Killion
Registered User
- Feb 19, 2010
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Phoenix XXIX: What's the next act? I'm tired of the dog & pony show
- Thread starter LadyStanley
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Well, having now done the calculations, I am afraid I won't let you off that easy, whileee. I think there is a further "accounting" to be done here.
As I showed, even if one aggressively assumes (as I did) that MH will cut arena costs by 10-20%, we still have the direct arena costs at a minimum of $17.9M. My aggressive cost reduction assumptions may be invalid if, as one might expect, Hulsizer is going to undertake a massive promotional and advertising campaign after he acquires the team. In fact, the structure of the deal reflects this, with more money available in the first 2.5 years.:
Since it is now clear that Hulsizer will likely start from a 2008-09 base of $17.9M in indisputable no-trickery arena management costs, even without considering escalation in the first couple of years to do a promo carpetbombing, let's do some math.
First off, the $17.9M is based on 2008-09 numbers, so let's add 2% annual inflation, so we have a 2010-11 number of $18.6M. We will add 2% per annum for inflation going forward as well.
First Half Year (now) - $10M maximum amount, less $9.3M (50% of $18.6M) in true direct arena costs = $700k in remaining room for your potential shenanigans (not so at all, if one accepts my interpretation).
Year 1 - $20M, less $19.0M (without any speculative marketing blitz), leaving $1M in room.
Year 2 - $20M, less $19.4M (without any speculative marketing blitz), leaving $600k in room.
Year 3 - $17M, less $19.8M, leaving a shortfall for Hulsizer that he must fund of $2.8M.
Year 4 - $15M, less $20.2M, leaving a shortfall for Hulsizer that he must fund of $5.2M.
Year 5 - $15M, less $20.6M, leaving a shortfall for Hulsizer that he must fund of $5.6M.
Based on the above, this would leave Hulsizer short for direct arena management expenses, without Hulsizer doing any of your proposed padding, by $13.6M.
Now, even if you allow for Hulsizer to use up the remaining room in the amounts for things which are "really hockey-related" because of an overly broad definition, we have Hulsizer not getting covered for legitimate arena management costs to the tune of $11.3M
Let's let that sink in: this $97M, this supposed generous "gift", is not going to cover all of Hulsizer's direct arena operating expenses, to the tune of $13.6 million (or $11.3M, if you continue to insist that Hulsizer is going to be allowed to use this for hockey costs).
Hulsizer - the guy who is getting this team "for free" - is going to have to come up with this money, in addition to his equity investment and his team losses.
AND THAT is not even accounting for any kind of promo and advertising blitz to try to get the market - especially the corporate market - to recover. Most of that money is going to come out of Hulsizer's pocket, unless he used the $2.3M in room noted above (which then makes it not available for any shenanigans). AND that is assuming that he and the NHL could wring 10-20% in efficiencies out of operations from Moyes' operations.
As for what this means to your longtime assertions that this fee was ripe for Hulsizer to funnel huge amounts of hockey expenses and get reimbursed for them, that notion is now refuted by basic mathematics. So, you're right, we are probably done on this, although not for the reason you may have intended.
Are these Arena management fees comparable to what other tenants get in othe NHL venues?
If its that easy, just say, okay MH, don't pay the Arena management fees, we will. Case closed. yet, that doesn't seem to be an option?
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OthmarAmmann
Omnishambles
Yes, interesting question, isn't it?
Anyone know how much money Pegula is getting from the city of Buffalo?
Roughneck
Registered User
Hasn't the issue been that an arena management fee isn't supposed to cover the costs to this extent, the arena manager is supposed to make money from events at the arena, and is paid a fee for that service which is seemingly considerably less than the ~$19M per year for the first five years he's being given by the COG?
This is only a bad deal for Hulsizer if he's making no money off of all these events over five years (which would make him an incredibly ****** arena manager), but because his costs are being so disproportionately subsidized (for lack of less illegal term) that its meant to increase his profit from the arena events and thus offset the losses from the Coyotes.
The answer is normally people PAY the owner for the PriviLeDGE of managing the arena. Any losses or expenses they incur is the responsibilty of the person or persons managing the arena. If you rent a store in a mall, does the mall pay you? Do they pay your light and water bills?
Ridiculous to the extreme....but god I hope it works. Lol.
Anyone watching the Coyotes game against Chicago right now? They keep saying it's a Sellout there and yet I see many empty seats.
Although it does look like they may have 14-15k in fans but no close enough for a sellout. Also there are many Chicago Jerseys in the stands.
Although it does look like they may have 14-15k in fans but no close enough for a sellout. Also there are many Chicago Jerseys in the stands.
Roughneck
Registered User
I couldn't tell you that but I know the Flames paid $20M to manage the Saddledome for 20 years (in addition to donating over $800K a year to amateur sport in the city).
And I didn't get that backwards, the Flames paid the Saddledome Foundation to manage the arena, not the other way around.
EDIT: Seems I was beaten to the point
Exactly, for example Québecor is going to pay the city of Québec 3.15 millions per year plus 15% of revenues for the right to manage the new arena we are building.
I cannot understand what the heck Glendale is doing.
As a yotes fan, I'm trying my best to not try to understand it, and just hope it happens. lol.
Great accounting by GSC2K2, I just think it all misses the point though.
metalfoot
Karlsson!
That's always been the biggest question on my side, why the owner is paying the tenant instead of vice versa. Now, I'm not in business. Haven't even stayed at a Holiday Inn Express lately. But to my way of thinking, owners rent to tenants, not the other way around.
TGOTC
Yer a wizard Oliver
LadyStanley
Registered User
WTF? Thanks for that.
Pershaps some folks are too young to remember or have not experienced enough to appreciate the wisdom of humorist, US poet laureate, Will Rogers.
I may be out of my league here because everyone else seems to have passed the BAR recently, so I'll just ask one question;
If Hulsizer does get the team and the Coyotes continue to lose money, does he still get the entire "arena management fee"?
If Hulsizer does get the team and the Coyotes continue to lose money, does he still get the entire "arena management fee"?
TheLegend
Megathread Gadfly
Hulsizer Interview: Of the $100 million in bonds, Glendale will get back $25 million immediately
Big whoop
That doesn't address Goldwaters objection. it does perhaps make the bonds more attractive in that 3/4 of the principal is being guaranteed .
Motown Beatdown
Need a slump buster
must of been hard for him to come up with another 5 million. Who else is starting to think this guy just doesn't have 170 million for the team.
TheLegend
Megathread Gadfly
Big whoop
It is a big whoop..... $75 million is right square in the zone of the three parking studies done. Eliminates any notion of descrepancies between what the city puts in an gets back.
It also means Hulziser and his group are now putting $95 million in towards the $170million team price.
Wow, how generous of him!
''Take a 100 million dollar loan at high interest and give it to me, and I'll give you 25 million dollars! You'll be rich!''
Damn. I missed it. Was anything relayed about the bond potential bond sale? Because if he's going to pay more, it's not likely going well. IMO.
So is he now searching for bond buyers? I guess if he put up some assets as collateral totalling 75 million, someone may bite.
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