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03-20-2011, 06:57 PM
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Originally Posted by GSC2k2 View Post
Actually, I was not repeating mine. I was responding to Ghost's unsupported assertion that the expenses were "grossly inflated", which I take as some sort of suggestion that MH is going to make more than he spends. Post whatever you want, but it is getting tedious on my end, at least.


- with the exception of "media relations" (which is arguably a promotional expense at $600k), anything above the "Total Hockey Expenses" line would be excluded.

- pretty well all of "Total Business Expenses" would be split 50/50 as advertising and promotional expenses, but keep in mind that the consultant reports issued while Moyes was trying to get his own deal with CoG indicated that the expenses were grossly inflated, so it is a safe bet that MH will run a tighter ship than the absentee owner Moyes). $16.6M - (20% for efficiency) = $13.4M x 50% = $6.7M

- League Expenses fails the GAAP test as a non-hockey related expense. They are also in any event primarily levies of the league to cover league-wide insurance and benefits (benefits alone are ~$2.2M)and are thus ineligible as "benefits expenses".

- Ownership expense is a separate payment to Moyes that he was making to himself, so it is not relevant.

- Other Ownership Expenses is also a Moyes related-party transaction, and is therefore irrelevant for our purposes.

- other expenses is probably eligible for reimbursement ($370k).

- As for AMG operations, that relates to the Arena Management Group expenses, which is another kettle of fish in those financials:

(i) About $6.1M in Event Expenses, consisting of "event labour" and "event expenses", which may be tighter with the NHL in charge;

(ii) About $5.3M in Non-Event Expenses, consisting of a variety of direct arena costs which I would not quibble with, although they may be tighter as well with the NHL in charge;

(iii) About $2.4M in "overhead allocations" from Moyes' other corporate organization for HR, Legal, F&A, IT and executive, despite the hockey team also having all of those services. This is an entry for a Moyes related-party transaction, and I will not count it.

I will take the $11.4M, deduct 10% for efficiency (not 20% as above, because hopefully the arena may need more event labour for more events), leaving $10.2M.

So, we have a rough estimate of $6.7M + $600k + $370k + $10.2M, giving us ~$17.9M.

Does that get us further down the road? Doe sit at least make the question of jacking up the numbers artificially relatively moot?
It has nothing to do with "jacking up the expenses" in my opinion, but rather an overly broad definition of "non-hockey related expenses". I happen to think that you are making unwarranted assumptions about what might and might not be included in Team expenses. I didn't mention any of the $53 million in hockey operations, but I expect that not all of that is for coach and player salaries / travel and equipment, so some of that will be eligible.

Suffice to say, non-hockey related expenses are not defined in the Lease as you or I might define them. Instead, they only explicitly exclude a narrow set of specific hockey-related expenses. I am not sure how GAAP helps clarifies this since it is based on the contractual definition of eligibility of expenses, not how they are accounted. Anyway, if this deal proceeds we will see how this is interpreted, and I remain confident that we will see much wider latitude in the expenses that are deemed "non-hockey related" and therefore eligible under the "arena management fee" than you are suggesting.

I agree it is getting tedious, and won't post anything more on this subject. Other posters can read the lease and financial statements and come to their own conclusions.

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