Phoenix XXVIII: Lawyers, Bonds and Money

[cbcwpg]

I would not be surprised to see one or two of the GWI Directors resign because they are not willing to take a chance the CoG could sustain a suit.

I agree, the GWI should have done everything they could to be in a position to come back next time and say "I told you so." The real victory and utility for them in this situation is to prevent any new publically subsidized arenas. However, they sat back and let it happen with Cactus League stadiums. They never did a thing to stop them from being built. It looks like the Cubs will get a new one in Mesa, and the GWI has shown no opposition. All paid for with taxpayer money.

I don't know if this is related , could be dependant on when these facilities were built or the money allocated, but I do remember an interview by Darcy Olsen where she was asked why they didn't try to stop other facilities ( including the jobing.com ) from being built with taxpayers money, and she said something to the affect that the GWI didn't have the legal structure ( lawyers I guess ) in place to challenge these. Where I guess today they do.

But , having the CoG use tax dollars to build an arena is not in violation of any gift clause, because the CoG still owns the arena. They have not given it away to another business or sell it for far less than its worth. Its still thier property. It was not built for someone else ( which could have been a violation of the gift clause ) JMO.

 

[Metzen]

The real victory and utility for them in this situation is to prevent any new publically subsidized arenas. However, they sat back and let it happen with Cactus League stadiums. They never did a thing to stop them from being built. It looks like the Cubs will get a new one in Mesa, and the GWI has shown no opposition. All paid for with taxpayer money.

I'm confused with these two situations.

1) The CoG built an arena with a tenant in place and a 30 year agreement. The tenant was wealthy and is committed to the area through other ventures. The arena itself can be funded (and was funded successfully?... before BK anyways?) by the rent paid by the tenant. AFAIK, the arena was (is?) to be paid off before the 30 year agreement is up. In this scenario, CoG is breaking even on the building until it's paid off then making money on the tenant for the remainder of the term.

2) The CoG has built an arena and is now offering up $millions more to keep a team here with no real sustainable business model for paying back their debt on the remaining term on the agreement. To my eyes, it appears their hope is the new owner will purchase the arena from them in 5 years freeing them from that debt load so they can utilize the rent revenue stream to pay down this new debt load. In this scenario, CoG is taking a pretty big risk, especially in light of the lack of ownership options should bankruptcy happen again, the additional debt they have to carry, and "hoping" the arena will be purchased from them at a later date.

I don't think they're comparable. I actually think CoG had a pretty good plan at the time the arena was built for covering the debt then making money in the future. I think the construction of public buildings that see mass use throughout the year is a good investment for cities to make. The ownership situation at the time "was" solid with Ellman owning the Coyote's and wanting to grow the area. Even Moye's, I argue, was a good owner till the last two years of his reign and wanted out. I think CoG made a safe bet at the time but their getting screwed in the end because of the bankruptcy and now having to pay someone to own the team. Their original plan has been thrown into disarray and they are trying to maintain status quo, no matter the cost.

 

[goyotes]

I don't know if this is related , could be dependant on when these facilities were built or the money allocated, but I do remember an interview by Darcy Olsen where she was asked why they didn't try to stop other facilities ( including the jobing.com ) from being built with taxpayers money, and she said something to the affect that the GWI didn't have the legal structure ( lawyers I guess ) in place to challenge these. Where I guess today they do.

But , having the CoG use tax dollars to build an arena is not in violation of any gift clause, because the CoG still owns the arena. They have not given it away to another business or sell it for far less than its worth. Its still thier property. It was not built for someone else ( which could have been a violation of the gift clause ) JMO.

The stadiums are being built now and during the time GWI had full litigation capacity. These are publically funded stadiums for the benefit of sports teams. In some cases, the cities own them. In others, the teams own the stadium. With respect to the Cubs, what I have heard is that the stadium is being built "for" the Cubs. I'm not sure it is a publically owned stadium. For the new D-Back's stadium, the tribe owns it but the funds are backed ultimately by general taxpayer money.

 

[CasualFan]

Just checking in from yesterday (and yet a whole thread removed) to take my lumps. Having insisted that the GWI would not sue, it appears they will sue when the deal closes. Heap on the "I told you" so's. I was wrong.

Having said that, I simply cannot believe this is the course they charted. This could indeed by their Waterloo. Best case is they win and get blamed for all the problems Westgate will present. Everyone (unfairly so IMO) will assume Westgate would have been a great success had the Coyotes stayed. The public will blame the GWI. Worse case is they lose, expose themselves and their directors to affirmative claims, and regardless, become responsible for having cost the taxpayers money.

The tide of public opinion down here has really turned against the GWI. A recent poll of over 5,000 participants surveyed had 72% in favor of the CoG's decision. Previously uncommitted media are now coming out and questioning the GWI and its motives. The Coyotes have been the lead story on TV news and sports. All the news has been pro-Coyotes staying and pro-CoG. Most have at a minimum questioned the GWI, and some have been openly critical. Fox10 news last night is just an example (yes, the same Fox Network).

Anyway, I will take my lumps now. "Thank you sir, may I have another."

I recall once stating that if Glendale filed a Tortious Interference that I would shred my law degree and go sell bead jewelry at the airport. Within a week, Glendale released a statement via ESPN that they were contemplating such a suit. To date, they have not filed. Accordingly, let's wait to see just how much bravado Goldwater has when the deal closes. Take no lumps and sell no beads before their time!

 

[Tommy Hawk]

Please allow me to do an extreme summary of Goldwater's case.

Let me know if I've got this right; Goldwater appears to have 3 issues to "sue" Glendale on concerning the Coyotes fiasco; they are:

1) Ownership of parking lot

2) Overpayment for purchase of parking lot (regardless who owns it)

3) Overpayment for 5 year arena management contract

Have I summarized Goldwater's case? And if so, would a direct hit on any one of those 3 points bring down this deal (assuming the threat of legal action doesn't kill it first)?

There are a couple of points GI appears they are going to use as the basis for their suit. First is disproportionate value received for the payments associated with parking. The second is associated with the management fee. The third is that the CoG is using their credit to help MH, even if the parking is truly worth the $100 million.

Rich Uncle Pennybags? Maybe he does...

The way I follow it, is that if the NHL didn't adopt that agreement, it would have been deferred back to the City. If the City was giving it to the team as per a new lease agreement, it would be the starting point for a law suit. Since it seems only the COG and GWI have the documents to support their cases. I am sure it would be a rivetting court proceeding...

Yup... Pennybags owns the parking rights... should have been charging for that parking...

So its settled... Pennybags has the parking rights and the space on the Gameboard is in fact Glendale.

When you land on parking in monopoly they give you money so this must be on what CoG is basing their arguments. MH landed on parking so we need to give him all the money from fees, etc.

Moyes is still on the hook, potentially, for damages to CoG, afaik.

If they had a right to assume the parking rights and failed, although your work above sheds some interesting twists to this, Debtors might be an interesting position as far as defending the amt of their liability (or demanding some portion thereof... but I think that would rest with J Baum).

But Moyes can argue that the city got the parking back and that was worth $100 million!!! And that is according to the city.

Just checking in from yesterday (and yet a whole thread removed) to take my lumps. Having insisted that the GWI would not sue, it appears they will sue when the deal closes. Heap on the "I told you" so's. I was wrong.

Having said that, I simply cannot believe this is the course they charted. This could indeed by their Waterloo. Best case is they win and get blamed for all the problems Westgate will present. Everyone (unfairly so IMO) will assume Westgate would have been a great success had the Coyotes stayed. The public will blame the GWI. Worse case is they lose, expose themselves and their directors to affirmative claims, and regardless, become responsible for having cost the taxpayers money.

The tide of public opinion down here has really turned against the GWI. A recent poll of over 5,000 participants surveyed had 72% in favor of the CoG's decision. Previously uncommitted media are now coming out and questioning the GWI and its motives. The Coyotes have been the lead story on TV news and sports. All the news has been pro-Coyotes staying and pro-CoG. Most have at a minimum questioned the GWI, and some have been openly critical. Fox10 news last night is just an example (yes, the same Fox Network).

Anyway, I will take my lumps now. "Thank you sir, may I have another."

There have been some "tweets" by some pretty politically connected individuals commenting on the Coyote situation basically saying cannot lose the Coyotes...time for some leadership...yadda, yadda. Grant Woods, close friend of McCain, being someone who tweeted out something along those lines last night.

I would not be surprised to see one or two of the GWI Directors resign because they are not willing to take a chance the CoG could sustain a suit.

I agree, the GWI should have done everything they could to be in a position to come back next time and say "I told you so." The real victory and utility for them in this situation is to prevent any new publically subsidized arenas. However, they sat back and let it happen with Cactus League stadiums. They never did a thing to stop them from being built. It looks like the Cubs will get a new one in Mesa, and the GWI has shown no opposition. All paid for with taxpayer money.

No piling on at all. And even if public opinions turns against GI, they will go forward, IMO. If all these big shots REALLY want to make a difference, change the AZ constitution so they can piss away the taxpayer money. And considering the financial state of almost many government bodies in this country, I would discount their idea of what is good for CoG. If McCain is so gung-ho to keep the team, have the federal government give the money and pay for the losses, they did it for AIG, Citibank, Wells, JPM, GM, etc.

 

[Donwood]

Not sure if someone else has pointed this out (so many posts to read )..but the musical chair rumour in BC was..

1. move Chilliwack WHL to Victoria.
2. move Abbotsford AHL to Chilliwack.
3. move Manitoba AHL to Abbotsford.

That would give lonely Abbotsford an AHL rival. Road teams could play 2 teams on their trip instead of just 1. (To me though, it would make more sense to make Victoria AHL).

Victoria has a ECHL team

 

[Dado]

So has anything other than talking actually happened?

Are bonds sold? Anybody filed a lawsuit? UHaul spotting?

Anything...?

 

[Donwood]

So has anything other than talking actually happened?

Are bonds sold? Anybody filed a lawsuit? UHaul spotting?

Anything...?

NHL claims the they have buyers, no claims on anything being sold yet. Goldwater won't file suit until the deal closes. No Uhauls yet, dealership on standby

 

[goyotes]

I saw some mention of a report today on the Coyote HF Board that the NHL had two buyers for all the bonds. I have not seen a link, and I could not find anything on line to confirm that rumor.

DJ tweeted he will be at the Hawks and Blues game in town this week. Take it with a grain of salt, but with some Coyote fans, they are reading into this that the transaction may still happen.

Bottom line is, I got zip, nada, nothing.

 

[leoleo3535]

Victoria has a ECHL team

And the owner of the ECHL team has made an offer of $8 million to purchase the WHL Chilliwack club and move it to Victoria.

This is far from a done deal....Sather & Burke want to sell but the 3rd party does not....Justin Morneau (baseball) is looking to partner with the 3rd party and keep the club in Chilliwack......

more info on this in the WHL forum....

 

[Larabee]

U.S.-based litigator William Harrie says the Arizona taxpayer watchdog has a solid case.

"The battle will lie at the injunction stage and be won at that stage," said Harrie. "Based upon what I’ve seen, Goldwater has a very good chance of being granted an injunction."

http://www.winnipegfreepress.com/br...itute-places-onus-on-opponents-118123229.html

 

[Donwood]

http://www.winnipegfreepress.com/br...itute-places-onus-on-opponents-118123229.html

Good news for Jet fans, yesterday the news was Goldwater would wait until the deal was done to sue, Now they will try and get an injunction to STOP the sale.

 

[crazed323]

Good news for Jet fans, yesterday the news was Goldwater would wait until the deal was done to sue, Now they will try and get an injunction to STOP the sale.

Thats not what I got out of it. This is speaking to the process of what will happen when goldwater sues which will only be if the bonds are sold. Someone posted earlier about a 3-4 day grace period after the bonds have been sold which would be a window to enter the injunction phase.

The bonds, lease and anything that needs to be signed will be signed together and the cooling off period will begin in which I am sure that any parties can change their mind. During this stage is when the GI will file in court.

Once the judge hears both sides I believe it says they will weigh each parties evidence and determine the likelyhood of which party would prevail. Then they would look at the options for relief and decide based on arguments of both sides and the judge's opinion itself if an injunction is necessary.

Hardly good news for Winnipeg. Depending if it comes down to this.

 

[goyotes]

Good news for Jet fans, yesterday the news was Goldwater would wait until the deal was done to sue, Now they will try and get an injunction to STOP the sale.

The GWI has not said they will sue to enjoin the sale. Unless something has changed since yesterday, the entire discussion on an injunction was introduced by the WFP. The GWI issued a press release, which they have not changed, that said they will sue after the deal closes.

To get an injunction to stop the sale of the bonds or transfer of ownership will require the court to hear the matter within one or two days notice. Frankly, that isn't going to happen now, and the GWI waiting to seek an injunction will mitigate against any claim it has with the court it is entitled to that relief. I have been proven wrong before, but if they ask for an injunction, I believe that request is not granted. Maybe a TRO at best, but I doubt they get that either.

Also, the GWI would need to post a bond in the event they do get an injunction and later it is demonstrated they lost on the merits (injunction doesn't decide case on merits, just on relief sought). The bond would be for the harm caused by taking legal action to delay or kill a deal. I doubt the GWI wants that kind of risk so an injunction would, again, be an unlikely strategy.

It is an interesting article, and I have said all along the GWI should have sued for an injunction if they wanted to protect the taxpayer. From the GWI press release, however, they only intend to sue after the sale.

 

[Le Golie]

The GWI has not said they will sue to enjoin the sale. Unless something has changed since yesterday, the entire discussion on an injunction was introduced by the WFP. The GWI issued a press release, which they have not changed, that said they will sue after the deal closes.

To get an injunction to stop the sale of the bonds or transfer of ownership will require the court to hear the matter within one or two days notice. Frankly, that isn't going to happen now, and the GWI waiting to seek an injunction will mitigate against any claim it has with the court it is entitled to that relief. I have been proven wrong before, but if they ask for an injunction, I believe that request is not granted. Maybe a TRO at best, but I doubt they get that either.

Also, the GWI would need to post a bond in the event they do get an injunction and later it is demonstrated they lost on the merits (injunction doesn't decide case on merits, just on relief sought). The bond would be for the harm caused by taking legal action to delay or kill a deal. I doubt the GWI wants that kind of risk so an injunction would, again, be an unlike strategy.

It is an interesting article, and I have said all along the GWI should have sued for an injunction if they wanted to protect the taxpayer. From the GWI press release, however, they only intend to sue after the sale.

Twenty minutes ago on the Hustler & Lawless radio show Gary Lawless told Dave Naylor that he knows for a fact GWI will seek an injunction. Lawless is in daily contact with GWI.

 

[MountainHawk]

I couldn't take this thread anymore, so I'm just going to win Megamillions on Friday and donate the $100M to Glendale.

 

[Ernie]

So if the GWI does sue after the deal is closed, and wins, who gets left holding the short end of the stick? The bond holders?

 

[Donwood]

So if the GWI does sue after the deal is closed, and wins, who gets left holding the short end of the stick? The bond holders?

Potentially yes

 

[Donwood]

Twenty minutes ago on the Hustler & Lawless radio show Gary Lawless told Dave Naylor that he knows for a fact GWI will seek an injunction. Lawless is in daily contact with GWI.

Exactly, I heard that was well. An injuction could stop the sale, the lawsuit would not.

 

[goyotes]

Good news for Jet fans, yesterday the news was Goldwater would wait until the deal was done to sue, Now they will try and get an injunction to STOP the sale.

OMG, the guy they quote is an insurance defense lawyer from a 20 lawyer firm in Fargo, ND!!! You do realize that the CoG has Snell & Wilmer (Arizona's largest law firm), Fennemore Craig (Arizona's oldest law firm) and Greenberg Traurig (one of the largest US law firms) as counsel who have all opined (and put their butts on the line) that this deal does not violate the Gift Clause.

 

[Metzen]

I couldn't take this thread anymore, so I'm just going to win Megamillions on Friday and donate the $100M to Glendale.

Why wouldn't you buy the Coyotes yourself? You'd be putting in more than Hulsizer!

 

[goyotes]

Twenty minutes ago on the Hustler & Lawless radio show Gary Lawless told Dave Naylor that he knows for a fact GWI will seek an injunction. Lawless is in daily contact with GWI.

It seems the GWI is sharing more information with the Canadian media then they care to share with the Phoenix-based media. As of last night, their position was they would sue after the deal closed.

Exactly how are they going to know the bonds have sold in a private placement? I'm asking a serious question because I don't know the answer. Who is going to tell them the bonds have sold and the deal has been signed? Where do they get this information and how much lead time do they have? How do we not know the bonds didn't sell today? And if the intent is to protect the taxpayer, wouldn't they seek to enjoin the sale of the bonds at an inflated interest rate, and not the purchase of the parking rights for which the bonds were sold to buy?

 

[Krautso]

OMG, the guy they quote is an insurance defense lawyer from a 20 lawyer firm in Fargo, ND!!! You do realize that the CoG has Snell & Wilmer (Arizona's largest law firm), Fennemore Craig (Arizona's oldest law firm) and Greenberg Traurig (one of the largest US law firms) as counsel who have all opined (and put their butts on the line) that this deal does not violate the Gift Clause.

With that kind of firepower, why didnt CoG move for a finding from the courts to remove the spectre of a lawsuit? Could they not have done it months ago?

 

[zimmy61]

It seems the GWI is sharing more information with the Canadian media then they care to share with the Phoenix-based media. As of last night, their position was they would sue after the deal closed.

Exactly how are they going to know the bonds have sold in a private placement? I asking a serious question because I don't know the answer. Who is going to tell them the bonds have sold and the deal has been signed? Where do they get this information and how much lead time to they have? How do we not know the bonds didn't sell today? And if the intent is to protect the taxpayer, wouldn't they seek to enjoin the sale of the bonds?

There would be a press release following the closing of a private placement.

 

[OthmarAmmann]

It seems the GWI is sharing more information with the Canadian media then they care to share with the Phoenix-based media. As of last night, their position was they would sue after the deal closed.

Exactly how are they going to know the bonds have sold in a private placement? I'm asking a serious question because I don't know the answer. Who is going to tell them the bonds have sold and the deal has been signed? Where do they get this information and how much lead time to they have? How do we not know the bonds didn't sell today? And if the intent is to protect the taxpayer, wouldn't they seek to enjoin the sale of the bonds?

Corporate issuers would have to file news of the sale with the SEC. I imagine municipal borrowers would have to do the same.