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Coyotes Ownership/Financial Situation #8

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Old
12-03-2009, 10:08 AM
  #126
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Originally Posted by mon2mon2 View Post
Anybody heard anything regarding the Ice Edge meeting with the NHL Monday?
Having the trouble getting the link from the AZ Republic since I'm on mobile.
Something about the NHL is concerned with Ice Edges ability to cover the losses when the team loses money.

Also it looks like the Camelback Hockey Group wants to have a exit clause if the team doesn't turn a profit after 5 years like JR wanted.
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12-03-2009, 10:31 AM
  #127
Alberta Yote
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I would be pleased to find out that the league is being very diligent in it's efforts to make sure any group they consider selling to has the ability and the willingness to cover what could be large losses for 2 or 3 years as there will be some and money will need to be spent to allow the success on the ice to continue to build.

As for the out-clause, 5 years seems reasonable and I would be surprised if they were able to find someone willing to commit much longer without some way of limiting their future losses. The problem will be in determining a method by which they can ensure a new ownership group is making a sincere effort to turn the team's fortunes around during the entire time they commit to the team being in Glendale.

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12-03-2009, 10:38 AM
  #128
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Whoever comes in too must sign a 7 year contract to keep the team in town and on good faith find new owners to keep the team in town if the team continues to lose money.

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12-03-2009, 11:08 AM
  #129
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Originally Posted by ArizonaPride View Post
Whoever comes in too must sign a 7 year contract to keep the team in town and on good faith find new owners to keep the team in town if the team continues to lose money.
That clause is only in effect at the NHL's discretion and I'm willing to bet they won't find any potential buyers if they enforce it.

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Old
12-03-2009, 12:29 PM
  #130
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Link was posted yesterday on HF BOH Board:

http://www.azcentral.com/news/articles/2009/12/02/20091202gl-coyotesbuyer1202-ON.html

Quote:
Stotland said his group would need some out clause.

"Any businessman would want it," he said, calling it a "last resort" if the franchise's operations did not turn around.

He declined details but said Glendale would need to make "concessions to make things thing go forward."

Glendale officials have said they would not give concessions. The city pays its debt for the arena, in part, with payments from the team.

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12-03-2009, 01:04 PM
  #131
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I was worried about a 2 to 3 year out clause, but 5 years would be plenty. I mean, considering new owners will start off with $0 debt, if the team still hasn't turned a profit 5 years from now, it never will.

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12-03-2009, 02:20 PM
  #132
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Originally Posted by zz View Post
I was worried about a 2 to 3 year out clause, but 5 years would be plenty. I mean, considering new owners will start off with $0 debt, if the team still hasn't turned a profit 5 years from now, it never will.
You think buyers will be paying $140 mill of their own cash?

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12-03-2009, 02:20 PM
  #133
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Originally Posted by zz View Post
I was worried about a 2 to 3 year out clause, but 5 years would be plenty. I mean, considering new owners will start off with $0 debt, if the team still hasn't turned a profit 5 years from now, it never will.
Yeah I'm thinking if our potential doesn't shine through by then, it's a lost cause.

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12-03-2009, 02:23 PM
  #134
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Originally Posted by Alberta Yote View Post
You think buyers will be paying $140 mill of their own cash?
I don't understand what you meant, can you rephrase?

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Old
12-03-2009, 02:25 PM
  #135
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Originally Posted by zz View Post
I was worried about a 2 to 3 year out clause, but 5 years would be plenty. I mean, considering new owners will start off with $0 debt, if the team still hasn't turned a profit 5 years from now, it never will.
Quote:
Originally Posted by Alberta Yote View Post
You think buyers will be paying $140 mill of their own cash?
The new owners will most certainly be financing the purchase, it's only a matter of how much.

They won't start with a deficit, that will come in the first month after transfer, but they will need to generate funds to pay loans whether that's from this team or other sources we don't really know.

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12-03-2009, 02:36 PM
  #136
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Originally Posted by Alberta Yote View Post
You think buyers will be paying $140 mill of their own cash?
Alright - I'll give it a shot anyway, even though I might have completely misunderstood your question.

The $140 M do not count as debt. That's the initial investment, which does not carry any debt to third-parties. Unlike a loan, or unpaid bills, that investment won't be featured on the balance sheet and won't count towards a measurement of team success. As far as the team's books are concerned, it'll start at 0 - or maybe a bit under zero depending whether the NHL includes current losses in the purchase price or decide to make it a secured credit.

You may dismiss that as a technicality, but I do believe there's a huge difference. Let me put it this way: if at the end of the year, the Coyotes, after deducing expenses from revenues, the Coyotes are in the black by $10, they'll be deemed profitable. And the $140 M won't have anything to do with it. So unlike last year, where the Coyotes would have had to pay yearly expenses + the $80 M in loans they had taken out before being considered profitable, new ownership will only have to pay expenses going forward. All existing debt is gone.

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12-03-2009, 02:37 PM
  #137
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Originally Posted by Alberta Yote View Post
The new owners will most certainly be financing the purchase, it's only a matter of how much.

They won't start with a deficit, that will come in the first month after transfer, but they will need to generate funds to pay loans whether that's from this team or other sources we don't really know.
The owners, as individuals, may owe money. The team won't. Just like Moyes' investment didn't count as secured or unsecured credit, since it was not debt carried by the Coyotes.

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12-03-2009, 02:41 PM
  #138
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Originally Posted by zz View Post
The owners, as individuals, may owe money. The team won't. Just like Moyes' investment didn't count as secured or unsecured credit, since it was not debt carried by the Coyotes.
I agree with all of that as far as the balance sheet goes as I'd expect the funds required to make the purchase would be invested into the club as capital. That said, unless the owners are planning to pay their payments from sources unrelated to the club, funds will need to flow from the team to the investors. That will be an expense of some kind which would reduce the profitability.

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12-03-2009, 02:47 PM
  #139
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Originally Posted by zz View Post
Alright - I'll give it a shot anyway, even though I might have completely misunderstood your question.

The $140 M do not count as debt. That's the initial investment, which does not carry any debt to third-parties. Unlike a loan, or unpaid bills, that investment won't be featured on the balance sheet and won't count towards a measurement of team success. As far as the team's books are concerned, it'll start at 0 - or maybe a bit under zero depending whether the NHL includes current losses in the purchase price or decide to make it a secured credit.

You may dismiss that as a technicality, but I do believe there's a huge difference. Let me put it this way: if at the end of the year, the Coyotes, after deducing expenses from revenues, the Coyotes are in the black by $10, they'll be deemed profitable. And the $140 M won't have anything to do with it. So unlike last year, where the Coyotes would have had to pay yearly expenses + the $80 M in loans they had taken out before being considered profitable, new ownership will only have to pay expenses going forward. All existing debt is gone.
This seems to be accurate. Which leads me to believe why the NHL is really confident on finding a buyer that would keep the team here. Buying a team at this price ($130-140mil) and to add to that, no debt, man, that's a heck of a deal.
Any 'smart' business group knows that. You would really need to **** things up not to succeed in this potential market.. (ie moyes), although, there was already existing debt that he incurred, but still.

I'm feeling very optimistic. Hopefully a great Christmas present coming to all us....

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12-03-2009, 02:49 PM
  #140
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Originally Posted by Alberta Yote View Post
I agree with all of that as far as the balance sheet goes as I'd expect the funds required to make the purchase would be invested into the club as capital. That said, unless the owners are planning to pay their payments from sources unrelated to the club, funds will need to flow from the team to the investors..
Like every business, there are 2 ways the investors are planning on getting the money back: either long term (10, 20 years) by making enough profits to offset the original investment, or simply increasing the value of franchise and selling later.

Quote:
That will be an expense of some kind which would reduce the profitability.
Nope, that's not an expense to the team. That's the profits generated when the team is in the black, which gets back to investors as dividends. Very different.

My original point was this: I am guessing that potential 5-year out clause would only kick in if the team's not profitable in 5 years. When determining whether or not the team's profitable, the original $ 140 M will not be taking into consideration. So the goal seems much more achievable now than last year, when the Coyotes were carrying a huge amount of actual debt, with interests.

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12-03-2009, 02:56 PM
  #141
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You're assuming that whichever group steps up to buy will have a business plan that will not require them to take any funds from the team for anywhere up to a 5 year period in order to ensure it can start to turn a profit. That's a good assumption and one that I hope the league will hold someone to.

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12-03-2009, 03:15 PM
  #142
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Originally Posted by Alberta Yote View Post
You're assuming that whichever group steps up to buy will have a business plan that will not require them to take any funds from the team for anywhere up to a 5 year period in order to ensure it can start to turn a profit. That's a good assumption and one that I hope the league will hold someone to.
That'd be outstanding. But even if the team does borrow additional cash to sustain the next few years of losses, the fact that today the debt is $0 puts new ownership in a much better position to succeed over the next 5 years than the Moyes group since the team did carry over $ 100 M in existing debt, which is now written off the books.

New ownership will be pretty much in Moyes / Ellman seats when they originally bought the team, with a better lease, a better pool of prospects, a finished arena without obstructed seats, a better management team as far as hockey operations are concerned, and hopefully no conflict of interests with other businesses (like the Moyes airline deal).

The only things that are not in the new owners' favor are the damage caused to the franchise over the past summer, and the past 7 years of poor on-ice results (the team was better when Moyes purchased it).

Problem #1 can be partly dealt with with a big re-branding and marketing effort. Make it look like a new team.

Problem #2 will be forgotten if we start making the playoffs regularly, which hopefully, with an influx of cash towards a couple good additions, is a trend that can start this season (fingers crossed).

So overall, I'd say it's a much better recipe for success.

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12-03-2009, 06:10 PM
  #143
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Basically, up for grabs is the keys to an expansion team, debt free. Although we have the advantage of one of the better prospect pools in hockey, for all intents and purposes our marketing efforts (and thus required resources) will be equal to or greater than an expansion team into a new (hockey) market. It's going to take a lot of work to bring people back.

There's history, there are fans, and now there's a good product on the ice. I'm surprised more people aren't clamoring for the team, but again, if Glendale hangs that lease around everyone's neck I can understand being gun shy. It's a bad time in the economy, no doubt, and an even worse time to find big money to invest in things like sports.

Pulling for Stotland.

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12-03-2009, 07:06 PM
  #144
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Pulling for Stotland.
Looking like it's gonna be Ice Edge.

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12-03-2009, 07:11 PM
  #145
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Quote:
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Looking like it's gonna be Ice Edge.
Why do you say that??

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Old
12-03-2009, 08:31 PM
  #146
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Originally Posted by mouser View Post
Looking like it's gonna be Ice Edge.
Yeah! Why? Considering this is coming from mouser, I'm very curious, to say the least.

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12-03-2009, 09:00 PM
  #147
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Just some rumors rumbling around. I imagine we'll find out if they amount to anything soon.

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Old
12-04-2009, 09:22 AM
  #148
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Any of you coming to Saskatoon for the second-home opener? I'm buying the first round.

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12-04-2009, 11:18 AM
  #149
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Quote:
Originally Posted by Alberta Yote View Post
Any of you coming to Saskatoon for the second-home opener? I'm buying the first round.
If Ice Edge buys the team and plays some games in Saskatoon, I would be all for a road trip.

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12-04-2009, 12:08 PM
  #150
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Originally Posted by Art.Vandelay View Post
If Ice Edge buys the team and plays some games in Saskatoon, I would be all for a road trip.
I don't think Ice Edge will get the team. NHL is concerned they don't have enough financing to cover losses in the first 2-3 years.
Also, if there were to be any games in Saskatoon, they would probably only be pre-season.

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