The NHL is Eyeing Austin Texas instead of Houston - Oak View agrees to Build New Arena!!!

[Tawnos]

You guys somehow ignore the fact that expansion cash is something all the leagues view as free money.

A lousy team like AZ with carpet bagging owners would lose money in just about every market, including Houston. It's EASY for corporate owners to direct cash flow from the actual product towards themselves and towards paying creditors.

It's a reason why community owned, non-profit Green Bay Packers consistently produces a very profitable, very competitive product--They don't siphon money towards themselves or towards interest payments.

A $300m sale of the Coyotes with a $100m relocation fee means $100m in free money for the owners that they wouldn’t get if the Coyotes stayed put. Not a viable reason for a healthy team, but that’s not what we’re talking about here.

 

[MNNumbers]

It actually is creative accounting.

Barroway completes buyout of Coyotes' minority owners

Notice the paragraph about the interest rate? Barroway's interest expenses are someone else's revenues.

That interest rate doesn't factor at all into my calculations.

What I am suggesting to you is that all of IA and Barroway amount to a 'front.' And, that the NHL quietly, behind the scenes, guaranteed IA and Barroway that they would not lose money in this transaction.

Never mind the interest. The team loses better than 20M a year. Effectively, the NHL owns it.

If they sell to Houston to Fertitta, that's cash in their pockets. 400M of cash. That's why it might happen.

 

[sexydonut]

It doesn't factor into your calculations, but it does matter for both Barroway/Coyotes, and for the NHL as the creditor.

It's just another example of financial legerdemain. All those extra expenses for the Coyotes are just revenues for the NHL.

 

[gstommylee]

A $300m sale of the Coyotes with a $100m relocation fee means $100m in free money for the owners that they wouldn’t get if the Coyotes stayed put. Not a viable reason for a healthy team, but that’s not what we’re talking about here.

Don't forget the league debt on the coyotes itself as well that has to be included in sales price of the team.

 

[gstommylee]

It doesn't factor into your calculations, but it does matter for both Barroway/Coyotes, and for the NHL as the creditor.

It's just another example of financial legerdemain. All those extra expenses for the Coyotes are just revenues for the NHL.

What revenue? The coyotes aren't making any revenue to the NHL.

 

[MNNumbers]

It doesn't factor into your calculations, but it does matter for both Barroway/Coyotes, and for the NHL as the creditor.

It's just another example of financial legerdemain. All those extra expenses for the Coyotes are just revenues for the NHL.

Until Barroway throws the keys on Bettman's desk. That's what I'm telling you. If the NHL is guaranteeing everything, then they ARE the BOG's losses. You can't gain revenue lending money to yourself. And, the bills have to be paid.

 

[sexydonut]

Revenue for the NHL. The NHL lent money for Barroway and is collecting interest on it. Every dollar of Barroway's interest expense (leading to financial losses) is also replicated as revenue on the NHL's income statement.

Barroway is essentially doing a leveraged purchase of the Coyotes, with the NHL as his banker.

 

[sexydonut]

Until Barroway throws the keys on Bettman's desk. That's what I'm telling you. If the NHL is guaranteeing everything, then they ARE the BOG's losses. You can't gain revenue lending money to yourself. And, the bills have to be paid.

LOL, if you actually believe this, you might purchase some beachfront property in Arizona. The Coyotes are losing a LOT because of debt repayments, with the NHL being the creditor who gains the same amount as interest revenue.

Par for the course in finance. Corporations, real estate, basically anything with a cash flow can and will have their values bid up, and their cash flow hijacked to pay speculators and bankers.

 

[gstommylee]

Revenue for the NHL. The NHL lent money for Barroway and is collecting interest on it. Every dollar of Barroway's interest expense (leading to financial losses) is also replicated as revenue on the NHL's income statement.

Barroway is essentially doing a leveraged purchase of the Coyotes, with the NHL as his banker.

That's not revenue that's paying off debt. Coyotes owe NHL $$ for that loan. Even if the loan is paid off, the coyotes are still losing millions and millions of dollars cause the arena is in a terrible location.

 

[sexydonut]

If a team is run by a bunch of carpetbaggers, it's just about assured to lose money and/or have much of its revenues siphoned off to feed its bosses and creditors. Cue Harold Ballard siphoning off Maple Leafs money for his own personal luxuries.

Under GAAP rules, paying off debt and interest expense are legitimate expenses, and debt interest is tax deductible too.

The Coyotes aren't a listed company, so you are taking their "debt" at face value. In reality financial sleight-of-hand is commonplace and expected.

 

[MNNumbers]

I have no argument with Coyote interest payments increasing the amount that is owed by the franchise. This was the principle behind the FIG load in the first place. Glendale was essentially buying the team for IA, through the AMF. That gave them the team for free, and all they had invested was operating costs.

However, that article you linked referred to an NHL LOC, and that American ownership was required to access it. That loan is NOT from the league itself. It's from CitiBank, with the NHL backing it.

There was another loan in the original IA purchase which came direct from the league. It was reported as a 85M interest free loan for 5 years. Interest free.

I have not seen any evidence that Barroway has actually borrowed from the league itself.

That being the case, I do not see any interest payments as going back into league coffers.

 

[sexydonut]

If the loan was from Citibank with the league as the guarantor, the league itself would receive a good chunk of those interest payments, as it is technically risking its own capital.

It doesn't make sense how you guys can conveniently overlook financial sleight-of-hand. It's common in just about every industry, yet it is rarely if ever discussed, let alone acknowledged.

 

[SwaggySpungo]

High tech market just like Seattle. Still a reasonable drive from Houston and no NBA competition like San Antonio would have

What? Google maps says Austin is a 3 hour drive from Houston.

You people think large crowds are going to be driving 6 hours to watch hockey in Texas? LOL.

 

[Major4Boarding]

In case it comes up. For reference

Toyota Center Lease Agreement (Page 150 - Exhibit E)

https://www.houstonsports.org/media/files/page/aad9f8ee/Toyota_Center_-_Arena_Lease.pdf

Multi-Purpose Arena Letter of Agreement

https://www.houstonsports.org/media/files/page/01e9a6f8/Multi-Purpose_Arena_Letter_of_Agreement.pdf

 

[Aero 75]

What? Google maps says Austin is a 3 hour drive from Houston.

You people think large crowds are going to be driving 6 hours to watch hockey in Texas? LOL.

The western suburbs of Houston (Cypress and Katy) are about a 2 hour drive to downtown Austin. No big deal. Texas is a big
state, and the drive from the western 'burbs isn't bad at all. Mostly farmlands and rolling hills.

Did see the article on Fox 26 News concerning the 'discussions' between the NHL and Fertitta. We shall see what comes out of this.

Sources say Houston Rockets owner Fertitta met with NHL Commissioner

 

[BKIslandersFan]

The western suburbs of Houston (Cypress and Katy) are about a 2 hour drive to downtown Austin. No big deal. Texas is a big
state, and the drive from the western 'burbs isn't bad at all. Mostly farmlands and rolling hills.

Did see the article on Fox 26 News concerning the 'discussions' between the NHL and Fertitta. We shall see what comes out of this.

Sources say Houston Rockets owner Fertitta met with NHL Commissioner

I don’t know if anyone is making two hour drive to watch a hockey game on weekdays.

 

[Aero 75]

I don’t know if anyone is making two hour drive to watch a hockey game on weekdays.

True, weekdays would be an issue from the western 'burbs of Houston to Austin for an NHL game. Maybe a few diehards from Houston if
a team were in Austin. Weekends, not an issue at all. I think half of Houston leaves on weekends.

 

[SwaggySpungo]

The western suburbs of Houston (Cypress and Katy) are about a 2 hour drive to downtown Austin. No big deal.

Wait? So now the big selling point is that Austin is *only* a 2 hour drive away from some suburbs of Houston? Driving 4 hours for a hockey game is not only a big deal, it's a massive deal. Nobody, especially Texans, are driving 4 hours to watch hockey.

Toronto to Niagara Falls is only an hour and a half by car. And nobody with any sense whatsoever thinks Niagara Falls should get an NHL team.

Austin isn't happening. The NHL isn't interested. This was Bob McKenzie spouting off his own personal opinion. The title of this thread is made up.

 

[TheLegend]

Its much cheaper to buy the coyotes and move a them than it is to pay 650m. Houston balked at 650m. NHL isn't going to expand any time in the foreseeable future. Seattle is imo the last market to fetch the NHL at least that kind of money.

Tommy..... you do understand that the NHL would be entitled to charge a relocation fee that could make the total cost of buying the Coyotes and moving them the same as if they bought in as an expansion, right???

Jeremy Jacobs obviously thinks Houston is worth that given comments he’s made. There are probably a few other owners who also think that as well.

Right now they aren’t in any hurry to get into Houston. They know what the market is worth and unless Barroway decides he can’t do it anymore or some other owner wants to bail from their market nothing is going to happen.

And the price will just keep going up as time goes on as Seattle found out.

 

[TheLegend]

Revenue for the NHL. The NHL lent money for Barroway and is collecting interest on it. Every dollar of Barroway's interest expense (leading to financial losses) is also replicated as revenue on the NHL's income statement.

Barroway is essentially doing a leveraged purchase of the Coyotes, with the NHL as his banker.

The Coyotes are no longer financed through the NHL’s LOC. That ended when Barroway bought out the original IA members.

This was discussed at great length in previous megathread chapters.

Barroway used a private lending firm to finance his buyout.

 

[sexydonut]

But he's still paying interest costs to the lender. Thus a good chunk of Coyotes cash flow is diverted towards debt service, and contributes to higher expenses and ultimately a financial loss.

Barroway is still a leveraged buyout guy, no different from the ones who bought Toys R Us, Sears, etc. by borrowing huge amounts of money, then gutting cash flow in order to pay back the loans.

Thus an otherwise viable/potentially viable business may have artificially inflated losses because of the financing involved.

 

[MNNumbers]

But he's still paying interest costs to the lender. Thus a good chunk of Coyotes cash flow is diverted towards debt service, and contributes to higher expenses and ultimately a financial loss.

Barroway is still a leveraged buyout guy, no different from the ones who bought Toys R Us, Sears, etc. by borrowing huge amounts of money, then gutting cash flow in order to pay back the loans.

Thus an otherwise viable/potentially viable business may have artificially inflated losses because of the financing involved.

Let me get this straight, SD.....

You are suggesting that the only losses the Coyotes have is in interest payments on money borrowed to purchase the team?

And, along with that, you are suggesting that the Coyotes operations are break-even.

Is that what you are saying?

 

[sexydonut]

No, not at all. But the Coyotes losses are artificially INFLATED because the owner bought them on leverage. You could purchase ANY team with borrowed capital and potentially siphon their cash flow to repay creditors and thus create losses. Cue many large European soccer teams. Despite very high revenues, Manchester United is up to its eyeballs in debt, partially due to its owners having to repay their loans in a strengthening US$. As a result, its product has suffered.

The Coyotes are not a listed company. There is no obligation to file these financial details and the public does not have access to them.

Furthermore, leveraged buyouts (LBOs) are commonplace and many/most businesses with enough cash flow are targeted by these tactics.

 

[MNNumbers]

No, not at all. But the Coyotes losses are artificially INFLATED because the owner bought them on leverage. You could purchase ANY team with borrowed capital and potentially siphon their cash flow to repay creditors and thus create losses. Cue many large European soccer teams. Despite very high revenues, Manchester United is up to its eyeballs in debt, partially due to its owners having to repay their loans in a strengthening US$. As a result, its product has suffered.

The Coyotes are not a listed company. There is no obligation to file these financial details and the public does not have access to them.

Furthermore, leveraged buyouts (LBOs) are commonplace and many/most businesses with enough cash flow are targeted by these tactics.

Is not the result of most LBOs that part of the business is also sold off for the financial sake of the new owners, who purchased the team with leverage? If so, how does that transfer to the Coyotes?

 

[uhlaw97]

People, get a clue. Tilman Fertitta is reportedly in negotiations to bring the Coyotes to HOUSTON...................NOT Austin.

He owns the NBA Rockets' arena, and wants a hockey team that can fill the arena on alternate dates.

Austin is NOT in the running. That's just silly.

Read on.

Sources say Houston Rockets owner Fertitta met with NHL Commissioner

Come on Uncle Tilman!!! MAKE IT HAPPEN!!!