I suppose that I should get on with that clarifying post that I promised, although a lot of you have figured out much of it on your own (which is not surprising). I guess the best way is just to list a bunch of things and hopefully everyone can find the answers to whatever questions they may have about this.
Some of these items have been identified by others in my absence at this point. I felt that, if I leave them out of here, this summary might seem even more disjointed. Accordingly, I have left them in for completeness.
1. We start with the Mixed-use Development Agreement, or "
MUDA", which was between a couple of Ellman entities (one for the arena development and one for the "retail/residential" development which is now Westgate) and the CoG signed in late 2001. It is the agreement under which lands get bought for development by Ellman. For present purposes, the parking advertising and naming rights are conveyed to Ellman. Parking Land gets conveyed back and forth between the parties as needed, as the development proceeds and as replacement parking is required in connection with the development.
2. At the same time, the parties also sign an "Arena Development Agreement" which deals with the construction of the arena, as well as "Parking Improvements" (the lots, basically). This is the agreement under which the CoG contributed their $180M. It clarifies that the Arena and the rest of the project is owned by the City (NOTE: this addresses
ownership, which is simple title holding and is distinct from the package of rights to the arena and parking, which is addressed in the lease described in the next paragraph, as well as other agreements).
3. At the same time (late 2001), the parties (which now include the team and a "retail/residential developer" and an arena manager, all owned by Ellman) sign the lease document (the Arena Management, Use and Lease Agreement, or "
AMULA"). The Arena Manager is obliged to manage and operate the parking, and they have to pay CoG an escalating parking surcharge of $X per ticket (X is now $2.80 and escalates more later as well).
4. It is important to stop and note that, during this Ellman phase of the dealings, it is the Ellman development company who owns the parking rights for this development -
NOTE: NOT THE CITY, BUT ELLMAN, WHO OBTAINED THESE RIGHTS UNDER THE ORIGINAL DEVELOPMENT DOCUMENTS. The City owns the land, but the parking rights were conveyed to Ellman. This is addressed in the MUDA and in the "Cross Easements" (documents which provide for shared use by all of the components of the development).
5. I should also note that this is fairly intuitive. Ellman is building this big honking shopping centre and residential development and hockey arena. In order to make all of that work, he must own the rights for his customers to park there. The documents reflect this.
6. I should also note that there are a plethora of other documents as well, which I will not review without a retainer.
As complex as the above is, I am trying to keep this as clean as possible.
7. During the following five years, arenas are built, Westgate is built, property is conveyed back and forth as construction and market circumstances warrant. None of it really matters for our purposes.
8. In 2006, Ellman and Moyes make their fateful decision to decouple these developments, with Ellman retaining Westgate and Moyes taking the team and arena management.
9. In order to make this work, since Moyes could not very well operate an arena without parking, as part of the dividing up of the development, the parties enter into a series of agreements under which Ellman's development company - NOT the CoG, but Ellman - granted various parking rights to Moyes' company.
10. Those 5500+ spaces?
Ellman had to make them available, as
he controlled the parking rights under the original development agreements. Unfortunately for us, the details (such as any temporary or other restrictions on charging for spaces, etc.) are not in the Easement document, which I have.
11. There are at least two other key documents (the Parking Use License and the Parking Agreement) which are undoubtedly the source of considerable detail. They are described in the Easement, but only in general terms which do provide insight into the purpose and general intent of the documents, but without the fine print (like restrictions on charging, temporary suspension for construction, etc.).
12. To answer someone's question about using the lots to charge someone for visiting Westgate, the parties thought about that. The Easement is limited to temporary parking "a reasonable period of time before, during and ... after any event at the Arena".
13. The parking rights apply only to the "Arena Manager" and their permitted successors and assigns. This is as you might expect, since if there is no arena manager, there are no arena events and the parking rights are effectively nil for practical purposes.
14. The Easement term is the shorter of (a) 99 years; and (b) the point when there is no more AMULA or replacement AMULA and the team is no longer around or the arena is gone.
15. Based on #14 above, the rights are not in "perpetuity". I should have mentioned that, in many jurisdictions, non-ownership interests in land have certain time limits for various reasons that do not matter here. The time limit is 99 years at most. It terminates earlier if the team or arena disappears. This makes logical sense. If either of those two goes away, there is no need for parking rights to continue to exist.
16. The majority of the parking details are doubtless in the other agreements. Regardless of whatever they were, in January 2011 the CoG approved a revised MUDA and Temporary Parking Agreement with Ellman which definitively confirmed their right to charge for parking (in a somewhat complicated transaction which involved the splitting of the $25M in escrow and the swapping of various parcels of land).
http://www.glendaleaz.com/Clerk/agendasandminutes/Meetings/Agendas/012511-14.pdf
17. In order to be able to execute that transaction, the CoG first had to secure the recovery of parking rights from Hulsizer, which they have arranged for under the terms of the new lease/management agreement.
18. When the NHL acquired the assets of Moyes' shambles of entities, in addition to the various assets of the franchise (which really consists of a bundle of contractual rights, from the franchise to the intellectual property, to player contracts, to vendor contracts, suite licenses, sponsorships and on and on), the NHL listed a series of contracts which were contracts that they could assume at their option so long as they did so before Moyes rejected them under the bankruptcy. These contracts include all of the separate contracts above. All the NHL needed to do was to so inform the parties and they would belong to them. All of these contractual rights of Moyes' companies were part of the bankrupt estate (along with the liabilities of Moyes under those contracts as well, of course) - the MUDA, the parking agreement, the parking use license, the easement, etc., etc. When someone goes into bankruptcy, all of their contracts go into the piles of assets and liabilities (and usually both).
19. As we all know, the NHL at no time were going to accept the existing AMULA in the circumstances. The idea (shared by the CoG) was always that the CoG would negotiate a new-ish deal with a new purchaser, whoever that may be.
20. As for the other ones, the NHL would let matters play out before they decided whether they would need to acquire them. The reason why they would do so is because, as much as they felt comfortable a local deal would be found, they were never 100% assured of the team being sold locally.
21. If the team were not sold locally, then all of those rights described in the above agreements would be of no value. They would have, for example, $25M in trust to build a parking garage for a non-NHL arena, and the NHL is not in that business. The parking rights would be extinguished, as there would be no team OR arena manager. None of it would be worth the bother or the legal fees necessary to reconvey things to Ellman or the CoG as might be needed (for the $25M parking garage escrow, for example). Accordingly, these contracts were placed in this optional category.
22. In conjunction with this, the bankrupt estate - as part of the final deal - agreed not to reject any of the contracts for a period of time, which period has been extended on numerous occasions (although if memory serves, the AMULA has now been rejected as everyone knew it would be). Since rejection just creates more damage claims against the estate and dilutes any possible minimal Moyes recovery, they have every incentive to cooperate with the NHL, CoG and prospective purchasers in this regard).
23. For its $140M, the NHL has effectively purchased the team
and these ancillary contractual rights that it had with the developer and other Ellman entities, such as parking. Parking is a valuable cash flow stream for most pro sports teams, with rare exceptions (the Leafs, I believe, do not control parking in downtown TO) due to its high profit margins of 75-80%. Again, of course, it makes no sense to have an arena and not even have the right of your patrons to park in the vicinity or traverse the land on the way to the arena AT ALL. Given the location of the arena in the middle of the development, that would lead to zero attendance.
I really, REALLLLLLY hope that this has clarified some of the questions that have arisen since I first dropped these items on the Board (it took me a long time to type).
All that being said, I think the following questions should be raised:
A. Is anyone still puzzled as to why this transaction has taken a long time to put together?
B. In light of the frighteningly large complexity of these transactions and the multiplicity of the parties involved (and that does not even count the bond issue, with more issues, more due diligence and more parties involved), does the "two weeks" punchline still hold a lot of currency for anyone?
I know it has caused a lot of mirth for some time. I get that, completely. I merely submit that, when all is said and done, it is somewhat misplaced.
Comments and discussion are, of course, welcomed.