Phoenix LXXII: Send in the Clowns

[Whileee]

I sincerely doubt it. It lacks... Clarkonomics. Plus all the nifty headshots of the major players. Too achievable for Joyce alone I feel.

Although, the "He can buy the arena" is referenced.

Perhaps her "thoughts" with an outsourced writer?

But it does have the BS assertion that Jamison's AMF was $12 million per year.

 

[aqib]

I mean, legally speaking, can you conspire to organize bankruptcy solely for the purposes of voiding a particular contract?

Well if you are solvent and liquid and your creditors object to you filing then the judge can say "you don't need to be here."

However, given the pile of debt the team was under and the value of the team its hard to argue they were solvent.

That being said, you have a lot of leeway to void contracts and leases in bankruptcy.

 

[CasualFan]

I mean, legally speaking, can you conspire to organize bankruptcy solely for the purposes of voiding a particular contract?

I think conspire to organize the BK is a bit strong. I think the financials show beyond any doubt that the team was destitute. Businesses extract concessions from municipalities pretty frequently. While an ultimatum of "subsidy or BK" might not sound very appealing, it hardly seems out of the ordinary and definitely doesn't appear criminal in any way.

In my opinion, the only potentially criminal acts were perpetrated by Beasley. I think the preponderance of evidence suggests that Beasley wired a series of lucrative Glendale contracts to the Reinsdorfs with Kaites serving as the lobbyist. Ed seems to have tried to do the same thing with the Coyotes but he hit the third rail. The record on this file should probably include info on the International Facilities Group and Global Spectrum contracts at University of Phoenix Stadium, Camelback Ranch agreements, Beacon Sports Capital Management contract, and the Hocking retainer. It's hard to look at those documents and arrive at any conclusion other than Beasley making some really suspicious contract decisions and then attempting to railroad Moyes. If Beasley had the council in his pocket perhaps they don't even use BK. The city could amend the AMULA via legislative/administrative action if the NHL could use the proxy to sell the team without Moyes' consent. Moyes might commence civil action but I think the NHL would like their chances in that case, plus they would have been rid of the Coyotes headache. But it seems that Scudder recognized what was happening and Rodier/Balsillie gave him the wildcard he needed.

Those opinions aside, the declarations create a factual record that clearly demonstrates the three entities - team, league, and city - all knew that BK was being considered at least as early as Fall of 2008. Shumways Dec even has a copy of the PPT they used at the Glendale meeting. The record consistently shows that none of this was a surprise to anyone involved. Glendale knew Moyes was done funding the team without a subsidy. Bettman knew Scudder was playing footsies with Roider. Gary documented his discussion about DIP financing and voiding the AMULA.

Each party took reasonable steps to act in their best interest, aside from Beasley. But only if you are viewing that as the interest of a steward of Glendale resources. If you're viewing it as what Ed Beasley's personal interests might be, it's probably a different answer.

 

[XX]

Each party took reasonable steps to act in their best interest, aside from Beasley. But only if you are viewing that as the interest of a steward of Glendale resources. If you're viewing it as what Ed Beasley's personal interests might be, it's probably a different answer.

Because the NHL was a benefactor/enabler/co-conspirator of Beasley's improper conduct, could it be argued that they are partly responsible for the fallout that followed? I'm not familiar with the docs, but is there really something in there authorizing Beasley to do 'whatever it takes' (or anything remotely outlining $20 million+ in subsidies) to keep the team? The line about him not needing council approval is pretty damning, at least to me. That would signal to me, the casual observer, that this backdoor Reinsdorf deal wasn't exactly on the up and up.

I guess if you go back and really look at things, the NHL didn't stand to lose much by letting this go to BK court. It could be argued, given the order of events, that it was actually their intention to do so. Anything to void the AMULA, letting them setup a sweetheart deal (Reinsdorf) or just flat out profit in the end (TNSE/PKP) regardless of what transpired.

I'm not seeing the motivation for the league to find a legitimate local buyer. Not after the AMULA was voided. At that point, their corporate interest is to attain the most money possible for the asset. Or, at the very least, recoup every $ spent. I see no reason for the league to cave on purchase price, beyond middling concerns about optics. It could be argued that the drawn out and often times dramatic process has given them adequate cover to exit the market. Lobbing guys like Hulszier and GJ at the problem really had no downside. Cities move at a pace slow enough to serve the NHL's end goal.

 

[BnGBear1970]

CF, that's about what I had figured. Since there's likely nothing to be had against the NHL, if the Coyotes end up out of town, can the city then turn on Beasley, citing his use of power to affect personal vendettas against Moyes rather than doing what was in the best interests of all parties?

 

[aqib]

Because the NHL was a benefactor/enabler/co-conspirator of Beasley's improper conduct, could it be argued that they are partly responsible for the fallout that followed? I'm not familiar with the docs, but is there really something in there authorizing Beasley to do 'whatever it takes' (or anything remotely outlining $20 million+ in subsidies) to keep the team? The line about him not needing council approval is pretty damning, at least to me. That would signal to me, the casual observer, that this backdoor Reinsdorf deal wasn't exactly on the up and up.

I guess if you go back and really look at things, the NHL didn't stand to lose much by letting this go to BK court. It could be argued, given the order of events, that it was actually their intention to do so. Anything to void the AMULA, letting them setup a sweetheart deal (Reinsdorf) or just flat out profit in the end (TNSE/PKP) regardless of what transpired.

I'm not seeing the motivation for the league to find a legitimate local buyer. Not after the AMULA was voided. At that point, their corporate interest is to attain the most money possible for the asset. Or, at the very least, recoup every $ spent. I see no reason for the league to cave on purchase price, beyond middling concerns about optics. It could be argued that the drawn out and often times dramatic process has given them adequate cover to exit the market. Lobbing guys like Hulszier and GJ at the problem really had no downside. Cities move at a pace slow enough to serve the NHL's end goal.

Well the NHL had a big gamble in court, if they had lost the right to determine where their franchises are located. Everyone had their opinions but without precedent no one knew how it was going to go. The NHL would have rather the team sold back in 2009 and not had to deal with this as long as they did.

 

[rt]

I see no reason for the league to cave on purchase price, beyond middling concerns about optics. It could be argued that the drawn out and often times dramatic process has given them adequate cover to exit the market. Lobbing guys like Hulszier and GJ at the problem really had no downside. Cities move at a pace slow enough to serve the NHL's end goal.

This seems rather astute. Still, the blame game bores me.

 

[XX]

Well the NHL had a big gamble in court, if they had lost the right to determine where their franchises are located. Everyone had their opinions but without precedent no one knew how it was going to go. The NHL would have rather the team sold back in 2009 and not had to deal with this as long as they did.

But if CF's take on events are to be believed, they were not going to sell the team without somehow voiding the AMULA first. Had they not extracted the subsidies discussed, Moyes was going to put the team into BK, even without Balsille. RIM Jim was just a convenient out and a nice wrench to throw into the process once it became clear that Moyes was going to be dicked over. I don't think anyone reasonably expected Balsille to succeed in his bid. Had Glendale decided to take the money and run, things would have been more interesting. But the right to own and operate a franchise in a location dictated by a league was beyond the scope of the BK court, if I remember right, and wasn't specifically addressed in the ruling. Balsille's bid made creditors more whole, but left the city unfulfilled in so far as they no longer had a team.

 

[CasualFan]

I'm not familiar with the docs, but is there really something in there authorizing Beasley to do 'whatever it takes' (or anything remotely outlining $20 million+ in subsidies) to keep the team? The line about him not needing council approval is pretty damning, at least to me. That would signal to me, the casual observer, that this backdoor Reinsdorf deal wasn't exactly on the up and up.

Beasley did a lot of things without council approval, most of which he appears to have massaged to remain technically in harmony with law and policy. Except maybe those fund transfers. He might have overstepped there. We'll have to wait to see just how forensic the audit gets on that.

Anyway, all the BK docs are public records and available free of charge. There were many depositions and declarations. Shumway's probably provides the best summary of the timeline: http://docs.bmcgroup.com/phoenixcoyotes/docs/azb_2-09-bk-9488_110.pdf

 

[aqib]

But if CF's take on events are to be believed, they were not going to sell the team without somehow voiding the AMULA first. Had they not extracted the subsidies discussed, Moyes was going to put the team into BK, even without Balsille. RIM Jim was just a convenient out and a nice wrench to throw into the process once it became clear that Moyes was going to be dicked over. I don't think anyone reasonably expected Balsille to succeed in his bid. Had Glendale decided to take the money and run, things would have been more interesting. But the right to own and operate a franchise in a location dictated by a league was beyond the scope of the BK court, if I remember right, and wasn't specifically addressed in the ruling. Balsille's bid made creditors more whole, but left the city unfulfilled in so far as they no longer had a team.

Well (and I don't remember if it was CF) but the sale to Reinsdorf gave them an AMF replacing the lease that existed.

As for Balsillie/Moyes, it was presenting as Balsillie's lawyer was searching for a movable team and he initiated the talks to sell the team.

What Moyes submitted is whats called a "prepackaged bankruptcy" thats where you file and submit a plan at the same time. Usually bankruptcies are in more of a crisis situation and there is a cooling off period.

Anyway what the court ruled was that you couldn't use bankruptcy to circumvent your franchise agreement. In the ruling he cited the hypothetical of someone putting a McDonalds franchise in bankruptcy and then trying to move it to a more desirable location. The other leagues filed supportive statements because they were afraid of other teams doing that. So if Balsillie had been allowed to do it then it wouldn't have stopped say Mike Bloomberg from buying the Dodgers in bankruptcy and moving them back to Brooklyn.

 

[Ciao]

I've wondered how long it would take Coyotes fans to become angry at the NHL's mismanagement of this mess. This has been a long time coming.

 

[NorthernILHawksFan]

In the old thread I mentioned how I have sympathy for the true Phoenix fans who have had to deal with this mess.

That doesn't mean I think Phoenix is a good hockey market. The team would be much, much better off in Quebec City.

However, I do feel for the true fans (the few of them down there). Of course, there isn't enough of them to justify Phoenix as a strong market.

 

[Fugu]

Well (and I don't remember if it was CF) but the sale to Reinsdorf gave them an AMF replacing the lease that existed.

As for Balsillie/Moyes, it was presenting as Balsillie's lawyer was searching for a movable team and he initiated the talks to sell the team.

What Moyes submitted is whats called a "prepackaged bankruptcy" thats where you file and submit a plan at the same time. Usually bankruptcies are in more of a crisis situation and there is a cooling off period.

Anyway what the court ruled was that you couldn't use bankruptcy to circumvent your franchise agreement. In the ruling he cited the hypothetical of someone putting a McDonalds franchise in bankruptcy and then trying to move it to a more desirable location. The other leagues filed supportive statements because they were afraid of other teams doing that. So if Balsillie had been allowed to do it then it wouldn't have stopped say Mike Bloomberg from buying the Dodgers in bankruptcy and moving them back to Brooklyn.

I don't believe that's an accurate description.

I think the battle Rim Jim faced was being turned down by the NHL as an owner. The court ruled it could not force the NHL to accept someone into the club that they didn't approve of as an owner. There was a BOG meeting prior to the hearings where the governors voted on Balsillie, Reinsdorf and maybe IEH. Only Reinsdorf was approved as a potential owner.

Moyes was allowed to put a failing asset into BK, despite the NHL claiming he had not right to do so. The court never actually ruled on this point, but proceeded with a bankruptcy regardless-- so approval without delving into technicalities?

The court also said that Moyes did not have a right to sell a territory that did not belong to him. (Hamiltion) There was still some wiggle room here too however since the court heard witness estimates on the value of the market in Hamilton. A buyer would have to pay for Phoenix + the difference in value if Hamilton was worth more.

They never actually had to get to addressing that point legally since the BOG turned down Balsillie as a potential owner.

 

[GuelphStormer]

I don't believe that's an accurate description.

I think the battle Rim Jim faced was being turned down by the NHL as an owner. The court ruled it could not force the NHL to accept someone into the club that they didn't approve of as an owner. There was a BOG meeting prior to the hearings where the governors voted on Balsillie, Reinsdorf and maybe IEH. Only Reinsdorf was approved as a potential owner.

Moyes was allowed to put a failing asset into BK, despite the NHL claiming he had not right to do so. The court never actually ruled on this point, but proceeded with a bankruptcy regardless-- so approval without delving into technicalities?

The court also said that Moyes did not have a right to sell a territory that did not belong to him. (Hamiltion) There was still some wiggle room here too however since the court heard witness estimates on the value of the market in Hamilton. A buyer would have to pay for Phoenix + the difference in value if Hamilton was worth more.

They never actually had to get to addressing that point legally since the BOG turned down Balsillie as a potential owner.

that was one of the more interesting aspects of the trial, i thot. both the league and balsillie offered economic evaluations of the hamilton market. both were quite positive and essentially differed only in value. i thot baum was very astute in obliging all parties to clearly think through their positions as well as their alternatives. and indeed he wasnt shy about offering advice with the occasional, "are you sure?".

re: BoG vote on Balsillie's "character", that was one of the more shameful elements of this whole saga. sure, jim played fast and hard, but even the rogues gallery sitting around the table must have recognized their hypocrisy, especially after having lauded balsillie as a saviour a couple years earlier, and then later admitting they'd still consider him. huh? what exactly are you actually saying, gary? it's hard to understand words that come out of both sides of your mouth.

 

[JimAnchower]

How long until John Spano joins this group? And I know Boots Del Biaggio is still in prison, but that shouldn't be a big hurdle to overcome. When will he join the group?

 

[Shawa666]

The asset is reasonably priced if you are QC or Seattle, but it is not reasonably priced for being in Glendale.

It's no different than a house. Why is the exact same house in City A $190,000, but in City B its $450,000? Because that is what the market will bare AND still allow the seller to sell. If the seller in City A asks for $400,000 what happens? The house sits on the market unsold for 4 seasons. Everything in the world only has value if someone is willing to pay for it.

The only reasons I see for the NHL to insist on the price of $170M are:

1- When Bettman bought the team out of BK he promised his bosses ( the owners ) that he was going to make them whole on the sale including expenses. Truth be told, IMO 80% of the other owners don't give a rat's behind about the Coyotes staying in Glendale. Maybe they did in the beginning, but after 4 years... they just want their money back.

2- The NHL is keeping the price high for the sole purpose of selling it in a relocation and have no intentions of keeping it in Glendale. They have been able to use the CoG's desperation to finance losses for two years and people's desire to get something using other peoples money ( re: Hulsizer, IEH, etc. ) to buy time until the team can be moved.

A sports franchise is easily protable. Did you forget the Atlanta to Winnipeg move already?

On the contrary, the NHL is nearly the sole cause of this. Glendale built the arena under the guise that an NHL team would be the main tenant, and signed the club to a 30 year lease accordingly. The NHL, for whatever reason, allowed Moyes to place the team into bankruptcy which voided the lease that the city was counting on. The league then held the team hostage, with all parties aware that TNSE was ready and willing to take a team at any point. During this fiasco, Atlanta boiled over and the NHL's hand was forced. Do we send Phoenix or Atlanta? For the sake of keeping up appearances, and with the benefit of the money from Glendale, the league sent Atlanta packing. Now they've been forced to wait until a new market is ready and willing, which QC seems to be.

The NHL had no say in this matter initially. Moyes overestimated the Hockey Market in Phoenix pure and simple. The team was already nosediving financially when it managed to get a swwetheart deal with Glendale. Remember, all franchises are independant theoretically. Moyes had every right to put the team in bankruptcy. The NHL moved in to prevent what it percieved as an hostile takeover by Balsilie.

The Atlanta situation was simple. ASG tought that the market couldn't sustain both the Hawks and the Thrashers. They believed that their best bet was in keeping the Hawks and threw the keys of the Trashers on Gary's desk.

At no point was the NHL, throughout this entire process, forced to legitimately look for a local buyer.

There is still no serious buyer willing to keep the Yotes in Phoenix. For a good reason.

If you consider their moral imperative as a corporation (profits for stakeholders) then their actions to this point are actually rather predictable. Why sell the team for a discount when you can extract full price and then some from a new market? Optics be damned. If Winnipeg or QC had built an arena specifically for a team, only to watch that team snake off, you guys would be screaming bloody murder. I think the league crosses over into dangerous territory, legally speaking, when they front buyers as legitimate (and deals as solid) when they have no intention of realistically selling the team to a local buyer. They managed to coax $50 million out of a city under duress, and this is somehow okay because the council deserved it?

I beg your pardon, but Glendale could and should have told the League to stuff it.

Why should a city watch a major investment crumple before their very eyes because the NHL didn't handle Moyes correctly? Why should the city be coerced into giving up hefty subsidies because the NHL didn't do its job?

Because it is not the 29 other team's duty to ensure the viability of the Phoenix franchise. Glendale made a lot of bad deals in hopes of riding the housing bubble. The City of Glendale was simply too small for the risk it took in building the Jobing.com. It was a stupid plan and it backfired. It's as simple as that.

Normally, a corporation would just write off that $70 million as the cost of defending their legal franchising rights. Why do you think the NBA, NFL and MLB were all hovering around, curious about the outcome? I believe at one point they even sent letters in support of the NHL. The right to dictate where you do business is worth everything. But when you have the opportunity to externalize that cost and pass it off to the public, why not? It's absolutely predictable, if you consider the amoral and pathological nature of a corporation.

I am thoroughly disgusted by this. The illusion that the league cares about the markets in which it operates has been totally shattered for me. It will be nearly impossible for me to support a business that conducts itself in such a way.

I'm curious to see your argument supporting the NHL (or any other business) in offloading costs onto taxpayers.

You're seriously telling me that you tought that the NHL cared about it's markets?

Really?

Did you not know that the team you loved so much was not an expansion team?

If anything the relocation wave of the late 90's should have taught you never to trust the League.

 

[Fidel Astro]

Since I pissed a lot of people off in the last discussion with my comments on the Phoenix fanbase, this is all I want to say in response:

All of the people criticizing the fan support of the Jets 1.0 and comparing it to Phoenix 2013 need to realize one thing. Our team left. So go ahead and talk **** about them all day. They moved. If you're comparing them to your team, your team should probably move too.

 

[powerstuck]

How long until John Spano joins this group? And I know Boots Del Biaggio is still in prison, but that shouldn't be a big hurdle to overcome. When will he join the group?

As there are persistent rumors of undisclosed investors willing to buy the Coyotes...he is probably in there somewhere already.

 

[IceAce]

hey, don't forget about John Rigas!

 

[cbcwpg]

is it actually her?

According to her twitter, it's her.

Joyce Clark ‏@clarkjv
My first blog: When is a deal not a good deal?" http://www.joyceclarkunfiltered.com

 

[powerstuck]

According to her twitter, it's her.

Joyce Clark ‏@clarkjv
My first blog: When is a deal not a good deal?" http://www.joyceclarkunfiltered.com

And is her twitter really hers

 

[goyotes]

Since I pissed a lot of people off in the last discussion with my comments on the Phoenix fanbase, this is all I want to say in response:

All of the people criticizing the fan support of the Jets 1.0 and comparing it to Phoenix 2013 need to realize one thing. Our team left. So go ahead and talk **** about them all day. They moved. If you're comparing them to your team, your team should probably move too.

On this point we can agree. I just hope the NHL does the right thing and moves them to QC, and not to Seattle which is an untested market, and I fear, after five years will prove no better than Phoenix as an NHL market.

It sometimes seems the NHL is its worst enemy. In the end, it will likely be established that the NHL wasn't fighting for the Phoenix market any more than it fought for Winni, QC or Hartford. The NHL was buying time to get its ducks in a row for expansion and relocation. What is shameful is the NHL probably took the CoG's $50M under the false pretense that the NHL would secure ownership to keep the team in Glendale. Or as Daly called the first $25M, just an insurance policy the NHL will not need.

No wonder there are many troubled teams. If the NHL was a well managed league, I don't think you would have 3 or 4 teams that regularly come up in talks about relocation. Hey QC, get that lease agreement signed in blood. If history has shown anything, its that a community shouldn't trust the NHL. Of course, just my opinion.

 

[mesamonster]

Still not one word from the Mainstream hockey media regarding the reemergence of the clowns ! Fool me once, twice, three times the hockey world is no longer listening to the chatter emanating from Glendale.

 

[Fidel Astro]

On this point we can agree. I just hope the NHL does the right thing and moves them to QC, and not to Seattle which is an untested market, and I fear, after five years will prove no better than Phoenix as an NHL market.

Oh, I agree. It has to be Quebec.

In the end, it will likely be established that the NHL wasn't fighting for the Phoenix market any more than it fought for Winni, QC or Hartford. The NHL was buying time to get its ducks in a row for expansion and relocation.

Even if that ends up being the case, at least they pretended they wanted a team there. With us, it was basically "**** you and good riddance, you filthy WHA refugees."'

I think what's probably more likely is that the NHL was, at one point, fighting for the Phoenix market but after a while moved into "buying time until we can have expansion/relocation worked out" mode.

If history has shown anything, its that a community shouldn't trust the NHL. Of course, just my opinion.

No, no, I agree completely. I mean, people were booing Bettman even when he announced we were getting a team again. Definitely can't trust these weasels. When you take something that is tied to culture and emotion and focus only on the financial aspects of it, you're bound to burn a lot of of people, and that's exactly what the NHL has done and continues to do.

 

[Fugu]

that was one of the more interesting aspects of the trial, i thot. both the league and balsillie offered economic evaluations of the hamilton market. both were quite positive and essentially differed only in value. i thot baum was very astute in obliging all parties to clearly think through their positions as well as their alternatives. and indeed he wasnt shy about offering advice with the occasional, "are you sure?".

re: BoG vote on Balsillie's "character", that was one of the more shameful elements of this whole saga. sure, jim played fast and hard, but even the rogues gallery sitting around the table must have recognized their hypocrisy, especially after having lauded balsillie as a saviour a couple years earlier, and then later admitting they'd still consider him. huh? what exactly are you actually saying, gary? it's hard to understand words that come out of both sides of your mouth.

This is where Al Davis citations come up, but let's say Balsillie had purchased a team in Phoenix. Absent the contractual element the league wanted (guarantee that he would not move the team), it's not clear that they could prevent a move by an existing owner. They thus have to prevent an entry into the citadel in the first place; and then IF there is a move made by an existing owner, they can seek damages (the difference between the two market valuations and fee to a team already in that market).

Had Moyes not been bound by an extremely punitive lease agreement, I'm willing to bet he might have pulled an Al Davis. THEN he would have sold the team.