Phoenix LII: Goodnight, Sweet Lieberman

[Merci*]

Hey Dado name me one team that built their arena with their own money!

 

[JB52]

II. The City also is giving the arena manager parking rights. In the previous proposed deal with Matthew Hulsizer, the City valued parking rights at approximately $100 million over a specified period, and used those estimates to issue bonds. The Council should be informed of the value of the parking rights that are being transferred and the basis of that value, as part of the assessment of whether the agreement includes an illegal subsidy and is fair to taxpayers.

I'm afraid I'm not very good in English. Does that mean what I'm reading? Like in: You're giving 100 million to GJ, bunch of idiots, even a blind man would see it.

 

[goyotes]

Ha! GWI has a sense of humor after all.

I thought that was funny too. But the argument of inconsistency cuts both ways. The GWI was on the other side of the issue when they sought to defeat the bonds. They can't really make it an issue in any suit at this point given their prior public stance. All in all, and maybe its just me, but I found their letter pretty tame.

One very interesting point is they seem to agree that the operational costs shifted to the arena manager need to be factored into the exchange of consideration. I know CF and I disagree on the consideration analysis, but I think the GWI is prepared to look at the cost transfer as a revenue item in terms of what the CoG is getting in return. Moyes said in the bankruptcy 4 years ago it costs $9.5 M to operate the arena. The operator of the Rexal Place says with hockey it cost them over $10 M to operate.

Assume old Scruggs wasn't completely off her rocker when she said a maximum of $12 M to operate the arena. Then on balance over the term of the lease the arena manager is getting about $3M from the City as a managment fee. Does that violate the gift clause? I have my opinion, but it doesn't matter. Of course, for that $3 M it is paying, the City will likely see something between $60M and $100 M in revenue over the term of the lease.

If you remove the general dislike for this situation and the history of hockey in Arizona, and you overlook the terrible process that is being followed to lead this item to a vote, and look at the deal and the other options available to Glendale, I find it hard to understand why so many believe this is only better than butt cancer. I think it is "far superior" to butt cancer.

 

[Dado]

Hey Dado name me one team that built their arena with their own money!

Why? Am I complaining that it happens?

No.

Some pretty extreme sensitivity in here...

 

[OthmarAmmann]

Can you please explain why you think that its going to be a disaster? No sarcasms I am just curious and open to different opinions.

I think the demand is there, especially for a single venue, but believe it will be grossly over budget. That is based on my gut, and that's all I'll say about QC in this thread.

 

[Merci*]

Why? Am I complaining that it happens?

No.

Some pretty extreme sensitivity in here...

No you are trying to compare an arena being built to a team receiving welfare from a city to stay afloat. Clear difference

 

[Harry22]

Hey Dado name me one team that built their arena with their own money!

Montreal.

 

[No Fun Shogun]

If this continues for another few months, we're going to need a full 1,000 post topic just to cover all the previous topic names that this ordeal has spawned.

 

[halligan10]

I'm afraid I'm not very good in English. Does that mean what I'm reading? Like in: You're giving 100 million to GJ, bunch of idiots, even a blind man would see it.

No it says: Your giving 100 to GJ, bunch of idiots, even a frenchman could see it.

 

[halligan10]

I think the demand is there, especially for a single venue, but believe it will be grossly over budget. That is based on my gut, and that's all I'll say about QC in this thread.

In this thread only or Quebec is just a place that you dislike?

 

[Brodie]

Hey Dado name me one team that built their arena with their own money!

Columbus

 

[JB52]

No it says: Your giving 100 to GJ, bunch of idiots, even a frenchman could see it.

Oh! I knew I was missing some of the subtleties of the GWI's fine prose.

 

[OthmarAmmann]

In this thread only or Quebec is just a place that you dislike?

thread

Quebec is nice

edit: for that matter I really like AZ too

 

[epo]

Is the exclusive use of the arena (other than 2 suites) not consideration, or is it assumed to have zero value?

 

[MAROONSRoad]

Hey Dado name me one team that built their arena with their own money!

Not Dado, but:

Montreal, Ottawa, Toronto, Vancouver

Winnipeg - 75% private funding; 25% public funding.

Calgary - arena built for the Olympics. 100% public.

Edmonton - has a deal like Winnipeg 1.0 and QC, but needs new arena.

A few US-based teams mainly in the larger markets.

 

[goyotes]

Is the exclusive use of the arena (other than 2 suites) not consideration, or is it assumed to have zero value?

The arena manager actually doesn't have "exclusive" use of the arena. The CoG has some rights to use the arena at its election for things called out for in the lease. However, I think you will find the right to use the arena to book events goes with every arena managment deal. I don't believe seperate consideration is given for that term since it is essential to the contemplated deal.

 

[halligan10]

thread

Quebec is nice

edit: for that matter I really like AZ too

I love Arizona as well. I wish Quebec would get a team but not the Coyotes. Westgate is so beautiful. It totally suck that the market crashed the way it did. Perhaps I am sure they will bounce back and hard even if the team leave town.

 

[MAROONSRoad]

I thought that was funny too. But the argument of inconsistency cuts both ways. The GWI was on the other side of the issue when they sought to defeat the bonds. They can't really make it an issue in any suit at this point given their prior public stance. All in all, and maybe its just me, but I found their letter pretty tame.

One very interesting point is they seem to agree that the operational costs shifted to the arena manager need to be factored into the exchange of consideration. I know CF and I disagree on the consideration analysis, but I think the GWI is prepared to look at the cost transfer as a revenue item in terms of what the CoG is getting in return. Moyes said in the bankruptcy 4 years ago it costs $9.5 M to operate the arena. The operator of the Rexal Place says with hockey it cost them over $10 M to operate.

Assume old Scruggs wasn't completely off her rocker when she said a maximum of $12 M to operate the arena. Then on balance over the term of the lease the arena manager is getting about $3M from the City as a managment fee. Does that violate the gift clause? I have my opinion, but it doesn't matter. Of course, for that $3 M it is paying, the City will likely see something between $60M and $100 M in revenue over the term of the lease.

If you remove the general dislike for this situation and the history of hockey in Arizona, and you overlook the terrible process that is being followed to lead this item to a vote, and look at the deal and the other options available to Glendale, I find it hard to understand why so many believe this is only better than butt cancer. I think it is "far superior" to butt cancer.

Other options:

- cut your losses.
- don't double or triple down on a losing bet.

COG expenses:

At time of bankruptcy:
$180MM plus interest.
(minus Balsillie money if you want to include that)

After 2 years of NHL subsidies:
$180MM plus $50MM =
$230MM plus interest

After proposed deal:
$180MM plus $50MM plus $325MM =
$555MM plus interest for, say, next 20 years

Starts adding up. Especially for a city of 250,000.

 

[OthmarAmmann]

So we didn't get butt cancer?

Well there was Pain in the AZ in March 2011, and it was about Hulzinger.

That was when "The Fax" came out IIRC

edit: No, Pain in the AZ was a few weeks before "the fax" but was the Bettman presser in AZ regarding GWI, where he appeared to be very frustrated. Let's watch:

Here is the 1st period intermission interview with Bettman.

For a guy who says he isn't angry, he sure seemed terse. I'd say he sounded defeatist tonight.

 

[goyotes]

Other options:

- cut your losses.
- don't double or triple down on a losing bet.

COG expenses:

At time of bankruptcy:
$180MM plus interest.
(minus Balsillie money if you want to include that)

After 2 years of NHL subsidies:
$180MM plus $50MM =
$230MM plus interest

After proposed deal:
$180MM plus $50MM plus $325MM =
$555MM plus interest for, say, next 20 years

Starts adding up. Especially for a city of 250,000.

Except the arena is the gift that keeps on giving. You can't not build it now to save the $180 M. As a property owner I am sure you understand that you have to manage the asset to get the most value. That means they have to pay to keep it up and in operational shape, which means spending convservatively $10 M a year, with or without an arena manager and the Coyotes. If you decide to just shut the doors it will still cost several million a year with just insurance and security costs and very minimal maintenance.

There just aren't other uses that are going to match the 600,000 visitors the Coyotes brought last year. That is one of the problems with this market. It is saturated and has just as many venues as it does entertainment options. And, Westgate goes from bad to full out implosion without an anchor tenant at the Job.

I hear what you are saying but there really is no way to "cut the loses". Glendale is doing something done all the time in Arizona, banking on inevitable growth to fix the problem. I think it is short sighted personally, but cutting their loses really isn't an option either.

 

[cbcwpg]

I'm thinking the parking might be all the GWI needs to act.

The city valued parking at $100,000,000 ( cue Dr. Evil laugh ) and is now giving that to Jamison for free. That's a gift IMO.

 

[cbcwpg]

There just aren't other uses that are going to match the 600,000 visitors the Coyotes brought last year. That is one of the problems with this market. It is saturated and has just as many venues as it does entertainment options. And, Westgate goes from bad to full out implosion without an anchor tenant at the Job.

I hear what you are saying but there really is no way to "cut the loses". Glendale is doing something done all the time in Arizona, banking on inevitable growth to fix the problem. I think it is short sighted personally, but cutting their loses really isn't an option either.

The Mayor of Glendale is of the opinion that enough events can be found to offset the number of people that go to Westgate for hockey, but the problem is nobody knows if this is true or not until the city is forced down this road because the team has left.

" banking on inevitable growth to fix the problem " .... Sounds like what most chronic gamblers do.

 

[backcheck42]

Hey Dado name me one team that built their arena with their own money!

Chicago.

 

[goyotes]

The Mayor of Glendale is of the opinion that enough events can be found to offset the number of people that go to Westgate for hockey, but the problem is nobody knows if this is true or not until the city is forced down this road because the team has left.

" banking on inevitable growth to fix the problem " .... Sounds like what most chronic gamblers do.

Which way is the wind blowing Mayor you mean? She also said this was the best deal the City had seen in three years, suppported the other ones, but doesn't want to support this. I'm not sure the Mayor is the most reliable source of information these days. She almost acts as if she was jilted by her lover Daly who promised the $25 M was never going to be spent, but wasn't willing to put that in writing, and was still asking for the money anyway. When she starts going down that road to justify her vote, I just shake my head and ask "do you really think we are ALL that stupid?"

And I do agree with you about their strategy to fix problems here in Arizona. But I have to tell you it is the way this state has looked at things since its inception. Remember, it is the wild west.

 

[goyotes]

I'm thinking the parking might be all the GWI needs to act.

The city valued parking at $100,000,000 ( cue Dr. Evil laugh ) and is now giving that to Jamison for free. That's a gift IMO.

Can you imagine that discussion in court?

Darcy: Mayor, didn't you value the parking rights you are now just giving to the arena manager at $100 M?

Mayor: Well didn't you tell the bond market we didn't own the rights so they shouldn't invest in bonds because the security had no value?

Darcy: You're avoiding my question Mayor. Have a cupcake.

Mayor: No, Darcy, it is you who is avoiding my question. Why do you hate me so? And take that cupcake and stick it where the sun doesn't shine.

Now that would be an interesting exchange for both sides. But I give the GWI more credit. Its fun to have fun with the city over this issue. I don't really see them making it part of their case, however.