Phoenix XXXIII: Sound of Silence

[Howler Scores]

Mayor Scruggs interview....

http://www.aztv.com/global/video/fl...dTag=Programming&activePane=info&rnd=78657059

Ah great find, in the Phoenix area this channel isnt even noticed so I wonder why she took her case to the fine people of Prescott. I wish she would do this more on the local stations to match the fury that GWI has been doing.

 

[BrianL*]

What really sucks is if the fans do not have a chance to give the team a proper send-off.

Absolutely. You deserve a chance to "raise the roof" (not to be confused with MTSC expansion) for your team a final time. If I was Mark Chipman (or even played him on TV), I would arrange an exhibition game in Glendale, with the team playing in Coyotes uniforms (assuming the NHL would allow). Or maybe we create a 3rd uniform cleverly similar to the Coyotes'). After the game, I would sell off the worn (and laundered, just to be clear) jerseys to raise money for a Phoenix charity. I think that would be a classy gesture to the fans that have kept this franchise alive for 15 years.

Of course, if you end up keeping the team, I hope you all go broke from tax debt and the team loses every game.

 

[Tommy Hawk]

The City got 3 studies, two of which are from reputable firms and found a value of ~$70 mil, and one from a single guy sued for basically fudging numbers that found $100 mil. This is clearly a point for the court to decide, but I would be betting on the judge going with the 2 reputable studies from well known firms over the Tom Hocking study. As a result, I stand by my wording of "heavily disputed", and I think that is a winning argument in court for GWI. You clearly disagree, so can you explain why you feel that the court will use the valuation of the Hocking study over the other 2?


You are muddling the point. The discount rate to a particular entity is heavily dependent on their financing rate. As discussed before, if I am borrowing money at x%, then my discount rate MUST BE >= x%. The risk associated with the income stream merely affects the premium over x%. In short, if I borrow money at x% to buy the present value of an income stream valued using a discount rate of y%, then if y < x, I AM GUARANTEED TO LOSE MONEY!

So, I believe my post on this is 100% correct, and if the city uses CASH ON HAND instead of bonds, they have more flexibility is arguing the discount rate. If they use bonds, then they are stuck with that rate as a minimum (and really, with a risk premium, they need to go a bit higher). There is simply no getting around this point, no matter how much you try to confuse the issue.

If they are bluffing on a nothing hand then how are they having any effect on this at all? With bonds at 8-9% interest, I think they have a pretty slam dunk winner of a case. At 6%, I think it gets murky (as it does if the city pays using cash on hand), and the case hinges on the interpretation of "grossly disproportionate". I think paying double is clearly "grossly disproportionate", but I can't say that paying 25% more is clearly "grossly disproportionate"? Much more murky at that point.

The discount rate used for determining the present value of future cash flows has NOTHING to do with ANYONE'S rate at which they can raise money to purchase that stream of cash flows. The discount rate is used to apply risk to that stream of cash flows.

The DECISION as to whether or not to purchase that stream of cash flows is based upon two things. First, the Present Value of those net cash flows. The scond is their cost of finding the purchase of those flows.

If there is an opportunity for me to buy the parking for $100 mil and i think the discount rate used was accurate for the risk associated with the cash flows, I would only buy that opportunity if I was able to raise the money for less than the discount rate used. If it would cost me more than that rate to raise the money, i would not purchase that stream of cash flows. However, let's say GSC was able to borrow $100 mil at 4.85% because he was able to take out a mortgage on his mansion at that price, then he would buy that future stream of cash flows because he believes it will return him more than it is going to cost him.

 

[pirate94]

Mayor Scruggs interview....

http://www.aztv.com/global/video/fl...dTag=Programming&activePane=info&rnd=78657059

I don't want no Scruggs

 

[Blue Shakehead]

I don't want no Scruggs

 

[YogiCanucks]

You guys are awesome.

 

[Einstein Theory]

I don't want no Scruggs

In the words of Nancy Reagan, "Just say NO to Scruggs"

 

[pirate94]

In the words of Nancy Reagan, "Just say NO to Scruggs"

i guess keeping in line with the Reagans....the GWI declared "A War on Scruggs" ??

 

[Blue Shakehead]

Article in the AZ Republic analyzing the numbers.

http://www.azcentral.com/news/artic...dale-phoenix-coyotes-deal-money-analysis.html

James, who is British, contends that governments like Glendale should be wary of consultant studies, as officials in the United Kingdom are. That country's finance ministry requires public projects to account for "optimism bias" - or the "demonstrated, systematic tendency for project appraisers to be overly optimistic."

Among assumptions James called "dubious" were:

- The Coyotes and the arena would turn a profit by 2012. Glendale is banking on a profit-sharing agreement in the lease, but the team has lost money since it moved to the Valley in 1996.

- Glendale would make $3 million in today's dollars over 30 years from selling naming rights and ads in the arena parking lot. James believes that it will be less.

- Westgate will boom in two years due to the recovering economy, dramatically boosting sales-tax revenue for Glendale. A study shows Westgate sales-tax hauls soaring 72 percent between 2012 and 2013 and rising more steadily after that. James believes that the anticipated growth is overstated.

- On the cost side, arena repairs that Glendale would pay are expected to reach $11 million in today's dollars over 30 years. James believes that the costs will be higher.

"There's an awful lot of optimism bias," James said. "If any of those (projections) don't work out the way they want them to, the city's in big trouble."

Other problems could emerge if Glendale's bond sale goes off track.

City officials planned for a 6 percent interest rate but now warn that the rate could go higher because the government watchdog Goldwater plans to sue to block the deal.

If the bonds turn out to be more expensive for Glendale, it would throw off the projections.

 

[Egil]

The discount rate used for determining the present value of future cash flows has NOTHING to do with ANYONE'S rate at which they can raise money to purchase that stream of cash flows. The discount rate is used to apply risk to that stream of cash flows.

The DECISION as to whether or not to purchase that stream of cash flows is based upon two things. First, the Present Value of those net cash flows. The scond is their cost of finding the purchase of those flows.

If there is an opportunity for me to buy the parking for $100 mil and i think the discount rate used was accurate for the risk associated with the cash flows, I would only buy that opportunity if I was able to raise the money for less than the discount rate used. If it would cost me more than that rate to raise the money, i would not purchase that stream of cash flows. However, let's say GSC was able to borrow $100 mil at 4.85% because he was able to take out a mortgage on his mansion at that price, then he would buy that future stream of cash flows because he believes it will return him more than it is going to cost him.

The city is purchasing the cash flows, so TO THEM, the value is based on a discount rate using the interest rate that they are paying, and they certainly can't use a rate less than what the money is costing them. If the city had better credit or the muni market wasn't partially siezed up, then maybe this transaction would make sense, but they don't and it is, so.....

 

[Howler Scores]

i guess keeping in line with the Reagans....the GWI declared "A War on Scruggs" ??

Let's be honest, that is all it is since they got the email that Glendale was playing with them. GWI uses the City North case (which they lost) and their funds are increasing from the media exposure so they won’t fall back and Glendale doesn’t want to issue bonds at an inflated rate and there is an impasse (with both sides taking it personally). I would like a formal decision date to be announced by the NHL because it’s the only way to overcome the impasse; something would have to be done on that date (at least I could set up a countdown on my phone). I hope the result is not the loss of an NHL team since the other 5 times a minor league team in the valley didn’t work; this would be the end to hockey in Arizona (except Prescott’s little team) and possible Westgate.

 

[pirate94]

Article in the AZ Republic analyzing the numbers.

http://www.azcentral.com/news/artic...dale-phoenix-coyotes-deal-money-analysis.html

what about all that guaranteed money?

 

[Mungman]

My goodness, the GWI's challenge to this deal came as a surprise to Glendale? Days before approving the deal at city council (December 14) the GWI wrote a sternly worded letter urging the COG to reconsider. Could Glendale actually try to claim that they were unaware of the GWI's intentions. I think a much more plausible explanation is that Glendale has always been unsure of the weight of their legal argument and instead of taking the GWI on in court they chose to try the PR and political route. We now know how unwise that approach was.

If Glendale was not prepared to take this to the bond market in December (at the time of finalizing the lease), then they were both unwise and unprepared. Note that at the city council meeting they actually declared an emergency so that Beasley could act in the bond market urgently, as required. It was 6 weeks hence that the GWI wrote a letter to bond agencies.

If Glendale has decided not to get a declarative judgment on this because it sets a bad precedent, then it is I who is compelled to chuckle. They have said that this will cost their burg in excess of $500 million, but they are not going to take the GWI to court lest it set a bad precedent. I think that a more plausible reason is that they are not sure that they would win a legal case, which would indeed be a bad precedent.

I realize that you are unprepared to blame anyone other than the GWI for the current predicament of Glendale, but I think you are letting off other culpable parties far too easily.

The Bolded part = BINGO

They do NOT want to screw up the operations of government bond and business interactions for this matter.

 

[goyotes]

IMO, much of what she says is completely correct. No City ever decides an issue in a duly exercised public meeting, and then go and play "mother may I" with the court to bless the decision. The GWI, as the challenging party, has the burden to demonstrate their allegations are true. The burden does not rest with the City to get court approval.

But, reading between the lines, I see the GoG washing their hands and not selling the bonds. She failed to acknowledge that the only hold up in the sale is Glendale selling its bonds. All sides are pushing away from the table and claiming there is nothing further for them to do.

I think...we are done like dinner.

 

[Dado]

So they officially chickened out of their "threat" to sue GWI, even though it will cost them a claimed $500M?

Riiiiiiiight....

For a municipal level organization, CoG's potent combination of incompetence and deceit is most impressive.

 

[Confucius]

Let's be honest, that is all it is since they got the email that Glendale was playing with them. GWI uses the City North case (which they lost) and their funds are increasing from the media exposure so they won’t fall back and Glendale doesn’t want to issue bonds at an inflated rate and there is an impasse (with both sides taking it personally). I would like a formal decision date to be announced by the NHL because it’s the only way to overcome the impasse; something would have to be done on that date (at least I could set up a countdown on my phone). I hope the result is not the loss of an NHL team since the other 5 times a minor league team in the valley didn’t work; this would be the end to hockey in Arizona (except Prescott’s little team) and possible Westgate.

I'm surprised you considered this team as working.

 

[pirate94]

IMO, much of what she says is completely correct. No City ever decides an issue in a duly exercised public meeting, and then go and play "mother may I" with the court to bless the decision. The GWI, as the challenging party, has the burden to demonstrate their allegations are true. The burden does not rest with the City to get court approval.

But, reading between the lines, I see the GoG washing their hands and not selling the bonds. She failed to acknowledge that the only hold up in the sale is Glendale selling its bonds. All sides are pushing away from the table and claiming there is nothing further for them to do.

I think...we are done like dinner.

I guess someone should tell the CoG "don't go chasing Waterfalls"

 

[Dado]

I'm surprised you considered this team as working.

From the perspective of a regional hockey game who is getting to watch the NHL at bargain-basement subsidized prices - sure, it works just fine.

 

[TJinAZ]

They wouldn't sue yet

So they officially chickened out of their "threat" to sue GWI, even though it will cost them a claimed $500M?

Riiiiiiiight....

For a municipal level organization, CoG's potent combination of incompetence and deceit is most impressive.

You can't sue until damaged. Just like GWI can't sue until the bonds are sold. You can't sue for theoretical damages if someone may do something that causes you harm.

Now if the team leaves, Glendale can sue on multiple grounds.

 

[Dado]

Now if the team leaves, Glendale can sue on multiple grounds.

CoG will never go after GWI.

I would not be at all surprised, however, if they went after the NHL for "blocking" the sale by "insisting" on a price so far above meaningful market value that it guaranteed a relocation.

Bad Faith Bettman...

 

[Fidel Astro]

Absolutely. You deserve a chance to "raise the roof" (not to be confused with MTSC expansion) for your team a final time. If I was Mark Chipman (or even played him on TV), I would arrange an exhibition game in Glendale, with the team playing in Coyotes uniforms (assuming the NHL would allow). Or maybe we create a 3rd uniform cleverly similar to the Coyotes'). After the game, I would sell off the worn (and laundered, just to be clear) jerseys to raise money for a Phoenix charity. I think that would be a classy gesture to the fans that have kept this franchise alive for 15 years.

I still remember the "funeral" for the Jets pretty vividly, and I was only in junior high back then. I would hope that even if the relocation announcement comes after the Coyotes are eliminated from the playoffs, the team holds some kind of 'goodbye' event for the fans.

Some of 'em have been putting in the effort for a long time, and as much as it goes against my sunbelt-hating/Canada uber alles attitude on these boards, the fans who actually do support the team are not to blame for the apathy of their neighbours.

Of course, if you end up keeping the team, I hope you all go broke from tax debt and the team loses every game.

That's a polite way of putting it. I have similar sentiments, but I have a feeling this board would censor most of 'em.

 

[Howler Scores]

I'm surprised you considered this team as working.

Do you think the NHL worked in Arizona?

Make up quotes much (I never said that, just combating the constant use of "let’s give them an AHL team, they won’t know the difference" in that statement)? Listen, read the article from azcentral and run the numbers. From a tax revenue perspective, how can you argue? From a terrible ownership issue, then you can argue; separate the two issues out.

 

[pirate94]

CoG will never go after GWI.

I would not be at all surprised, however, if they went after the NHL for "blocking" the sale by "insisting" on a price so far above meaningful market value that it guaranteed a relocation.

Bad Faith Bettman...

I'm not sure they can go after the NHL for setting a price. CoG can't dictate what the Coyotes sell for, they have zero ownership stake in the team.

 

[pirate94]

Make up quotes much (I never said that, just combating the constant use of "let’s give them an AHL team, they won’t know the difference" in that statement)? Listen, read the article from azcentral and run the numbers. From a tax revenue perspective, how can you argue? From a terrible ownership issue, then you can argue; separate the two issues out.

I'm not making up quotes. I asked you a question, if it's that hard of a question to say yes or no, then i understand.

Terrible ownership? I'm sorry i have extreme issues with that belief. Tickets are greatly reduced for a team that is very competitive for 2 years straight and people can barely be bothered to go to games. the NHL has told them "we want the NHL to work in Arizona" they've tried repeatedly.

If you think people there won't know the difference between AHL and NHL i'd say i feel for you, but if that team leaves, it's not because the NHL didn't try and make it work there. If AHL hockey is not good enough for you, then Arizona isn't the hockey state you seem to think it is.

Don't talk about "running the numbers", because that would change the argument into attendance, shortly followed by "bad owners", which isn't even an argument worth getting into.

 

[Confucius]

I'm not sure they can go after the NHL for setting a price. CoG can't dictate what the Coyotes sell for, they have zero ownership stake in the team.

I believe the league wanted their money back plus losses they incurred, No more no less.