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Wild minority owner Falcone in a bankruptcy investment pickle

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09-13-2010, 09:05 AM
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LadyStanley
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Wild minority owner Falcone in a bankruptcy investment pickle

http://www.nypost.com/p/news/busines...Q37GMf6v2I8N5K

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Falcone, who runs the $8 billion New York hedge fund Harbinger Capital Management, bought the [Hooter's Las Vegas] casino's troubled $130 million senior loan, putting him in a prime ownership position for when the casino seeks bankruptcy protection, sources tell The Post.
But there's a glitch: Falcone isn't allowed to own the casino.
The investment guru and avowed hockey nut -- who skated for Harvard in college -- made a mint shorting toxic mortgages in 2007 and used a small slice of that fortune to buy a 40 percent stake in the NHL's Minnesota Wild.
Now Falcone faces this blind-side hit: The NHL restricts owners from owning a casino with a sports book, and Hooters operates a sports book.
Falcone is permitted to own the company's debt, which he picked up on the cheap over the last year. But he's barred from owning an equity stake in such a concern, which is exactly what he will end up with when he moves to collect on the monies owed him by forcing the casino into a bankruptcy Court reorganization.

(This also means that any future NHL franchise owner in Vegas would probably need to be an independent personage and not associated with any casino sports book operation.)

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09-13-2010, 10:29 AM
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Originally Posted by LadyStanley View Post
http://www.nypost.com/p/news/busines...Q37GMf6v2I8N5K


(This also means that any future NHL franchise owner in Vegas would probably need to be an independent personage and not associated with any casino sports book operation.)

Or they change the rules if they're that enamored of Vegas. No idea why.

Anyone who made a mint off toxic mortgages will get little sympathy from me. I "know" how these things work since deregulation allowed the investment houses and banks to run amok, but something as simple as ethical values might offer a better compass.

The real irony here is that the markets are a far larger 'casino' operation than anything in Vegas. It's rampant speculation and gambling on a gargantuan scale.

He'll probably divest himself of the Wild ownership if the windfall is going to be huge. After he cashes out of that, I'm sure he can find an NHL team that would welcome a minority interest with deep pockets.

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09-13-2010, 10:53 AM
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Tommy Hawk
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Originally Posted by Fugu View Post
Or they change the rules if they're that enamored of Vegas. No idea why.

Anyone who made a mint off toxic mortgages will get little sympathy from me. I "know" how these things work since deregulation allowed the investment houses and banks to run amok, but something as simple as ethical values might offer a better compass.

The real irony here is that the markets are a far larger 'casino' operation than anything in Vegas. It's rampant speculation and gambling on a gargantuan scale.

He'll probably divest himself of the Wild ownership if the windfall is going to be huge. After he cashes out of that, I'm sure he can find an NHL team that would welcome a minority interest with deep pockets.
The markets definitely can be a bigger gamble than casinos. The whole "run amok" statement since deregulation is a bit misleading since the big cause of the subprime meltdown was due to Fannie Mae and Freddie Mac, US Government Agencies (not financial institutions) deciding to get in on the super risky market and also offering no doc mortgages and easing their requirements. Until that happened, it was a tiny fraction of the market and would have been easily handled. Thank You Barney Franks.

Now, for the casino, since there seems to be difficulty in selling ownership stakes in clubs nowadays (Carolina, St. Louis, Phoenix, Dallas), I am not sure the BoG doesn't give some kind of waiver or puts some type of condition on the ownership, such as no say in day to day operations, personnel decisions, etc. in either business.


Last edited by Tommy Hawk: 09-13-2010 at 11:00 AM.
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09-13-2010, 11:15 AM
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Fugu
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The markets definitely can be a bigger gamble than casinos. The whole "run amok" statement since deregulation is a bit misleading since the big cause of the subprime meltdown was due to Fannie Mae and Freddie Mac, US Government Agencies (not financial institutions) deciding to get in on the super risky market and also offering no doc mortgages and easing their requirements. Until that happened, it was a tiny fraction of the market and would have been easily handled. Thank You Barney Franks.
There's more than enough blame to go around. I still think the "real" problem is the decline in real income and that job creation is replacing higher paying jobs with lower value ones. Imo, the rest is just the unintended consequences from trying to manage these things--- preserving Americans' [unrealistic] consumption expectations.

Quote:
Now, for the casino, since there seems to be difficulty in selling ownership stakes in clubs nowadays (Carolina, St. Louis, Phoenix, Dallas), I am not sure the BoG doesn't give some kind of waiver or puts some type of condition on the ownership, such as no say in day to day operations, personnel decisions, etc. in either business.
Samueli was allowed to own the Ducks while he was convicted of a federal crime (misdemeanor???), but he had to separate himself from governance. Falcone has a whopping 40% of a team that sold for $260 M, so I can see that he'll more than likely find a way to manage his way through both of these things, and that the league would work with him. That's $104M. Too bad he's not interested in buying a team on his own.

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09-13-2010, 11:50 AM
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He also could likely go the NFL/Kroenke route - and pass control of his Wild stake to a family member

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09-13-2010, 11:54 AM
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Kroenke is the sole owner however. I just wonder if being the minority owner means he can distance himself for a temporary time with less hassle?

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