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December 2009 NHL Board of Governors meeting

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Old
12-15-2009, 10:18 PM
  #26
Agent007
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I just saw a day one update on sportsnet and here's what was said:

-The cap is expected to rise by one million dollars,
-Phoenix/Ice Edge deal (if completed) will cost owners $0,
-The owners have been asked to give phoenix a full revenue share (whether or not they meet the requirements),
-There is pressure now to modify rules on hits to the head.

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12-15-2009, 10:25 PM
  #27
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I just saw a day one update on sportsnet and here's what was said:

-The cap is expected to rise by one million dollars,

-Phoenix/Ice Edge deal (if completed) will cost owners $0,
-The owners have been asked to give phoenix a full revenue share (whether or not they meet the requirements),
-There is pressure now to modify rules on hits to the head.

I don't believe that for one second, unless someone is projecting a loonie at 1.20.

Also, how does the IE deal cost the owners zero if the offer for the team is about $140 MM, the NHL paid $140 MM, and someone (NHL) is paying the current bills?

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12-15-2009, 10:34 PM
  #28
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TSN.ca has more:

http://tsn.ca/nhl/story/?id=302494

On the cap:

Quote:
The commissioner gave a broad state of the league address on the opening day of meetings and expects to go into much more detail Wednesday. Part of his presentation involved a look at projected revenue that left Bettman predicting next year's salary cap will only change slightly from its current level of $56.8 million.
"My own view is it's not going up dramatically and it's not going down dramatically," said Bettman. "My guess is within a million, a million-and-a-half or two million either way is the swing we're looking at."
One of the biggest factors in determining where it ends up is the success of the Canadian dollar. It's currently resting around 95 cents, which is helping offset some of the losses the league has experienced because of the recession.
"If it's at 95 cents and remains there the rest of year, the cap may go up a million," said Bettman. "If it goes down to 90, it may go down."
On Ice Edge:
Quote:
The commissioner reassured some members of the board of governors on Tuesday that they won't be on the hook for the money-losing team if a proposed sale to the Ice Edge group goes through. The league paid US$140 million to purchase the Coyotes out of bankruptcy earlier this season and expects to recoup that amount -- plus operating losses -- from Ice Edge.

However, full revenue sharing is wanted for PHX (probably to stick the big revenue clubs with the "losses" that the league wouldn't incur if IE took on the operating losses, expected to be less than the $60 MM projected earlier:

Quote:
While that was obviously good news for the governors, at least one was quietly upset with news that Bettman wants the Coyotes to receive a full amount of revenue sharing even though they won't meet all the criteria. Teams who meet the full standard will receive in the neighbourhood of $10-$11 million from the wealthier clubs.
Ice Edge signed a letter of intent to purchase the Coyotes last week. Details of the group's bid, including sale price, have yet to be revealed publicly.
Bettman indicated that the Coyotes are currently on pace to lose less than the $60 million they were down a year ago.
So Ice Edge will pay $140 MM + the losses, which are somewhat less than $60 MM? That's $180-200 MM, no? This should be really interesting.

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12-15-2009, 11:17 PM
  #29
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So basically the cap is expected to be around 54.8-58.8 million.

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12-15-2009, 11:21 PM
  #30
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Originally Posted by Fugu View Post
I don't believe that for one second, unless someone is projecting a loonie at 1.20.

Also, how does the IE deal cost the owners zero if the offer for the team is about $140 MM, the NHL paid $140 MM, and someone (NHL) is paying the current bills?
For the cap to rise by $1M with a $.95US $CDN, you would be looking at about a 1% drop in organic revenues. This might not seem like a lot given the economy but if you compare it with last year's rate of 4.5%, and organic growth rates of 8%+ in the previous two years, it does represent a significant change.

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Old
12-16-2009, 12:27 AM
  #31
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Originally Posted by Fugu View Post
Also some grumbling is expected if the Coyotes are given a full share of revenue sharing as the league wants to do. Some BOG members would like it to be by the book:

http://sports.espn.go.com/espn/blog/...=lebrun_pierre
I wouldn't be surprised to discover it's a wash whether the NHL gives the team a full share or not. All the bids to buy the team in bankruptcy included adjustments to the purchase price for the amount of actual revenue sharing received in 08-09.

Ice Edge may well have a similar adjustment in their offer that offsets purchase price by the revenue sharing received for 09-10.

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12-16-2009, 01:03 AM
  #32
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http://blogs.mercurynews.com/sharks/...on-nhl-agenda/

Sharks beat writer Pollak on Tuesday's meeting info

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12-16-2009, 01:16 AM
  #33
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http://www.sfgate.com/cgi-bin/articl...SPMO1B4J93.DTL

SF Chronicle erstwhile Sharks columnist (who gets so many hockey facts incorrect as it's not his favorite sport) Ray Ratto rants on the BOG meeting.

(If it weren't for the perhaps monthly stories from Ratto, there wouldn't be any original content in the Chron. And I usually just skim or skip his articles.)

He's really anti-Phoenix. And berates the NHL for not going as far as the NFL WRT head injuries (which IMHO is totally bogus and the NHL has been tracking and trying to do something about it for years).

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12-16-2009, 03:02 AM
  #34
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Quote:
Originally Posted by Fugu View Post
On Ice Edge:

However, full revenue sharing is wanted for PHX (probably to stick the big revenue clubs with the "losses" that the league wouldn't incur if IE took on the operating losses, expected to be less than the $60 MM projected earlier:

So Ice Edge will pay $140 MM + the losses, which are somewhat less than $60 MM? That's $180-200 MM, no? This should be really interesting.
Or Bettman is employing some of his funny math skills again?

The NHL was a secured creditor in the bankruptcy so their advances/loans to the Coyotes from last season will be offset in the $140 million purchase price. However, the team is currently losing money at a rate of about $5 million per month by some accounts. It's nice to see that Bettman wants, however, to extend the full amount of revenue sharing to the team, even though the franchise can't likely meet the targets stipulated in the CBA. But, alas, the Coyotes fiasco won't cost any of the members of the BOG a cent.

Another thing about the Ice Edge bid: it may appear equity heavy upfront (some say 80% down), but according to certain reports the financing will include a line of credit to finances losses for up to 5 years in the amount of 100 million dollars. The draw down per year would be estimated at about 20 million in losses if things don't turn for the better soon. In other words, the franchise could burn through their equity fairly quickly. (I'd be surprised, despite all that is said and reported, if there is no "out clause" -- by another name and not necessarily in the lease, but in a "side agreement" -- if Ice Edge uses up a certain portion of that line of credit.)

Link on line of credit:

http://www.theglobeandmail.com/sport...rticle1400489/

However, that may be a "gamble" Bettman, Glendale and Ice Edge are willing to take. Again, certain question arises regarding this group, its financial backers and their intentions.

GHOST

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Old
12-16-2009, 05:45 AM
  #35
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I wouldn't be surprised to discover it's a wash whether the NHL gives the team a full share or not. All the bids to buy the team in bankruptcy included adjustments to the purchase price for the amount of actual revenue sharing received in 08-09.

Ice Edge may well have a similar adjustment in their offer that offsets purchase price by the revenue sharing received for 09-10.
Revenue sharing amount is prescribed within the CBA, as you know. You know how the revenue sharing pot is derived, so yes, it does cost the owners, but instead of being an across the board assessment as I'd presume it'd be otherwise, only some teams will pay.

Also, to the bolded part, the TSN blurb says IE would pay the full amount and all costs YTD, but receive revenue sharing. I don't see how the adjustment is possible?

Edit: Just to expand, if revenue sharing is required by several teams in the NHL, the remaining teams have to meet the benchmarks set in the CBA. If there are a couple that are also having some financial difficulties, would they also not expect the league to give them the maximum amount possible, regardless of benchmarks set? Unless the commissioner can unilaterally expand the pot, the money comes from shared monies firstly, then a tax on the top ten revenue teams. Finally, although I've quipped that the revenue transfer system is believed to be designed to help teams when they're down, in reality the BOG do not want it to be managed without benchmarks to ensure everyone is doing all they possibly can. This is not what the revenue transfer clause was created for, and in reality if a team is bankrupt and owned by the league, then all the money needs to come from the league (the other 29 teams). Any team should still get only the money they'd get per the CBA.

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12-16-2009, 10:30 AM
  #36
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Quote:
Originally Posted by Fugu View Post
Revenue sharing amount is prescribed within the CBA, as you know. You know how the revenue sharing pot is derived, so yes, it does cost the owners, but instead of being an across the board assessment as I'd presume it'd be otherwise, only some teams will pay.

Also, to the bolded part, the TSN blurb says IE would pay the full amount and all costs YTD, but receive revenue sharing. I don't see how the adjustment is possible?
Putting the purchase $ into escrow for final distribution after revenue sharing was calculated is how the previous offers structured it.

Interestingly on the "who pays" for the revenue sharing difference it's probably the low revenue clubs, not the high revenue. The league's going to collect 4.5% either way, so the amount the high revenue clubs pay in won't change unless the minimum guaranteed commitment exceeds 4.5% [which probably hasn't happened before]. It would be the revenue receiving clubs that have their distributions reduced to include Phoenix.

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12-16-2009, 10:41 AM
  #37
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Quote:
http://blogs.mercurynews.com/sharks/...on-nhl-agenda/

Sharks beat writer Pollak on Tuesday's meeting info
Quote:
http://www.sfgate.com/cgi-bin/articl...SPMO1B4J93.DTL

SF Chronicle erstwhile Sharks columnist (who gets so many hockey facts incorrect as it's not his favorite sport) Ray Ratto rants on the BOG meeting.

(If it weren't for the perhaps monthly stories from Ratto, there wouldn't be any original content in the Chron. And I usually just skim or skip his articles.)

He's really anti-Phoenix. And berates the NHL for not going as far as the NFL WRT head injuries (which IMHO is totally bogus and the NHL has been tracking and trying to do something about it for years).
I had no idea this many sharks fans were against the Coyotes as well.

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Old
12-16-2009, 11:06 AM
  #38
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Originally Posted by mouser View Post
Putting the purchase $ into escrow for final distribution after revenue sharing was calculated is how the previous offers structured it.

Interestingly on the "who pays" for the revenue sharing difference it's probably the low revenue clubs, not the high revenue. The league's going to collect 4.5% either way, so the amount the high revenue clubs pay in won't change unless the minimum guaranteed commitment exceeds 4.5% [which probably hasn't happened before]. It would be the revenue receiving clubs that have their distributions reduced to include Phoenix.
Consider that the revenue sharing maximum this year would be $10-11 MM. That's about $3-4 less than last year, while one could argue that more teams may be in need of some help since their HRR is flat or declining (if one believes the attendance figures, and I do... prices are probably lower on tix due to all the promos they have to run). In order for everyone who needs help to get help, the pot has to be divided up amongst a higher number of teams (ergo, less per team even if everyone got 100% of what the NHL could give out).

I suppose both types of teams will end up "paying" for it, depending on exactly how many teams need help and if the pot has to be expanded beyond the 4.5%. In the Globe piece on the meeting, one governor said he doesn't care which way it goes because they'll have to pay for it one way or the other. I guess I'm trying to say that the revenue transfer system with it's linkage to player costs isn't designed for this purpose. They really should stick to managing that system as per design. If they believe Phoenix needs another form of assistance, then so be it. It is their money after all. I personally believe league execs are trying to downplay what this is costing the league. That's the wrong approach. Either the owners are behind them or they aren't. I don't see much evidence that says the owners didn't back the league's assumption of the team, for myriad reasons. No need to muddy the waters.

Quote:
Originally Posted by GHOSTofMAROONSroad View Post

Okay which one of you guys is Brian, because I've been pushing this angle since Devellano pointed out how they'd fill the 8K seats that remain after STH sales:

Quote:
By the way, Burke gave the traditional Leafs response to the question of a second team. “Someone has to make the business case that it won't hurt us,” he said. If anyone can, plus convince them it won't harm the Buffalo Sabres or even the Detroit Red Wings, the Leafs might go for it. Burke noted the Wings draw fans from as far east as London, Ont. And good luck to anyone who has to convince them it's a good idea.

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12-16-2009, 11:15 AM
  #39
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http://www.theglobeandmail.com/sport...rticle1401944/

Shoalts's summary on the first evening:

Quote:
“What I told the governors is our expectations are to get out of it with what we put in,” he said. “I think it's pretty clear what we put in, $140-million, it's a matter of public record.”
No mention here of the "other" costs....

For Fourier:

Quote:
Bettman added the league's revenues are flat this season but the salary cap will not change much from this season's $56.8-million. If the Canadian dollar remains in the 95-cent range for the rest of the year, he said, the cap could even go up by about $1-million.
The expectation was that the cap would drop significantly next season because this season's revenues were expected to fall because of the recession. But the strong Canadian dollar means the six Canadian teams, which provide 25 per cent of the NHL's income, all have strong revenues, which keeps the overall figure higher than expected.
That's before Cdn national monies...

For GHOST:
Quote:
Bettman also said no one raised the possibility of expansion or relocation into other Canadian markets such as Toronto, Winnipeg or Quebec City.
“The board has no interest in expanding or relocating right now but they are aware of the interest,” he said.

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Old
12-16-2009, 11:25 AM
  #40
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For the cap to rise by $1M with a $.95US $CDN, you would be looking at about a 1% drop in organic revenues. This might not seem like a lot given the economy but if you compare it with last year's rate of 4.5%, and organic growth rates of 8%+ in the previous two years, it does represent a significant change.

I think this is very optimistic. The NBA is in a similar boat, having the same season and cycle as the US (as far as lag and timing of the economic crisis). The NHL doesn't appear to be as hard-hit at the gate, but consider this blurb (credit GC):
http://www.cbssports.com/mcc/blogs/e...38893/18850386
Quote:
Average paid attendance is down 3.7 percent in the NBA through the first quarter of the regular season, sending gate receipts plummeting 7.4 percent,
NHL attendance was down about 2%, and I'd expect some decline in gate receipts. According to leek's source, the NBA is only 35% reliant on gate receipts. The NHL's number is higher because their national TV monies are about a third of the NBA's.

Pistons correlate quite well with the Wings (and both have huge cable deals with FSN):

Quote:
The hardest-hit franchise so far is the Detroit Pistons, whose net average gate receipts are down a staggering 42.8 percent year-over-year, according to the figures reported by teams to the league office. The Pistons made an average of $537,263 per game on ticket sales through their first eight home games, down from $938,833 at the same point last season. The Pistons, located in the epicenter of joblessness, have seen paid attendance slip 22 percent, to 14,821 from 18,993 in the first month of 2008-09.
The Wings had been making $1.1 MM per game, with an STH base of 14K (avg ticket price ~$56). They've lost 2K STH's, and judging by the mailings I get and the ads I see here, they're really working very hard to sell the remaing seats, with pretty hefty discounts for the cheaper seats (2 tix for $50-60, inclusive of food/beverage). Thus the Pistons were ~$200K below the Wings last year in gate receipts/game. Even if the Wings weren't hit as hard, they have to be suffering. The economy has been THAT bad in Michigan.

It must hold true for several other hard hit areas. The loonie is going to have to do more than 0.95 to make up for some of this mess, in my humble opinion.

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Old
12-16-2009, 11:38 AM
  #41
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Originally Posted by Fugu View Post
Consider that the revenue sharing maximum this year would be $10-11 MM. That's about $3-4 less than last year, while one could argue that more teams may be in need of some help since their HRR is flat or declining (if one believes the attendance figures, and I do... prices are probably lower on tix due to all the promos they have to run). In order for everyone who needs help to get help, the pot has to be divided up amongst a higher number of teams (ergo, less per team even if everyone got 100% of what the NHL could give out).
Was that figure published somewhere? My napkin calcs come up with about $14m assuming flat league revenue. If league revenue drops below last season then the revenue sharing guaranteed minimum climbs higher.

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12-16-2009, 11:44 AM
  #42
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Was that figure published somewhere? My napkin calcs come up with about $14m assuming flat league revenue. If league revenue drops below last season then the revenue sharing guaranteed minimum climbs higher.

Yes, both Shoalts and Sportsnet (I believe) published the $10-11 MM figure, citing that more teams qualifying would reduce the per team allotment.

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12-16-2009, 12:05 PM
  #43
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Yes, both Shoalts and Sportsnet (I believe) published the $10-11 MM figure, citing that more teams qualifying would reduce the per team allotment.
Sounds like that may be an error or misunderstanding on their part. There's a minimum guaranteed revenue sharing amount each recipient team gets as well as a maximum amount per team. In the event the league 4.5% is enough to cover the minimum guarantees then the excess $ is applied to revenue sharing, increasing the amount each team receives, capped by the maximum distribution. If the 4.5% isn't enough to cover the guaranteed minimum distributions then the league increases the $ collected [CBA 49.4(b)]. Assuming flat revenue I calc a minimum per team amount at ~$14m and maximum at ~$18m.

I think the 4.5% minimum commitment was enough to cover the minimum team distributions in 05-08. Haven't seen enough data leaked on 08-09 yet to guess whether they may have gone over the 4.5% last season. In general the more out of whack the salary cap gets compared to league revenue the larger the per team minimum commitment becomes. Last season's 12.9% escrow refund shows the cap, revenue and player compensation were seriously out of alignment. Flat revenue and cap for 09-10 would lead to similar results.

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12-16-2009, 12:49 PM
  #44
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Originally Posted by Fugu View Post
I don't believe that for one second, unless someone is projecting a loonie at 1.20.

Also, how does the IE deal cost the owners zero if the offer for the team is about $140 MM, the NHL paid $140 MM, and someone (NHL) is paying the current bills?
Allow me to demonstrate:

NHL costs:

$140 million purchase price.
+
~$15-20 milion operating loss (a too-high number, but let's be conservative).
+
$5 million legal expenses

NHL receipts:

$140 million sale price
+
Proportional recovery on the $11 million in unsecured claims which they purchased from the Unsecured Creditors Committee (at least proportional, but likely in its entirety because they are probably senior to Moyes personally under the terms of their original 2006 agreements with Moyes)
+
Recovery on the $15 million personal guarantee in favour of the NHL against Moyes

Mystery solved, I hope.

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12-16-2009, 01:20 PM
  #45
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Originally Posted by GSC2k2 View Post
Allow me to demonstrate:

NHL costs:

$140 million purchase price.
+
~$15-20 milion operating loss (a too-high number, but let's be conservative).
+
$5 million legal expenses

NHL receipts:

$140 million sale price
+
Proportional recovery on the $11 million in unsecured claims which they purchased from the Unsecured Creditors Committee (at least proportional, but likely in its entirety because they are probably senior to Moyes personally under the terms of their original 2006 agreements with Moyes)
+
Recovery on the $15 million personal guarantee in favour of the NHL against Moyes

Mystery solved, I hope.
I was originally going to ask - wasn't Moyes' guarantee $30M - but a quick google came up with this law blog piece that I don't recall ever seeing posted in the Phoenix Bankruptcy Part XXVIMOUSE threads:

http://amlawdaily.typepad.com/amlawd...y-coyotes.html
Quote:
The only major difference in the new proposal is that the NHL agreed to place the $11.6 million in claims they purchased behind the claims of other unsecured creditors in line--except for Jerry Moyes, the current owner of the Coyotes, court records show. The NHL struck a separate deal with Moyes outside of bankruptcy court that cuts his liability stemming from a $30 million guarantee to just $15 million, according to lawyers on the deal.
This piece also seems to confirm that the purchased $11.6M in unsecured debt is senior to Moyes' claims.

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12-16-2009, 03:48 PM
  #46
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this was on the wire here at the station too, seems outdoor hockey in canada is a possiblity.

Quote:
PEBBLE BEACH, Calif. - Even though the NHL's board of governors meetings didn't include discussion about expansion to Canada, the league is clearly looking at increasing its exposure in the country.

Commissioner Gary Bettman says the NHL is looking to create a second outdoor game that will be played in Canada next season, potentially around CBC's Hockey Day in Canada in February.

There was also some discussion about Ice Edge's plan to have the Phoenix Coyotes play five regular-season games in Saskatoon.

While some governors quietly said they weren't crazy about the plan, none of them seemed willing to mount strong opposition for fear of hampering the sale.

Ice Edge signed a letter of intent to purchase the Coyotes last week.

One issue that wasn't raised during two days of meetings was the possibility of expanding to markets like Quebec or Winnipeg.

(The Canadian Press)

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12-16-2009, 03:49 PM
  #47
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Yeah, the NHL put the $15m Moyes personal guaranty forgiveness into their 2nd bid adjustment and included it in the final version.

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12-16-2009, 04:11 PM
  #48
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I really wish Shoalts would stop making false statements for emphasis. He can make his case without lying.

[quote]"Jones argues that before the team's debt spiralled out of control it broke even on the hockey operations. But even then the Coyotes could manage barely $20-million a year in ticket sales. Now, anyone who goes to a game says there are about 5,000 fans in the seats and it's anyone's guess how many paid the full price for their tickets[quote]

"Anyone who goes to a game" DOES NOT say there are about 5,000 fans in the seats. And people wonder why some of us read Shoalts so critically. He could have accurately said, "Now, some who go to a game claim there are about 5,000 fans in the seats and it's anyone's guess how many paid the full price for their tickets."

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12-16-2009, 04:50 PM
  #49
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I had no idea this many sharks fans were against the Coyotes as well.
Ratto is not a hockey fan. IMHO, he's a wannabe Sharks pundit, part of his all around sports "knowledge" he spouts in newspaper (and radio, and regional sports TV).

The actual fans themselves are very supportive and encouraging of Phoenix as a franchise (except when we play them ).

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12-16-2009, 04:56 PM
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Originally Posted by GSC2k2 View Post
Allow me to demonstrate:

NHL costs:

$140 million purchase price.
+
~$15-20 milion operating loss (a too-high number, but let's be conservative).
+
$5 million legal expenses

NHL receipts:

$140 million sale price
+
Proportional recovery on the $11 million in unsecured claims which they purchased from the Unsecured Creditors Committee (at least proportional, but likely in its entirety because they are probably senior to Moyes personally under the terms of their original 2006 agreements with Moyes)
+
Recovery on the $15 million personal guarantee in favour of the NHL against Moyes

Mystery solved, I hope.
It was never a mystery. Just very creative use of numbers on Bettman's part, imo.

Are you really going to stake your reputation on $15-20 MM operating loss? While $60 MM may be a trifle high especially since the operation has been cut to the bare bone and may stay that way......

Don't bother. You can claim it all you want. Count me as a disbeliever until you or anyone else shows some numbers from a verifiable source. I'm in no mood for your "conservative and all is well" speculation today.

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