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Phoenix XXVII: Can we all get along?

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Old
03-12-2011, 01:44 PM
  #76
Dado
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Originally Posted by AllByDesign View Post
It is a poor stance, for sure. I believe that there is a business model that would support the Coyotes in Glendale.
I don't agree with that, in it's broadest sense. Phoenix is a marginal hockey market, like any number of other markets. In a 30 team league, if it's not Phoenix in trouble, it will just be some other team, the problem isn't solved it's simply moved.

The only way out IMO is to contract the league to 24 or fewer teams (20 would be ideal) with Phoenix as one of them. But then you have to ask whether it makes sense to use one of the limited slots on such a low-revenue market.

Of course,promotion/relegation would solve this issue in the fairest possible manner, which of course means it'll never be implemented.

And for the record, Winnipeg is clearly a marginal market as well, for it's own unique reasons.

 
Old
03-12-2011, 01:46 PM
  #77
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Originally Posted by Killion View Post
In your absence Fugu?. Well, amongst other things, Clint Bolick, lead litigator, author, Research Fellow with Stanfords Hoover Institute, Bon Vivant & Gadfly thinks so too. .He & his wife joined a "Return the Coyotes to Winnipeg & Support the Goldwater Institute" Facebook page.
I think that page is trying to, cowtow to Winnipeg supporters. So it asks for donations and plays on the bring the jets home angle. Does the guy actually believe that or is he just marketing to the Winnipeg people? I think the latter.

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03-12-2011, 01:49 PM
  #78
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Only if I get an appropriate cut of the gate and PPV buys. For the right cash, I might even turn on Crazy Ike and toss him into the cage wall a few times.
Sure, as long as you are willing to pay $10 million up front for the right to those future revenues.

(I did the math, and with some optimistic projections I think that the NPV of the revenues over the next 30 years would cover it).

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03-12-2011, 01:52 PM
  #79
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Originally Posted by TRVIPERS View Post
Back on topic.

According to DAVID SHOALTS
Quote:
"Oh, by the way, about that $25-million, which the Glendale politicians took out of an account earmarked for expenses in keeping their city liveable. Hulsizer promised to hand that over to the city once he buys the team, so no sale means the NHL is entitled to keep it.
And good luck to the city if it tries to get it back from the NHL. So goodbye Coyotes and goodbye another $25-million for good measure."

Now if this deal falls apart and the NHL indeed does keep the 25M that COG put up to cover loses,can GWI sue the COG for giving this money to a private entity (being the NHL) and not receiving anything in return?
Since GWI seems to feel that they decide what is illegal, I guess we would have to ask them.

Kidding aside, the CoG did receive value in return. They got the rights to the $@5M in escrow monies that Ellman had put in place for a parking garage (which they then split with Ellman in another complicated assessments/land-swap deal.

Shoalts is right, of course. The CoG and NhL have an agreement in place. THe terms of that should govern, unless the parties decide otherwise.

Quote:
Originally Posted by crazed323 View Post
Really I don't care one bit about the services in Glendale. However, lots of arguments for keeping the Coyotes in Glendale revolves around the economic impact to the area.

If the COG goes through with the bond sale, and the parking does not cover the costs. What is the economic impact then?
Impact is negative?

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03-12-2011, 01:55 PM
  #80
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Originally Posted by GSC2k2 View Post
Only if I get an appropriate cut of the gate and PPV buys. For the right cash, I might even turn on Crazy Ike and toss him into the cage wall a few times.
You should hold out for control of all parking revenues instead.

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03-12-2011, 01:55 PM
  #81
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Originally Posted by Dado View Post
I don't agree with that, in it's broadest sense. Phoenix is a marginal hockey market, like any number of other markets. In a 30 team league, if it's not Phoenix in trouble, it will just be some other team, the problem isn't solved it's simply moved.

The only way out IMO is to contract the league to 24 or fewer teams (20 would be ideal) with Phoenix as one of them. But then you have to ask whether it makes sense to use one of the limited slots on such a low-revenue market.

Of course,promotion/relegation would solve this issue in the fairest possible manner, which of course means it'll never be implemented.

And for the record, Winnipeg is clearly a marginal market as well, for it's own unique reasons.
Excellent post

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03-12-2011, 01:55 PM
  #82
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Sure, as long as you are willing to pay $10 million up front for the right to those future revenues.

(I did the math, and with some optimistic projections I think that the NPV of the revenues over the next 30 years would cover it).
I can do that deal. Draw up the papers.

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03-12-2011, 01:58 PM
  #83
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Impact is negative?
That is putting it in mild terms.

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03-12-2011, 02:11 PM
  #84
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MOD: Questions about missing posts, moderation, infractions....... should ALWAYS be addressed to the moderators by private messaging. Thanks.

 
Old
03-12-2011, 02:22 PM
  #85
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Now if this deal falls apart and the NHL indeed does keep the 25M that COG put up to cover loses,can GWI sue the COG for giving this money to a private entity (being the NHL) and not receiving anything in return?
Thats something many are keeping an eye on TR. The GWI has a problem with the manner in which the stop-loss guarantee was agreed to by the COG, and ya, they could very well seek an injunction prohibiting its disbursement to the NHL should it come to that. What I think is more likely however, in order to avoid that while appearing magnanimous & gracious in its exit from Phoenix, the NHL simply tacks on the $25M+ in losses to the relo sale price in order to cover its losses.

[mod del]


Last edited by LadyStanley: 03-12-2011 at 02:44 PM. Reason: relo/realignment of non PHX teams
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03-12-2011, 02:22 PM
  #86
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Originally Posted by GSC2k2 View Post
I think you are spot on. Fortunately, the NHL has a buyer for the current market value , so I take it you anticipate closing soon enough.
I have asked for you to justify the $170 million price valuation before. It is an innapropriate price for what the team is worth in its current location. Hulsizer is a willing buyer as long as there are "incentives" provided by the city.

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The mods had a much more evil plot. Lock GC, Crazy_Ike, Fidel and Jeffrey in a thread together.





Disclaimer: Yes, I love all you guys.
The argument with no beginning nor ending.

Quote:
Originally Posted by Dado View Post
I don't agree with that, in it's broadest sense. Phoenix is a marginal hockey market, like any number of other markets. In a 30 team league, if it's not Phoenix in trouble, it will just be some other team, the problem isn't solved it's simply moved.

The only way out IMO is to contract the league to 24 or fewer teams (20 would be ideal) with Phoenix as one of them. But then you have to ask whether it makes sense to use one of the limited slots on such a low-revenue market.

Of course,promotion/relegation would solve this issue in the fairest possible manner, which of course means it'll never be implemented.

And for the record, Winnipeg is clearly a marginal market as well, for it's own unique reasons.
You have some fair points on how to approach Phoenix from a different angle, but don't actually add any context of why you disagree with my point. There is a business model that can work. It starts with a 40-50 million dollar purchase price. Since there isn't any hope of that occuring, the rest of my model is insignificant.

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03-12-2011, 02:26 PM
  #87
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No, the exact opposite. Glendale presented a set of facts the law firms' opinions were based on. Their opinions are based on the assumption Glendale owns the parking rights. Bolick is suggesting Glendale doesn't own them.
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Originally Posted by GHOSTofMAROONSroad View Post
This is the exactly the point I tried to make a few days ago. Legal opinions are made on the basis of assumed facts -- typically set out by or in agreement with the client who pays for the opinion. A legal opinion is only as good as the factual basis on which it is based. If you adjust the facts, you may well get a different opinion. If the "facts" are incorrect, the opinion may be worthless in its conclusions.

GHOST
On a more substantive note, I was intending to address this.

Ghost is correct that legal opinions are based on a set of assumptions. To the extent that the assumptions are correct, the law firm is protected from exposure (with certain logical exceptions, such as where they have some actual knowledge that the assumptions are false).

I therefore took a look at the Fennemore Craig draft opinion.

The opinion sets out two types of assumptions:

1. A series of what are "boilerplate" assumptions that form part of any legal opinion.

2. A specific assumption regarding the CBRE report.

THe latter one is what caught my eye. However, what it says is the following:

Quote:
as to the underlying market value of the rights being acquired and the services being obtained by the City by and through the Arena Agreements, the Market Valuation Report on Arena Lease and Management Agreement, Use and Non-Relocation Agreement and Agreement of Assignment, Reconveyance, Modification and Abrogation of Rights Regarding the NHL Coyotes Hockey Team and Jobing.com Arena, prepared by CBRE Consulting, dated January, 2011.
It appears that Fennemore Craig has relied on the CBRE report only as it pertains to the market value of the parking rights. I do not see anything apparent that indicates they assumed anything as to ownership of the assets. They did rely on CBRE's math and financial projections (as you would expect them to, since they are rendering a legal opinion, and parking projections is not what a law firm does).

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03-12-2011, 02:33 PM
  #88
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I have asked for you to justify the $170 million price valuation before. It is an innapropriate price for what the team is worth in its current location. Hulsizer is a willing buyer as long as there are "incentives" provided by the city.
I must have missed that in one of the frequent post blizzards that come around these parts. It happens.

$170M = 2.8 times previous revenues of ~$60M (which is not the peak revenues for the team).

2.8 times revenues (which is the measure used for sports team acquisitions) is well within the range for NHL hockey team sales.

That wasn't too hard.

THe "incentives" provided by the CoG are fair value for assets/services received/covenants received.

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03-12-2011, 02:33 PM
  #89
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So if these opinions are only based on assumptions. What good are they?

You would think that the City of Glendale would be smart enough to provide whatever existing documents they have to a lawfirm and ask them to go through them the same as GI. From the ground up not assuming anything. Something of such importance to the COG would have warranted the associated costs with this.

I truly believe that the demise of the coyotes is truly in the hands of the COG and no one else. Cannot blame Hulsizer for only wanting what someone has offered.


Last edited by crazed323: 03-12-2011 at 02:34 PM. Reason: I should have said recent demise, as the past is the past.
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Old
03-12-2011, 02:33 PM
  #90
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I think that page is trying to, cowtow to Winnipeg supporters. So it asks for donations and plays on the bring the jets home angle. Does the guy actually believe that or is he just marketing to the Winnipeg people? I think the latter.
You do realize that is just a fun FB group set up by a Winnipegger, right? It's not asking for donations, and there are hardly any likes. It's just a little group just like any group you or I could make. Are you possibly confusing it with the actual Goldwater FB page?

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03-12-2011, 02:35 PM
  #91
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You do realize that is just a fun FB group set up by a Winnipegger, right? It's not asking for donations, and there are hardly any likes. It's just a little group just like any group you or I could make. Are you possibly confusing it with the actual Goldwater FB page?
I believe I was, thanks. So I'm incorrect.......again

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03-12-2011, 02:36 PM
  #92
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I don't agree with that, in it's broadest sense. Phoenix is a marginal hockey market, like any number of other markets. In a 30 team league, if it's not Phoenix in trouble, it will just be some other team, the problem isn't solved it's simply moved.

The only way out IMO is to contract the league to 24 or fewer teams (20 would be ideal) with Phoenix as one of them. But then you have to ask whether it makes sense to use one of the limited slots on such a low-revenue market.

Of course,promotion/relegation would solve this issue in the fairest possible manner, which of course means it'll never be implemented.

And for the record, Winnipeg is clearly a marginal market as well, for it's own unique reasons.
You do make a good point. I wonder where the equilibrium is. It is non-trivial to determine and weight all the variables which need to be considered when attempting to find the optimal size of a league. It's not as simple as eliminating all the marginal markets.

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03-12-2011, 02:40 PM
  #93
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The one thing I've been wondering about is the complaint from the pro-deal camp that GWI saying the deal is illegal, but won't sue.

First of all, from what I've read and the interviews I've watched, Goldwater has never said the deal IS illegal, they always say that they believe it COULD be illegal. Why would you sue if you weren't sure? They have said on numerous occasions, that they are not litigious.

Again, if CoG is sure that they are on the up and up with this deal, and that GWI is illegally interfering with the bond sale, why have they not sued? I don't think it's fair to complain that one side is not sueing if your side is unwilling to do the same.

If I am trying to compete a business deal that is good and true, and someone is breaking the law in an attempt to put the kibosh on it, I am sueing that person, without a second thought.

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03-12-2011, 02:49 PM
  #94
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Originally Posted by TRVIPERS View Post
Now if this deal falls apart and the NHL indeed does keep the 25M that COG put up to cover loses,can GWI sue the COG for giving this money to a private entity (being the NHL) and not receiving anything in return?
Sure. Closing the barn door after the horse(s) have left, hitting it when it's dead, rubbing salt into the wounds. Really a "kick 'em when their down" move by GWI.

Did Glendale receive more than $25m worth of value from the team operating in their city and all the visiting teams for 41+ games (preseason too) or so?

I can see this as a countersuit should COG end up suing GWI over the loss of the team. But otherwise, it would be a really bad PR move IMHO.

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03-12-2011, 02:54 PM
  #95
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Originally Posted by GSC2k2 View Post
I must have missed that in one of the frequent post blizzards that come around these parts. It happens.

$170M = 2.8 times previous revenues of ~$60M (which is not the peak revenues for the team).

2.8 times revenues (which is the measure used for sports team acquisitions) is well within the range for NHL hockey team sales.

That wasn't too hard.

THe "incentives" provided by the CoG are fair value for assets/services received/covenants received.
Not sure I agree with you but I'm not sure the considerations violate the Arizona gift clause either. Probably up to a judge to decide.

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03-12-2011, 02:56 PM
  #96
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Sure. Closing the barn door after the horse(s) have left, hitting it when it's dead, rubbing salt into the wounds. Really a "kick 'em when their down" move by GWI.

Did Glendale receive more than $25m worth of value from the team operating in their city and all the visiting teams for 41+ games (preseason too) or so?
I can see this as a countersuit should COG end up suing GWI over the loss of the team. But otherwise, it would be a really bad PR move IMHO.
The city should think it has, considering they will be paying that much if not more in the forseeable future. 17 million in management fees interest on 116 million dollar Bond issue, plus the principal ofcourse. Adds up to more than 25 million per year.

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03-12-2011, 03:00 PM
  #97
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Originally Posted by GSC2k2 View Post
I must have missed that in one of the frequent post blizzards that come around these parts. It happens.

$170M = 2.8 times previous revenues of ~$60M (which is not the peak revenues for the team).

2.8 times revenues (which is the measure used for sports team acquisitions) is well within the range for NHL hockey team sales.

That wasn't too hard.

THe "incentives" provided by the CoG are fair value for assets/services received/covenants received.
That multiplyer is not a constant when valuing a sports team. That multiplyer will fluctuate depending on profit or loss. I believe it isn't fair to do a full financial breakdown, based on the fact we have missing numbers and length of time it would take to be thorough.

Edit:

I almost forgot the last part of your post. The Incentives on the parking are fair value if intrest to service the debt is ignored. Arizona law may ignore it, but I don't ... Arena management fee is out of line as well as the purchase price for the arena at the end of the 5 years.


Last edited by AllByDesign: 03-12-2011 at 03:08 PM.
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03-12-2011, 03:07 PM
  #98
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The one thing I've been wondering about is the complaint from the pro-deal camp that GWI saying the deal is illegal, but won't sue.

First of all, from what I've read and the interviews I've watched, Goldwater has never said the deal IS illegal, they always say that they believe it COULD be illegal. Why would you sue if you weren't sure? They have said on numerous occasions, that they are not litigious.

Again, if CoG is sure that they are on the up and up with this deal, and that GWI is illegally interfering with the bond sale, why have they not sued? I don't think it's fair to complain that one side is not sueing if your side is unwilling to do the same.

If I am trying to compete a business deal that is good and true, and someone is breaking the law in an attempt to put the kibosh on it, I am sueing that person, without a second thought.
Someone asked that a while back, and I gave an answer which I thought was straightforward enough. The short version:

1. GWI is likely not going to be good to cover the damages;

2. Suiing a purported "taxpayer watchdog" (regardless of whether they are or not) is a political goldmine for the political opponents of Scruggs et al. It would be catnip for the GOP or tea party, even if justified.

Item 2 is really the more operative issue for politicians, given their constant focus on re-election. Your and my considerations would be differnet, assuming you - like me - are not an elected politician.

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03-12-2011, 03:12 PM
  #99
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If anyone wants to hear yet another Darcy Olsen interview, Winnipeg's sports radio station is broadcasting an interview in the next few minutes (around 10:15 local time).

http://www.sportsradio1290.com
Sorry to interrupt, but does anyone know where I can hear the interview if I wanted to listen to it now? Is it possible?

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03-12-2011, 03:14 PM
  #100
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That multiplyer is not a constant when valuating a sports team. That multiplyer will fluctuate depending on profit or loss. I believe it isn't fair to do a full financial breakdown, based on the fact we have missing numbers and length of time it would take to be thorough.
Actually, those figures are pretty consistent as a range regardless of P&L. I know, I know, it seems weird to me too, but that is how it is done in that industry.

Quote:
Edit:

I almost forgot the last part of your post. The Incentives on the parking are fair value if intrest to service the debt is ignored. Arizona law may ignore it, but I don't ... Arena management fee is out of line as well as the purchase price for the arena at the end of the 5 years.
It is fair value even if interest expense is included, because if one includes (as I agree it should) interest costs, then one must also include indirect revenues, such as hundreds of millions in excise taxes to be collected and incremental property taxes (as well as a number of other revenue categories) which are excluded per Turken but must be included if you are taking an entire view of the transaction and include other costs.

There is nothing wrong with the purchase price of the arena after 5 years (as determined by a fair market evaluation, up to $130M, which i expect is pretty close to the UCC at that point).

THe arena management fee is equal to costs expended by Hulsizer. THat is fair market value by definition.

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