Phoenix CXXXVI - Coyotes up for sale again

[TheLegend]

I'm not sure what's being argued here either....

But, the whole thing was led by Ellman, if I have it right. He wanted to do a big development, and he wanted the Yotes as an anchor, to draw people to his development.

The deal he made with Glendale was a free arena in return for building out Westgate, and the benefit to Glendale was going to be the economic activity in Westgate.

To suggest that somehow it was actually the opposite, and that the city promised Westgate in return for bringing the Yotes is backwards as far as I know. It would have been much crazier for Glendale to offer to build the arena AND to promise the development of Westgate, just to get the team there. And, that is what would have had to have been the case in order for Ellman or his successor to sue Glendale.

In contrast, it was Glendale which may have had a case in the BK, that the original lease should have held. And, I think that, reasonably, that's what they expected, since the NHL bought the team and was running the arena for no AMF immediately out of BK.

Pretty good assessment....

If you look at it from a purely simple overall viewpoint, Westgate was supposed to be an $800 million master development for which the city put in roughly 25% of the cost. City would get its 25% (plus interest costs) back over a period of years through sale taxes and the ticket surcharges.

Of course there are lots of factors that came into play that turned it all into the creature we’ve spent the last decade studying every nuance.

 

[MNNumbers]

Pretty good assessment....

If you look at it from a purely simple overall viewpoint, Westgate was supposed to be an $800 million master development for which the city put in roughly 25% of the cost. City would get its 25% (plus interest costs) back over a period of years through sale taxes and the ticket surcharges.

Of course there are lots of factors that came into play that turned it all into the creature we’ve spent the last decade studying every nuance.

And, continuing the history.....what would have happened had the recession which began in 2006 waited until 2012?

It's an unfair question, of course, because all such investment carries risk.....but, had there been no recession, it's very reasonable to assume the following:

Westgate would be much larger than now.
The west valley would be more affluent, on average, than it is now.
The entire thing would have been in the black rather than the red.
There would have been no selling from Ellman, and thus no BK from Moyes.
Glendale would still be hosting hockey, without paying the team an AMF.

And, we wouldn't be having this discussion, because the team and NHL hockey would still be PART of the overall scheme in Glendale (and I mean in the sense of 'overall plan'). That would all be similar to what the Islanders want to do.

What's happening is that sports, rather being stand alone, and a business which uses arenas, is becoming an in-grained part of the arena and surrounding areas. Whether one thinks this is good for sport or not, or for NHL hockey or not, is dependent on one's point of view. In such a world, the profitability of the team itself is not completely, but largely irrelevant. It's simply part of a bigger piece.

To bring this back to the Coyotes in particular, I believe that the current quest for a new arena depends on this very thing: Is there somewhere else in the Valley which sees this kind of vision being something to shoot for, in a way which makes it a good investment. Apparently, what we have found is that largely, no municipality sees it that way. And, perhaps, the last possibility is a partnership with the tribes.

 

[TheLegend]

And, continuing the history.....what would have happened had the recession which began in 2006 waited until 2012?

It's an unfair question, of course, because all such investment carries risk.....but, had there been no recession, it's very reasonable to assume the following:

Westgate would be much larger than now.
The west valley would be more affluent, on average, than it is now.
The entire thing would have been in the black rather than the red.
There would have been no selling from Ellman, and thus no BK from Moyes.
Glendale would still be hosting hockey, without paying the team an AMF.

And, we wouldn't be having this discussion, because the team and NHL hockey would still be PART of the overall scheme in Glendale (and I mean in the sense of 'overall plan'). That would all be similar to what the Islanders want to do.

What's happening is that sports, rather being stand alone, and a business which uses arenas, is becoming an in-grained part of the arena and surrounding areas. Whether one thinks this is good for sport or not, or for NHL hockey or not, is dependent on one's point of view. In such a world, the profitability of the team itself is not completely, but largely irrelevant. It's simply part of a bigger piece.

To bring this back to the Coyotes in particular, I believe that the current quest for a new arena depends on this very thing: Is there somewhere else in the Valley which sees this kind of vision being something to shoot for, in a way which makes it a good investment. Apparently, what we have found is that largely, no municipality sees it that way. And, perhaps, the last possibility is a partnership with the tribes.

Nice post... (yeah it’s a bit cliche but it really is)

The poster over in F40 who originally cited this recent rumor is still convinced something is on track and that it involves the tribe tearing down their old original casino in the L101-L202 area. So if the tribe does indeed embark on a development that includes a new casino/resort facility and it includes an arena capable of holding a pro hockey franchise... that seems to be the only way this can happen.

 

[Fairview]

Nice post... (yeah it’s a bit cliche but it really is)

The poster over in F40 who originally cited this recent rumor is still convinced something is on track and that it involves the tribe tearing down their old original casino in the L101-L202 area. So if the tribe does indeed embark on a development that includes a new casino/resort facility and it includes an arena capable of holding a pro hockey franchise... that seems to be the only way this can happen.

When this type of rumor first surfaced a few years back, there was some legitimate question as to whether the league would consider allowing the team to enter an agreement with a tribal entity and a building on reservation land? Has there ever been any clarification as to whether the league was ok with this type of deal?

 

[PredsHead]

The problem here is that the Coyotes were promised a Westgate that was to be astronomically bigger than its current state stretching past the football stadium and be a destination similar to desert ridge and Tempe Marketpalce but WAY larger. I’m suprised the NHL and Coyotes don’t sue for breach of contract for not following through on the original vision of what Westgate was to be.

I’ve been in nearly every square inch of the arena Doing the media thing and with the exception of the scoreboard they recently replaced and the minuscule press room it’s a perfect arena.

That is sort of my point, if Parsons owns Westgate and the Coyotes you get back to the original vision for the place. I think most parties knew the team would never make enough money on its own to be successful, but if the money made at Westgate went into the same pocket then it would at least hopefully "make the juice worth the squeeze" as they say. He got Westgate for a rock bottom price and with some of that famous "fuzzy" NHL math he could possibly do the same with the Coyotes right now. That would give him everything except GRA itself, but with a good lease which I believe they are only paying $500,000 in rent a year and get all hockey revenue. Even if he pays the rumored $500M asking price, that plus the $130M spent on Westgate still gets him in the game for cheaper than Seattle's expansion fee alone. I understand it does not fix the problem of the arena being in an inconvenient location for many people, but it gives you a very wealthy, powerful and savvy guy who is now invested in finding ways to alleviate that problem. I just do not see an entity that could/would/should be willing to basically take the "GRA/Westgate plunge" all over again and gamble that much money on making the NHL work in Arizona. Between a new arena and the team itself, that would be asking someone to gamble close to $1.oB on this while fighting two other arenas for every non-hockey related dollar. Since GRA is still sitting idle most nights the Coyotes aren't playing, I just do not see how a third arena could ever work. Franchise values will keep increasing, but not sure they will grow at a rate to make that worth while. Meanwhile Parsons could come in for at most $630M and give it an honest try in Glendale. If it doesn't work out, he can sell/move the team and still have Westgate as an investment property. There is almost a no lose scenario for Parsons, he either wins big and Westgate and the Coyotes are successful or it doesn't work and he is left with two assets which are worth more than he paid for them. All he would be out is any loses the Coyotes run, which should be offset by any profit made by Westgate. Would also have another expansion fee check coming and a new TV deal which may help cover any loses.

 

[Fairview]

That is sort of my point, if Parsons owns Westgate and the Coyotes you get back to the original vision for the place. I think most parties knew the team would never make enough money on its own to be successful, but if the money made at Westgate went into the same pocket then it would at least hopefully "make the juice worth the squeeze" as they say. He got Westgate for a rock bottom price and with some of that famous "fuzzy" NHL math he could possibly do the same with the Coyotes right now. That would give him everything except GRA itself, but with a good lease which I believe they are only paying $500,000 in rent a year and get all hockey revenue. Even if he pays the rumored $500M asking price, that plus the $130M spent on Westgate still gets him in the game for cheaper than Seattle's expansion fee alone. I understand it does not fix the problem of the arena being in an inconvenient location for many people, but it gives you a very wealthy, powerful and savvy guy who is now invested in finding ways to alleviate that problem. I just do not see an entity that could/would/should be willing to basically take the "GRA/Westgate plunge" all over again and gamble that much money on making the NHL work in Arizona. Between a new arena and the team itself, that would be asking someone to gamble close to $1.oB on this while fighting two other arenas for every non-hockey related dollar. Since GRA is still sitting idle most nights the Coyotes aren't playing, I just do not see how a third arena could ever work. Franchise values will keep increasing, but not sure they will grow at a rate to make that worth while. Meanwhile Parsons could come in for at most $630M and give it an honest try in Glendale. If it doesn't work out, he can sell/move the team and still have Westgate as an investment property. There is almost a no lose scenario for Parsons, he either wins big and Westgate and the Coyotes are successful or it doesn't work and he is left with two assets which are worth more than he paid for them. All he would be out is any loses the Coyotes run, which should be offset by any profit made by Westgate. Would also have another expansion fee check coming and a new TV deal which may help cover any loses.

Your statement "if it doesn't work out, he can sell/move the team" is the key. So far the NHL doesn't want to sell the team to an owner and give him those rights. They are pretty adamant that they will only sell to an owner who will agree to keep the team in Arizona. So far, no one would agree to that condition using their own money. If the NHL removes that condition, tells the new owner to give it a try and if it doesn't work, then you can move the team out of market, then I believe you would have a sale. The other option that you mention, the one where he could just sell the team to someone else, but that person would be required to keep the team where it is , is exactly the situation that we are in now and have been in for years. He would be left with an asset that has more money sunk into it, as is where is, than he could ever hope to recover. And you would at that point, have someone with the "savvy" as you suggest, admitting that it will not work, yet asking for an unreal valuation to avoid taking a bath in red ink. An asset that is worthless " as is, where is".

 

[Dolemite]

Sure.... the Los Arcos project did...

Westgate != Los Arcos

Not really sure what kind of point you’ve been trying to make. Coyotes and Westgate were two separate entities owned by the same people. One was used as a means to an end.

Again, this was long before Los Arcos and the Coyotes came into the picture. The original vision of Westgate was to be the destination in the valley. The plans were drawn up and then they looked to the coyotes.

 

[PredsHead]

Your statement "if it doesn't work out, he can sell/move the team" is the key. So far the NHL doesn't want to sell the team to an owner and give him those rights. They are pretty adamant that they will only sell to an owner who will agree to keep the team in Arizona. So far, no one would agree to that condition using their own money. If the NHL removes that condition, tells the new owner to give it a try and if it doesn't work, then you can move the team out of market, then I believe you would have a sale. The other option that you mention, the one where he could just sell the team to someone else, but that person would be required to keep the team where it is , is exactly the situation that we are in now and have been in for years. He would be left with an asset that has more money sunk into it, as is where is, than he could ever hope to recover. And you would at that point, have someone with the "savvy" as you suggest, admitting that it will not work, yet asking for an unreal valuation to avoid taking a bath in red ink. An asset that is worthless " as is, where is".

The key piece of that statement is that he can sell/move IF it doesn't work out. As far as I am aware most/all of the rejected groups were buying the team with the sole intention of moving it somewhere else. Parsons wouldn't be doing that, he would be trying to make it work in Arizona. However, if after say 7 years they are still having the same issues than he would be free to sale the team off market. Similar to what Dundon signed on for in Carolina. The NHL get what it wants, an honest try at a franchise in Phoenix and Parsons has some protection if it doesn't work out.

 

[Fairview]

The key piece of that statement is that he can sell/move IF it doesn't work out. As far as I am aware most/all of the rejected groups were buying the team with the sole intention of moving it somewhere else. Parsons wouldn't be doing that, he would be trying to make it work in Arizona. However, if after say 7 years they are still having the same issues than he would be free to sale the team off market. Similar to what Dundon signed on for in Carolina. The NHL get what it wants, an honest try at a franchise in Phoenix and Parsons has some protection if it doesn't work out.

The 7 years would be the sticking point. That is a big commitment to make on a team with decades of losses and the league's acknowledgement that it will not work in Glendale.

 

[TheLegend]

When this type of rumor first surfaced a few years back, there was some legitimate question as to whether the league would consider allowing the team to enter an agreement with a tribal entity and a building on reservation land? Has there ever been any clarification as to whether the league was ok with this type of deal?

That was a question I brought up and no... I’m not aware of anything that the league would go for such a deal.

Biggest stigma in the past within pro sports dealing with gaming tribes was the proximity of sports betting. A few years ago MLB vetoed a move by a San Diego tribe (Sycuan band of the Kumeyaay Nation) in buying the naming rights to the Padres’ new downtown stadium because of their casino. Now we have the Diamondbacks spring training facility located on the Salt River reservation. The NHL is in Vegas with the NFL not far behind. The NHL is now looking into getting involved with the growing fantasy sports betting business.

Certainly looks like things are changing. There are still the issues of dealing with an entity who operates with a lot of legal autonomy but is that any different than what the NBA and NHL do now having franchises in two different countries?? Or any different than if the NHL moves into Europe and/or Asia??

 

[Jakey53]

Tilman Fertitta is the rockets owner rich enough to pay off all the debt of the yotes there is always a possibility that they could sell off the roadrunners to help pay it down like the blues Tom Stillman Speaks About Sale of Peoria Rivermen and Chicago Wolves Affiliation

If any owner has to sell the AHL team to pay down his debt from buying a NHL team shouldn't be in the NHL to begin with. With Tilman that wouldn't be the case, but I can't see him buying a NHL franchise after spending over 2 Billion for the Rockets. The guy is rich but I don't think he wants to be leveraged too thin.

 

[Fairview]

That was a question I brought up and no... I’m not aware of anything that the league would go for such a deal.

Biggest stigma in the past within pro sports dealing with gaming tribes was the proximity of sports betting. A few years ago MLB vetoed a move by a San Diego tribe (Sycuan band of the Kumeyaay Nation) in buying the naming rights to the Padres’ new downtown stadium because of their casino. Now we have the Diamondbacks spring training facility located on the Salt River reservation. The NHL is in Vegas with the NFL not far behind. The NHL is now looking into getting involved with the growing fantasy sports betting business.

Certainly looks like things are changing. There are still the issues of dealing with an entity who operates with a lot of legal autonomy but is that any different than what the NBA and NHL do now having franchises in two different countries?? Or any different than if the NHL moves into Europe and/or Asia??

The question that comes to mind is the legal standing of any lease that would be agreed upon and the remedy if any terms of the lease were violated. We know and understand US and Canadian laws and contract law. Would the reservation have to follow the same standard or if I understand correctly could they remedy the situation as they see fit? If the Coyotes promise anything more than the home games on the schedule they would likely default after a year or 2, then what happens? Could they be locked out of their building?

 

[Centrum Hockey]

If any owner has to sell the AHL team to pay down his debt from buying a NHL team shouldn't be in the NHL to begin with. With Tilman that wouldn't be the case, but I can't see him buying a NHL franchise after spending over 2 Billion for the Rockets. The guy is rich but I don't think he wants to be leveraged too thin.

Rockets owner Tillman Fertitta calls luxury tax ‘horrible hindrance’
this article is from before the season Some owners are willing to lose so much money to try to win and the rockets owner let go of two important players from last season people criticize Dan Gilbert but he went deep in into the tax during lebron era 2.0.The coyotes might lose money right away if they went to Houston and Started losing games.

 

[Dirty Old Man]

Hmmmm, so Rocket boy doesn't like spending money, eh? Interesting, very inter...oh look, the Rockets are 14th in their conference. Ouch. It's like he's Sarver's Texan cousin; buy a successful NBA franchise and then *plop*.

 

[jonathan613]

If fertita really was interested in hockey why would he not do what they did in seattle and request to file an expansion application? I would expect you would want to do do that so you can at least run a formal ticket drive to see if houston as a market is really interested in hockey? He could always subsequently decide to bid on the coyotes instead of paying the higher expansion fee. If I am him, there is no way I am buying a team without having a solid belief that hockey can work in my city. So why has he not taken those steps?

The 2 reasons (aside from a what i believe is a correct assertion that the coyotes will thrive in arizona if they can get a downtown arena) I believe the NHL is fighting to keep arizona is they do not know what to do about calgary and would prefer calgary relocate to houston instead of arizona as well not having a clue what to do if fertitta is not really as interested in hockey as people think. No one seems to have any backup plan to fertitta/houston here.

 

[The Feckless Puck]

If fertita really was interested in hockey why would he not do what they did in seattle and request to file an expansion application? I would expect you would want to do do that so you can at least run a formal ticket drive to see if houston as a market is really interested in hockey? He could always subsequently decide to bid on the coyotes instead of paying the higher expansion fee. If I am him, there is no way I am buying a team without having a solid belief that hockey can work in my city. So why has he not taken those steps?

The 2 reasons (aside from a what i believe is a correct assertion that the coyotes will thrive in arizona if they can get a downtown arena) I believe the NHL is fighting to keep arizona is they do not know what to do about calgary and would prefer calgary relocate to houston instead of arizona as well not having a clue what to do if fertitta is not really as interested in hockey as people think. No one seems to have any backup plan to fertitta/houston here.

In brief:

There should be no question that the NHL would work in Houston. I think that Fertitta would prefer a turnkey operation to building one from scratch, though, which is why the Coyotes are in the discussion.

Calgary is not going to relocate to Houston. I can't see them relocating at all, but if they do, it'd be to Quebec City IMO. That's the NHL's backup plan for all contingencies, if you ask me.

 

[Tom ServoMST3K]

I don't have a feel at all for the situation. I felt good about my knowledge and what I didn't know heading into the megathread break, but right now I just don't know.

I guess I'm just baffled by what kind of chances the tribes have for actually making this thing happen. I wanna say a low chance, but I have no confidence in that assessment.

 

[gstommylee]

In brief:

There should be no question that the NHL would work in Houston. I think that Fertitta would prefer a turnkey operation to building one from scratch, though, which is why the Coyotes are in the discussion.

Calgary is not going to relocate to Houston. I can't see them relocating at all, but if they do, it'd be to Quebec City IMO. That's the NHL's backup plan for all contingencies, if you ask me.

Of a eastern conference relocation not in general. NHL is not going to approve anything that unbalances the league again/ Quebec is not getting a team via western city relocation.

 

[The Feckless Puck]

I guess I'm just baffled by what kind of chances the tribes have for actually making this thing happen. I wanna say a low chance, but I have no confidence in that assessment.

Well, it's not up to the tribal groups to make the whole thing happen. Basically, they've got to provide the land (which isn't a problem) and provide some sort of subsidy that normally wouldn't fly outside of reservation land. If you asked me to theorize from the hip, I'd say it would be some sort of gambling situation - if not in the arena itself, then on the larger plaza built around it. Remember, the site that has been bandied about in rumor currently has a casino facility there, and I have a hard time thinking they won't build something there at the arena site to maintain some of that revenue generation.

The big question in this theoretical scenario - for me, anyway - is who the ownership group will be, and how they're negotiating with the tribal groups. At this point we can be reasonably sure that Andy Barroway isn't involved. I'd also have to think that the NHL is in on whatever's going on, because no way would anything remotely relating to tribal issues leak without them being relatively sanguine about the prospects. If that's so, then they'd have to have a fairly good idea of the wherewithal of the new owner(s) to do this.

 

[Fairview]

Well, it's not up to the tribal groups to make the whole thing happen. Basically, they've got to provide the land (which isn't a problem) and provide some sort of subsidy that normally wouldn't fly outside of reservation land. If you asked me to theorize from the hip, I'd say it would be some sort of gambling situation - if not in the arena itself, then on the larger plaza built around it. Remember, the site that has been bandied about in rumor currently has a casino facility there, and I have a hard time thinking they won't build something there at the arena site to maintain some of that revenue generation.

The big question in this theoretical scenario - for me, anyway - is who the ownership group will be, and how they're negotiating with the tribal groups. At this point we can be reasonably sure that Andy Barroway isn't involved. I'd also have to think that the NHL is in on whatever's going on, because no way would anything remotely relating to tribal issues leak without them being relatively sanguine about the prospects. If that's so, then they'd have to have a fairly good idea of the wherewithal of the new owner(s) to do this.

Or there is the possibility that nothing is going on beyond some very very preliminary investigation on the part of both sides. That would be the reason that nothing credible has been released anywhere. No realistic timelines, no whispers of any names involved. The only mention of the casino site that I am aware of came from a fan on the F40 thread. Unless I missed something? What I recall was a mention from national media about the possibility of new owner/investors and at the time it was not necessarily contingent on a new arena.

 

[The Feckless Puck]

Or there is the possibility that nothing is going on beyond some very very preliminary investigation on the part of both sides.

There is that possibility, yes. What's actually going on is that we're doing the standard megathread thing of taking every rumor out there and hashing it into oblivion, because there isn't any hard news to be had. The most credible allusion to new ownership I have read has been from Elliotte Friedman, who mentioned that there is something in the works but IIRC didn't mention a new arena. But at the moment we're precisely where we were before we resurrected the megathread, and that is in Waiting Mode.

 

[gstommylee]

If fertita really was interested in hockey why would he not do what they did in seattle and request to file an expansion application? I would expect you would want to do do that so you can at least run a formal ticket drive to see if houston as a market is really interested in hockey? He could always subsequently decide to bid on the coyotes instead of paying the higher expansion fee. If I am him, there is no way I am buying a team without having a solid belief that hockey can work in my city. So why has he not taken those steps?

The 2 reasons (aside from a what i believe is a correct assertion that the coyotes will thrive in arizona if they can get a downtown arena) I believe the NHL is fighting to keep arizona is they do not know what to do about calgary and would prefer calgary relocate to houston instead of arizona as well not having a clue what to do if fertitta is not really as interested in hockey as people think. No one seems to have any backup plan to fertitta/houston here.

NHL opened expansion for team 32 for Seattle and Seattle only.

 

[Fairview]

There is that possibility, yes. What's actually going on is that we're doing the standard megathread thing of taking every rumor out there and hashing it into oblivion, because there isn't any hard news to be had. The most credible allusion to new ownership I have read has been from Elliotte Friedman, who mentioned that there is something in the works but IIRC didn't mention a new arena. But at the moment we're precisely where we were before we resurrected the megathread, and that is in Waiting Mode.

Yes, I agree. We opened this mega thread for business , and I don't want them to close it again...but the reality is that nothing seems to be happening, except some vague references to having things done by at first " early December" , then " around Christmas " and lately " end of the season". I think that when the dates keep changing the way they have, we are looking at smoke and mirror activity in all likelihood. NHL propaganda.

 

[TheLegend]

NHL opened expansion for team 32 for Seattle and Seattle only.

Right.... and had Fertitta plucked down $650 million and asked for a franchise in Houston the league would have said “no thanks.”

 

[TheLegend]

Yes, I agree. We opened this mega thread for business , and I don't want them to close it again...but the reality is that nothing seems to be happening, except some vague references to having things done by at first " early December" , then " around Christmas " and lately " end of the season". I think that when the dates keep changing the way they have, we are looking at smoke and mirror activity in all likelihood. NHL propaganda.

OR... it’s just a very complex negotiation that’s going on and what we get are tiny bits of hear say about when the parties hope to get it done and we’re fed it as a hard deadline.

I can understand the skepticism that this is the league playing a shell game. That’s why I decided a long time ago that whatever happens will eventually happen and worrying about it is senseless.