Phoenix XXXVI - There's got to be a morning after

[borno87]

I respect your ideas and the only counter I can point out to your breakdown is that the Cubs deal is very important. It is similar in dollar amounts (80 million to the 50 or 100 million in bonds), and the official ruling in the $97 million dollar CityNorth case was:

http://www.azcentral.com/community/scottsdale/articles/2010/01/25/20100125citynorth0125.html



For this reason, if it was to go to court, it would affect a whole bunch of deals and could take a lot of money out of the State. I think a future judge could rule the Cubs/Coyotes deals in the similar fashion but every judge can view the same document differently.

While I can appreciate that the Cubs deal had direct implications to you personally, it remains irrelevant to the dispute between the COG and GWI regarding the Coyotes. The only way this deal is going to completed, is if GWI backs down. What happens in the court after the fact is at this late hour is irrelevant IMO.

This battle has been ongoing for 6 months now, and the war has been waged not in the court room, but rather in public via press releases, dueling interviews/media appearances and transcribed meetings featuring a variety of cupcakes. If COG releases an amended purchase agreement tomorrow and votes on Tuesday, they will simply be passing the ball back to GWI to determine the fate of the Coyotes. GWI will either back down and declare victory if the terms are significantly altered to their liking, or they will stand firm and continue to block the transaction as the clock runs down to triple zeros.

If this conflict ends up in court, the NHL and the Coyotes will be long gone by the time either side sees a judge. In which case CF's dream/nightmare scenario would unfold involving a 3 way lawsuit orgy that will leave only the legal beagles interested in the end. Further implications to Mesa/Cubs may have an impact on the courts decision if GWI were to prevail in such a scenario, however I'm afraid at the point we would be calling the Coyotes by another name.

 

[CasualFan]

Thanks for the PM and your clarification. I will need to go back to the documents and find reference to what I had at one time concluded vested the rights with Moyes, including the right to charge for parking as the arena tenant. I'll try to find my source and post it for your consideration.

You were correct. It is in Section 4.5
http://156.42.40.50/UnOfficialDocs/pdf/20061261680.pdf

However, we must also look at Section 5.4

For those not interested in looking at the document, this is the Parking Use and License Agreement of September 25, 2006 between Moyes and Ellman. Section 4.5 says the Team has the right to all parking revenue from Arena Events. Section 5.4 says in no event shall the Team be allowed to transfer that right to the City (unless the City becomes the Arena Manager).

 

[Mungman]

Short answer: It’s all about the publicity.

Long answer: IMO, as a local in the fine County of Maricopa, I have to question if they are truly looking out for all tax payers. I feel GWI is like any other business and they need to generate revenues. From their annual reports, it appears they get about $2 million in donations/revenue each year (So I can’t wait to see what their newest reports will state to see if there was a bump in revenues).

My issue is that the Cubs were very close to getting a "Cubs Tax" placed on all teams in the Cactus League. So instead, Mesa works out a deal that will have some tax revenue generated in exchange for issuing a bond to build the Cubs new stadium. The Cubs threatened to move if they did not get a new stadium. The difference can be argued that the deal is also backed by land that they can sell (if I am correct).

To me it’s a similar case but with different players. So for GWI to not go after them by saying "they (Mesa) works with us", I have to wonder if it’s all about public credit and recognition to receive future donations versus keeping an eye out for the poor tax payer. That is the long answer to your questions and in my small circle of friends, 80% agree to that view. (But that poll is biased as you can see).

See I see this as a straw man when people bring up this deal (and others with a similar structure). This arguement would have held water back in the day when CoG was issuing bonds to build Jobing.com arena, this deal is materially different in that the money is not going into a physical work (stadium in Mesa's case, Jobing.com in the past w/ Coyotes) but to the purchase (or to offset the purchase however you want to parse it) a franchise.

In the end if lets say Mesa issued 50MM (all numbers fictional) in bonds for the stadium and the Cubs go to Forida in five years the city still has a physical work (the stadium) to show for the investment. In the current case the CoG issues another 116MM (or whatever comes out of the woodwork next) in bonds and the team leaves in 5 years all they are left with is an extra 116MM of debt (never mind how they get their hands on the arena management monies). If they just let the team go they would have an arena and debt just like Mesa would, instead they have that PLUS the 116MM in franchise purchase costs (this is the grey area GWI is living in).

 

[Howler Scores]

If COG releases an amended purchase agreement tomorrow and votes on Tuesday, they will simply be passing the ball back to GWI to determine the fate of the Coyotes. GWI will either back down and declare victory if the terms are significantly altered to their liking, or they will stand firm and continue to block the transaction as the clock runs down to triple zeros.

Fair enough, but with this new rumored package that includes the old $50 million in bonds at the rate around 6%, I think GWI can't stop the deal once it is voted on by CofG's Council. GWI can take it to court but in one man's opinion, a judgment similar to CityNorth could be declared because it would also affect Mesa (the deal probably violates the Gift Clause the its still valid) .

It’s hard for me to think that a judge would rule all deals in which bond money was raised to finance gazillionaires is invalid. The only thing I can think of in my limited knowledge of the legal ways is if some kind of injunction could stop the process. If someone can find another example of this in Arizona (other than CityNorth) it could put that worry pill back in my head. For right now, I think its coming down to this vote on Tuesday.

I view this situation like it’s the season finale of my favorite TV show, and the ratings hasn’t been that great. But the TV show brings out the big guns during the season finale and it shows a new direction that might get it renewed (I liked the season finale of “V†which introduced new characters and killed off others to save dollars down the road).

 

[Mungman]

You were correct. It is in Section 4.5
http://156.42.40.50/UnOfficialDocs/pdf/20061261680.pdf

However, we must also look at Section 5.4

For those not interested in looking at the document, this is the Parking Use and License Agreement of September 25, 2006 between Moyes and Ellman. Section 4.5 says the Team has the right to all parking revenue from Arena Events. Section 5.4 says in no event shall the Team be allowed to transfer that right to the City (unless the City becomes the Arena Manager).

Ohhhhhhh you're naughty, I see what you did there.... that Edited For Fun is quite the piece of information. I can see some throbbing forehead veins coming soon.

 

[Howler Scores]

mod:

...

To respond to Mungman's comments (didnt want to quote all), I think your assessment is fair. I can't help but think it’s a situation where a stadium exists already (and is about 10-15 years old) but the Cubs want a new one like the other teams in Arizona.

The Cubs then found an out clause and used the threat of moving to Florida to get a new stadium and retail center around the stadium to generate more money. So while it’s not the exact situation, it feels similar to me (NHL saying they are moving the Coyotes if you don’t find a way to finance the deal).

Yes, if Mesa issued a bond to build the stadium and the Cubs move in 5 years anyways, Mesa does have the new stadium to show the money was used for something; but then they are stuck with 2 empty stadiums (assuming they don’t tear down their current one). However, the Cubs want out of the stadium that is almost as old as Chase Field in Phoenix so Mesa is essentially not getting what they originally planned when they built their first stadium.

This is why I keep harping on GWI not messing with the Cubs deal because while it’s different players, the overall theme just seems similar.


http://www.azcentral.com/community/mesa/articles/2009/01/30/20090130mr-cubscontract0131.html

The clause was included in the contract the team signed in 1996, could be exercised in 2011. The actual 20-year contract expires in 2016.

http://www.azcentral.com/community/...adium-project-renderings-spring-training.html

In January, the Cubs agreed to stay, but only if they could get the new facilities. The Cubs and Mesa signed a memorandum of understanding providing $84 million in public funding for the stadium and practice areas. In addition, Mesa would pay an unspecified amount for infrastructure.

At first it was hoped most of the stadium money would come from car-rental taxes and Cactus League ticket surcharges approved by the state Legislature. But that idea died amid bitter opposition from Major League Baseball and other Cactus League teams and cities, so Mesa decided in June to pay for the stadium itself.

Mesa believes it's essential to keep the team not just for its estimated $138 million annual Valleywide economic impact, but also because Mesa's image and business climate would suffer a devastating blow were the Cubs to leave.

The enterprise fund balance is about $60 million. Mesa will use that to begin paying off bonds it will sell for stadium construction. Over time, the city expects to sell large land holdings in Pinal County and those proceeds will replenish the enterprise fund. City Manager Chris Brady said the value of Mesa's Pinal County land far exceeds what will be needed to finance the stadium.

The main difference is the vote was by all Mesa citizens, not just the Council

 

[wpgallday1960]

You were correct. It is in Section 4.5
http://156.42.40.50/UnOfficialDocs/pdf/20061261680.pdf

However, we must also look at Section 5.4

For those not interested in looking at the document, this is the Parking Use and License Agreement of September 25, 2006 between Moyes and Ellman. Section 4.5 says the Team has the right to all parking revenue from Arena Events. Section 5.4 says in no event shall the Team be allowed to transfer that right to the City (unless the City becomes the Arena Manager).

Ok. I'm a little confused here. When Moyes declared bankruptcy in 2009 did the CoG become the arena manager and therefore the parking rights transferred to them (by way of section 5.4)? Who really owns the parking rights as of today?

 

[borno87]

Fair enough, but with this new rumored package that includes the old $50 million in bonds at the rate around 6%, I think GWI can't stop the deal once it is voted on by CofG's Council. GWI can take it to court but in one man's opinion, a judgment similar to CityNorth could be declared because it would also affect Mesa (the deal probably violates the Gift Clause the its still valid) .

It’s hard for me to think that a judge would rule all deals in which bond money was raised to finance gazillionaires is invalid. The only thing I can think of in my limited knowledge of the legal ways is if some kind of injunction could stop the process. If someone can find another example of this in Arizona (other than CityNorth) it could put that worry pill back in my head. For right now, I think its coming down to this vote on Tuesday.

I view this situation like it’s the season finale of my favorite TV show, and the ratings hasn’t been that great. But the TV show brings out the big guns during the season finale and it shows a new direction that might get it renewed (I liked the season finale of “V” which introduced new characters and killed off others to save dollars down the road).

The COG will approve the deal on Tuesday. I have no doubt about that, however we only need to go back to December to see that the COG is hardly the last step in the completion of the deal.

To clarify my opinion as to why GWI backing down is the only way this deal is completed, I will sum it up in one word: timing. If GWI further objects to a deal that COG approves on Tuesday, I'm not sure the NHL is willing to complete the agreement given the chance that GWI follows through with its threat and sues. The result of such a lawsuit (excuse me while I channel my inner Sunnucks/Lawless) could result in the purchase agreement/lease between MH and the COG being invalidated.

Now obviously you don't think that is the remedy the courts would undertake should a Gift Clause violation be confirmed, however the mere possibility of such a scenario leads me to believe that the NHL will walk if GWI does not back down. Bettman has gone to great lengths to paint GWI as the cause for the deal not being completed to date and will leverage that perception when making a relocation announcement if such a scenario came to pass. Even if this scenario only were to come around in 1-2 years from now, I'm sure the NHL has considered the possibility that this does mess does end up in front of a judge and have determined what their next move would be. IMO, it would be jumping ship.

OT - I too enjoyed the direction V took at the tale end of this season.

 

[goyotes]

Ok. I'm a little confused here. When Moyes declared bankruptcy in 2009 did the CoG become the arena manager and therefore the parking rights transferred to them (by way of section 5.4)? Who really owns the parking rights as of today?

The Moyes estate owns the rights, which the NHL can assume until June of 2011.

Not sure what to do about the prohibition on transfer to the City. GSC may have thought this out and responded once already, but I can't remember.

So, in the end, the GWI's argument that the City already owns the rights as a consequence of the Jan. 25th agreement is, can we all agree, a red-herring that demonstrates they either 1) don't understand the chain of title, or 2) like to make statements that sound good to the press, but will not hold up in court.

 

[Fugu]

The Moyes estate owns the rights, which the NHL can assume until June of 2011.

Not sure what to do about the prohibition on transfer to the City. GSC may have thought this out and responded once already, but I can't remember.

So, in the end, the GWI's argument that the City already owns the rights as a consequence of the Jan. 25th agreement is, can we all agree, a red-herring that demonstrates they either 1) don't understand the chain of title, or 2) like to make statements that sound good to the press, but will not hold up in court.

I thought Moyes has officially rejected the AMULA, as of Nov 2010 or the latest, Feb 2011. And the NHL cannot assume the old lease because it comes with that onerous 30 yrs clause. They have to wait for a new lease to come out of COG, otherwise they need to protect their ability to relocate without further entanglements.

(kdb's "who's on second" seems appropriate here)

 

[goyotes]

I thought Moyes has officially rejected the AMULA, as of Nov 2010 or the latest, Feb 2011.

The document of which CF references was one of the assumable contracts in the bankruptcy. In bankruptcy, the NHL was allowed to pick and chose which contracts of the debtor it could assume. That right has been extended until June of 2011. Moyes consent in not an issue. What would be interesting is what happens if this deal doesn't close and the NHL doesn't assume the contract.

I think the parking rights revert back to Ellman at that point, and perhaps then, and only then, could one argue that the Jan. 25th agreement conveys parking revenue rights to the CoG.

 

[Fugu]

The document of which CF references was one of the assumable contracts in the bankruptcy. In bankruptcy, the NHL was allowed to pick and chose which contracts of the debtor it could assume. That right has been extended until June of 2011. Moyes consent in not an issue. What would be interesting is what happens if this deal doesn't close and the NHL doesn't assume the contract.

I think the parking rights revert back to Ellman at that point, and perhaps then, and only then, could one argue that the Jan. 25th agreement conveys parking revenue rights to the CoG.

I recall the discussion about the assumable contracts, but is there one that is not the AMULA that gave Moyes the parking rights as the Arena Manager? I recall one extension (the first year post-bankruptcy), but since then Moyes Estate has indeed rejected the AMULA. Something is in a gray area here, no?

 

[LeftCoast]

I thought Moyes has officially rejected the AMULA, as of Nov 2010 or the latest, Feb 2011.

I don't think the parking rights were a part of the AMULA (lease agreement), rather they were a part of the MUDA (land development agreement).

The apparent sequence of title transfer seems to go:

1. From the City (owns the land) to the developer (Ellman / Moyes).
   
2. To Moyes (when he acquired Ellman's interest in the Coyotes).
   
   <<Bankruptcy>>
   
3. From Moyes' estate to the NHL when the NHL acquired the team, assets and obligations from bankruptcy.
   
   << Proposed Future Transfers >>
   
4. From the NHL to Michael Hulsizer (IF the deal to acquire the team completes).
   
5. From Michael Hulsizer back to the City of Glendale (as a part of the new Arena lease).

However there appears to be some disagreement about whether each of these transfers of rights is documented and legal.

The January 25th 2011 Agreement is a real head scratcher because it appears to take a short cut from Step 1 to Step 5, bypassing everything in between.

 

[Fugu]

I don't think the parking rights were a part of the AMULA (lease agreement), rather they were a part of the MUDA (land development agreement).

The apparent sequence of title transfer seems to go:

1. From the City (owns the land) to the developer (Ellman / Moyes).
2. To Moyes (when he acquired Ellman's interest in the Coyotes).
   
   <<Bankruptcy>>
3. From Moyes' estate to the NHL when the NHL acquired the team, assets and obligations from bankruptcy.
   
   << Proposed Future Transfers >>
4. From the NHL to Michael Hulsizer (IF the deal to acquire the team completes).
5. From Michael Hulsizer back to the City of Glendale (as a part of the new Arena lease).

However there appears to be some disagreement about whether each of these transfers of rights is documented and legal.

The January 25th 2011 Agreement is a real head scratcher because it appears to take a short cut from Step 1 to Step 5, bypassing everything in between.

So going back to CF's statement:

Section 5.4 says in no event shall the Team be allowed to transfer that right to the City (unless the City becomes the Arena Manager).

Moyes has terminated his Arena Manager contract (the AMULA). There is no other entity that will assume the old contract. The NHL "may" assume the CCD? that holds the parking rights if COG enters into a new lease so that they can transfer the parking rights to MH, who then would sell these to the city. Yet as part of the same package of contracts/rights and concluding with the Jan 25 document, it says that the city can only acquire these rights if it's the Arena Manager.

???

 

[Howler Scores]

The COG will approve the deal on Tuesday. I have no doubt about that, however we only need to go back to December to see that the COG is hardly the last step in the completion of the deal.

That is true, my definition of speed is different from a court's speed so who knows how the NHL will react. I guess the only shot I have left is that TNSE gets a contract saying that if the courts rule its illegal in Arizona, then they get the team (impossible I recognize). I know that is not something anyone wants and holds a lot of parties’ hostage but I am just spilling out dribble at this point; either way, whoever wins is doing it at the cost of someone else’s pocket book.

While there was similar back and forth between the State of Florida and the State of Arizona, I don't believe a particular city in Florida was ever decided for the Cubs. So it did become a “my state is better than your state” argument for both sides; similar to the Coyotes situation now. The difference being that the plan was held out of the courts and this 2 year drama has caused a lot of people frustration.

 

[LeftCoast]

So going back to CF's statement:



Moyes has terminated his Arena Manager contract (the AMULA). There is no other entity that will assume the old contract. The NHL "may" assume that contract if COG enters into a new lease so that they can transfer the parking rights to MH, who then would sell these to the city. Yet as part of the same package of contracts/rights and concluding with the Jan 25 document, it says that the city can only acquire these rights if its the Arena Manager.

???

What a shell game.

So the Jan 25 agreement ties the parking rights to the arena manager. But the proposed new Hulsizer lease tries to separate the parking rights (City) from the Arena Management (Hulsizer).

So who is the Arena Manager right now?

Who's on first?

 

[Ulfie]

What a shell game.

So the Jan 25 agreement ties the parking rights to the arena manager. But the proposed new Hulsizer lease tries to separate the parking rights (City) from the Arena Management (Hulsizer).

So who is the Arena Manager right now?

Who's on first?

New vote possible, and so we'll have another agreement to pick apart.

http://www.azcentral.com/community/...ndale-vote-reworked-phoenix-coyotes-deal.html

 

[Killion]

I don't think the parking rights were a part of the AMULA (lease agreement), rather they were a part of the MUDA (land development agreement). The January 25th 2011 Agreement is a real head scratcher because it appears to take a short cut from Step 1 to Step 5, bypassing everything in between.

Precisely the premise many if not most of us having been working from. With the 01/25/11 Agreement seeming to either accidentally or by design leapfrog's steps; and 2 clearly divergent opinions between CasualFan's & GSC's. well, lets just say I for one am thoroughly confused.... There doesnt appear to be any language in the agreement that specifically assigns the parking rights to the COG, yet, one could liberally interpret it as doing so....

....the city can only acquire these rights if it's the Arena Manager.???

Ya, ditto on the bolded. Unreal. This is just way too complicated & complex for its own good.

 

[CGG]

So going back to CF's statement:



Moyes has terminated his Arena Manager contract (the AMULA). There is no other entity that will assume the old contract. The NHL "may" assume the CCD? that holds the parking rights if COG enters into a new lease so that they can transfer the parking rights to MH, who then would sell these to the city. Yet as part of the same package of contracts/rights and concluding with the Jan 25 document, it says that the city can only acquire these rights if it's the Arena Manager.???

The city needs to be the arena manager to acquire the parking rights from Hulsizer, but Hulsizer needs to be the arena manager to acquire the $97 million "fee" from the city.

My head hurts.

 

[Killion]

So who is the Arena Manager right now?

Arena Management Group LLC. A copy of the agreement exists somewhere here-in linking to the agreement on pdf.... I believe it was first made available through the Globe&Mail..... are you sure you wanna shuck that shell open, again?.

 

[CasualFan]

Arena Management Group LLC. A copy of the agreement exists somewhere here-in linking to the agreement on pdf.... I believe it was first made available through the Globe&Mail..... are you sure you wanna shuck that shell open, again?.

Respectfully, Arena Newco, LLC (NHL Entity) assumed all the obligations of the Arena Manager per their transitional agreement with Glendale.

 

[RR]

I believe Balsillie ultimately amended that simply to get Glendale's backing in court. Thus the city would have received $25MM regardless, and another $25 MM if the relo was approved. I don't have time to dig it up but I know the offer was changed at least 1-2 times.

That was the final offer. The other condition was the City would surrender its rights to bring any future legal action against the buyer (PSE) or seller (Dewey Ranch Hockey, LLC).

 

[Jonjmc]

Here is a question for our lawyers here. Isn't the Jan 25 agreement assigning the parking spaces back to the city, only talking about the parking spaces that would have been eliminated by building a parking garage?

 

[Killion]

Respectfully, Arena Newco, LLC (NHL Entity) assumed all the obligations of the Arena Manager per their transitional agreement with Glendale.

Im so confused Im losing track of whats transpired. Arena Newco & Coyotes Newco LLC's. Delaware.

 

[goyotes]

I recall the discussion about the assumable contracts, but is there one that is not the AMULA that gave Moyes the parking rights as the Arena Manager? I recall one extension (the first year post-bankruptcy), but since then Moyes Estate has indeed rejected the AMULA. Something is in a gray area here, no?

The assumable contract is the parking use agreement, not the AMULA in total. The NHL can assume the parking use agreement, which it will convey to MH. Therefore, the Ellman cannot "assign" if that is indeed how you read the Jan. 25th agreement, his parking rights under the MULA, because he conveyed those rights to Moyes 5 years ago.

I believe this puts a fork in the GWI's argument that the CoG already owns the rights. They own the dirt, not the right to parking revenue. It has long been a red-herring argument that plays well to the press, but would be rejected on summary judgment by any judge.