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Phoenix XCVII: Forget it, Jake. It's Glendale.

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Old
07-07-2013, 10:54 PM
  #176
fishbert
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Quote:
Originally Posted by CasualFan View Post
Sure, I'll remind you.

1) The "operating loss of $2.1MM" you refer to comes from this summary statement.

2) It's important to note that January 2013 had no non-hockey events. It only had Coyotes games. So that $523k loss in the left column? That's all on the Yotes.

3) After you remove the Coyotes losses from January, the net result of the summary report: six months of non-hockey programming produced a loss of $1,592,308. That's a pretty useful data element because if double it, you have a forecast for the year. The operational loss for non-hockey events would be approx $3.2MM.
Fair enough, that makes it a $145k operational loss per event instead of $190k.

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Originally Posted by CasualFan View Post
4) SMG estimates there are $1.6MM - $1.9MM in best practices that would reduce overhead expenses. To be conservative, let's use the low number of $1.6MM. That brings the operating loss down to $1.6MM
A) "SMG estimates..." based on what? (I contend: hand-waving)

B) SMG's benchmark year was FY 2012, which saw 74 events at the arena (including hockey... which is germane since the $5.6M operating loss figure SMG uses as their benchmark also includes the effects of hockey). Surely this $1.6M-$1.9M figure is significantly lowered by the 22 events you extend FY 2013 to in items 1 through 3. How much is it to be lowered? We have no way of knowing, since SMG doesn't provide any basis for their $1.6M-$1.9M estimate.

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Originally Posted by CasualFan View Post
5) SMG estimates they could bring in an additional $1.6MM - $4MM in naming rights and suite/premium seat sales. If we take the middle of that range at $2.8MM, we're now at an operational profit of $1.2MM on the arena
A) "SMG estimates..." based on what? (again, I contend: hand-waving)

B) Again, not if we assume operating expenses based on 22 events (your FY 2013 extension, again points 1 through 3... and again, no way of compensating, with SMG not providing any of the data on which their estimated figures are based [if there is any]).

-------

Ok, for ***** and giggles, now let's go back up to that first bit about operating losses per event of $145k (thank you for that correction, btw)...

If we extend FY 2013 to 74 games (bringing it into parity with the SMG baseline year, FY 2012), that $1,592,308 in non-hockey event losses becomes $10,711,890.
Taking SMG estimates at face value (which is risky, as we don't know what they're based on), the mid-point of their estimated savings is $4.55M.

$10.7M - $4.6M = $6.1M in operating losses ... SMG pays back 1/3 of their management fee and Glendale sees no change in their budgeted arena management expense.

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Originally Posted by CasualFan View Post
Not rocket science.
No, it's really not.


Last edited by fishbert: 07-07-2013 at 11:23 PM.
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07-07-2013, 11:05 PM
  #177
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Originally Posted by MNNumbers View Post
OK, I read the SMG bid. The financials are fairly easy to digest, it seems:
SMG:
We will start from a historic baseline of Glendale's net losses associated with the Arena. We will say at this point that 5.5M/yr makes sense. But, we can negotiate that with CoG and adjust according to other financial information, if necessary.
Then,
Year 1: CoG will pay SMG 300K as a base fee for services.
Then, SMG will manage the Arena. It will be on a profit sharing basis. It is difficult to describe easily. It seems to work like this:
1) Glendale is responsible for all net Arena operating losses.
2) If Losses come in at between 2.5M and 4.5M, SMG will be paid (as their Incentive Fee) {4.5M - (Whatever the net losses are)} x 20%
3) If Losses come in at between between 2.5M and break even, then SMG will be paid (Incentive Fee) 400K(Covers section 2) + {2.5M - (whatever net losses are)}x30%
4) If the Arena comes in without losses, then SMG will be paid (Incentive Fee) 400K + 600K + Net Profits x 40%
5) In the event of Net Profits, SMG is willing to negotiate a cap to their Fees in this scenario.

Year 2: Base fee decreases to 225K
Year 3: Base fee decreases to 150K
Year 4: No base Fee.

Other parts:
SMG will invest 500K into a Fund for use to promote new events coming to Arena and Westgate.

Guarantee: If 5.5M - Net Losses > Base Fee + Incentive Fee for any fiscal year, SMG will refund their fees to make whole.


Comments by me:
This proposal has no guarantee in it. There is a chance in this proposal that Glendale could end up paying more than 6M (I use that because it is the budget number).
There are no estimates of events or attendees.

The great upside to the proposal is that SMG has financially incentivized itself to make money.

I suppose it would be possible to say there is risk here as well.

However, SMG will get literally 0$ in year 4 and 5 if they don't reduce the losses to Glendale. This means that effectively, the proposal is a loser for SMG because they have to pay their people, if they can't reduce the losses to the city. For this reason, it seems reasonable (although not guaranteed) that SMG as a manager would reduce city costs.
Entirely agree with your reading of the SMG bid. (ok, one minor nit to pick: SMG will refund their fee if operating losses exceed those in FY2012, but they will not "make whole")
...still looking for any indication in that bid that SMG will operate a revenue-neutral arena.

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07-07-2013, 11:15 PM
  #178
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Originally Posted by fishbert View Post
Entirely agree with your reading of the SMG bid.
...still looking for any indication in that bid that SMG will operate a revenue-neutral arena.
Only indication is the estimates that you don't have any confidence in.

Apparently, SMG believes (I am going to only use the non-NHL figures here, because with NHL SMG is not running the Arena) there are 1.9-5.6M of unrealized revenues. As I read that item, only .3 - 1.6M of that is in 'events.' The rest would be premium seating and commercial rights. Those won't cost any extra (well, perhaps a little, but I think we would agree that re-pricing and higher marketing won't cost 1.6-4.0M).

And, SMG believes there is 1.6-1.9M of 'inefficiencies' (my word) that they can save. I assume that part of this is my staffing the Job with some of the same people as are running a portion of the NFL stadium management, they can reduce overhead.

My level of confidence in those numbers is higher than yours, because of the statement "We would be happy to review in more detail." That says to me "We have more details, but this is a long pdf already, and you may not be interested in all the details right now." Also, since the compensation is tied directly to performance, I have some confidence in those numbers.

They are not guarantees, however.

Again, I do like this better that IA/RSE/Global

EDIT: Answer to nit-pick. My use of 'make whole' was intended to say that they will refund their fees. But in the case where: Losses-5.5M < SMGFees, SMG would return only enough to make Losses=5.5M. At least, that is how I read it.

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07-07-2013, 11:16 PM
  #179
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Originally Posted by fishbert View Post
I contend: hand-waving
Well, it seems like anything that doesn't fit your preferred narrative is hand-waving. You asked how SMG could run net neutral based on 7 months ending Jan 2013. I showed you exactly how. It was pretty straight forward.

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07-07-2013, 11:28 PM
  #180
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Originally Posted by CasualFan View Post
Well, it seems like anything that doesn't fit your preferred narrative is hand-waving. You asked how SMG could run net neutral based on 7 months ending Jan 2013. I showed you exactly how. It was pretty straight forward.
You didn't; you took SMG's savings based on FY 2012 arena performance (74 events) and applied them directly to FY 2013 performance (11 events... 22, extended to a full FY). Very questionable.

After you made this comment, I added a bit to my comment above to show what the results would be if you corrected this questionable math of yours. You may wish to go back and take a look. (or not, since you don't appear particularly interested in anything that doesn't fit your narrative)

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07-07-2013, 11:31 PM
  #181
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Originally Posted by fishbert View Post
If we extend FY 2013 to 74 games (bringing it into parity with the SMG baseline year, FY 2012), that $1,592,308 in non-hockey event losses becomes $10,711,890.
Taking SMG estimates at face value (which is risky, as we don't know what they're based on), the mid-point of their estimated savings is $4.55M.

$10.7M - $4.6M = $6.1M in operating losses ... SMG pays back 1/3 of their management fee and Glendale sees no change in their budgeted arena management expense.
Wow, you're just making things up now. I guess since you posted the 7 months link and it totally proved my point, we ended up here... creating whole new equations based on nothing but your imagination. Your estimates are much more risky than anything in the SMG bid. MOD


Last edited by Fugu: 07-08-2013 at 12:28 PM. Reason: ...
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07-07-2013, 11:34 PM
  #182
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Originally Posted by CasualFan View Post
Wow, you're just making things up now. I guess since you posted the 7 months link and it totally proved my point, we ended up here... creating whole new equations based on nothing but your imagination. Your estimates are much more risky than anything in the SMG bid.
Explain how SMG will generate their millions in savings estimated with FY 2012's 74 events off the mere 22 events you assume from FY 2013, then maybe you can get away with such a snide and dismissive tone. Until then, you're adding apples (savings on 74 events) and cranberries (expenses on 22 events) and calling it a profit.

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Originally Posted by CasualFan View Post
Wow, you're just making things up now.
My point from the beginning has been that that's all any of us can do because of SMG's lack of supporting data behind their assumed savings figures. You did your best (mixing FY 2012 savings and FY 2013 expenses), and I did my best attempt at compensating for your mis-step to show how significant a mis-step it was.

Anyway, I'm done arguing with you over this. MOD


Last edited by Fugu: 07-08-2013 at 12:28 PM. Reason: personal shot
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07-07-2013, 11:57 PM
  #183
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Originally Posted by fishbert View Post
Explain how SMG will generate their millions in savings estimated with FY 2012's 74 events off the mere 22 events you assume from FY 2013, then maybe you can get away with such a snide and dismissive tone. Until then, you're adding apples (savings on 74 events) and cranberries (expenses on 22 events) and calling it a profit.

My point from the beginning has been that that's all any of us can do because of SMG's lack of supporting data behind their assumed savings figures. You did your best (mixing FY 2012 savings and FY 2013 expenses), and I did my best attempt at compensating for your mis-step to show how significant a mis-step it was.

Anyway, I'm done arguing with you over this. It's like trying to reason with a brick wall, and I have better things to do with my time.
You don't appear to grasp the concept of "fixed expenses" vs "variable expenses". That's probably why you extrapolated the fixed expenses in your equation. If you gain a comprehension of some elementary arena management items, it will probably seem like less of a brick wall.

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07-07-2013, 11:58 PM
  #184
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Back to the SMG Bid,

I have an alternative arrangement for the financial offers:

Initial Base Fee: Yr 1= 300K, then 225K, then 150K, then 0

What I will call 2nd Level Base Fee: 1.15M/yr (Note: this is the same as 20%x2M + 30%x2.5M, shared savings portions to SMG described in their bid)

Increases:
If the Arena runs Net Positive: CoG gets 60%, SMG 40%, until a negotiable limit is reached for SMG.

Decreases:
The first 2.5M of losses will be split 70/30 between CoG and SMG
The next 2M of losses will be split 80/20 between CoG and SMG
If Losses reach 4.5M, that means SMG has refunded all their 2ndBaseFee
If Losses still mount, and surpass 5.5M, then the first Losses after 5.5M will be covered from the Initial Base Fee, until it is all gone.

Extra Expenses: 500K from SMG for a fund to draw events to the Job and Westgate.

I like this look because it describes SMG as being penalized for lack of performance.

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07-08-2013, 12:23 AM
  #185
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Originally Posted by kihekah19 View Post


Nice! You make a point without being too serious or holier than thou.... well done Whileee!
Actually, I was serious about personally supporting the idea of a city or other level of government to provide several million to subsidize an NHL team. I know it's selfish, but I'm a hockey fan and it enhances my quality of life. I'd be willing to pay higher municipal taxes for the privilege, if it came to that.

My commentary regarding Glendale generally involves trying to assess and speculate about what might happen, more than trying to preach about what ought to happen. I think there's an important difference between the two.

When I write posts scolding the COG or NHL, it's generally when they have engaged in what I think is egregious or unethical actions (such as deliberately misleading city council and the public, as Beasley did, or keeping the sale price of the team artificially high even though Glendale greatly helped the NHL fend off Balsillie's foray).

I wish Coyotes' fans the best as they strive to keep their team. I hope that your new ownership group has the wherewithal and commitment to turn things around for you.

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07-08-2013, 01:25 AM
  #186
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Originally Posted by fishbert View Post
You did your best (mixing FY 2012 savings and FY 2013 expenses), and I did my best attempt at compensating for your mis-step to show how significant a mis-step it was.
Here's my legitimate attempt at being helpful:

Equation:
It looks like you took the $1,592,308 operational loss from Jan 2013 financial sheet, then divided it by 11 (since there were eleven events) to get a "loss per event" number of $144,755. Then you took that and multiplied it by 74 events to create a loss of $10,711,890

I can understand why you might approach it that way but here are the problems that you might not be aware of:

- Fixed Expenses
The set of expenses labeled "non-event expenses" and "overhead allocation" in the summary financials are fixed expenses. These expenses generally do not increase or decrease based on number of events. However, you included fixed expenses in your per event loss figure. FYI: The NHL averaged about $6.8MM per year in fixed expenses. It is in this area that SMG indicates they can operate the arena more efficiently. As an industry leader with experience and expertise in managing arenas, it seems perfectly reasonable that SMG could save $1.6MM or more on fixed expenses compared to what the NHL was doing. The NHL fixed expenses for HR, IT, Executive, etc were highly questionable and perhaps even audit worthy.

- Fixed Expenses Comparative Analysis
I'm not suggesting that anyone take SMG's word for anything. However, data from other arenas is a pretty strong indication that fixed arena costs are around $5MM per year. SMG would probably be very well positioned to estimate what the fixed costs are, since they manage a bunch of arenas. Also, BarneyG provided a really good analysis on fixed costs from a huge cross section of NHL arenas. It's in the BOH Archive. It also corroborated the $5MM fixed cost estimate.

- Event Revenue/Expense
Event expenses and event revenues work in tandem. You cannot have one without the other. Going back to the financial statement, events expenses and revenues are broken out in their own section. For the Jan 2013 report, it was $2,621,700 Revenue / $1,440,013 Expense. Of course when revenues exceed expenses, the result is a profit. The profit was $1,181,687 for seven months ending Jan 2013. Note: when you back-out the profit from the Coyotes games in January, the result is $1,179,006 in event profit from the 11 non-hockey events. That is an average of $107,182 per event in profit.

So, a more correct equation would be:
$107,182 x 74 Events = $7,931,494 - $5MM Fixed Expenses = $2,931,494 Profit

However, 74 Events is probably stretching it quite a bit. Let's say they can do half of that, for a total of 37 Events. The even more correct equation would be:
$107,182 x 37 Events = $3,965,734 - $5MM Fixed Expenses = Loss -$1,034,266

- 1st Time Revenues
SMG bid included revenue from naming rights and premium seating. This is the first time Glendale would have participated in any of those types of revenues, although RSE contemplates giving 20% of naming revenues. Obviously, since it is the first time Glendale has seen any money from these streams, it is rightfully listed as an increase by SMG.

- 1st Time Revenues Comparative Analysis
Arenas without professional sports tenants don't generate as much in naming rights revenues as buildings with pro anchor tenants. However, in comparing the reported deals from around the country (including the KFC Yum! arena) it seems reasonable to estimate $1MM per year in naming rights and commercial sales. Premium seating and suites are even more lucrative. I'm not suggesting that anyone take SMG's word for anything. I would suggest that $1.8MM in suite/premium revenue is quite reasonable.

Net of the SMG bid is approximately:
Fixed Expenses, $5MM
Event Net of Expense/Revenue, $3.9MM
Naming/Suite-Premium Seat Revenue, $2.8MM

Pay SMG their share of revenues and you're at net-neutral.

In conclusion, when I say "you don't know how to read the bid", what I'm trying to articulate is that all of the data is available and fairly easily assembled. Not assembled as a big fat assumption; assembled as a reasonable forecast based on specific Jobing.com data along with comparative analysis from other similar facilities.

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07-08-2013, 01:39 AM
  #187
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Originally Posted by MNNumbers View Post
And, if I were a hockey fan living in the Phoenix Valley in any municipality except Glendale, I would really be in favor of Glendale spending several million for my entertainment and enjoyment and quality of life.
And I am. Muchas gracias.

Similarly, if I either for whatever reason didn't like Gary Bettman and wanted him to look bad, or wanted NHL hockey in another city or country where it is not currently, or didn't like having to pay so much for tickets in the NHL city in which I do live, I would support any theory favoring relocation of the Coyotes, especially if I get to claim some dubiously defined moral high ground about how much less citizens of a distant mid-sized city would suffer if they did.

I still love that some of you are so steamed about this

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07-08-2013, 03:07 AM
  #188
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apparently LeBlanc was on tv again, five for howling editor tweeted some points, so did coyote beat writer

Quote:
Jaime Eisner ‏@JmeEisner 2h
LeBlanc: Our view was this was a mismanaged organization #Coyotes

Jaime Eisner ‏@JmeEisner 2h
LeBlanc: Organization needs to do a better job marketing the product #Coyotes

Jaime Eisner ‏@JmeEisner 2h
LeBlanc: We absolutely plan to increase salary immediately #Coyotes

Jaime Eisner ‏@JmeEisner 2h
LeBlanc: A few more weeks of lawyering. BoG is final step in process #Coyotes

Jaime Eisner ‏@JmeEisner 2h
LeBlanc: Already finalized purchase and sale from NHL #Coyotes

Brett Murdock ‏@B_Murdock1320 2h
"It's not a bad thing to have two favorite teams." - LeBlanc #Coyotes

Brett Murdock ‏@B_Murdock1320 2h
LeBlanc realizes the need to get transplant/snowbirds to support #Coyotes as well as their own teams.

Brett Murdock ‏@B_Murdock1320 2h
LeBlanc says purchase agreement w/ NHL is done (was already known). Still expects to speak to quite a few lawyers leading up to closing.
also, today is the 8th, RSE due to sign arena deal today


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07-08-2013, 03:41 AM
  #189
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finally found that old IceEdge video, coyote talk starts at about 3.30

http://www.youtube.com/watch?v=HLwekbJFYPI#at=250

Quote:
McCullough: People in Phoenix donít want to go to a hockey game anyway. You might as well bring them to Canada where people will go bonkers to watch a hockey game. Five games in Canada to us is very interesting. You can sell out an Islanders preseason game in Saskatoon for Godís sakes, so you can end up with a very interesting situation where demand is outrunning supply and thatís what you always want in an economic situation.
That was 2009, I am curious how much their views have changed in the 4 years since then. Make no mistake, I am anti-relocation, just don't trust this ownership group at all.

Heres the IceEdge interview from 2010
http://video.nhl.com/videocenter/con...id=35&id=63481

They cut off Twitter Jones pretty quick

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07-08-2013, 06:39 AM
  #190
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Originally Posted by wunderpanda View Post
apparently LeBlanc was on tv again, five for howling editor tweeted some points, so did coyote beat writer



also, today is the 8th, RSE due to sign arena deal today
Blown deadline #1

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07-08-2013, 07:28 AM
  #191
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Blown deadline #1
Don't you think it's a bit early to call that? They have to the end of the business day to sign, n'est pas?

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07-08-2013, 07:57 AM
  #192
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- Event Revenue/Expense
Event expenses and event revenues work in tandem. You cannot have one without the other. Going back to the financial statement, events expenses and revenues are broken out in their own section. For the Jan 2013 report, it was $2,621,700 Revenue / $1,440,013 Expense. Of course when revenues exceed expenses, the result is a profit. The profit was $1,181,687 for seven months ending Jan 2013. Note: when you back-out the profit from the Coyotes games in January, the result is $1,179,006 in event profit from the 11 non-hockey events. That is an average of $107,182 per event in profit.
Does anyone else see an issue with this? I'm assuming this is roughly correct, that a decent arena manager can make a profit of about $107,000 per non-hockey event.

Now RSE comes in here and a huge part of their "extra revenue streams" to the city is to charge a $5 surcharge on all non-hockey events. Won't $5 a ticket eat a very large amount of that $107,000 profit for each non-hockey event? Won't this make it far less feasible for RSE to host non-hockey events at Jobbing? If they aren't making a (decent) profit off each non-hockey event, why host non-hockey events in the first place? They have no incentive to do so, especially when there's very little (or no) profit to be had by the manager, and all of the "upside" (ticket surcharges and most of the parking income) goes to the city?

Not to mention, tickets might be much harder to sell if everyone is forced to pay $15 to park for the non-hockey events. It is now far riskier for an arena manager to host non hockey events becuase it is much more difficult to generate a profit for that manager, with surcharges and parking charges both decreasing demand and syphoning off money to that flows to the city.

This looks like it's set up to run NHL style where the arena hosts hockey and not much else. RSE has very little incentive to host non-hockey events as their profit margins are very small, yet Glendale depends heavily on the alleged non-hockey event revenue to close the gap.

Five years of doom and gloom, very few events, scare Glendale into thinking that hockey is their only hope for not having to "board up the arena" and then tear up the lease and demand $20 million a year instead of $15 million a year. That's where this seems to be going.

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07-08-2013, 08:44 AM
  #193
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Originally Posted by CGG View Post
Now RSE comes in here and a huge part of their "extra revenue streams" to the city is to charge a $5 surcharge on all non-hockey events. Won't $5 a ticket eat a very large amount of that $107,000 profit for each non-hockey event? Won't this make it far less feasible for RSE to host non-hockey events at Jobbing? If they aren't making a (decent) profit off each non-hockey event, why host non-hockey events in the first place? They have no incentive to do so, especially when there's very little (or no) profit to be had by the manager, and all of the "upside" (ticket surcharges and most of the parking income) goes to the city?
So long as there is profit to be had, they will host events. You could cut that number in half and it'd be worth it. We don't know the details of the arrangement with Global Spectrum, so I'm not going to speculate. A $5 surcharge does't make concert tickets and the like less palatable. Ever used Ticketmaster? Parking is also more of a concern for hockey than it is one time events. Anyone who goes to the downtown venues (USAC, Comerica, Chase etc...) has to pay for parking, so it's not like it's a shock to the system. I'd be more concerned about how they plan to monetize parking that is split with Tanger & Westgate, although validation is an easy solution. I'm sure the shops and bars would put up with such a nuisance in exchange for having events.

Has anyone run the numbers at 17,000 to see if the even works in a best case scenario? I'd be curious to see that.

RSE looks like a waste of time to me. A debt bomb strapped to a bunch of Canadians who have no loyalty to the valley. I'd say the plan is for the league to buyback the team, then fold it or flip it with GTA2 being the end goal.

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07-08-2013, 09:50 AM
  #194
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This looks like it's set up to run NHL style where the arena hosts hockey and not much else. RSE has very little incentive to host non-hockey events as their profit margins are very small, yet Glendale depends heavily on the alleged non-hockey event revenue to close the gap.

Five years of doom and gloom, very few events, scare Glendale into thinking that hockey is their only hope for not having to "board up the arena" and then tear up the lease and demand $20 million a year instead of $15 million a year. That's where this seems to be going.
This is interesting logic. I suppose many of us have thought about it. It points out why I can't really figure out what RSE's goal is here.

It seems there are 2 possibilities:
1) RSE really wants to use the 5-year opt out. In this case, they book just enough events so that their total losses = 50M+ $1. Then, either a new lease, or, more likely, relo or sale for relo. What seems risky about this is that the losses could be huge even if you work hard at booking the building, and even with exactly 50M in losses, you have about 200M sunk into the franchise, and selling it for relo at that point might not take care of that.

2) RSE really thinks they can make it work. I think that would be a long shot. Salary cap floor going up means ticket prices have to rise, corporate boxes have to rise, etc. Big question there, too.

So, I just don't know what they are going to do, if they can close and something doesn't derail the arrangement yet.

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07-08-2013, 10:07 AM
  #195
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So long as there is profit to be had, they will host events. You could cut that number in half and it'd be worth it. We don't know the details of the arrangement with Global Spectrum, so I'm not going to speculate.... RSE looks like a waste of time to me. A debt bomb strapped to a bunch of Canadians who have no loyalty to the valley. I'd say the plan is for the league to buyback the team, then fold it or flip it with GTA2 being the end goal.
Yes thats rather critical, understanding specifics pursuant to Global Spectrum's involvement. They have several divisions as your aware (food services, ticketing, maintenance, security etc) including an extensive marketing & sales division that handles everything from naming rights to sponsorships, cross-promotions & so on. Most of their "Arenas" with the exception of Wells Fargo are small, Oshawa's GM Centre, the Mattamy Centre (formerly Maple Leaf Gardens in Toronto), OHA, CHL, ECHL & AHL sized buildings. Quite a few stadiums including UofP right there in Glendale, some theatres & "entertainment zones" mostly in Florida & so forth. In Hamilton Ontario they partnered up with House of Blues (Copps Coliseum & the Hamilton Convention Centre).

Its a good company, reputable. Im guessing here, purely speculating, but as they were announced as "partnering with RSE/IceAz" Id say its probably code for their having been sub-contracted & retained, providing a wide-range of services which is performance based. The engine if you will that Le Blanc & Co will be relying upon for a lot of these revenue streams in addition to the day-day management of the facility itself of course. Rojo Food Services sub-contracted as well, looking after concessions, premium food & beverage services for suites etc, ranked actually pretty highly (4th) amongst NFL stadiums. Its unlikely we'll ever know or find out exactly what the details are deal-wise between GS/RSE, but its a good sign, that these guys arent completely winging it, hiring pro's. The proof being actual performance.

As for RSE "looking like a debt bomb", pretty much impossible not to agree with that Im afraid. I dont even look at this as being a real sale, a real deal. These guys are essentially a shell, Fortress & the NHL the co-owners in extending credit along with Glendale itself, its largesse in over-extending itself in effectively co-signing on RSE's loan with Fortress, providing the annuals. I havent got a clue whats going to happen. But assuming the sale is closed, withstands whatever challenges (if any, though Id be rather shocked if there werent any based on what Ive been hearing), just what the end-game might be, a sale for relo in 2018, perhaps Global Spectrum & RSE having re-built just enough value in the franchise for someone with deep pockets to bite, buy & keep it in Glendale, well, there are several possibilities.... almost pointless to speculate until the deals actually closed, see what transpires over the next 2-6-12-24mnths.

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07-08-2013, 10:26 AM
  #196
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I havent got a clue whats going to happen. But assuming the sale is closed, withstands whatever challenges (if any, though Id be rather shocked if there werent any based on what Ive been hearing), just what the end-game might be, a sale for relo in 2018, perhaps Global Spectrum & RSE having re-built just enough value in the franchise for someone with deep pockets to bite, buy & keep it in Glendale, well, there are several possibilities.... almost pointless to speculate until the deals actually closed, see what transpires over the next 2-6-12-24mnths.
Killion -

Heard anything more over the weekend in regard to challenges to the deal?

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07-08-2013, 11:02 AM
  #197
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What I have a problem with under the deal is they are using false numbers, you can't project revenue streams using average attendance, it won't balance out as accurate, especially when the average attendance numbers are usually inflated.

What happens if they get 5,000-6,000 people per game during the week with 10,000-12,000 per game on weekends?

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07-08-2013, 11:13 AM
  #198
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FY 2009 had a different arena manager than the following FYs, didn't it? (AMG vs Arena Newco)
That's a significant variable to introduce when trying to suss out non-event expenses.

FY 2013 is such a dramatic outlier that I'm not sure it can tell us much without introducing significant confounding variables, even if we try to extend it out to a full FY.

Comparing expenses under a different arena manager to an odd-ball outlier season is questionable, as is the exclusion of hockey events... surely they require additional security, housekeeping, etc. ("non-event" spending).
Agree to disagree I guess. You decided to leave out 2 of the 4 available data points because they didn't fit your narrative (FY 2012 vs FY 2013: # of events drop sharply without hockey, relatively small decline in expenses? "ignore it, it's an outlier!"). I'll give you credit for trying to justify your position, however. You are right that the analysis should have included hockey events. I guess I'll just provide this utility cost data that shows those costs are essentially fixed.

I disagree that a change in the arena manager invalidates the whole analysis. Otherwise we can just wave our hands and say anything goes, since neither RSE nor SMG have managed this particular arena before. Your analysis of the RSE bid would be useless as well. I don't think you want to go that far.

I'm a bit puzzled as to what your point really is. I think SMG would have to work very hard to give Glendale a revenue-neutral arena. But if your point is that all expenses are variable expenses (despite evidence of the contrary) and that therefore this arena can never make money, it means that Jobing.com is in such a different situation than every other arena in North America that the only sensible option is to demolish it.

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07-08-2013, 11:15 AM
  #199
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Originally Posted by ajmidd12 View Post
What I have a problem with under the deal is they are using false numbers, you can't project revenue streams using average attendance, it won't balance out as accurate, especially when the average attendance numbers are usually inflated.

What happens if they get 5,000-6,000 people per game during the week with 10,000-12,000 per game on weekends?
When the NHL took over, the first thing they did was cut the free tickets. They're still cheap, and great deals are there, but the goal was to establish a threshold for paid attendance. We've seen it steadily rise in recent years. TV ratings doubled. The team is competitive, so it's worth watching. Of note is the fact that the Suns will be absolutely putrid this year, and represent the biggest mindshare opponent the Coyotes have. Meanwhile, the hockey team went out and signed a PPG player, re-signed a bunch of talent and looks like they'll make a go of contending. Probably a nice bounce in ticket sales to be had there.

The whole 'having ownership finally' thing is an unknown. I can tell you that it definitely plays into peoples minds around here. The NHL monetized the **** out of the Coyotes while they had them (tons of sponsors) and I imagine RSE will do no worse, now that they are staying. The real 'tell' here won't be attendance but will be the percentage of corporate suites sold. If there's major uptick there, hockey in the desert has a future. It's never been about raw attendance. You need dat corporate money to really thrive.

I don't see the team falling on their face on the ice. Just not going to happen. I expect a steady uptick of positivity around the team. Then it will come crashing to the ground as the reality of the debt these guys saddled themselves with sets in. The local rag wasn't fooled. First article? "They're staying, but what about 2018?"

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07-08-2013, 11:23 AM
  #200
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Killion - Heard anything more over the weekend in regard to challenges to the deal?
No, nothing since late last week.

Quote:
Originally Posted by ajmidd12 View Post
What I have a problem with under the deal is they are using false numbers, you can't project revenue streams using average attendance, it won't balance out as accurate, especially when the average attendance numbers are usually inflated. What happens if they get 5,000-6,000 people per game during the week with 10,000-12,000 per game on weekends?
Indeed. Doing is a quantum leap from imagining. If, IF this deal goes through, lets see how they actually do. You should never take a leap of faith like this from a standstill, and I fear what were going to be witnessing is merely the perpetuation of problems, exacerbated further by the fact that Glendale has once again joined hands with this lot in trying to make that leap. Fact of the matter is, if they truly believed in their abilities to turn things around, theyd' have simply accepted the 6.5 and gotten on with it, rather than once again placing the city in jeopardy. I actually do believe it can be turned around, what Glendale had budgeted more than ample under the right ownership & management group. How is the NHL, how do they justify this mess of a situation in first receiving $170M from Fortress & RSE, then turning around and lending them $85M to carry themselves forward? Its not a "sale", its continued league stewardship, welfare from the COG & the NHL. The markets seriously damaged, beyond sceptical, cynical. These guys have got one Hell of a sales job on their hands and theyve put themselves further behind the 8Ball over the terms & conditions of this transaction. People are not stupid.


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