming impacts Arizona’s economy: 15K jobs, $1.81 billion

To quote:

"According to the report, which is slated to be released to the public Friday, statewide tribal gaming revenue hit $1.81 billion in the fiscal year that ended June 30, 2014, about the same as in 2012, when a similar report was compiled."

Source: http://www.azcentral.com/story/mone...ndian-casinos-drive-arizona-economy/73491018/

The 'gross' revenue for FY2015 (Jun 2014 to June 2015) was $1.84 billion, with $88.4 million going into the the Arizona Benefits Fund...

Additional references: https://gaming.az.gov/

I do not envision the tribe investing in LeBluster's(tm) arena project for a few million in 'potential' revenue...

 

[powerstuck]

At most European soccer stadiums I have been to, you can place bets on the match being played. IIRC, there were limits to how much you can bet, but it was completely legal. It may be a while until this can happen in US and Canada, but I do think sports gambling is going to be legalized more in the US soon.

Betting isn't illegal per se. In Canada you can legaly bet on sport games outcomes and/or score predictions. (see https://miseojeu.lotoquebec.com). Heck Loto-Quebec even added betting on the issue of American Presidential (Source in French)

 

[The Feckless Puck]

thanks, Fugu. so, to be over-simplistic, the tribe has a big pile of casino profits burning a hole in their pocket and they would use that to pay for the new arena? and at the risk of being laughed at ... is it reasonable to assume that big pile in the half billion dollar range?

so, given that distinct source of the money, normal considerations for return on investment in a new arena, become less relevant here?

Well, we're venturing into supposition here, but IMO I'd say that they a) have significant existing resources to fund a new arena and b) their income stream is enough to make debt servicing and eventual payoff a rather easier thing for them than for, say, City of Phoenix or ASU.

The Suns are the biggest wildcard. If you ask me, the Salt River folks had an arena plan already in place when Glendale torpedoed IceArizona. Prior to the Westgate fireworks, building an arena likely was a bit more of a gamble because if they built it and the Suns eventually decided to stay in Phoenix, they'd be in trouble. Assuming, of course, that all of this supposition on my part is true, the Glendale/Coyotes fracas could not have come at a better time for the tribe.

Now, I'm fully expecting that all of my theorizing is going to be proven false somehow, but to me on the ground here in the Valley there seems to be some degree of sense to the whole thing that is absent in the other two potential landing spots for the hockey team.

 

[Fugu]

The "Arena Management Fee" went to the bank that financed the bulk of the purchase of the Coyotes. IA had no latitude to access those funds to "manage" the arena.

Just like any other arena operator, they used revenues from hockey and non-hockey events (parking, ticket surcharges, concessions, naming rights, etc.) to pay the actual cost of managing the arena, while sending a portion of the revenue from arena events (parking, surcharges, etc.) to the arena's owner (Glendale). Now, I suppose you could say that IA shouldn't have been expected to transfer any arena-related revenues to the City of Glendale for events at the arena they owned, so the revenues they received should be deducted from the $15 million. By the same argument, you could add all of the revenues accrued to IA (other than direct hockey-related) from the arena should be "added" to the $15 million management fee. If IA's portion of the arena revenues allowed them to break even or earn a profit on the management of the arena, then the $15 million "management fee" would be free and clear profit. What might be helpful to sort this out would be an audited financial statement related the the arena management. I understand that there were some "issues" with IA reluctant to provide that, but perhaps I am missing something.

I think it was set up this way so FIG could remove the risk of loaning money to an entity that has been revenue-challenged for most of its existence. They were guaranteed to get their $15 MM first, so if there were shortfalls, IA did not have the control to move money around. As you know, a lot of people will pay their debt last, and all else failing, file for bankruptcy. That's probably why they ceded their rights to the NHL and FIG.

 

[MNNumbers]

MNN, I take the position that the reason the franchise needed that much of a subsidy didn't just come from what they could (or could not garner) on the arena side, but is more indicative of a failure to derive revenues from the hockey business. Consider that bigger teams are getting $20-30 MM per year in just local TV money. Far more revenue from sponsors and, of course, higher ticket prices @ higher attendance numbers.

...snip

Oh, I agree completely, Fugu. The question I was addressing was that of Legend, who wondered why we keep quoting 15M, as if it was a free and clear subsidy.

My comments about that are in the general area of: How much has actually been lost since the Coyotes no longer have the 15M/yr available? These are monies which need to be recovered as you mentioned above - local revenues of some kind.

That the whole organization seems to have been losing $$, even WITH the 15M/yr speaks volumes about what will happen without it. Namely, more losses yet.

The question in my mind continues to be.....

Who finances the losses?

As has been asked... Suppose there were a new facility with a favorable AMF arrangement being built starting tomorrow. There are still 3 issues....

1- How much money would the organization continue to lose even with the new AMF arrangement? In Glendale, it was not zero.....

2- How much money will be lost playing as a renter in any other arena in the years they wait a new facility? Again, large amounts.

3- Who will pay these losses? And, for how long?

 

[Killion]

Now, I'm fully expecting that all of my theorizing is going to be proven false somehow, but to me on the ground here in the Valley there seems to be some degree of sense to the whole thing that is absent in the other two potential landing spots for the hockey team.

... ya, as I said, its only thing that does make sense at this time & given the timelines signaled by LeBlanc. As Bettman also commented on the matter during the ASG Break, then one could also assume that he's aware of possible Band involvement and in backing LeBlanc's statements doesnt have a problem with the club potentially doing business with them, arena on native land, built & paid for in a P3 of sorts. Then again, could be all smoke.

 

[Fugu]

Oh, I agree completely, Fugu. The question I was addressing was that of Legend, who wondered why we keep quoting 15M, as if it was a free and clear subsidy.

My comments about that are in the general area of: How much has actually been lost since the Coyotes no longer have the 15M/yr available? These are monies which need to be recovered as you mentioned above - local revenues of some kind.

That the whole organization seems to have been losing $$, even WITH the 15M/yr speaks volumes about what will happen without it. Namely, more losses yet.

The question in my mind continues to be.....

Who finances the losses?

As has been asked... Suppose there were a new facility with a favorable AMF arrangement being built starting tomorrow. There are still 3 issues....

1- How much money would the organization continue to lose even with the new AMF arrangement? In Glendale, it was not zero.....

2- How much money will be lost playing as a renter in any other arena in the years they wait a new facility? Again, large amounts.

3- Who will pay these losses? And, for how long?

I just wanted to point out that LeBlanc's promises to COG <schoolgirl analogies come to mind> didn't work on FIG.