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Ownership Cluster**** Thread: This is the last one, Really!

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Old
07-30-2012, 11:10 AM
  #326
kihekah19
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Quote:
Originally Posted by Clownquestion View Post
GJ may go through with the deal figuring that Glendale will have to pay on that contract even without the tax increase - but would that really be a good risk?
Only if he's okay with being the second owner of the franchise to file bankruptcy. Seeing how this unfolds would seem a no brainer and hopefully the last obstacle....

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07-30-2012, 11:11 AM
  #327
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Originally Posted by Clownquestion View Post
It would not surprise me. I've seen several places that the tax thing doesn't really affect the whole Coyotes deal, but I can't see how it won't have at least a little bit of effect.

Skeete even said that if the tax increase did not go through, they would have to consider whether or not they would be able to afford the lease agreement. And sure, GJ may go through with the deal figuring that Glendale will have to pay on that contract even without the tax increase - but would that really be a good risk?

If the tax referendum is thrown out, that is an obstacle that is out of the way. Really, the last obstacle as far as the CoG is concerned.
I'm not so sure. If Glendale failed to produce the agreed upon fee, doesn't that void Tue agreement and free Jamison to move the team wherever he'd like? Kinda seems like the best possible outcome for the JIG, if that's correct.

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07-30-2012, 11:12 AM
  #328
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Quote:
Originally Posted by Clownquestion View Post
It would not surprise me. I've seen several places that the tax thing doesn't really affect the whole Coyotes deal, but I can't see how it won't have at least a little bit of effect.

Skeete even said that if the tax increase did not go through, they would have to consider whether or not they would be able to afford the lease agreement. And sure, GJ may go through with the deal figuring that Glendale will have to pay on that contract even without the tax increase - but would that really be a good risk?

If the tax referendum is thrown out, that is an obstacle that is out of the way. Really, the last obstacle as far as the CoG is concerned.
My thinking is that GJ wants to make sure that The 50million in losses gets covered from before he buys them

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07-30-2012, 11:58 AM
  #329
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Originally Posted by korpedo View Post
My thinking is that GJ wants to make sure that The 50million in losses gets covered from before he buys them
That's not it. What happened is his business plan assumed a funding round with a minimum of $X ($ 170M, $250 M - whatever). Investors sign up, under the condition that X is met. As long as it's not, nobody's handing over money. This guarantees that no investor gets ****ed by being the only one in the deal, handing over $ 20 M which would only lead to guaranteed failure. Every funding effort has such a clause.

So right now he's at X minus $ 20M, and he's trying to convince investors to change the binding agreement, reduce the required amount and start gathering checks.

I did all this for a smaller sum last year. We were 10% short on the minimum amount to start gathering checks. I can tell you from experience that the absolute worst thing you can do is go back to investors and change the documents, since that's a great opportunity for said investors to get cold feet and jump ship. We ended up coming up with the remainder out of our own pockets. Much safer that way.


Last edited by zz: 07-30-2012 at 06:16 PM.
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07-30-2012, 12:11 PM
  #330
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Quote:
Originally Posted by OEL View Post
That's not it. What happened is his business plan assumed a funding round with a minimum of $X ($ 170M, $250 M - whatever). Investors sign up, under the condition that X is met. As long as it's not, nobody's handing over money. This guarantees that no investor gets ****ed by being the only one in the deal, handing over $ 20 M which would only lead to guaranteed failure. Every funding effort has such a clause.

So right now he's at X minus $ 20M, and he's trying to convince investors to change the binding agreement, reduce the required amount and start gathering checks.

I did all this for a smaller sum last year. We were 10% short on the minimum amount to start gathering checks. I can tell you from experience that the absolute worst thing you can do is go back to investors and change the documents, since that's a great opportunity for said investors to get cold feet and jump ship. We ended up coming up with the remainder out our own pockets. Much safer that way.

This is really, really bad news.
Can you offer any verification, or are you merely speculating?

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07-30-2012, 12:38 PM
  #331
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Originally Posted by kihekah19 View Post
Can you offer any verification, or are you merely speculating?
I guess you can call it speculation, but it's just how investment rounds work.

There's no way in hell investors would have signed up if the minimum cash injection for the investment round to close was $ 170M, leaving no money to cover losses. No. Way. That'd be guaranteed failure. So whatever the amount is, I would bet my right hand it's at least $ 200M. You take $ 20M out of that, and you're left with $ 180M. Which tells me he has investors signed up to cover the base price, but not enough to actually cash out checks. And until he either meets that pre-defined amount or manages to convince investors to change the deal and start handing over the money, all he has are promises.


Last edited by zz: 07-30-2012 at 06:16 PM.
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07-30-2012, 12:40 PM
  #332
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Quote:
Originally Posted by OEL View Post
That's not it. What happened is his business plan assumed a funding round with a minimum of $X ($ 170M, $250 M - whatever). Investors sign up, under the condition that X is met. As long as it's not, nobody's handing over money. This guarantees that no investor gets ****ed by being the only one in the deal, handing over $ 20 M which would only lead to guaranteed failure. Every funding effort has such a clause.

So right now he's at X minus $ 20M, and he's trying to convince investors to change the binding agreement, reduce the required amount and start gathering checks.

I did all this for a smaller sum last year. We were 10% short on the minimum amount to start gathering checks. I can tell you from experience that the absolute worst thing you can do is go back to investors and change the documents, since that's a great opportunity for said investors to get cold feet and jump ship. We ended up coming up with the remainder out our own pockets. Much safer that way.

This is really, really bad news.
He could have had the initial investors lined up with money needed to purchase the team and cash calls as needed. The problem comes in when things like the tax issue, arena management deal, GWI challenges, etc, lots of moving parts keep changing. The way these deals work is, the investors agree to agree, then they all pony up at closing. Until there is a closing, anyone can back away for any reason. Look at wall street IPO's that get canceled on the day they were supposed to go public, same thing. Some investors could have financial issues outside of this deal they are dealing with, or they could back away because they have better opportunities else where.

Many issues can come up along the way, causing investors to back away, some not related to the deal, when there is a broad investment group. I suspect some combination of issues. So, Jamison gets several new groups to replace the groups that backed away, now the NHL has to do due diligence on new investors, that takes time to complete.

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07-30-2012, 12:44 PM
  #333
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Originally Posted by cobra427 View Post
Until there is a closing, anyone can back away for any reason.
That's not how it works. When you sign investors up, they can't back away. It's a legally binding agreement between 2 parties that the investor will put up the money once the investment pool reaches an agreed minimum amount.

IPOs are a completely different animal. We're talking about private equity here.

EDIT: your argument only makes sense if Jamison's investors only made verbal promises, which are worth absolutely nothing. If that's the case, this whole thing is a complete waste of time.


Last edited by zz: 07-30-2012 at 01:12 PM.
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07-30-2012, 12:48 PM
  #334
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If we're speculating, then maybe GJ & Co is also trying to buy Westgate from iStar Financial before finalizing the ownership. IMO this would explain why it hasn't been completed yet. Had to make sure the arena deal was in place before buying Westgate and it's all or nothing. I can't see GJ not knowing how much he needed to purchase the Coyotes or not having the capital to complete it before negotiating the arena deal. Now they are playing hardball with iStar. I seen a report iStar wasn't trying to sell Westgate, but how profitable will it be if the Coyotes leave and from I understand, iStar hasn't shown a profit in a while on all their over all endeavors.

But of course, I'm just speculating and rely on what I have read. And that's a lot of money.

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07-30-2012, 01:12 PM
  #335
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Quote:
Originally Posted by OEL View Post
That's not how it works. When you sign investors up, they can't back away. It's a legally binding agreement between 2 parties that the investor will put up the money once the investment pool reaches an agreed minimum amount.

IPOs are a completely different animal. We're talking about private equity here.

EDIT: your argument only makes sens if Jamison's investors only made verbal promises, which are worth absolutely nothing. If that's the case, this whole thing is a complete waste of time.
Actually, that is how it works, I have some experience in this area. It is not verbal, there are written agreements and good intentions, with plenty of ways out, but it is likely not binding until it closes. Unless they are totally unsophisticated investors, which I doubt. There are many reasons for this, such as wanting to know who your partners are in the investment, materiel changes (tax issue), law suits (GWI),especially if there are cash calls.

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07-30-2012, 01:14 PM
  #336
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Quote:
Originally Posted by OEL View Post
I guess you can call it speculation, but it's just how investment rounds work.
Yes, speculating.

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07-30-2012, 01:17 PM
  #337
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Quote:
Originally Posted by OEL View Post
That's not how it works. When you sign investors up, they can't back away. It's a legally binding agreement between 2 parties that the investor will put up the money once the investment pool reaches an agreed minimum amount.
One post someone backs out of the funding round, the next it's a binding agreement. I'm afraid you can't have it both ways.

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07-30-2012, 01:25 PM
  #338
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Originally Posted by kihekah19 View Post
One post someone backs out of the funding round, the next it's a binding agreement. I'm afraid you can't have it both ways.
What are you talking about??

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07-30-2012, 01:28 PM
  #339
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Quote:
Originally Posted by OEL View Post
What are you talking about??
What appears to be your conflicting statements.

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07-30-2012, 01:36 PM
  #340
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Originally Posted by kihekah19 View Post
What appears to be your conflicting statements.
Where did I mention someone pulling out?

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07-30-2012, 01:42 PM
  #341
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Originally Posted by cobra427 View Post
Actually, that is how it works, I have some experience in this area. It is not verbal, there are written agreements and good intentions, with plenty of ways out, but it is likely not binding until it closes. Unless they are totally unsophisticated investors, which I doubt. There are many reasons for this, such as wanting to know who your partners are in the investment, materiel changes (tax issue), law suits (GWI), especially if there are cash calls.
I guess it all depends on the purchase agreement. We had structured it to make it difficult for investors to pull out once signed. It was safer for us to have a pretty solid assurance of getting the money rather than take the risk of someone getting cold feet and screwing the whole deal by putting us under the minimum threshold and preventing the round from closing.

Although, in the end, I agree that if someone decides not to hand over the check, litigating is not really worth it.

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07-30-2012, 01:45 PM
  #342
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Quote:
Originally Posted by OEL View Post
Where did I mention someone pulling out?
So you are saying he's always been 20 mil. short?

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07-30-2012, 01:48 PM
  #343
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Originally Posted by kihekah19 View Post
So you are saying he's always been 20 mil. short?
Yes, that is what I am saying. I don't remember any confirmed report that he actually had all the money ready to starting cashing out checks.

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07-30-2012, 01:55 PM
  #344
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Originally Posted by OEL View Post
Yes, that is what I am saying. I don't remember any confirmed report that he actually had all the money ready to starting cashing out checks.
More speculation. Thank you for the clarification.

Your initial post, that started all this (in my mind anyway) began by stating: "That's not it. What happened is"....

It's now apparent that your initial post was an opinion, hunch, or guess, as opposed to what seemed to imply fact. Again, thank you for the clarification.

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07-30-2012, 02:01 PM
  #345
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Is anyone else following the updates (via a twitter source) from the courtroom regarding the Sales Tax deal today? What would be your guess on the ruling? Looks like Glendale has a strong case on the "all sales taxes" part of the petition but what do I know?

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07-30-2012, 02:07 PM
  #346
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Originally Posted by naurutger View Post
Is anyone else following the updates (via a twitter source) from the courtroom regarding the Sales Tax deal today? What would be your guess on the ruling? Looks like Glendale has a strong case on the "all sales taxes" part of the petition but what do I know?

At this point I would have to agree with you.

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07-30-2012, 02:08 PM
  #347
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https://twitter.com/azc_aseligman

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07-30-2012, 02:24 PM
  #348
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Seems like the judge doesn't understand why they are in court over this. Good news

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07-30-2012, 02:31 PM
  #349
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Originally Posted by OEL View Post
I guess it all depends on the purchase agreement. We had structured it to make it difficult for investors to pull out once signed. It was safer for us to have a pretty solid assurance of getting the money rather than take the risk of someone getting cold feet and screwing the whole deal by putting us under the minimum threshold and preventing the round from closing.

Although, in the end, I agree that if someone decides not to hand over the check, litigating is not really worth it.
I agree, a tight purchase agreement is best. But, sophisticated investors will want a way out, to cover certain circumstances. Even in a tight purchase agreement, it would not cover you for unforeseen materiel changes, and this deal has had plenty. The environment for private equity is pretty bad right now, so I could see the parts/investors moving around and changing, until it closes.

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07-30-2012, 02:33 PM
  #350
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Court has recessed and the judge says he will give the issue "as much attention as I can in the time I have available."

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