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PKP offer for Coyotes may be 230 million (mod: to QC w/relo $$)
I'm assuming that when the NHL decides the "value" of a relocated franchise it puts a little more effort into that, than the effort the NHL puts in to finding and vetting potential owners, but you never know. Maybe Bettman has some random numbers on his office wall, throws a dart, and whatever he hits is the value. But realistically, I'm sure it's a bit more complicated.
In Winnipeg's case maybe the NHL only asked for $170M because the league was in a tight spot with potentially two teams on the move and only one market to move to at the time. And for following Gary's rules they get the discount. As well, the NHL wasn't selling the team and trying to recoop money they had spent proping it up. Other than getting the $60M relocation fee, I'm sure they NHL would have been happy if ASG could have only sold the team for $1 and really gotten punished.
In Quebec's case, they have the problem of having the NHL as owners of the Coyotes when Gary has stated that he will make the NHL's pocket book whole again after a sale. So you have the $140M + whatever the CoG's AMF of $25M and counting didn't cover + a relocation fee. And if you look at the NHL constitution/bylaws it appears the NHL can charge whatever they want for relocation.
Is QC worth $230M? It is if someone pays that. We will see.
Yotes have not been perennial playoff participants. Also, who says new owners would keep them, regardless of where the team is located?
The value of a team is based upon its assets, earning potential, same as a stock. Components of that are value appreciation (or decline), annual net income/losses (not revenues). Players and other personnel under contract would be assets but it also depends on the contract. If a GM is under contract to the team and the team is sold, his contract may not be one of the assets sold. Players would presumably be covered depending on the CBA wording.
If the earnings potential in Quebec City is greater than in Winnipeg then the value of a team is greater. Look at the Leafs compared to the Stars. The difference in value is the assets and that value is based upon where the assets are located. A beach front property house in Yellow Knife is not worth the same as that same house on the beach in Florida.
First, you have to deduct the revenues that go to the league. Second, you have to deduct the costs. I do not know how the NHL works but in baseball, most of the revenue from playoff ticket sales goes to the league.
Tommy,
This is correct. I was remarking on the idea that a playoff run somehow makes the Coyotes more valuable to a new owner relocating them. Strictly speaking financially, it does only in the sense any debts the team may have would be less if they make money in the playoffs.
My point was that going forward, a 2012 playoff run means nothing for the 2012-13 season.
In fact, there is one argument for the opposite idea. If the team makes a run, then the coach deserves higher pay, the GM does, and the UFAs do. So, the new owner has more obligations.
Does anyone remember how much the creditors were owed? I don't, but had the impression that $140MM pretty much covered the claims that were admitted.
If the NHL is paid more than the creditors are owed, the NHL would of course be entitled to keep the difference because the creditors' claims under any agreement would be exhausted.
The $140M covered the claims of the secured creditors - and some small unsecured ones whose claims the NHL explicitly bought out. It did not cover the unsecured creditors - CoG's Liquidated Damages claim being by far the largest, as well as Moyes' claims - who were paid pennies on the dollar from the remains of the estate.
IMO if PKP is really offering this kind of money, anyone who wants to work for the Coyotes next year should be boning-up on French!
Putting that much money in front of the BOG would be practically irresistable, unles the is a similar pile of money available somewhere else nearby. The NHL does seem to be fond of money!
A playoff appearance is guaranteed a minimum of 2 games.
Assume sellouts for all playoff games (let's say 18,000 tickets).
Average ticket price is probably around $100/ticket (okay, so I'm using that for easy math, sue me).
Ignore for the moment any extra revenue from regional TV deals, parking, concessions, merchandise sales, etc.
So being swept in the first round of the playoffs is equal to 2 * 18,000 * $100 = $3.6MM in ticket revenue. So there's a minimum increased value of $3.6MM before you factor in any other revenue stream (and in QC that might be a pretty low average playoff ticket cost, but as I said, easy math). That figure can balloon pretty quickly: win the first round in 6, and lose the second round in 6 for 6 games, increase ticket price to $150 - 6 * 18,000 * $150 = $16.2MM in ticket sales.
Anyone know how many seats the proposed arena will have? MTS only has about 15,000 seats, so an 18,000 seat arena, selling out for every home game of a season would sell (18,000 - 15,000) * 41 = 123,000 more tickets. At even an average of say $60/ticket that's a flat $7.4MM in increased ticket sales. A quick google search tells me the average Jets ticket was $82, which would make for $10.1MM in additional ticket sales per year. So (neglecting time value of money) after a mere 6 years, a QC franchise playing in an 18,000 seat arena would pay back the additional $60MM in ticket sales alone. An arena the size of Bell Centre (21,000 seats) would do it in 3 years.
First, it costs more to build and operate an 18,000 seat arena than a 15,000 seat arena. So, depending on the public-private cost-share, that would reduce the profitability.
Second, you can't assume that the last 3,000 seats in an 18,000 seat arena could be sold for the "average" ticket price. The added ticket revenue from an 18,000 seat arena will depend on how high a price can be charged for the last 3,000 seats in the arena. For example, the upper level season ticket prices in Calgary range from $33-55. If they averaged $45 then the extra 3000 seats would generate about $5.5 million extra per year.
Judging by the opening post of the thread it sounded like the $230 million figure was an off the cuff comment to draw attention to a radio broadcast than a well thought out valuation.
I'd imagine that the coyotes will be sold to Quebecor for $170 to $180 million. Quebec and Winnipeg are similar size markets but Bettmen will want to keep the allure of franchise values continuing to increase.
The $140M covered the claims of the secured creditors - and some small unsecured ones whose claims the NHL explicitly bought out. It did not cover the unsecured creditors - CoG's Liquidated Damages claim being by far the largest, as well as Moyes' claims - who were paid pennies on the dollar from the remains of the estate.
Interesting, thanks. At some point the NHL will have to get him the money back that he lost or Wayne might just start to boycott his support of the NHL.
Interesting, thanks. At some point the NHL will have to get him the money back that he lost or Wayne might just start to boycott his support of the NHL.
IMO if PKP is really offering this kind of money, anyone who wants to work for the Coyotes next year should be boning-up on French!
Putting that much money in front of the BOG would be practically irresistable, unles the is a similar pile of money available somewhere else nearby. The NHL does seem to be fond of money!
Fortunately for me, I am fluent in both languages and I can write in English or French at a professional leve. Unfortunately, I don't think they will hire someone with no prior experience who just got his degree.
Does anyone remember how much the creditors were owed? I don't, but had the impression that $140MM pretty much covered the claims that were admitted.
If the NHL is paid more than the creditors are owed, the NHL would of course be entitled to keep the difference because the creditors' claims under any agreement would be exhausted.
If there are claims against the bankrupt estate that the NHL does not admit (such as those of Gretzky and Moyes), they can litigate over the validity of those claims if it makes any difference to the pot of money that the eventual purchaser would pay to the NHL.
I lost track of the bankruptcy proceedings a very, very long time ago, and don't particularly wish to absorb that again.
What really interests me is the suggestion that PKP would pay that much money for a franchise. If that's true, Jim Treliving would have to hand over a lot of pizzas to match that offer, or even come close, if he is actually an "interested" purchaser.
I think if it was north of $200 million because thats what Balsillie's bid was and if I remember correctly that covered every debt exactly. I believe though that included loans from Moyes to the team and the $8 million to Gretzky. Those weren't invalid claims just last in line.
Bankruptcy code has a specific order of creditors and the Moyes and Gretzky claims were last in line.
They already broadcast 40+ Sens games and they have a contract for a few more years with them. They also are the official French broadcasters of the Montreal Impact (MLS) and the Toronto Blue Jays (MLB), they just had the Masters, they broadcast a few NBA games a week, etc.
They are not DESPERATE for content. Sure, the Nords would put the network over the top, but it doesn't need them to be viable. To take the next step? Sure, but not to be a profitable entity.
After knowing that, I would hold the NHL hostage too over what sounds like too much for the Coyotes.
After knowing that, I would hold the NHL hostage too over what sounds like too much for the Coyotes.
Well, TVA Sports isn't desperate for content, but that doesn't mean PKP has leverage on the league; he still needs a REAL tenant for "his" arena. He signed a 25-year lease with the city and he will have to manage the arena EVEN IF HE DOESN'T GET AN NHL TEAM! He still is desperate for a team, my point was just that TVA Sports is a perfectly viable entity even without the Nords.
To make his whole plan work, PKP needs the Nords though. The TV Network, like the arena, are just part of the plan. TVA Sports can succeed by itself, the arena MIGHT succeed by itself, but the only way for PKP to make this venture REALLY profitable is if he has a hockey team to put in his building, on his channel(s), in his magazines and in his newspapers. And I'm not even gonna start with cellphone plans, cable subscriptions and merchandising. That's "convergence" (don't know the proper English term for that) at its best. The whole masterplan depends on PKP getting the Nords. If he does, Quebecor will be more powerful and bigger than ever.
Last edited by JordanStaal#1Fan: 04-10-2012 at 03:59 PM.
I can understand that. And, have thought of it as well. It's a little dicey to make a supply and demand argument here.
I suppose one thing that bugs me is that it seems the wording amounts to talking out of both sides of their mouth.
Calling something a relo fee makes it sound like a standardized tax or something. "Oh, we have this policy. If you move, it costs you...." However, in the event Mr Wang moves the Islanders to Seattle (I am not predicting that, only using it as an example), there won't be a $60M relo fee, will there?
We all know how to read between the lines. Coyotes as a franchise don't have much value in PHX. Worth much more in PHX (probably in SEA, too). League needs to get something for that. Call it a relo fee... Whatever.
It's still all smoke and mirrors. What they are really saying is, "We are going to get lots of $ from you. And, we are going to make it look like NHL franchises in general are worth lots and lots..." When, in reality, we all know that the value of an NHL franchise is highly dependent on location, and in new markets, while there is lots of potential, the value may actually not be so high. And, really, if the info get abotu StL is true, even some established markets...
I personally call it Gary's **** you tax, or the pound of flesh.
It might simply be a godfather offer from Peladeau. How can the owners refuse a 60 million premium on top of the 60 million relocation fee. Why even attempt to stay in Phoenix with this offer.
First, it costs more to build and operate an 18,000 seat arena than a 15,000 seat arena. So, depending on the public-private cost-share, that would reduce the profitability.
Second, you can't assume that the last 3,000 seats in an 18,000 seat arena could be sold for the "average" ticket price. The added ticket revenue from an 18,000 seat arena will depend on how high a price can be charged for the last 3,000 seats in the arena. For example, the upper level season ticket prices in Calgary range from $33-55. If they averaged $45 then the extra 3000 seats would generate about $5.5 million extra per year.
You also can't assume the tickets will be the lowest price. It's not like they're just adding additional rows to the back. It's a different layout, with different pricing structures, and different effects upon purchase behaviors. Adding more rows to a section where the front half are charged more than the back half means the front half is now larger. That is to say, half of the additional seats will effectively be at the higher price, with half at the lower. The "average" price may not be perfectly accurate for additional rows, but to try claim the price for bad seats in Calgary might be somehow related to the price of average seats in QC is pretty ludicrous.
It might simply be a godfather offer from Peladeau. How can the owners refuse a 60 million premium on top of the 60 million relocation fee. Why even attempt to stay in Phoenix with this offer.
You also can't assume the tickets will be the lowest price. It's not like they're just adding additional rows to the back. It's a different layout, with different pricing structures, and different effects upon purchase behaviors. Adding more rows to a section where the front half are charged more than the back half means the front half is now larger. That is to say, half of the additional seats will effectively be at the higher price, with half at the lower. The "average" price may not be perfectly accurate for additional rows, but to try claim the price for bad seats in Calgary might be somehow related to the price of average seats in QC is pretty ludicrous.
I wasn't suggesting that the price for bad seats in Calgary or anywhere else is a benchmark for the average seat price in QC.
What I meant was that when you go from a 15,000 to an 18,000 seat arena, those additional 3,000 seats are furthest from the playing surface, and therefore at the lowest end of the price spectrum. So, when people say that they can sell those extra 3,000 seats for the "average" price, they are misrepresenting the ticket pricing scheme used in every arena. If you look at any ticket pricing chart, the most expensive seats are in the lower bowl. The cheapest seats are at the upper levels. That is where the extra seats are when comparing a 15,000 and 18,000 seat arena.
One of the reasons that Winnipeg average ticket prices are so high, is that they can sell the cheapest seats for a good price, because they are still decent view seats.
In Winnipeg's case maybe the NHL only asked for $170M because the league was in a tight spot with potentially two teams on the move and only one market to move to at the time. And for following Gary's rules they get the discount. As well, the NHL wasn't selling the team and trying to recoop money they had spent proping it up. Other than getting the $60M relocation fee, I'm sure they NHL would have been happy if ASG could have only sold the team for $1 and really gotten punished.
It seemed to me that TNSE negotiated a price of $170 million with the Atlanta group, and then the league negotiated their cut from that $170 million, which they called a relocation fee and for which TNSE didn't care because it didn't come from their pockets. I am sure that the league is hoping that that sets a precedent by which any franchise sale involving relocation also includes such a fee to be paid to the NHL.
Since the league owns the Coyotes, I expect the league to take as much as $60 million from whatever PKP is willing to pay them and call that a relocation fee. It's all going into the same pocket, but doing so will perpetuate the precedent of the league collecting a fee anytime a franchise is relocated.
However, regardless of how the league wants the world to view the purchase price, I am sceptical that PKP would pay a total of $230 million for the Coyotes. I just don't see how a team in Quebec is worth so much more than a team in Winnipeg, and given their current alternatives I can't imagine the league turning down something closer to $170 million in total. I suppose it all boils down to how much each side is desperate to make a deal, and how much each side is willing to walk away from a deal they don't like.
So the precedent is to now do relocation fees? A few franchises have not had to pay them correct? Would Seattle have had to pay 1?
The NHL has also in the past charged expansion fees, so call it relocation or expansion it doesn't matter.... you will pay something to join the club and all the existing owners will get a cut.
