August 12, 2010
AZ Republic: Without Coyotes, no one would buy stuff
The Arizona Republic ran a long article on the city of Glendale's finances for its arena deal yesterday; you can read it for yourself here. I'm just going to focus on the article's first sentence:
One thing is clear: the picture today would look worse if last summer's bankruptcy had sent the Coyotes to Canada.
The evidence, if you read further down: Reporter Rebekah Sanders notes that most of Glendale's arena debt is paid by sales tax revenues, writing that "dining and shopping largely spurred by sports games around Westgate brought $12.8 million in sales-tax revenues in 11 months last fiscal year." But, of course, those people would be eating and shopping anyway even without the Coyotes — many of them still doing so in Glendale — which means you can't credit the team's presence with creating all that tax revenue.
It would have been nice for a newspaper article to try to figure out how much of the arena-district spending is actually new revenue — or at least mention this "but-for" problem — but that's apparently outside the scope of today's journalism.
July 30, 2010
Coyotes buyers might be broke after all
When we last left the saga of the Phoenix Coyotes last month, on-again off-again suitors Ice Edge Holdings had just delivered proof that they had the cash to purchase the team. So, what are the latest developments?
The group of Canadian and American investors was required to show Glendale proof of its financing last month in order to negotiate exclusively with the city and work on a detailed lease for the Coyotes to play at city-owned Jobing.com Arena.
At the deadline, Glendale said Ice Edge had submitted "some of the required financial information." City officials declined public records requests for more detail.
But on Monday, city spokeswoman Julie Frisoni revealed that Ice Edge has failed to submit some of the required documents, five weeks past the deadline.
Dear lord, this may never end.
For now, at least, Jerry Reinsdorf hasn't re-entered the bidding, but given the number of times he and Ice Edge have each jumped into and out of the Coyotes sale process over the last year and change, you should never rule anything out. Meanwhile, Winnipeg hockey fans are trying to decide how excited to get about the prospect that no viable Arizona buyer will be found, and the NHL will relocate the team back to its original hometown, as it threatened earlier this year.
Given the levels of public subsidies that would be required to keep the team in Glendale, that might ultimately be best for all concerned — except for the remaining Coyotes fans, obviously, especially those who don't pay Glendale taxes.
June 18, 2010
Coyotes buyers prove they're not broke
Well, that's one hurdle cleared: Ice Edge Holdings, the prospective buyers of the league-controlled Phoenix Coyotes, met Friday's deadline to provide proof that they actually have the cash to pull off the purchase. Which may not sound like a huge accomplishment, but given that the company's own CEO said earlier this month he wasn't sure they'd pull it off, it's at least a step forward.
(And, of course, given some of the previous characters who've been approved to buy NHL teams, "not being flat broke" might not actually be that high a bar to set.)
Now all Ice Edge needs is to negotiate a final lease agreement with the city of Glendale, and a purchase agreement with the NHL, and they can happily become the owners of their own bankrupt hockey franchise. Hint to Glendale city negotiators: Try not to give up your right to sue the team if they violate their lease.
June 09, 2010
Reinsdorf out, Ice Edge back in, still no Coyotes lease
Stop me if you've heard this before: The Glendale city council voted last night to approve a memorandum of understanding with a purchasing group that hopes to buy the league-owned Phoenix Coyotes. Unlike the last MOU back in April, however, the names of the prospective owners have changed: Jerry Reinsdorf pulled out of the bidding on Monday night, leaving Ice Edge Holdings — that's right, the same guys who originally floated playing some home games in Canada — the winners in the Coyotes derby.
This is potentially a good thing for Glendale, given that the subsidy package demanded by Ice Edge was somewhat less egregious than the one Reinsdorf would have required. But there's still no actual lease deal in place with Ice Edge — the vote last night just gave them a 60-day exclusive negotiating window to secure one — and the city's leverage in those talks are still going to be pretty lousy, given that if they don't approve an owner they're stuck paying $25 million to the NHL and still having the team move to Winnipeg.
Yet another wild card, meanwhile, is that Ice Edge must secure financing to actually buy the team, something that even its own CEO isn't so sure about, according to the Winnipeg Free Press:
Daryl Jones, CEO of Ice Edge Holdings, the lone group in discussions with the City of Glendale to buy and keep the Phoenix Coyotes at Jobing.com Arena, is not sure his team will be able to put together a financing package to purchase the team.
"It's hard to gauge the probability of this deal closing," said Jones.
"Realistically, there has been a great deal of financial turmoil in the world over the last 45 days, sovereign-debt issues and stock market corrections, which are going to make it harder for us, or any group, to close this transaction. That being said, we do remain optimistic."
Furthermore, the Free Press notes that one "source close to the deal" says that even if Ice Edge "can provide proof of financing right now, there's no guarantee it will still be in place when this deal gets near closing." Not to mention that the NHL could still always reject Ice Edge's purchase offer, even once a lease is in place. At which point:
Should Ice Edge fail to close a lease deal with Glendale in the next 60 days, presumably the only option left for the city at that stage would be Chicago Bulls and Chicago White Sox owner Jerry Reinsdorf.
Isn't this where we came in?
May 24, 2010
NHL to Glendale: Local buyer this year, or Coyotes go to Winnipeg
Glendale's agreement to keep the Phoenix Coyotes in town just gets worse and worse: Not only has the city agreed to pay Jerry Reinsdorf $165 million if he buys the team from the NHL, and subsidize up to $25 million in team losses this year if he doesn't and the team remains in league hands, but now, it turns out, if no buyer is in place by December 31, the NHL will move the team to Winnipeg, where it originally played until moving to Arizona in 1996.
The clause in the agreement — officially completed on Friday, and leaked to the Globe and Mail — actually only says that if no local owner is found by the end of the year, the NHL can take advantage of a "bona-fide offer from a viable purchaser who would relocate the hockey team to another market." But according to the Globe and Mail, the only other buyer who the NHL has spoken to is True North Sports and Entertainment, which just happens to own Winnipeg's hockey arena.
While you can see why the NHL would want this clause — if the search for a Coyotes owner goes on much longer, it'll outlast Law and Order — but it leaves Glendale in an awful pickle: The city now must either give in to the demands of Reinsdorf (or his competitors for the team, Ice Edge), or else face spending $25 million to keep the team in town and then still losing the team. And even if one of the "local" buyers (one is from Chicago, the other from Canada) does sign on the dotted line, there's still an excellent chance that the team will be moved anyway a few years (and tens of millions more in taxpayer dollars) down the line.
At this point, you have to wonder if it wouldn't make sense for Glendale to just cut its losses and let the team go, already — after all, if Arizona is a viable hockey market, the NHL will be back eventually (Phoenix Predators, anyone?), and if not, it's going to be hard to keep the team there long-term. And besides, it'd make all the Winnipeg Jets fans happy.
May 12, 2010
Coyotes sale off, on, back off, back on?
I have been sadly negligent in covering the last few days of twists and turns in the Phoenix Coyotes saga, which was already more convoluted than New York's 12th Congressional District. Since Friday:
- Designated buyer Jerry Reinsdorf reportedly dropped his bid again, leading Glendale to go back to Ice Edge Holdings and ask them to submit a new bid.
- Talks with Ice Edge collapsed, leaving the Coyotes with no potential buyers at all.
- The Glendale city council voted to pay up to $25 million in team losses for 2010-11 if the NHL still owns the team, in order to keep it in town.
Reinsdorf's group now says that it's still in the running for the team, with one source telling AP that talks aren't dead, they're "probably more like taking a nap." But there's still no final purchase deal in place.
Best guess from here is that there's some aspect of the team's lease that Reinsdorf and Glendale are still dickering over, something not spelled out in the memorandum of understanding they signed last month. Glendale officials now say they still expect the sale of the team to go through by the end of June; don't be too surprised to see a few more curveballs like this latest one between now and then.
April 14, 2010
Reinsdorf in, Ice Edge out in Coyotes lease vote
The Glendale city council held its vote last night on the two competing lease proposals by prospective owners of the Phoenix Coyotes, and the result was a dramatic one: The council unanimously approved the bid of Chicago White Sox owner Jerry Reinsdorf, while rejecting by a 5-1 vote the proposal by Ice Edge Holdings.
Reinsdorf is still a long way from taking control of the bankrupt, league-owned hockey franchise, however. Last night's votes were technically just on "memorandums of understanding"; an actual lease still has to be drawn up and approved by the council and Reinsdorf. The NHL also needs to agree on a sale price with Reinsdorf, who will be helped out by a promise of $65 million in taxpayer dollars that he can use toward the team's purchase price. (He'd also receive up to $100 million in public money over the next five years to cover losses, and be guaranteed a set sale price if he then decided to bail on the team. However, he would not get a pony.)
So the big question is: Why? I'm 2,000 miles from Phoenix, and the press coverage has been singularly mute on any reasons the council may have given for its blessing of the Reinsdorf bid. (The Arizona Republic, the state's paper of record, only managed to run eleven sentences on the council vote.) An AP story gave one hint, reporting that "vice mayor Manny Martinez questioned whether Ice Edge actually had the capital available," something we've heard concerns about before. Or there's always the Phoenix New Times' conspiracy theory, which is that Glendale City Manager Ed Beasley is steering the process to Reinsdorf to help out Beasley's friend (and Reinsdorf's arena lobbyist), former state legislator and ex-weatherman (no, not that kind) John Kaites.
In any case, even if the NHL and the council sign off on Reinsdorf's purchase, it will still likely face additional legal hurdles. The conservative Goldwater Institute (yes, named for that Goldwater) has already threatened to sue to block the deal, under state laws requiring a public benefit from any subsidy agreements. Goldwater lawyer Carrie Ann Sitren told the Globe and Mail that Reinsdorf "really seems to have insulated himself completely from any financial liability," noting that Reinsdorf will have operating losses covered by the public for five years, after which he's free to sell the team or move it. Sitren indicated that any suit would likely come after a lease deal is finalized, which likely won't happen until the NHL approves the team's sale to Reinsdorf, which is expected (but not required) by the end of June.
The only thing for sure right now, then, is no home games in Saskatoon for the Coyotes. Not until 2015, anyway.
April 12, 2010
Glendale outlines Coyotes bailout offers
The city of Glendale, as promised, released its proposed lease deals with the two prospective buyers of the Phoenix Coyotes on Friday, with a final council vote set for tomorrow. You can read the Arizona Republic summary of the proposals, or go right to the source by downloading the memorandums of understanding themselves (Jerry Reinsdorf's here, and Ice Edge Holdings' here; neither is more than four pages long).
Both bidders had previously indicated that they'd want a payoff from Glendale in exchange for keeping the Coyotes in town, and both leases provide for that:
- In Reinsdorf's case, this would include a city-created "community facilities district" that would generate $65 million in unspecified "revenues" (including, but no doubt not limited to, parking fees at Coyotes games) to be used to help defray Reinsdorf's purchase price, as well as $25 million a year to offset any losses the Coyotes accrues on Reinsdorf's watch (capped at $100 million over seven years). Reinsdorf could sell the team after five years, at which point Glendale would have to find a buyer willing to pay him $103 million, his initial investment — in effect guaranteeing that Reinsdorf would come out of the deal with his annual operating losses covered and his investment intact.
- Ice Edge would get a CFD as well that would take over control of arena parking, but in its case it would get only $7.5 million a year in parking fees, $5 million a year to offset losses, and $2 million a year from a ticket tax on all arena events. The MOU explicitly states that the city would have to supply enough cash to the CFD to make all of these payments, in the event that parking fees were insufficient.
Not included in the MOUs: where this CFD money is supposed to come from, though sales and business taxes are considered likely.
There are already reports that the NHL prefers Reinsdorf's bid, and it looks like Glendale does too, considering how much sweeter his deal would be. But then, he's a guy who knows how to use leverage.
Meanwhile, I'd love to provide more info on tomorrow night's council hearing, but all I can find on the Glendale council website is this.
April 09, 2010
Coyotes lease proposals out today; vote Tuesday
The Glendale city council plans to release proposed lease deals with prospective Phoenix Coyotes owners Jerry Reinsdorf and Ice Edge Holdings later today. The council will then vote on the leases (technically "memorandums of understanding") on Tuesday, giving the public four whole days in which to read the language and respond. (The council itself got a peek at the language last Tuesday, giving them seven whole days to read and digest it.)
The lease language, you'll recall, is now key to the team's future, ever since the two bidders revealed that they'd only keep the team in town if supplied with major subsidies by the cash-strapped city. As for what form those subsidies would take, we've had a few hints in advance of today's official release:
- The Arizona Republic reports that while Ice Edge won't immediately seek to schedule five home games a year in Saskatoon, as it had previously requested, it would seek to revisit that plan if "revenue stayed low."
- Reinsdorf is seeking an option to create a "community-facilities district" that can levy special property assessments to fund infrastructure improvements, which here would presumably be construed to mean shoring up the Coyotes' penalty-killing infrastructure. Even the council apparently doesn't have details on this one; Reinsdorf would only negotiate such a district if he decided he needed one later on. Which he would presumably have leverage to demand, if he's going ahead with an insistence on an out clause in the lease if revenues aren't up to par.
Meanwhile, Ice Edge is already griping about the lease concessions not being enough, and threatening to pull out of the bidding entirely. "We believe that Glendale is playing a dangerous game of poker," ice Edge CEO Daryl Jones told CanWest News Service. "At the end of the day, Ice Edge doesn't have to own this team, or any team. We make investments with the objective in generating an appropriate return. While we have become very passionate about supporting the fine hockey fans of Phoenix, a bad deal is a bad deal, and no amount of brinkmanship will lead us into signing a bad deal."
We'll see if the same holds true for the Glendale city council.
March 29, 2010
Coyotes bidders drop subsidy demands on Glendale
The Glendale, Arizona city council is set to review two new lease proposals from the ownership groups vying to take over the NHL-owned Phoenix Coyotes — though "vying" may be an overstatement, given that both Ice Edge Holdings and Jerry Reinsdorf are looking for major subsidies in order to grace Glendale with their presence. Globe and Mail writer David Shoalts further reports that Reinsdorf is looking for an escape clause that would let him break any lease if revenue and ticket sales weren't up to his lofty standards.
Shoalts further reports that Glendale might not be able to offer significant lease breaks even if it wants to:
- An Arizona state supreme court ruling in January outlawed any subsidies that don't result in "direct public benefits."
- The conservative Goldwater Institute has threatened to sue if the city gives the Coyotes any lease breaks.
- Glendale is flat broke.
The only thing for sure, it seems, is that this isn't going to end well. Unless, just maybe, you live in Winnipeg.
March 22, 2010
Would-be Coyotes buyers lack cash
Ice Edge Holdings' bid to buy the Phoenix Coyotes just gets better and better: Now not only are they demanding $6-11 million a year in lease breaks in order to do the deal, but they're apparently having trouble coming up with $140-160 million for the purchase price. This despite that fact that at today's interest rates, $11 million a year alone would be more than enough to pay off the entirety of a $140 million loan. Maybe Ice Edge has a really bad credit score.
In any case, the Coyotes sale now appears to be in even more disarray than it was last year, if that's possible, with Chicago White Sox and Bulls owner Jerry Reinsdorf possibly re-entering the bidding — though it's worth noting that Reinsdorf wanted lease breaks to subsidize his purchase, too. Hockey Night in Canada's Pierre LeBrun asserted on Saturday: "If they don't figure this out by mid-May, maybe we're talking relocation."
Move threats are a dime a dozen, needless to say, especially coming from a source whose audience might be more than a little interested in restoring an additional NHL franchise to Canada. If it does happen, though, you can bet even more people will be comparing Ice Edge to an abusive boyfriend.
March 17, 2010
Prospective Coyotes buyers: Glendale pays us $6-11m a year, or deal's off
The COO of Ice Edge Holdings, the group that last year proposed buying the Phoenix Coyotes and having them play some games in Saskatoon and Halifax, has declared that the only way they'll buy the team now is if the city of Glendale agrees to substantial annual subsidies.
"Glendale has to deliver an appropriate lease, or there's probably no deal," Daryl Jones told Toronto sports radio on Monday. "The team's going to lose $20 million this year... If you just added back the attendance they had last year, that gets you $6 to $7 million more to the bottom line. Assuming you get $10 to $15 million out of a new lease per year, you get to break even or profitable pretty easily."
Jones wouldn't say what the Coyotes were paying under their old lease, but it's actually public record: about $4 million a year for 2007, the last year the team actually made its full rent payments. So that means Ice Edge is looking at asking the city of Glendale to pay the Coyotes between $6 and $11 million a year for the privilege of having them play there. Admittedly, that's less than the state of Louisiana used to pay the New Orleans Saints in negative rent, but it's still enough to make you wonder how badly Arizona really needs a hockey team anyway — or if it wouldn't be cheaper for Glendale just to buy the team itself, so that at least if the team starts turning a profit, the city might get some of its money back.
February 22, 2010
Glendale seeks sales-tax kickback for Coyotes
Apparently special tax districts are all the rage right now: In the midst of the Arizona legislature's debate over a TIF for the Chicago Cubs' spring-training stadium, state rep Jerry Weiers has introduced a bill to kick back a portion of sales taxes in a two-mile radius around sports arenas to local governments, to help pay for arena operations or infrastructure. Given that Weiers hails from Glendale, that's clearly targeted at the Phoenix Coyotes, who as you may recall are having a wee bit of a dustup over where to play and who's going to throw money at them to play there.
This isn't technically a STIF, since it would be current sales tax revenue that would be kicked back to Glendale, not future sales tax increases, but it amounts to much the same thing: a way for the state to pay the team to stay in Arizona without actually just paying them outright. Weiers skipped any claims about economic benefits or what have you in promoting his bill, telling the Arizona Republic, "If we don't figure out a way to keep this team, they're going to Canada." Yeah, as the old joke goes, all over Canada.
UPDATE: Looks like the Weiers bill is dead already — see link in comments.
December 07, 2009
One sports subsidy leaves, one enters
The good news: The New England Patriots parking-lot footbridge is no longer getting federal stimulus money. The less-good news: This is not because anyone thought better of the idea, but rather because it wasn't expected to be "shovel-ready" by the February deadline. And it still may get state economic development money.
Meanwhile, the city of Glendale may be stepping up to the plate instead, as it's reportedly considering seeking stimulus money for the Jobing.com Arena, home of the Phoenix Coyotes (at least for the moment). No word on exactly what would get funded by the money — the Phoenix Business Journal helpfully says "financing and job creation." And even if Glendale gets the benefit from that, given that it's simultaneously exploring ways to bail out the Coyotes, it could end up little more than a passthrough.
November 03, 2009
NHL purchase of Coyotes is final
The Phoenix Coyotes are officially a ward of the league after the NHL finalized its purchase of the bankrupt franchise for $140 million today. (Bankruptcy court judge Redfield Baum gave his blessing to the sale yesterday, as expected.) Coyotes fans celebrated by staying home from the game in record numbers.
Next up: the sale of the team by the NHL to parties unknown, who may or may not keep the team in Arizona. The league says it will look first for local buyers, but only for the next year — and its notion of "local" is, shall we say, flexible.
October 27, 2009
The interminable Phoenix Coyotes sale saga may be almost over, or at least entering a new phase, after team owner Jerry Moyes yesterday reached an agreement to sell the bankrupt franchise to the NHL for $140 million. The deal still has to be signed off on by bankruptcy court judge Redfield Baum, but barring complaints from other creditors — say, Wayne Gretzky — that's expected to be resolved in the next few days.
If the NHL does end up with full control of the Coyotes, expect to see a repeat of MLB's Montreal Expos relocation bidding war, with the caveat that in the Coyotes' case, the league has promised to spend at least the next year looking for local ownership. Of course, given that the two leading "local" owners are a guy from Chicago who wants Glendale to pay him to keep playing there and a group that wants to play home games in Canada, it's still likely to end up as a multi-city subsidy-grubbing campaign. Stay tuned.
September 30, 2009
No sale on Coyotes, but NHL is the winner
And the winner of the Phoenix Coyotes is ... nobody! As threatened earlier this month, Judge Redfield Baum rejected both bids for the bankrupt NHL franchise, ruling that neither Jim Balsillie's plan to move the team to Hamilton over the league's objections nor the league's offer to buy the team itself and search for a new owner met the standards of a bid that was in the best interest of creditors.
If the NHL lost the battle, though, it looks to have won the war. Baum decisively rejected Balsillie's attempt to buy the Coyotes under any circumstances, ruling that the NHL has the right to approve or deny prospective owners, and the league had previously voted unanimously to bar the BlackBerry king. The NHL, meanwhile, will be allowed to revamp its bid to produce more money for outgoing Coyotes owners Jerry Moyes and Wayne Gretzky (which was Baum's main objection to the league bid) — or, presumably, it can sit back and wait for a new crop of non-Balsillie bidders, which is what it wanted all along. Wrote the judge, unable to resist a painful sports metaphor: "In hockey parlance, the court is passing the puck to the NHL who can decide to take another shot at the sale net or it can pass off the puck."
Balsillie has said he won't appeal. So the big question now is: Who'll bid for the Coyotes now that they don't have to compete with Balsillie? The last two bidders promising to keep the team in Arizona — for one season at least — you'll recall were a guy from Chicago who wanted to be paid to play there (and who has a history of shaking down cities for subsidies) and a consortium that wanted the team to split its home schedule between cities 3,000 miles apart. It's always possible someone has been hiding in the woodwork waiting for the price to drop, but at this point, the NHL has got to be shaking palm trees in hopes another Russian billionaire falls out.
September 16, 2009
Glendale council: Help us, NHL, you're our only hope
The Glendale city council endorsed the NHL's bid to buy the Phoenix Coyotes yesterday — which should come as no surprise, as the NHL is the only entity that's expressed any desire to keep the team in town. Though telling outgoing Coyotes owner Jerry Moyes to get lost when he tried to testify for Jim Balsillie's bid was a nice touch.
The most important thing here is that Glendale has now joined most of the other Coyotes' creditors in endorsing the NHL bid, which is likely going to be what sways Bankruptcy Judge Redfield Baum, whose primary goal is to get the best deal for the team's creditors. (That is, if he approves any bid at all.) If so, the NHL has only promised to keep the team in town for one year, at which point if no local owner emerges — which seems pretty damn likely, especially considering the team's, um, fan base — then we get to go through this all over again next year, only with the NHL holding the auction instead of a bankruptcy court. Which means they'd be free to pick an owner based on any criteria they choose, like who they think has the best character, or who is best pals with the commissioner, or who promises to build the snazziest new stadium — nah, that'd never happen.
September 14, 2009
NHL to Balsillie: Say you're sorry
As expected, Friday's session of the Phoenix Coyotes bankruptcy hearing provided plenty of drama, as the standoff between the NHL and Blackberry king Jim Balsillie reaches absurd proportions.
On Friday, both sides upped their offers for the bankrupt franchise, Balsillie guaranteeing more of his $242 million offer, the league promising for the first time that some of its $140 million bid would go to current owners Jerry Moyes and Wayne Gretzky. The NHL also levied a new demand before Balsillie will ever be allowed to own an NHL team: He has to say he's sorry:
"Perhaps someday his passion for hockey will meet up with a recognition on his part that he isn't above the rules that apply to all the other NHL owners," Tony Clark said at an auction for the league's bankrupt Phoenix Coyotes, for which Balsillie and the NHL are the only bidders.
"Maybe he will find a way to express an honest regret and a humility and acknowledge where he went wrong."
From what I can tell, what Balsillie needs to express "regret" for is thinking he can buy an NHL team without the approval of the NHL. Or arguing it in court. Or something.
In any case, demanding fealty from its potential owners isn't likely to win the NHL any friends from its latest foe: The nation of Canada, whose Competition Bureau said if Balsillie's bid to move to team to Hamilton, Ontario, is blocked, it will consider investigating whether the Toronto Maple Leafs violated competition (i.e., antitrust) laws by unilaterally vetoing the move.
"We are looking at all the paperwork that's coming out of the proceedings and we will take action if we believe that the veto that Toronto thinks they have is exercised and blocks a team," deputy commissioner Richard Taylor told the Toronto Star. "The exercise of the veto that effectively blocked a team from moving would raise concerns for us and would be something we would investigate." "Paperwork" could be an oblique reference to the letter from Maple Leafs ownership to the NHL, introduced by Balsillie's lawyers as evidence, stating that "the Toronto Maple Leafs do not agree that the relocation of a club into their home territory would be subject to a majority vote. They continue to believe a unanimous vote would be required."
Of course, if Canada does charge the NHL with antitrust violations, they'll likely have to get in line. Does anybody really still believe that this will all be resolved before the start of the hockey season?
September 10, 2009
Coyotes judge: Bailiff, kick these two nuts in the butt
Okay, the Phoenix Coyotes saga officially has more preposterous twists than Melrose Place. The latest came at today's bankruptcy court hearing — originally scheduled to be the date of the actual auction of the team, but who knows when that will happen now — when Judge Redfield Baum said he might just not award the team to either bidder:
The league said it would look for a buyer to keep the team in Glendale, but if one can't be found, they'd consider moving it.
Either way, "it will necessitate the rejection of the lease," said lawyer Jordan Krupp.
"You're all forgetting there's a third option here," said Baum.
"No sale."
And that's right, "either bidder" — did I neglect to mention that Ice Edge Holdings, the group that wanted to have the Coyotes play some home games in such far-flung places as Saskatoon or Halifax, pulled its bid at the last minute on Tuesday night, saying it couldn't come to an agreement with Glendale on a new arena lease?
That leaves only two bidders: Jim Balsillie, who the NHL has declared will join their exclusive club when Arizona freezes over; and the NHL, whose bid Baum raked over the coals today:
Early in the day, the judge got tough with the NHL, wanting it to clarify who gets what in its $140 million bid. He said it didn't seem fair that Jerry Moyes would get very little in the NHL bid, wondering why the league was treating him so differently from other creditors.
"I can't approve a bid I don't understand," said Baum.
With options like these, you sort of understand why Baum might be threatening to take the franchise and go home. Tomorrow, both Balsillie and NHL commissioner Gary Bettman are expected to testify; if the courtroom is still standing afterwards, Baum has promised to issue a ruling "certainly before the start of the season" on October 1.
September 06, 2009
NHL v. Balsillie: Haggling over the price
In the latest weirdness in the Phoenix Coyotes bankruptcy case, the NHL has filed papers saying that a "reasonable" relocation fee for moving the team to Hamilton would be between $101 million and $195 million dollars. Spurned would-be owner Jim Balsillie, who wants to do just that, insists that $11.2 million to $12.9 million would be more like it.
The NHL responded that "the notion that a team in Hamilton would be worth only $11.2 million to $12.9 million more than a team in Phoenix is patently absurd." To which New York Times hockey writer Jeff Z. Klein adds: "Which of course raises the question: Why have a team in Phoenix and not Hamilton?"
The NHL's response, presumably, would be that a Hamilton team would cannibalize revenues from Toronto and Buffalo, whereas Phoenix has sole possession of that hockey hotbed that is the Arizona desert. Still, it does make it seem like the NHL is cutting off its nose to spite Balsillie — or, at the very least, holding up a move that might increase overall league revenues just so the league can demand a cut in return.
Either way, you have to imagine that the San Francisco Giants and Bud Selig's Oakland A's stadium taskforce are closely watching how this plays out. How to determine territorial rights indemnification — not just how much money changes hands, but who the payees and payers are among the teams involved and the league — is likely to play a huge role in determining whether it's feasible for the A's to move to San Jose.
September 03, 2009
And the verdict on whether Jim Balsillie can enter the auction to buy the Phoenix Coyotes is ... going to wait for yet another hearing. Everyone gathered in Judge Redfield Baum's bankruptcy court yesterday as promised, at which point the following transpired:
- Baum hinted that he'd like to leave Balsillie in the auction, saying he wanted as many offers to consider as possible.
- Baum told Balsillie that he should reconsider his self-imposed September 14 deadline for gaining control of the team, since he thinks they'll still be in court then.
- The NHL raised concerns about setting the schedule for the 2009-10 season, at which point Balsillie's lawyers huddled and offered to keep the team in Phoenix for a year before moving it to Hamilton, Ontario. NHL representatives immediately rejected the offer.
At that point, in the words of the Toronto Star, "The judge admonished both sides for negotiating in court, suggesting they do it in private and offered to have them go home and come back Thursday." From the sound of it, though, the next hearing will actually be on either September 10 or 11, which doesn't bode well for the Coyotes auction taking place on the 10th as planned. Maybe Baum will just lock both sides in a room and wait for somebody to explode.
September 01, 2009
Coyotes sale even more confused than ever
The Phoenix Coyotes auction is still nine days away, but already all hell has broken loose in the race to decide the team's new owner (and where it will play). In the past week, we've seen:
- Would-be frontrunner Jerry Reinsdorf unexpectedly drop out of the bidding either because (depending on which report you believe) he couldn't work out an arena lease with Glendale or because of an "unwilling seller" or because of "growing negative publicity" around his bid. Sorry about that, chief.
- The NHL entered its own $140 million bid for the Coyotes, with the intent of selling the team to a local owner once it's out of bankruptcy. Though the league's court papers indicate that if no local buyer is found by next June, the NHL may move the team anyway, raising the specter of a Montreal Expos-like multi-city bidding war. Though it's worth recalling that it wasn't much of a war.
- Ice Edge Holdings submitted their own $145 million bid to buy the team and have it split time between Arizona and Canadian cities such as Saskatoon and Halifax. Wayne Gretzky is reportedly backing the Ice Edge bid, though he hasn't made any public statements himself, so it's hard to say whether he kept a straight face while doing so.
Meanwhile, Bankruptcy Judge Redfield Baum has yet another hearing scheduled tomorrow to decide yet again whether Blackberry zillionaire Jim Balsillie will be allowed into next week's auction, after the NHL preemptorily rejected him as a prospective owner. Who, if anyone, will end up with the team after next week's auction remains anyone's guess, but it's probably a safe bet to put your money on there being further lawsuits ahead no matter what.
August 13, 2009
Reinsdorf up, Balsillie down in Coyotes chase
Another week, another dip in the rollercoaster that is Jim Balsillie's bid to buy the Phoenix Coyotes and move them to Hamilton, Ontario. Last week, you'll recall, the bankruptcy court judge overseeing the team's sale said Balsillie would be allowed to bid at the September 10 auction, while the team's biggest creditor came out in opposition to Jerry Reinsdorf's lower bid, which would keep the team in Glendale but would rely almost entirely on public subsidies.
This Tuesday, all that changed. First, the creditor, SOF Investments, announced that it had cut a deal with Reinsdorf — no one's saying what exactly, though apparently it involves some cash and some debt — and now approved his bid. Then, Judge Redfield Baum declared that he'd set a September 2 hearing to determine whether Balsillie would be bounced from the auction, as the NHL wants, on the grounds that the league has already rejected him as a prospective owner. The two sides are already wrangling over who will be deposed for the occasion, so the hearing itself is likely to bring fireworks galore.
Among Balsillie's gripes, notes Hamilton Spectator writer Steve Milton, is that he's being unduly discriminated against by the NHL:
Balsillie's rejection was the first the NHL has ever applied to a prospective ownership transfer or relocation on the basis of the proposed owner lacking "good character and integrity."
Everywhere but in NHL legalese, the character and integrity issue is, of course, a ridiculous joke, considering what Balsillie has accomplished in his working life and some of the scoundrels whom the NHL has approved as owners during Bettman's tenure alone.
What, you mean like inmate number 48605-053?
August 06, 2009
Bankruptcy judge: Come one, come all to Coyotes auction
The Phoenix Coyotes soap opera just got much more interesting again yesterday, when bankruptcy court judge Redfield T. Baum announced that any and all bids for the team will be accepted at a September 10 auction, including those from prospective owners who would move the team. And yes, that includes Jim Balsillie, whose offer to buy the team and move it to Hamilton, Ontario Baum rejected in June.
Baum didn't say why he'd changed his mind, but it couldn't have helped that the only two local bidders have started looking more and more troubled in the past week. The lets-play-a-bunch-of-games-in-Saskatoon consortium was already getting laughed at in Canada. Then it was revealed that Jerry Reinsdorf's bid would require the city of Glendale to pay him $23 million next year from a sales tax surcharge, and up to $15 million a year after that, or else the team would be relocated. (This was revealed in court papers filed by current Coyotes owner Jerry Moyes, who favored Balsillie's bid; Moyes is currently facing possible contempt charges for revealing the documents, which the city claims were supposed to be secret.)
The Arizona Cardinals immediately filed papers opposing any tax on their tickets to bail out the Coyotes — or, more to the point, Reinsdorf, who could easily recoup his entire $148 million bid through public tax money — while the Coyotes' biggest creditor, Michael Dell of computer fame, objected to the Reinsdorf bid as well. (Baum specifically cited Dell's opposition in his decision.)
As for what happens at the September auction, all bets are off: Baum has previously agreed that the NHL has the right to approve or deny franchise sales, so there's a significant chance that Balsillie could win the auction, but still be denied the team. And no matter who wins, there are sure to be plenty of lawsuits filed by the losers.
In the meantime, though, Hamilton hockey advocates are singing Burton Cummings songs in celebration — though sadly, not the one about strained Canadian-U.S. relations.
August 03, 2009
Balsillie sues again over Coyotes; new bidder mulls Saskatoon time-share
The Phoenix Coyotes sale saga drags on, with jilted bidder Jim Balsillie filing still more court papers before a bankruptcy hearing today, claiming that the NHL has "attempted to sabotage the sale process" because "[Commissioner Gary] Bettman and a number of the governors have a personal grudge" against him.
Balsillie had bid $212 million to buy the team and move it to Hamilton, Ontario, though the NHL disagreed that his bid was actually worth that much. With Balsillie's bid shelved, at least for the time being, that leaves two bidders who claim that they'd keep the team in Phoenix: Chicago White Sox and Bulls owner Jerry Reinsdorf, who bid $148 million; and a consortium that bid $150 million with the intention of boosting the team's value by — I am not making this up — having it play five games a year in Saskatoon, Saskatchewan. If you're wondering why the NHL encouraged the team to move from Winnipeg to Phoenix in the first place, yeah, so is Gary Bettman.
June 16, 2009
Judge blocks "unapproved" Coyotes move to Hamilton
So much for a knock-down, drag-out fight over the NHL and antitrust law: Phoenix bankruptcy court judge Judge Redfield Baum rejected BlackBerry billionaire Jim Balsillie's $212 million bid for the Phoenix Coyotes, essentially on technical grounds, saying there wasn't enough time before Balsillie's June 29 deadline to evaluate if it was the best deal for creditors.
Baum did, though, appear to uphold the NHL's assertion that it has the right to control franchise movement (something current Coyotes owner Jerry Moyes claimed violates U.S. and Canadian antitrust law), writing in his opinion, "From the outside looking in, it appears that each of the leagues has not suffered or been materially damaged when one of its members made a quick and unapproved move as the then Baltimore Colts and San Diego Clippers did in 1984 and the Seattle Pilots did in 1970," and saying that for Moyes to try to use bankruptcy to break his contract with the NHL that the Coyotes will play in Phoenix would be "akin to a purchaser of a bankrupt franchise in a remote location asserting that it can be relocated far from its original agreed site to a highly valuable location, for example New York City’s Times Square."
Since an "unapproved" move is what Baum objected to, and the only people who've expressed any interest in buying the team and keeping it in place for the time being include three out-of-towners and a guy who won't even give his name, you have to wonder if this means an approved move could be in the cards. As Stephen Brunt writes in today's Globe and Mail:
There's a deal to be made — it's a buyer's market — though it's hard to imagine who would step forward to assume the long-term arena lease, and the inevitable, massive annual losses that would seem to entail.
All of which would suggest that one way or another, the NHL is going to have to work out a deal with someone: who will buy the team, pay lip service to the idea of making hockey work in Phoenix, and then relocate somewhere more palatable to the league's current interests.
Of course, it's also conceivable that Balsillie will file another lawsuit, or readjust his purchase offer, or
June 10, 2009
And you thought U-Haul was expensive
The NHL expects up to $100 million as a relocation fee for the bankrupt Phoenix Coyotes, according to Susan Freeman, a lawyer representing Blackberry billionaire Jim Balsillie. As the franchise bankruptcy case drags on, Judge Redfield T. Baum agreed that the league has a right to demand such a fee, and warned its representatives, against their protestations, that a definite figure should be set before June 22, when the NHL may be forced to auction the team off and allow it to move.
The NHL, for its part, wants a September 10 auction for a franchise that would remain in Phoenix.
While Judge Baum sifts through all manner of legal issues, one theme remains constant throughout the proceedings: Everyone wants a slice of the pie. More than 40 lawyers are present, representing the NHL, the City of Glendale, present owner Jerry Moyes, and a host of creditors and other interested parties.
At one point the judge quipped, "We're not selling a used car here."
He's right. Over the last 13 years, a used car would have been a better deal.
June 08, 2009
Coyotes filing reveals secret NHL constitution
As expected, the Phoenix Coyotes bankruptcy lawsuit is turning into great entertainment, if not exactly the kind the NHL wants as competition during the Stanley Cup finals. Already we've seen the release of the heretofore super-secret NHL constitution (bylaws here and here) as part of Coyotes owner Jerry Moyes' evidence filings over the weekend; Moyes claims the clause allowing the Toronto Maple Leafs veto power over another team moving into Ontario violates Canadian competition laws, which is like metric for antitrust laws.
Meanwhile, in an attempt to head off the purchase of the Coyotes by his arch-nemesis Jim Balsillie, NHL commissioner Gary Bettman filed an affidavit listing Toronto Argonauts owners David Cynamon and Howard Sokolowski as interested in buying the team and keeping it in Phoenix — except that Toronto Star sportswriter Damien Cox insists the pair is really only interested in getting dibs on a second Ontario franchise themselves. And that's not even counting the guy who wants to build a 30,000-seat arena in the Toronto suburbs and get an NHL expansion team. At this rate, it's only a matter of time before Rick Horrow shows up.
May 25, 2009
Coyotes enter mediation, final ruling due by June 22
My apologies for not reporting this at the time: Last Tuesday, bankruptcy court judge Redfield Baum ordered Phoenix Coyotes owner Jerry Moyes and also-Phoenix Coyotes owner the National Hockey League to enter mediation to determine who is the real Rosa Parks. If they can't settle matters by this Wednesday, Judge Baum will make a ruling by June 22.
The Canwest News Service, meanwhile, is speculating that a verdict ruling that the Coyotes can be sold and moved without league approval would wreak havoc on team stability, with teams moving left and right. Among the learned folk chiming in as part of the article:
"You could, maybe, see two baseball teams in Boston, for instance, and that could be destructive,'' says Michael McCann, an associate law professor at the University of Vermont. "It would also allow owners to hold teams up for ransom in their local markets. Teams would ask for concessions and if they don't get them, say 'We could be out of here.' Particularly given all the economic troubles in North America right now, that's a major issue."
Two thoughts on this: One, it would be really hard to fit two baseball teams in Boston given that the city has only one stadium, and the Red Sox own it. (Likewise eight hockey teams in New York, another suggestion in the article.) And two: "Teams would ask for concessions and if they don't get them, say 'We could be out of here.'" How is this any different from today?
May 17, 2009
What would Coyotes' flight really cost Glendale?
The Arizona Republic has another today in its series of articles on how the loss of the Phoenix Coyotes would screw over the city of Glendale. So far, it reports, Glendale has been able to pay off its $180 million debt for the arena it build for the team with rent payments and arena-related tax revenues: "From fiscal 2006 to 2008, ... Glendale paid $25.9 million on its arena debt in that period and collected $27 million in revenue from developments directly related to the arena." Take away the Coyotes' $2.4 million in annual rent payments, and sales taxes from fan purchases, and "the city could be forced to skim money from reserves or funds that could have gone to public services."
Of course, "arena-related tax revenues" is a notoriously fungible concept, thanks to the substitution effect (if you need a refresher on the substitution effect, here's an excellent one) — not to mention that some of the related development, like the retail/commercial/residential development that then-Coyotes owner Steve Ellman built next door, come with their own expenses for city services. But the point remains that unless Glendale can book more concerts or something to fill empty dates during the hockey season, it's going to have a tougher time paying its arena debt.
But then, that could be true if the Coyotes stay as well, since team officials were already talking about demanding lease concessions even before the team filed for bankruptcy. (There will be different team officials once the bankruptcy shake out, but three guesses as to whether they'll back off this demand now that the team has effectively broken its lease.) While losing rent payments would still leave the team-related tax revenues, those are the revenues that are most directly cannibalized from other spending in the Phoenix area, if not necessarily Glendale proper.
Maybe Glendale should be demanding that its neighboring cities pay an annual subsidy to let the Coyotes leave — and let their shoppers go...
May 14, 2009
Balsillie gets Hamilton lease, NHL calls him "illusory" and "duplicitous"
The charges and countercharges have been flying fast and furious in the Phoenix Coyotes bankruptcy case, with the following transpiring just in the last 24 hours:
- Elected officials in Ontario turned out to be just fine with Coyotes suitor Jim Balsillie's demand for $120 million in public money to renovate Hamilton's hockey arena if he moves the team there. Ontario Premier Dalton McGuinty, a Liberal, asked if he would rule out the use of public funds, replied, "I'm very much in favour of a new hockey team in Ontario"; his deputy premier, George Smitherman, went further, saying, "If we see success in terms of a franchise coming this way, if there are capital needs there, I think the premier's said we'll be open to the conversation." MPP Andrea Horwath, a New Democrat whose riding (that's "district" in Canadian) includes the arena, chimed in that while, "I don't think a blank cheque to a multimillion-dollar corporation is the best way to go, ... I think government should be looking to partner in whatever way we can." Then she talked about the battered steel industry and added, "So anything that can bring some excitement, some hope and some economic stimulation are all positive things -- particularly in an economic downturn." And her fellow New Democrat Paul Miller got special dispensation to wear a "Hockey Night in Hamilton" T-shirt in the Ontario legislature this morning.
- The Hamilton city council unanimously approved giving Balsillie an option on a 20-year (or maybe 32-year — reports differ) lease on Copps Coliseum, provided he gets the Coyotes. No details on how much rent Balsillie would be paying on the place (if that's even been negotiated yet), but the city council did commit to lobby the province and federal government for renovation funds.
- Balsillie, awed by the love of his fellow Ontarians, promptly released a statement saying he'd never asked for any public money, notwithstanding yesterday when his spokesman said he did.
- The NHL, not awed by anyone, issued bankruptcy court papers calling Balsillie's offer to buy the team "illusory, at best, and a sham, at worst" and "a last-ditch effort" to get around league rules, and said that it had taken control of the team from principal owner Jerry Moyes and so Moyes' bankruptcy filing was illegal. And if it wasn't, it was just plain wrong: "Even assuming that Mr. Moyes' conduct was technically permissible, it smacks of bad faith and duplicitous dealing," wrote the league. "The court should not condone such inequitable conduct."
- Balsillie fired back with a statement of his own asserting: "Who owns or controls the team is a distinction without a difference. The team itself is still bankrupt, voluntarily or not. The owner of the team has a fiduciary obligation towards the creditors."
At this rate, maybe they should forget about playing hockey and just sell tickets to watch the lawyers fight.
May 13, 2009
Balsillie to Hamilton: Want a team? Cough up $120m
So much for the hometown discount: Would-be Phoenix Coyotes owner Jim Balsillie announced that he'd seek $120 million in public funding for renovations to Copps Coliseum as part of any deal to move the Coyotes to Hamilton, Ontario. Hamilton mayor Fred Eisenberger said he doesn't consider the demand "out of line" and that he's "cautiously" optimistic about cutting a deal with Balsillie — but then, since Balsillie would apparently be asking the province of Ontario and the Canadian federal government for the funds, it's no skin off his nose. Prime Minister Stephen Harper may want to take back his endorsement of relocating the Coyotes, though.
Meanwhile, Coyotes head coach and hockey legend Wayne Gretzky threw his backing behind Jerry Reinsdorf's $130 million bid to buy the team and keep it in Arizona — which is far less than Balsillie's $212 million offer. Unless the bankruptcy court judge overseeing the Coyotes' Chapter 11 filing is a big Gretzky fan, it looks like we're headed for a major international antitrust case here.
May 12, 2009
Hamilton officials: If we spend it, Coyotes will come
Apparently even having an owner who's publicly announced he wants to move to your city doesn't absolve you of spending public money to lure him: The CEO of Copps Coliseum in Hamilton, Ontario, says it would take $85 million in renovations to make the 24-year-old arena "NHL-ready" if the Phoenix Coyotes were to move there. Included would be an upgraded dehumidification system to keep the ice from melting, which makes sense, plus removing the roof and adding 50 to 60 extra luxury suites, which would better be described as "profit-ready."
Of course, it is possible that Hamilton could negotiate for Coyotes owner Jim Balsillie to pay more in rent — out of those added suite sales, perhaps? — to cover the renovation costs, which would be only fair. Not saying it's likely, but this is Canada, after all.
In other Coyotes news, the court overseeing the team's bankruptcy has given the NHL a deadline of today to turn over documents related to a possible sale of the team to a new owner who would keep it in Arizona. One possible buyer: none other than Chicago White Sox and Bulls owner Jerry "Leverage Man" Reinsdorf, who not only got a new baseball stadium out of Chicago by threatening to move to Tampa Bay, but oversaw the Montreal Expos relocation process, and so would be the oddest white knight ever.
May 09, 2009
AZ Republic: If Coyotes move, people will shop at different stores!!!
The ink is still wet on the Phoenix Coyotes bankruptcy filing, and already we have the first newspaper article (in the Arizona Republic) warning that the loss of the team would cost the local economy:
The loss of the Phoenix Coyotes would hit hardest in the city the team has called home since 2003, but the loss would ripple to shops and restaurants along the Loop 101 corridor in Peoria and Phoenix...
Those with the biggest stake are Glendale taxpayers and the shop and restaurant owners at Westgate and elsewhere that benefit from fans trekking to west Glendale.
And what do those shop and restaurant owners have to say about this dire situation? Here's a sampling of those quoted by the Republic:
- "We're going to continue to follow it like the rest of the Valley," said Nicole Traynor, a spokeswoman at Westgate City Center, the commercial development just outside the arena's door.
- "It would affect our business so it's definitely not a good sign for us," said Kevin Lee, general manager at Kabuki Japanese restaurant.
- Amanda Martin, general manager at Coffee Plantation, said that burly hockey fans still come in to get their "non-fat, sugar-free vanilla latte or a cappuccino." But Martin said the coffee shop's biggest crowd comes from the nearby movie theater.
- "We've got a lot of the players' wives and families that shop in our store . . . a lot of them are Canadian and have family and friends that come down to visit and come into our store. A lot of them are very large spenders. (That loss) will definitely be felt around town," owner Steven Koeppel said.
Okay, so not exactly panic in the streets, but still concern — which makes sense, as there can be a bit of spillover from sporting events to local stores. Of course, there's another unstated factor here as well: If Phoenix-area residents are no longer spending their money in and around hockey games, they'll be spending it somewhere else. But "Loss of Coyotes Would Be Boon To Scottsdale" doesn't quite trip off the printing presses the same way.
May 06, 2009
Phoenix Coyotes file Chapter 11; Ontario move next?
The simmering Phoenix Coyotes situation blew up completely yesterday, with the team filing for Chapter 11 bankruptcy protection, and BlackBerry billionaire Jim Balsillie launching a wildcat bid to buy the team and move it to Hamilton, Ontario.
The rough timeline:
- NHL commissioner Gary Bettman and deputy commissioner Bill Daly arrived in Phoenix yesterday to negotiate the sale of the Coyotes, who've been making payroll only thanks to heavy subsidies from the league, to local interests.
- Less than an hour before a scheduled meeting with Bettman, team owner Jerry Moyes filed for bankruptcy, reportedly without bothering to notify the NHL.
- Balsillie, who'd previously been rebuffed by the NHL in attempts to buy the Pittsburgh Penguins and Nashville Predators with the intent of moving them to his native southern Ontario, jumped in with a $212 million offer to buy the team.
- The NHL announced it had removed Moyes as owner of the Coyotes and placed the team under league control
So, now what happens? The Coyotes had agreed to stay in Phoenix (really Glendale, Arizona) for 30 years (with a $700 million early termination penalty) as part of the deal to get a new $220 million arena in 2003, but a bankruptcy court can wave off that provision if it so chooses. Likewise, while the NHL insists that its approval is required to buy a team or move a franchise, a judge may disagree. ("We are investigating the circumstances surrounding the [bankruptcy] petition, including the propriety of its filing," Daly said in an emailed statement last night, but it doesn't seem there's much the league can do to undo it now, "propriety" or no.) The Globe and Mail even reports that Balsillie has managed to get himself ahead of the NHL in line when it comes to secured creditors, though other sources disagree.
If Balsillie succeeds in winning the franchise, he'd almost certainly move it to the Copps Coliseum in Hamilton, though he's reportedly said he'd working building a new arena and naming it after Wayne Gretzky's dad. The players union, interestingly, is apparently in favor of such a move, believing it would boost league revenues, and so also salaries under the revenue-sharing agreement agreed to after the 2004-05 lockout. Bettman, who as NHL commissioner has pushed for more franchises in the U.S., especially the Sunbelt, reiterated this morning that he doesn't feel likewise, saying, "We fix the problems. We don't run out on cities." (Threatening to run out on cities, that's a different story.)
Regardless of how things work out, Glendale looks to be screwed: Either it loses its team and is stuck with an empty arena and 25 years of construction debt payments, or it is forced to offer major lease concessions to get the team to stick around &mdash Moyes even noted in his bankruptcy filing "the city's willingness to offer incentives to keep the team as a tenant." This could get ugly like the Saints deal before it's all over.
An initial bankruptcy court hearing is set for 1:30 pm on Thursday in Phoenix. But given all the legal tangles involved — this could be the biggest challenge to leagues' monopoly right to control franchises since the Oakland Raiders case in the 1980s — it's not likely to be concluded for a long, long time.
January 13, 2009
Sports bailout: The drumbeat continues
More on difficulties teams are having financing stadiums amid the economic collapse, and their hopes for the government to ride to their rescue. From Sports Business Journal:
The sullen economy and tight credit markets have made it difficult for teams and municipalities to borrow money to fund projects, which in effect has everybody in the facilities industry searching for answers....
"The problem is if you're not credit-worthy or have creative financing, you won't get a project underwritten today," said Chris Dunlavey, a Washington, D.C.-based consultant. "Private packaging sustained by revenues of a project are being completely disregarded these days."
And then, inevitably, we arrive at the calls for the cavalry to come to the rescue, from a familiar source:
Teams and facility developers acknowledge that sports takes a back seat to the dramatic fallout in other business sectors. However, they are encouraged with President-elect Barack Obama's push for public infrastructure improvements across the country, developments they feel could create momentum for their own projects.
"The bond markets drying up is not a baseball issue but a nation issue," said David Samson, president of the Florida Marlins, a team that spent the past 10 years trying to get a deal done before getting the green light to start building a new ballpark this year. "We don't view that as a risk. If that happens, the Marlins will be the last thing on anybody's mind."
That makes about as much sense as most things Samson has said, but it's still worrisome that the meme of a sports bailout seems to be picking up speed.
The Phoenix Coyotes, meanwhile, are apparently still trying to recoup the $2.70-a-ticket surcharge that is the only revenue the city of Glendale gets in exchange for putting up $180 million of the $220 million cost of the team's arena. (Rent? A share of arena revenues? Get real!) With the Coyotes leveraged up to their ears in debt, though, and hockey commentators openly talking about the team folding, they may actually get a hearing for throwing good public money after bad.
The New York Times hockey blog has a good rundown of the Coyotes mess, which unfortunately goes awry at the end in trying to argue that NHL teams have moved to the U.S. in increasing numbers not because of the league's desire to expand into the Sun Belt, but because they "outgrew" their original hometowns, and were beset by rising player salaries:
To cover those escalating salaries, owners needed new revenue. Since hockey was an arena-based gate-receipts business - as it always has been and continues to be - the owners found that they needed more seats, more amenities, more luxury boxes and, yes, even better parking revenue. Many owners got those things. Not all did.
Norman Green, the North Stars owner, issued the ultimatum and was the first to make good on it, in 1993. Unable to coerce a new deal out of the Twin Cities (and with his local mall business failing and facing a sexual harassment suit in the Minnesota courts), he packed up his team and headed to Dallas. Other teams followed, each with their own local twists, turns and absurdities.
In the case of the Jets/Coyotes, there was political wrangling galore and ever-shifting demands from the Jets owners, led by Winnipegger Barry Shenkarow. The public, some politicians and some in the business community exhausted all avenues to save the Jets. But the civic and commercial forces in Winnipeg could not make it work, and perhaps Shenkarow would never have relented anyway.
The problem with this argument is that even with "more seats, more amenities, more luxury boxes," most new arenas wouldn't have made money overall - if not for government subsidies so that the teams could reap the benefits of those new amenities without worrying their little heads about construction debt. The NHL's shift southward, then, has less to do with greedy players or with Sun Belt colonialism than with the fact that unlike Canada, U.S. cities were willing and ready to build lavish new facilities with public money. For no compensation beyond a piddly $2.70 per ticket.
December 26, 2008
Money-losing Coyotes inch closer to bailout demand
Things are looking even worse for the debt-ridden Phoenix Coyotes, as they've reportedly taken an advance on league revenue from the NHL after pledging virtually all of the team's other revenues as collateral on an $80 million loan. And it looks like the team is even closer to asking its public landlords for a bailout, according to the Globe and Mail:
A third source said the Coyotes have already approached the city of Glendale about renegotiating their 30-year lease at Jobing.com Arena. While the lease does give the team most of the revenue from the arena operations, there are items such as parking in which the city takes money from the Coyotes.
The only way the team can break its lease and relocate is by declaring bankruptcy.
Let this be a reminder to cities considering building arenas in exchange for "ironclad" agreements that the team won't move: It's always possible to play the threat card, lease or no lease.