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Developer Ellman regroups after lost decade

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11-14-2013, 09:57 PM
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Developer Ellman regroups after lost decade

A fascinating read for anyone who has followed the Coyotes saga, even in passing.

Most notably, three things stand out for me:
1) Ellman thinks the same COG deal the current owners have would have saved his/Moyes ownership
2) Scottsdale would have been the best/better option - per Ellman
3) Ellman had the arena side at Jobing.com doing extremely well


Quote:
Developer Ellman regroups after lost decade
By Peter Corbett
Mon Oct 28, 2013
...
In 2001, Ellman bought the Coyotes and hired hockey legend Wayne Gretzky to run the team. He shunned Scottsdale and forged a deal for Glendale to build a $180 million hockey arena near Loop 101 and Glendale Avenue.

Jobing.com Arena opened in 2003, and within two years under Ellman’s management, it became a top Valley concert venue for major acts like the Rolling Stones, Paul McCartney, U2 and Britney Spears.

But the hockey team was losing as much as $20 million a year, and Ellman was two years behind schedule in building Westgate, the shopping center with condos and apartments he was required to build as part of his deal with Glendale.

By April 2006, Ellman split withbusiness partner Jerry Moyes, who had been covering the team’s heavy losses. Ellman said he paid Moyes $95 million and gave up his 36 percent ownership interest in the Coyotes. Ellman held on to the 233-acre Westgate site.
...
Meanwhile, Glendale pledged $15 million annually for 15 years to keep the Coyotes at Jobing.com Arena. [2013]
Ellman said if Glendale had offered him and Moyes the same deal as the new ownership group, the two businessmen would probably still own the team.

“I’m sure you’ve heard the expression that many large projects work well for the third buyers,” he said.

Ellman said he regrets the hockey arena was not built in Scottsdale at what is now the site of SkySong: The ASU Scottsdale Innovation Center, a technology office park.

“If we would have gotten a deal approved in Scottsdale, my prediction is we’d still own the team, and the project would have completely revitalized south Scottsdale,” said Ellman, adding that slow-growth advocates blocked his plan.

...
At the time, Scottsdale officials kept pushing Ellman to disclose his financial commitment for the $525 million project and whether public funds would be spent on the arena. A stadium district would have provided $200 million in tax rebates. The city extended negotiations for the deal in March 2001, but then Ellman cut a deal with Glendale.
Former Scottsdale mayor Mary Manross said the city tried to work with Ellman, but the Los Arcos site was too small for the hockey arena and retail development adjacent to a neighborhood.
“Ellman became nervous about a potential referendum and so (he) started looking toward Glendale,” she said.
http://www.azcentral.com/business/ne...st-decade.html

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11-15-2013, 02:18 AM
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Quote:
Originally Posted by Fugu View Post
A fascinating read for anyone who has followed the Coyotes saga, even in passing.

Most notably, three things stand out for me:
2) Scottsdale would have been the best/better option - per Ellman
No one, *no one* ever disputes this. For all the **** we in AZ get about "not being a hockey market", had that arena gone up at the Los Arcos location, a lot of HF people would have had *nothing* to talk about the last 4 years (and the next 5).

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11-15-2013, 02:44 AM
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Quote:
Originally Posted by Fugu View Post
A fascinating read for anyone who has followed the Coyotes saga, even in passing.

Most notably, three things stand out for me:
1) Ellman thinks the same COG deal the current owners have would have saved his/Moyes ownership
2) Scottsdale would have been the best/better option - per Ellman
3) Ellman had the arena side at Jobing.com doing extremely well




http://www.azcentral.com/business/ne...st-decade.html
Hindsight is always 20/20. However.....

1) It was Ellman who negotiated and agreed to the original lease with Glendale. Moyes was a minor partner at that point and didn't get more involved until Ellman needed money from him to keep the Westgate Project afloat. The arena was open for over a year before construction of the rest of Westgate was even started. Seems like a huge gap in time to start building the project, considering the city had funded the arena construction.

2) Scottsdale would have been a better location for the existing fan base at that time. But Ellman is the one who balked when the Scottsdale city council wanted to see his financials before they agreed to giving him a massive tax break he was looking for on the Los Arcos project. Not unlike Moyes also balking at being opening the books with Glendale when they asked him for the same thing.

Now there are conflicting stories in these parts as to just what all went down with Ellman and Scottsdale, but the sense I get is Scottsdale was willing to work something out had Ellman been more forthcoming with them.

3) Yes... he did have the arena doing well. But he didn't have the competition for acts like there is now, and even with that.... it obviously wasn't enough if he now says he needed a deal like what IceArizona got.

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11-15-2013, 05:19 AM
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Well, thankfully, those idiots don't own the team anymore. Funny how that one worked out. Scottsdale certainly didn't get the better end of the deal when they played hard to get with Ellman. A Los Arcos arena would have been better for pretty much everyone, including surrounding cities like Tempe.

The west valley may never recover or grow enough to save the Coyotes, but at least I can say I saw competitive hockey if they do end up moving.

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11-15-2013, 11:14 AM
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Well then, Ellman should have showed Scottsdale the money. It's all on him.

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11-15-2013, 11:22 AM
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Originally Posted by saskganesh View Post
Well then, Ellman should have showed Scottsdale the money. It's all on him.
I wonder how real the 'threat' of environmental review/impact was such that it seemed to scare Ellman off? The mention as well of the site being too small for an arena-- was that truly a factor?


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Originally Posted by DirtyOldMan View Post
No one, *no one* ever disputes this. For all the **** we in AZ get about "not being a hockey market", had that arena gone up at the Los Arcos location, a lot of HF people would have had *nothing* to talk about the last 4 years (and the next 5).
Having lived in the Valley for a brief period a couple decades ago... I never understood Glendale as the development site.

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11-15-2013, 11:32 AM
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Originally Posted by TheLegend View Post
Hindsight is always 20/20. However.....

1) It was Ellman who negotiated and agreed to the original lease with Glendale. Moyes was a minor partner at that point and didn't get more involved until Ellman needed money from him to keep the Westgate Project afloat. The arena was open for over a year before construction of the rest of Westgate was even started. Seems like a huge gap in time to start building the project, considering the city had funded the arena construction.
It sounded like he bit off more than he could chew actually. He was behind schedule on the Westgate development and, of course, he had to bring in Moyes as a cash bank. That sounds like a cash flow problem perhaps. He paid $87 MM for the hockey team.


Quote:
2) Scottsdale would have been a better location for the existing fan base at that time. But Ellman is the one who balked when the Scottsdale city council wanted to see his financials before they agreed to giving him a massive tax break he was looking for on the Los Arcos project. Not unlike Moyes also balking at being opening the books with Glendale when they asked him for the same thing.
This is an interesting point. Do most cities that subsidize arenas or teams in some manner ask for the owner's financial records? Ellman may have been highly leveraged. Moyes probably didn't trust the Glendale staff (and maybe rightly so), having also never had an interest in being that owner in the first place.

It's just fascinating to think though that IF COG had given Moyes that $14 MM they'd requested, how differently things might have gone.

The Scottsdale potential seems too obvious in hindsight to even mention further.



Quote:
3) Yes... he did have the arena doing well. But he didn't have the competition for acts like there is now, and even with that.... it obviously wasn't enough if he now says he needed a deal like what IceArizona got.
I think the problem is two-fold, similar to the NJ Devils situation. The team can be doing well, but if the arena side is losing money, it drags the team down too. Or-- the arena business can be doing well, but the team is dragging things down (Florida, Atlanta), so it's a matter of the magnitude of the loss. Ellman mentions Moyes was putting in $20 MM per year back when they first moved in Jobing, and Ellman finally parting ways with him by giving him $95 MM and his 36% of the stake in the venture (I presume that's the team and arena rights). Parking?

When did the arena competition come online again?

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11-15-2013, 12:15 PM
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Having lived in the Valley for a brief period a couple decades ago... I never understood Glendale as the development site.
Well, in the mid 90s when I moved to Phoenix and probably when you left, the lion's share of the growth and incoming industry (Intel, Motorola, etc.) was on the east side of town (Scottsdale, Tempe, Chandler, Gilbert, Mesa), but they were also starting to put the infrastructure (Agua Fria, Papago freeway completion and expansion, e.g.) in anticipation of the same thing happening on the west side (Glendale, Peoria, Buckeye, Surprise)... and to some extent, it did... Laveen, for instance, now is full of red-tile roof suburbs like the rest of the valley - not true in 1995... but then tech crash + 9/11 + recession + housing market crash, and the growth didn't happen as fast nor was as great as some over there had hoped. Glendale was certainly plan B (they saw an opportunity to be an entertainment center with the arena and NFL stadium), but since plan A wasn't gonna happen, for us it was better than plan C, which was I believe Portland OR.

It would be interesting to have a season ticket holder address map for ~1998 and for now similar to the one that was found for the Atlanta Braves thread.

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11-15-2013, 12:17 PM
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Originally Posted by Fugu View Post
It sounded like he bit off more than he could chew actually.
Ya, dont think theres much question about that. Eyes bigger than his reach. Great vision but incapable of execution as he was always lacking the green & readies. So he played people & credit facilitators, certainly the City of Glendale and then stiffed pretty much the lot of them on his way out of town. Nice bit of revisionism up there in the linked article, gets points for creativity however....

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11-15-2013, 12:32 PM
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Originally Posted by DirtyOldMan View Post
Well, in the mid 90s when I moved to Phoenix and probably when you left, the lion's share of the growth and incoming industry (Intel, Motorola, etc.) was on the east side of town (Scottsdale, Tempe, Chandler, Gilbert, Mesa), but they were also starting to put the infrastructure (Agua Fria, Papago freeway completion and expansion, e.g.) in anticipation of the same thing happening on the west side (Glendale, Peoria, Buckeye, Surprise)... and to some extent, it did... Laveen, for instance, now is full of red-tile roof suburbs like the rest of the valley - not true in 1995... but then tech crash + 9/11 + recession + housing market crash, and the growth didn't happen as fast nor was as great as some over there had hoped. Glendale was certainly plan B (they saw an opportunity to be an entertainment center with the arena and NFL stadium), but since plan A wasn't gonna happen, for us it was better than plan C, which was I believe Portland OR.

It would be interesting to have a season ticket holder address map for ~1998 and for now similar to the one that was found for the Atlanta Braves thread.
Definitely a picture that's worth a thousand words, huh? I'd love to get my hands on those types of maps for all the NHL teams. Would quickly highlight or dispel some points.

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Originally Posted by Killion View Post
Ya, dont think theres much question about that. Eyes bigger than his reach. Great vision but incapable of execution as he was always lacking the green & readies. So he played people & credit facilitators, certainly the City of Glendale and then stiffed pretty much the lot of them on his way out of town. Nice bit of revisionism up there in the linked article, gets points for creativity however....

Where do you disagree with his version of events? He owed Glendale $25 million for a parking garage that never got built, and I think he settled that score. Honestly, I think the guy who took the biggest bath was Moyes. Putting aside whether he 'deserved' it and all, I honestly think he easily lost $100 million, and maybe closer to $200 million as claimed.

Maybe you guys who followed the mega series more diligently than I did (as I kinda checked out by 2011-ish) remember the details, but Ellman paid Moyes $95 million to exit, plus the remainder of his stake in the Coyotes, as mentioned above. Was there any further info on how much of that wasn't Coyotes related, probably being money Moyes footed him for Westgate?

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11-15-2013, 12:44 PM
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Where do you disagree with his version of events? He owed Glendale $25 million for a parking garage that never got built, and I think he settled that score.
Ellman to pay for Westgate parking garage

To quote:

"No parking garage was constructed, but Ellman said that by the end of this week, he would "settle the debt" with the city and deposit the money to allow the city to build the structure."

Source: http://www.azcentral.com/news/articl...an0628-ON.html

However...

Westgate developer, Glendale will split $25M in escrow account

To quote:

"The agreement also calls for Glendale and Ellman to split a $25 million escrow account reserved to pay for a future parking garage.

[Councilmember Joyce] Clark said it was a "coup" for Glendale to negotiate to keep half of it.

"That wasn't our money. It was someone else's money," she said."

Source: http://www.azcentral.com/community/g...otes-deal.html

So, why didn't Glendale build the parking garage...hmmmm

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11-15-2013, 03:03 PM
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Quote:
Originally Posted by Fugu View Post
Where do you disagree with his version of events? He owed Glendale $25 million for a parking garage that never got built, and I think he settled that score... Was there any further info on how much of that wasn't Coyotes related, probably being money Moyes footed him for Westgate?
Oh my. I wouldnt even know where to begin and the exercise would absolutely require opening up old wounds. Theres just no nice way to go about it. I wish there were however, as Llama's posted with the one example of that parking garage fiasco alone with the money placed in escrow, never built, the rest of Westgate way behind schedule, Ellman being fined big money by the COG monthly, those fines washed & he receives 50% of the escrowed money back pursuant to yet more dysfunction over CFD's & parking issues with the Bidwells & the City.... just on & on & on.

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Originally Posted by Llama19 View Post

To quote:

"The agreement also calls for Glendale and Ellman to split a $25 million escrow account reserved to pay for a future parking garage.

[Councilmember Joyce] Clark said it was a "coup" for Glendale to negotiate to keep half of it.

"That wasn't our money. It was someone else's money," she said."
Just bizarre. Imagine that? The guys been & continues being fined millions of dollars by Glendale for falling behind, Westgate not even 1/4 the size he'd promised years into it, Steve there still being referred to as "Mr. Ellman" by former Mayor Elaine Scruggs like he's Burt Lancaster, The Rainmaker. A God amongst mere mortals when in fact he was more Impressionist & Comedian Frank Gorshin pretending to be... www.youtube.com/watch?v=nnrTMbCjAWQ

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11-15-2013, 07:50 PM
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Originally Posted by Llama19 View Post
Ellman to pay for Westgate parking garage

To quote:

"No parking garage was constructed, but Ellman said that by the end of this week, he would "settle the debt" with the city and deposit the money to allow the city to build the structure."

Source: http://www.azcentral.com/news/articl...an0628-ON.html

However...

Westgate developer, Glendale will split $25M in escrow account

To quote:

"The agreement also calls for Glendale and Ellman to split a $25 million escrow account reserved to pay for a future parking garage.

[Councilmember Joyce] Clark said it was a "coup" for Glendale to negotiate to keep half of it.

"That wasn't our money. It was someone else's money," she said."

Source: http://www.azcentral.com/community/g...otes-deal.html

So, why didn't Glendale build the parking garage...hmmmm

The parking space wasn't needed?

Quote:
Ellman, in developing Westgate, promised the city he would provide a certain amount of permanent parking. By 2008, Ellman had not built the garage and deposited $25 million into the account to let the city build the structure.
But Westgate has developed more slowly than anticipated, leaving plenty of available parking.
"Over time that money has just sat there and languished," Clark said, and the bank that loaned Ellman the money, Credit Suisse, put on pressure to get it back.
Win-win? Ellman got half the money back and Glendale received the other half to do with it as it pleased instead of building unnecessary space.



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11-15-2013, 08:02 PM
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Originally Posted by Fugu View Post
It sounded like he bit off more than he could chew actually. He was behind schedule on the Westgate development and, of course, he had to bring in Moyes as a cash bank. That sounds like a cash flow problem perhaps. He paid $87 MM for the hockey team.
That's my guesstimate. But Glendale also set one condition he had to meet first and that was to completely rebuild an abandoned shopping center (Northern Crossing) close to the downtown core. Ellman did complete that task before he started on Westgate. And IIRC (and it's been a while).... the tax proceeds from that project also go towards the paying the arena bonds.



Quote:
This is an interesting point. Do most cities that subsidize arenas or teams in some manner ask for the owner's financial records? Ellman may have been highly leveraged. Moyes probably didn't trust the Glendale staff (and maybe rightly so), having also never had an interest in being that owner in the first place.

It's just fascinating to think though that IF COG had given Moyes that $14 MM they'd requested, how differently things might have gone.

The Scottsdale potential seems too obvious in hindsight to even mention further.
It's a very good point.... should a city demand seeing a potential owner's financial strength before they commit public funds to their benefit??? I would think yes.... but.... just how deep should they be allowed to go?? Would be an interesting discussion.

Moyes' is the type of guy who wants complete control over whatever he's involved with. So it wasn't a surprise he refused to let Beasley's staff see his financial situation. But had he been able to show that the franchise needed the adidtional help who knows?



Quote:
I think the problem is two-fold, similar to the NJ Devils situation. The team can be doing well, but if the arena side is losing money, it drags the team down too. Or-- the arena business can be doing well, but the team is dragging things down (Florida, Atlanta), so it's a matter of the magnitude of the loss. Ellman mentions Moyes was putting in $20 MM per year back when they first moved in Jobing, and Ellman finally parting ways with him by giving him $95 MM and his 36% of the stake in the venture (I presume that's the team and arena rights). Parking?

When did the arena competition come online again?
IIRC..... Moyes' initial investment was less than $20M. And his stake in the Coyotes wasn't that big initially, but as he kept putting more money in that stake grew until they parted ways.

As far as the situation with the Coyotes after they moved to Glendale.... they were doing fine attendance-wise (despite moving away from the core fanbase. They were getting an All-star game... things looked like they would hold their own. But then the first lockout came.... followed by the economic crash after that.

I'd rather not get into a "what if" discussion at this point tho. Ellman was able to compensate for the lost season by booking a lot of non-hockey events that year. But it started turning south after that and a combination of factors were involved.

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11-15-2013, 08:13 PM
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IIRC..... Moyes' initial investment was less than $20M. And his stake in the Coyotes wasn't that big initially, but as he kept putting more money in that stake grew until they parted ways.

As far as the situation with the Coyotes after they moved to Glendale.... they were doing fine attendance-wise (despite moving away from the core fanbase. They were getting an All-star game... things looked like they would hold their own. But then the first lockout came.... followed by the economic crash after that.

I'd rather not get into a "what if" discussion at this point tho. Ellman was able to compensate for the lost season by booking a lot of non-hockey events that year. But it started turning south after that and a combination of factors were involved.
The missing link is the value and details of the transaction between Moyes and Ellman. As you mention, he was a minority owner at the outset, so let's assume your $20 million is like horseshoes and grenades--- close enough.

Upon parting in 2006, Ellman paid Moyes $95 million and relinquished what he'd retained as a stake to that point-- 36% of team. He also said Moyes pumped in $20 million per year to cover losses (2002, 2003, 2004, 2005). The lockout year is hard to guesstimate, but there would be $60-80 million potentially in losses that Moyes covered before taking over completely.

He had tried to sell the team, asking price initially being ~$200 million--- per Bettman's desire to keep franchise values higher.

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