Westhead: Coyotes' survival hinges on arena deal battle

[snovalleyhockeyfan]

http://www.tsn.ca/coyotes-survival-hinges-on-arena-deal-battle-1.283772

Rick Westhead at TSN just posted this an hour ago it appears, so I'll let you all discuss this as this could be a major story. I did a cursory read of the story and it looks as if there's a possible breach of contract concern that has come up concerning the payments being made to IceAZ.

Mods, if you want to merge this into the most recent Westhead thread, that's OK.

Click to read more...

 

[Fugu]

We can leave this as a separate thread, and hopefully just discuss the lease and contractual issues.

However, I'm seriously confused, or is Hughes that's confused, because COG knew the money would be going directly to the lender. There was a filing showing this was set up.

Secondly, isn't FIG out of the picture now, due to Barroway's entry?

When the city council in Glendale voted to give the owners of the Coyotes $225 million (all U.S. dollars) over 15 years, the money was supposed to be used by the team to manage the 12-year-old Gila River Arena, where the Coyotes play their home games.
...
But nearly two years after council approved the controversial pact, city officials claim the money that cash-strapped Glendale is paying to the team's owner IceArizona is instead going directly to Fortress Investment Group, the New York-based asset manager which financed holding company IceArizona's purchase of the Coyotes.

Glendale Vice Mayor Ian Hughes says using taxpayer dollars to pay down the team's debt rather than for direct arena management expenses amounts to a breach of contract. Hughes says he hopes in coming weeks to rally support on Glendale's seven-member city council to direct the city's attorney to explore whether the Phoenix suburb can get out of its contract with the Coyotes, a potential legal battle that could finally herald the Coyotes' exodus from the desert.
"The taxpayer got the short end of the stick," Hughes said in an interview. "If they call this an investment, you'd think there would be a possible return. I'm hard pressed to see the benefits to the city of Glendale."

As for the numbers:

The city does receive a portion of revenue sharing from the arena's operations. Last year, the city received about $6.5 million from IceArizona, which means the deal cost the city about $8.5 million.
"I asked our finance director...if the hockey team packed up and left the next day, what would be the impact, and the answer was an $8.5 million windfall profit for us," Hughes said. "We increased sales tax to the citizens to cover this (arena management deal). We have needs in law enforcement and our fire department that we can't fund. We had to put off purchasing of new pumpers for the fire department. We have three libraries in Glendale and all of their hours have been cut way back."

Might their finance director want to go back and do the calculations without the hockey team based there AND being the arena manager? They probably are better off without, but I don't think these numbers add up.

 

[Fugu]

Ahhh....


This is the more interesting part of the article:

That's because consultant Tony Tavares, the onetime president of both the Dallas Stars and Mighty Ducks of Anaheim, has delivered to Glendale city auditors a report that alleges IceArizona under-reported its losses last season during the first year of the 15-year arena management contract, sources tell TSN.

While IceArizona said it lost $34.8 million during the 2013-14 NHL season, Tavares's confidential report claims the holding company lost far more than that. TSN couldn't confirm the exact amount Tavares claims IceArizona lost. The report suggests tactics the city might take to challenge the Coyotes in their bookkeeping.

TSN spoke to a source with first-hand knowledge of Tavares' report who said any such misreporting could arguably be used by lawyers to claim that the team has breached the terms of its arena management contract.

 

[Slot]

We can leave this as a separate thread, and hopefully just discuss the lease and contractual issues.

However, I'm seriously confused, or is Hughes that's confused, because COG knew the money would be going directly to the lender. There was a filing showing this was set up.

Secondly, isn't FIG out of the picture now, due to Barroway's entry?



As for the numbers:



Might their finance director want to go back and do the calculations without the hockey team based there AND being the arena manager? They probably are better off without, but I don't think these numbers add up.

Numbers probably DO make sense in that repealing the special sales tax will result in a decrease in intake at the same time that they won't be giving $15MM to the 'yotes.

 

[cbcwpg]

Ok, maybe I'm confused, or maybe it was just an assumption by pretty much everyone, but in regards to:

But nearly two years after council approved the controversial pact, city officials claim the money that cash-strapped Glendale is paying to the team's owner IceArizona is instead going directly to Fortress Investment Group, the New York-based asset manager which financed holding company IceArizona's purchase of the Coyotes.

was it not obvious to these people on council that this is exactly what most everyone thought that IceArizona would do with the money? Pay down debt....

"The taxpayer got the short end of the stick," Hughes said in an interview.

Was there any doubt of this always being the case?

 

[Fugu]

Ok, maybe I'm confused, or maybe it was just an assumption by pretty much everyone, but in regards to:

But nearly two years after council approved the controversial pact, city officials claim the money that cash-strapped Glendale is paying to the team's owner IceArizona is instead going directly to Fortress Investment Group, the New York-based asset manager which financed holding company IceArizona's purchase of the Coyotes.

was it not obvious to these people on council that this is exactly what most everyone thought that IceArizona would do with the money? Pay down debt....

I remember this being a requirement by the lender, and CF linking to paperwork about the set up (which came up in the Barroway discussions).

 

[TheLegend]

^^^^^

Well....

If I wanted to be nick picker..... He got the Vice Mayor's name wrong. (It's Ian Hugh) And US Airways Arena isn't in Glendale.

Pretty sloppy for an "investigative" piece.


But to me.... What doesn't make sense is the allegation that IA under-reported their losses. At least from a conspiracy nut's POV that if they truly wanted get out of Dodge and flip the team to another market they would want to get over that $50M number ASAP.

I guess you could go with the theory that they want to keep it on the down low so that it wouldn't scare people off further and you'd end up with Florida type attendance numbers. But that's pure speculation.

 

[cbcwpg]

I remember this being a requirement by the lender, and CF linking to paperwork about the set up (which came up in the Barroway discussions).

And if it was a requirement by the lender, it was most likely documented somewhere, so how can the city be surprised at all by where the money is going?

This whole issue should come as no surprise. A deal this complex with this many moving parts was bound to be challenged by one of the parties eventually over some "discretion" or disagreement.

IMO, it looks like the CoG has finally seen the light and is looking for someway / anyway to get out of this deal.

 

[MNNumbers]

I will insert the quote later. Salt called the owner.. "Andy"?

That's wrong.

 

[The Feckless Puck]

^^^^^

Well....

If I wanted to be nick picker..... He got the Vice Mayor's name wrong. (It's Ian Hugh) And US Airways Arena isn't in Glendale.

Pretty sloppy for an "investigative" piece.

To me, it's SOP for most of the Canadian coverage of the Coyotes. I particularly love that they put a photo of the arena with about 100 fans in it, with the caption "The Coyotes only sold out three games" - as if that was a game crowd.

They know their audience and what will get them clicks. I'm not going to say the Coyotes' situation doesn't remain dire, but I wish - just once, for god's sake!! - that someone would do an objective and balanced report on these issues.

The media doesn't work like that anymore, though.

But to me.... What doesn't make sense is the allegation that IA under-reported their losses. At least from a conspiracy nut's POV that if they truly wanted get out of Dodge and flip the team to another market they would want to get over that $50M number ASAP.

I guess you could go with the theory that they want to keep it on the down low so that it wouldn't scare people off further and you'd end up with Florida type attendance numbers. But that's pure speculation.

That's exactly the case. They need all the revenue they can get prior to the endgame here, whatever that ends up being.

Makes sense that this is happening (yet again) just as we're about to draft a potential franchise player in the draft, though. I've been battling so hard to be a hockey fan for so long, but damn if fate, karma, or whatever it is hasn't laughed and kicked me in the balls at every turn.

 

[Killion]

However, I'm seriously confused, or is Hughes that's confused, because COG knew the money would be going directly to the lender. There was a filing showing this was set up.

Secondly, isn't FIG out of the picture now, due to Barroway's entry?



As for the numbers:

Might their finance director want to go back and do the calculations without the hockey team based there AND being the arena manager? They probably are better off without, but I don't think these numbers add up.

Your not alone in being confused as this is like something straight out of the Twilight Zone. Spacetime Continuum. I seriously had to look at the date of this article to make sure it wasnt from the fall of 2013 as it was then that IA filed publicly to have the AMF's paid directly to FIG. Publicly. On the record. Inf easily obtained. That Council Members & the Mayor were unaware of this I find very very hard to believe. Im like kinda Gobsmacked theyd be so out of it, completely out to lunch.

Absolutely crystal clear certainly to everyone here what was going on, that those so called AMF's were not going to manage the facility but were being funneled to FIG in covering IA loan pursuant to the purchase of the club. Direct subsidy. Yet Goldwater did nothing, reporters either skirted the issue altogether or were unaware entirely, I have no idea really. But this report, its like a report that tells one "water is wet". Weve known this for 2yrs and its "breaking news" to the Vice Mayor & Council in Glendale? How insane is that? Mind blowing.

And no, the numbers never did add up or make any sense whatsoever. This has just got to be the richest arena management fee ever paid to anyone anywhere on the face of the planet. I just dont know what to make of this latest development. Its like suddenly one morning the Vice Mayor wakes up from the delusion, the spell broken or what? Like a drunk suffering from alcoholic blackout then being told what a horror story he'd been & created and now suffering pangs of shame, humiliation & regret? This is at best dysfunction, ignorance; completely schizophrenic at its worst. I mean.... Im just.....

 

[The Feckless Puck]

I will insert the quote later. Salt called the owner.. "Andy"?

That's wrong.

Actually, though, Barroway prefers to go by Andy, not Andrew.

 

[MNNumbers]

Two questions.

Why is Barroway making payments, and why does Daly comment on that?

What's with Sherwood's comments that he can't get Barroway to meet with him? Curious that he would make a statement negative toward the team, as he is the one who pushed the lease through two years ago.

 

[Mightygoose]

Also, Weiers mentions that Barroway will not meet them in person in Glendale. Only 90 minutes in New York?

I realize Andrew is an east coast guy...still with owning the asset in Glendale he would be down there more than enough to meet with his partners locally.

The colour grids on this Rubik's cube just doesn't seem to align.

 

[JuniorNelson]

This is a signal, right? Aside from Bettman, is there anybody that wants Arizona Coyotes to stay in place?

 

[Killion]

Two questions.

Why is Barroway making payments, and why does Daly comment on that?

What's with Sherwood's comments that he can't get Barroway to meet with him? Curious that he would make a statement negative toward the team, as he is the one who pushed the lease through two years ago.

I assume Daly made that comment to allay any fears or questions as to solvency while re-affirming Barroway's ownership. We were led to believe that when Andy Barroway became majority owner the FIG loan was retired & again, my assumption being he re-financed the $110M (less interest) through the NHL's LOC via Citi Bank at considerably better rates. The AMF previously being paid directly to FIG now being paid directly to IA's Arena Mgmnt Div. So Daly stating that yes, Barroway not missing any payments to Citi. The $85M interest fee loan provided by the NHL, well, I really dont think we'll find out when or exactly how that ever gets paid off, be it in year 5 or shortly thereafter or what.

As for Council Member Sherwood, believe it or not the latest PAC to launch a Recall on Sherwood was actually successful. Passed the City Clerks Offices and an election scheduled I believe for November. This all based on Sherwoods flip flopping on the arena management deal & the Tohono's casino issue. He's said he plans to fight the Recall issue, and may even run for Mayor though I think he's got a pretty steep hill to climb in that regard, credibility pretty much shot. He was really the driver of the bus that got that Arena Management Dealeo over the line and now that the chicken are coming home to roost like politicians of every stripe he's trying to run away from owning it. Really, whenever government gets involved in the private sector, just doesnt end well or even public projects, often beyond dysfunctional, massive cost over-runs etc like the long gun registry in Canada or whatever. Believe it was then MP Alan Rock who championed that program then running from that one when costs wound up being over 50X's what he'd initially claimed & so on. We see this kind of thing all too frequently everywhere Im afraid.

 

[RxPens]

Always interesting the news that is released as we enter our first long weekend of the summer. Planting the smallest seed possible...

 

[powerstuck]

To me, it's SOP for most of the Canadian coverage of the Coyotes. I particularly love that they put a photo of the arena with about 100 fans in it, with the caption "The Coyotes only sold out three games" - as if that was a game crowd.

They know their audience and what will get them clicks. I'm not going to say the Coyotes' situation doesn't remain dire, but I wish - just once, for god's sake!! - that someone would do an objective and balanced report on these issues.

The media doesn't work like that anymore, though.

I gotta agree with you on this. What I would like tho is someone local, from either Glendale or Phoenix to take it and run with it.

It shouldn't be Canadian journalists going live with this, but someone reliable from AZ who can give local and outsiders a non-biased look at things.

Yet it seems like everyone is scared to talk about it. Don't get me wrong, but even the original Glendale/IA deal got more coverage outside AZ than in.

As for the original post, to me all this sounds like someone wants to check the books and other parties are not interested in anyone doing so. Seems like there could be a lengthy war of tugs going with this.

 

[White Out 403*]

This was always on the table. The residents of glendale are now suffering greatly and basic services like fire and health are suffering, so that short sighted coyote fans (in the hundreds) who went to city hall to talk about their love of their team should come first.

 

[Killion]

Actually, though, Barroway prefers to go by Andy, not Andrew.

Yeah, more than just a few typo's & mistakes made in the article as pointed out by some here & even in the Comments section below it on TSN's site. Mistakes like that do indeed eat away at the entire credibility & integrity of any given report. Whomever this unnamed NHL owner he's got as a source, dont think said source knows anymore nor less about the situation & whats really going on, just his "opinion" and not a terribly informed one at that. Less informed in fact then some of us here who have been following this situation very closely since 2008, even more than a few since 1996.

 

[Dirty Old Man]

As for the original post, to me all this sounds like someone wants to check the books and other parties are not interested in anyone doing so. Seems like there could be a lengthy war of tugs going with this.

I actually think I like this phrasing better.

This was always on the table. The residents of glendale are now suffering greatly and basic services like fire and health are suffering, so that short sighted coyote fans (in the hundreds) who went to city hall to talk about their love of their team should come first.

Yes, yes, it's true. FEMA has set up tent camps outside of Luke AFB at the west end of the city so the beleagured residents can find water, food, and shelter without the constant threat of criminal activity and random fires.

 

[Ernie]

The wrangling might go on for some time, but this has got to be the end of the line for the Coyotes.

It really makes you wonder whether this whole agreement was just Bettman finding a way to keep the Coyotes playing while they found a place in the West to move them to.

The struggle now will be Glendale trying to keep from making any more payments to a team that is planning an exit. At the same time, the costs of taking on the NHL in court could be prohibitive.

If I was on the Seattle council, I'd be paying attention to how the NHL treats its host cities.

 

[DyerMaker66*]

But to me.... What doesn't make sense is the allegation that IA under-reported their losses. At least from a conspiracy nut's POV that if they truly wanted get out of Dodge and flip the team to another market they would want to get over that $50M number ASAP.

I guess you could go with the theory that they want to keep it on the down low so that it wouldn't scare people off further and you'd end up with Florida type attendance numbers. But that's pure speculation.

They wanted to be able to go to the media and say: "See, the Coyotes do/ will work out with competant ownership! Everything's coming up Milhouse!"

False idols ftl.

 

[snovalleyhockeyfan]

The wrangling might go on for some time, but this has got to be the end of the line for the Coyotes.

It really makes you wonder whether this whole agreement was just Bettman finding a way to keep the Coyotes playing while they found a place in the West to move them to.

The struggle now will be Glendale trying to keep from making any more payments to a team that is planning an exit. At the same time, the costs of taking on the NHL in court could be prohibitive.

If I was on the Seattle council, I'd be paying attention to how the NHL treats its host cities.

Well, we know about that with the NBA, hence the way in which the SoDo MOU was set up.

 

[Killion]

Yes, yes, it's true. FEMA has set up tent camps outside of Luke AFB at the west end of the city so the beleagured residents can find water, food, and shelter without the constant threat of criminal activity and random fires.

.... in a post apocalyptic wasteland huh? thats if they can make it that far, dont get torn to shreds by marauding packs of Chupacabras...... but in all seriousness, the Member does make a very good point DOM. Fact is, theres absolutely no way no how a city of less than 300,000 souls can possibly cover the costs of the Arena Mgmnt Fee's AND continuing to service the debt on the original arena construction bonds. Even if every single game was a sell out & you had at least a one round playoff run while tripling or quadrupling the number of event & concert bookings youd still be short. All that being said, its a GD Crying Shame because Im certain that franchise could survive & thrive in Glendale under a far more modest & incentivized model in working with the City though even this now highly debatable, highly questionable & suspect. What is clear is that Glendale is having some serious buyers remorse & appears to be looking for a way out OR... it could just be cheap political talk & posturing. Thats pretty common. All bark & no bite.