Phoenix LXXXV: A Bridge to Nowhere

[gstommylee]

I believe that IF the Coyotes left that it would not kill that shopping center or Arena. In fact it might even be the same or better for the city. IMO I think that an AHL team could eventually play in the arena and would draw 4000-6000 a game and those fans would still shop and go to dinner and drinks before or after games. I also believe that Anaheim or Los Angeles could use that as there farm team and The new Seattle NHL team would be based IN Portland ,OR This would allow wast coast expansion of the AHL. Just a thought to ponder.

Oi i don't think portland OR would be rooting for a team thats the farm system of Seattle.

 

[RAgIn]

But if Renaissance Sports & Entertainment and the city of Glendale cannot come to terms on arena management payments by Friday, the NHL may pull the plug on the deal and the team’s future in Arizona.

“The thing is, if there’s not some sort of framework in place for a deal by Friday, you have to imagine the NHL will pull the plug. This can’t continue to drag on into July,” said an executive working close to the deal.

“The clock is really ticking here,” the executive said. “The good news is, it seems they’re down to tweaking the deal, making some minor refinements. It appears Renaissance has met the City’s main objective—to create enough revenue that this deal works for both sides.”

Interesting quotes. Sunnucks though.

The source also pointed out that Renaissance executives believe their deal is better for the city than past Coyotes pacts.

Oh my. Can't wait to see this deal.

http://www.sportingnews.com/nhl/sto...e-nhl-hockey-renaissance-sports-entertainment

 

[Donwood]

I believe that IF the Coyotes left that it would not kill that shopping center or Arena. In fact it might even be the same or better for the city. IMO I think that an AHL team could eventually play in the arena and would draw 4000-6000 a game and those fans would still shop and go to dinner and drinks before or after games. I also believe that Anaheim or Los Angeles could use that as there farm team and The new Seattle NHL team would be based IN Portland ,OR This would allow wast coast expansion of the AHL. Just a thought to ponder.

The Phoenix Roadrunners played in IHL at the same time as the Coyotes, so An AHL team would work in time.

 

[gstommylee]

Interesting quotes. Sunnucks though.



Oh my. Can't wait to see this deal.

http://www.sportingnews.com/nhl/sto...e-nhl-hockey-renaissance-sports-entertainment

I doubt its that much of an agreement compared to last weeks one. Sherwood may have his own personal agreement but until the other council members are satisfied. They aren't any closer to getting it done then they were yesterday.

 

[rt]

They cant be, and those that arent fans or are casual fans, you have to give them a reason to attend, create a buzz. Cant win every game, but make an effort, not be mathematically eliminated from playoff contention by February. Once the novelty wore off at the AWA, lousy environment, new building goes up & BAM, Lockout. Team loses all momentum, exacerbated by on ice futility & ineptitude under Gretzky, Moyes clueless, seriously damaging the market. Theres just no way you can blame the people of Phoenix. Lousy product, mismanagement. Amazing that seasons ticket sales are even where there at, miraculous run last year packing the joint followed by... another Lockout. I mean, WTF?! I cant think of a more ridiculous, just unbelievably shabby, badly handled situation than this one in any league at anytime anywhere, unless we go back to the 1930's & the Relocation of the Ottawa Senators to St.Louis. Mindblowing.

I'm glad that at least one person outside of Arizona gets it.

Thanks. I mean it.

 

[knorthern knight]

Wildly speculating here but, perhaps the franchise IS the collateral

Would the NHL allow that though?

As has happened in the case of St Louis, the NHL can contract the existing franchise, and create a new one in its place, without the debts. So I wouldn't consider the franchise as high grade collateral.

 

[TheLegend]

Before I learned how the internet actually worked, I used to correct them all. The whole time thinking that people would want to comprehend the nuances of the agreements. What a perfect imbecile I was.

I certainly appreciate your explanations CF, along with those from a small handful of others I've learned to respect over the past four years.

Last year, Norma Alvarez required explanation on the difference between a utilities franchise and a hockey franchise for ordinance purposes. Yet she holds cult status among the relocation enthusiasts

 

[knorthern knight]

You might think more dates could be accomplished, and you may be right. I am just saying what the local concensus is. Also, it is rumored that no more than 20 dates are guaranteed by either RFP. I again emphasize "rumor". Phoenix has 9 or 10 venues that allow for more than 2,500, and several other venues that approach 1,000. There is a glut of concert sites and a finate number of concerts that come to the Valley.

However, remember that you're not paying $60+ million in salaries to players. Then there's the front office and the GM and the coaching staff and trainers, all needing to be paid. And it is rather energy-intensive to maintain an NHL-sized rink full of ice in the blazing desert sun. 20 concerts/wrestling/etc will probably be a better financial proposition than 45 hockey games. That's the situation at Philips Arena in Atlanta and Sprint Center in KC.

 

[knorthern knight]

I know this was discussed weeks ago. All the negatives people point out that affect the Coyotes could be positives for the league. Low revenues keep the cap down, probably tens of millions in tax deductions for the league and the 29 owners. Also gives them some sense of stability with the finance problems other teams may have.

The "taxable income fallacy". Would you rather...

• earn $1million dollars, and pay 50% tax
• or stay on welfare, earn zero, and pay no tax

The NHL faces a similar situation...

• Lose $30 million (1 million per team) next season, and pay for it in "after-HRR-tax" money
• Have the franchise do $30 million better in QC next season. The resulting $1 million per team is split 50/50 with the NHLPA. Each team is still $500,000 better off

 

[EvilCoop]

Norma's an idiot, yet she's "our" idiot.

 

[Confucius]

The "taxable income fallacy". Would you rather...

• earn $1million dollars, and pay 50% tax
• or stay on welfare, earn zero, and pay no tax

The NHL faces a similar situation...

• Lose $30 million (1 million per team) next season, and pay for it in "after-HRR-tax" money
• Have the franchise do $30 million better in QC next season. The resulting $1 million per team is split 50/50 with the NHLPA. Each team is still $500,000 better off

The league should let the C B C have the Canadian broadcast rights for free to keep revenue low.

 

[CrazyMonkey1208]

Ah Westgate. how many times have Glendale council people made dumb votes based on "Save Westgate"
And Sherwood with his stupid, "they may as well board up the arena: Hey, remember the arena management contract that was YOUR idea?

There was no hockey at the Job last year from April until January...and I didn't hear anything about Westgate doing bad. I think I recall hearing the opposite.

By Sherwood's logic, Westgate would be better off shut down from April-October every year.

 

[JimAnchower]

So Sherwood is optimistic, Morgan doesn't seem to know which way this is going, and Giblin describes the feeling as "lackluster" from council members he talked to. Granted, of those three only one has a vote, but that person also happens to be the biggest advocate as well. So, we don't know.

 

[powerstuck]

They cant be, and those that arent fans or are casual fans, you have to give them a reason to attend, create a buzz. Cant win every game, but make an effort, not be mathematically eliminated from playoff contention by February. Once the novelty wore off at the AWA, lousy environment, new building goes up & BAM, Lockout. Team loses all momentum, exacerbated by on ice futility & ineptitude under Gretzky, Moyes clueless, seriously damaging the market. Theres just no way you can blame the people of Phoenix. Lousy product, mismanagement. Amazing that seasons ticket sales are even where there at, miraculous run last year packing the joint followed by... another Lockout. I mean, WTF?! I cant think of a more ridiculous, just unbelievably shabby, badly handled situation than this one in any league at anytime anywhere, unless we go back to the 1930's & the Relocation of the Ottawa Senators to St.Louis. Mindblowing.

When you look at it, since day 1, Gary has been pushing shady friends as owners of the team, no wonder were are here today.

 

[cbcwpg]

The one nice thing about the Coyote's saga is, if you time it right you can take a couple of days off and stain your deck, and when you jump back in, nothing has changed.

 

[Wheathead]

So when they say that Westgate will die without the Coyotes, that means I can assume that it is completely dead the other 324 days a year when the Coyotes aren't playing at Jobing.

 

[mmajeski06]

So when they say that Westgate will die without the Coyotes, that means I can assume that it is completely dead the other 324 days a year when the Coyotes aren't playing at Jobing.

We all know the only cure for pre-draft anxiety is retail therapy.

 

[Killion]

When you look at it, since day 1, Gary has been pushing shady friends as owners of the team, no wonder were are here today.

... and making accommodations for them, Leipold, Vanderbeek, Wang etc, all understandable to varying degree's as their insiders, members of the club so to speak. But yes, certainly he's enabled & supported the efforts of prospective buyers in Phoenix who have absolutely no business in trying to launch themselves into the Big Leagues on the backs of the taxpayers.

 

[Whileee]

I doubt its that much of an agreement compared to last weeks one. Sherwood may have his own personal agreement but until the other council members are satisfied. They aren't any closer to getting it done then they were yesterday.

I think that the city manager (Bowers) will also have an influence on this. He seems to have appreciated the seriousness of Glendale's financial picture, and if the deal is likely to seriously harm their budget structure he is likely to warn council members. The ideal "tweak" for the COG is for RSE to shoulder more of the risk by relying on revenues rather than an AMF. It would also give them more of an incentive to build those revenues, which will be important in the long term. There have been rumors of an "out" clause. Since it seems that RSE might be shifting the risk to Glendale, I wonder if the "out" clause is for them (if revenues do not "bridge the gap"). That would be the ideal scenario for RSE. They get the AMF, and if they are light on the revenues and the COG can't afford them, then the COG terminates the lease leaving them free to relocate or re-sell. I would not be surprised if that is how the deal looks (if we ever see it).

 

[GuelphStormer]

can someone explain to me ... im reading that most the "newly discovered" revenue streams are largely based on optimistic potentials, reliant on arena attendance and proximate activity. event (maybe even shopping) parking fees? a CFD? event ticket surcharges? what else? and as such, they cannot be guaranteed. so, is this new RSE "plan" supposed to be somehow structured so that the city would be required to guarantee these monies to RSE, regardless of what is actually raised?

if it was structured on the other hand, in such a way that RSE would be the one required to increase attendance, book more events, etc. and that they would get a cut of that new bigger revenue pie generated by all that new activity, but that they would not be guaranteed of anything by the city ... then I dont see why the city wouldnt do that. put all the risk on RSE.

 

[Killion]

The ideal "tweak" for the COG is for RSE to shoulder more of the risk by relying on revenues rather than an AMF.

For sure, as in actually perform, but that seems anathema, an alien concept to this Crew. Without the $13-$15M guaranteed, Fortress isnt going to back their play, of that Im convinced. So RSE along with Sherwood have apparently come back with whatever projections, guessing parking, increase in ticket surcharges, CFD, sponsorships, naming rights etc (ALL things as we know that any business worth spit wouldve already identified & included in their OWN business plan & prospectuses). City of Glendales apparently responded with "can you guarantee those revenue streams"?... I mean, this is just beyond ludicrous. Glendale asking them to guarantee those revenues is a rhetorical question, its blowing them out of the water. If they were confident in those numbers, already presented to Fortress who apparently didnt buy into them & instead insisted/insist still on obtaining municipal guarantee's that their loans going to be covered then look, open admission that the entire deal is predicated on social welfare for private business, forget about performance, straight shot out of town by way of another bankruptcy only this time it might include the City of Glendale itself being knocked right out when they cant make a payment, Fortress putting a lien on City Hall. So here we are again Whileee. Le Blanc & Jones, with Gosbee & Dey in tow looking to buy the team with the City of Glendale over-extending its cash & credit facilities. A blatant breach of the Az Gift Clause. These guys are just plain delusional. Beyond dumb as what their up to assumes everyone else is even dumber. Transparent as a pane of glass for Gods sake. Bettmans knows this, RSE "semi-plausible" but absolutely no-hopers', playing for time.

 

[mesamonster]

Having followed this never ending saga for many years now, what i find truly fascinating are the people (COG Council included) who are attempting for the umpteenth time to spin the same old facts to gain a positive outcome. The economic facts that surround this franchise are no different today than they were four years ago, yet somehow these folks want to believe that fans(buyers) habits have changed in a way to now make this a viable entity!

Folks, they have not!!! This RSE proposal is a complete non-starter. The mere fact that RSE is borrowing the bulk of the money to make this purchase is clue#1 that it will not work. However, what it does is expose the "capital expense line item" that nobody was factoring in to all of the previous buyer proposals. The Fortress and NHL loans, both need to be repaid and both carry implied rates of interest. yet another expense on top of what we all know is a business concept that is turned upside down with expenses far exceeding even the most optimistic revenue expectations.

The new streams of income to COG from RSE are complete "pie in the sky" expectations that will NEVER be realized. Say you are a bicycle manufacturer and it costs you $100 to build your product, yet over the 17 years of your existence you have never been able to sell your product for more than $50. What should you have learned? Simply stated, this is not a viable business, either for the prospective ownership group or for the the city of Glendale. Viability can ONLY be achieved through a series of drastic price hikes. Simple economics 101 says such pricing behavior will result in fewer sales NOT MORE. To think that re-pricing parking and /or adding a CFD is going to remedy this tragedy is delusional at best! Killion, you are so right this is a hopeless play gone horribly wrong right in front of the audiences eye, tickets to this tragi-drama are selling like hot cakes! Perhaps the COG could tap the viewers of this and other threads for the needed new revenues, it would be far more lucrative than what is being attempted today.

This deal will die, Seattle is not ready for prime time, QC or contraction are the only options left for the nubbish little henchman and his band of incompetents!

 

[CGG]

It's really a 2 step problem:

Problem # 1

- The COG can only afford a net $6 million AMF due to budget constraints.
- RSE needs $15 million in a guaranteed AMF from the COG so they can get a loan from Fortress, who won't accept wonky revenue projections.

Solution: COG gives RSE $15 million and will magically recover the extra $9 million a year through ticket surcharges, parking fees, rent, arena naming rights, parking lot advertising, slight of hand, taxes on Coyotes jerseys, and beer can refunds from the all-powerful Westgate restaurant & bar mafia.

Everything's looking good so far.

Problem # 2

- The revenue projections for the "extra" $9 million is based on wildly optimistic Hockingesque calculations that have absolutely no hope of materializing.
- The COG (more likely City Manager Bowers) is too smart to agree to this and open themselves up to a gigantic shortfall in revenue.
- Bowers also knows if he can't make it almost certain to come out at least cash neutral, this is a gift clause violation as they're guaranteeing performance of a private business to help secure a loan.

Solution: If the COG has to guarantee $15 million in AMF, get RSE to guarantee the extra $9 million in newly found magic revenue streams to the COG.

It's now all in how the city plans on getting RSE to [Hulsizer] guaranty [/Hulsizer] the $9 million in revenue. Sherwood is calling this a slight tweak - he's probably thinking and suggesting that if the revenue doesn't hit $9 million, RSE pays a penalty fee of $10,000 and that's that. RSE is fine with that, all the risk stays with the city.

But Bowers is probably thinking if the revenue is $5 million short, then RSE has to pay back that $5 million the next season, or the next year's AMF is cut by $5 million - an actual dollar-for-dollar guarantee. This puts all the risk back where it should be, with the team owners. No way in heck RSE goes for this though. If they actually thought they could get this extra $9 million in revenues there's no way they would agree to just give all that to the city. Therefore they know the $9 million is completely unrealistic and will be completely unwiling to guarantee it on a dollar-for-dollar basis.

Smart move if this is what Bowers is doing, they avoid paying a subsidy and expose the deal for the fraud that it is. They will make RSE pull the plug, essentially becuase not even they believe in the projections for the new revenue streams.

 

[cbcwpg]

It's one thing in RSE wants to borrow money to buy the team and has to show the lenders how they are going to generate revenue to pay these loans off, but it's a totally different thing to tell the lenders that the CoG is going to guarantee those revenues.

Instead of coming out and just giving RSE $15MM in the form of an AMF, the CoG will give RSE $6MM for AMF, but "share" revenues to the tune of $9MM. Someone correct me if I'm wrong, but isn't all of this just another way to get around the Gift Clause? Really, has this all just been four years of trying to defeat the Gift Clause?

 

[Killion]

so, is this new RSE "plan" supposed to be somehow structured so that the city would be required to guarantee these monies to RSE, regardless of what is actually raised?

if it was structured on the other hand, in such a way that RSE would be the one required to increase attendance, book more events, etc. and that they would get a cut of that new bigger revenue pie generated by all that new activity, but that they would not be guaranteed of anything by the city ... then I dont see why the city wouldnt do that. put all the risk on RSE.

I guess you werent around, here on hf at least when Le Blanc & Jones under the guise of Ice Edge Holdings took a couple of runs at the franchise. First shot was during the actual BK in 2009, telling everyone they planned to bid then postponing that in order to "let the NHL deal with this situation themselves", tripe, platitudes of that nature. Then they show up again in 2010, telling Jerry Reinsdorf to either put up or shut up & get out of our way, demanding & then receiving an "exclusive" negotiating window from the COG, and then proceed to waste everybodies time for mnths upon months on end. Cook up a CFD, special tax district around Westgate requiring Steve Ellmans involvement. Wild projections.... So. Ellman tells Glendale he's happy to ask his tenants to pay the extra tax, just return the $40M you required I put into escrow some years ago for that parking garage I failed to build (the one the Bidwells demanded & launched suit over last year vs COG for $60M) & wipe out the millions in fines youve been dinging me with for falling behind on the development as a whole. Glendale of course complies, giving Ellman back $20M, money btw that was never really his to begin with, likely screwed out of CreditSuisse, mebbe Michael Dell, some Cricket Player outta Abu Dhabi or whatever. Long story short, Ice Edge requires that the COG guarantee's minimum thresholds based on their projections that are to be paid as arena management fee's that again, are will into the stratospheres of absurdity.

Bottom line GS; Fortress isnt gonna hand over $120M to these guys based on their business plan that wouldve already included things like parking, a CFD, naming rights, outdoor advertising, all manner of goodies. No way, they didnt buy those numbers, but mebbe the new Mayor & the Council members in Glendale will huh? They'll only lend the money if its guaranteed by the municipality. The AMF, 100% going to service the loan, and not to actually, you know, manage the building.