Saskatoon still in play for Coyotes
by James Mirtle on Dec 14, 2009 6:00 AM CST
36 comments
The Coyotes' situation was going to be front-and-centre anyway, even before Ice Edge Investment Group – fronted by Bassano, Alta., native Daryl Jones – entered into a tentative purchase agreement late last week. Jones confirmed in an interview yesterday that his operating plan still involves playing a handful of games in Saskatoon and getting former coach Wayne Gretzky back involved with the franchise, but not likely on the hockey operations' side, where he's pleased with the work of general manager Don Maloney and coach Dave Tippett.
Gary Bettman has reportedly agreed to the games in Saskatchewan, but this purchase still has to go through the board of governors, and we've already heard rumblings some are skeptical these guys have the dough.
What I think is clear is that this was the only option in terms of a group looking to make a go of things in Glendale, which would seem to leave the governors with an easy choice — especially if this offer truly is mostly cash as Elliotte Friedman reported on the weekend. There is also talk from Ice Edge that they have as yet unnamed local investors "worth billions" involved, which is perhaps where this coin comes from.
It's hard for me to fathom, however, how they can jump into this while keeping the existing lease term. Maybe there's been some major give from the city that we've yet to hear about?
The league has covered the Coyotes' losses via a line of credit to this point, but there'll have to be a cash call to the other 29 owners down the line. My guess is the governors opt to unload this thing while they can and deal with the consequences later.
We've seen it before.
0 recs |
36 comments
| Add comment
|
Email
Print
Comments
Can’t be worse than Boots Del Biaggio
by Belligerent Burkie on Dec 14, 2009 8:09 AM CST reply actions
Boots isn’t even the worst the NHL has ever had, so yeah, it could be.
Hockey blogging can't get any flatter.
Boots isn’t even worse than everyone the NHL has right now.
by J. Michael Neal on Dec 14, 2009 11:29 AM CST up reply actions
It’s hard for me to fathom, however, how they can jump into this while keeping the existing lease term. Maybe there’s been some major give from the city that we’ve yet to hear about?
Well, putting 5 games a year in Saskatoon would be one of the gives from the current lease. Maybe the special taxing district Reinsdorf proposed returned in some form.
Hockey blogging can't get any flatter.
Billions, you say?
Didn’t know Belfour was interested in owning a team.
by garth the hoser on Dec 14, 2009 10:00 AM CST reply actions 2 recs
It would likely not require a “cash call”, James. I would imagine they just take more out of central revenue (in addition to the monies that they take out to run the NHL offices and central operations). It would result in lower remittances to the teams.
Same financial effect, but no one is going to have to “write a check”.
I remain amazed that people cannot see how this COULD become a huge win for a prospective purchaser.
I can see how it COULD become a huge win for a prospective purchaser. What I don’t see is much evidence that it WILL be a huge win for a prospective purchaser, or even that it is PARTICULARLY LIKELY TO BE a huge win for a prospective purchaser. Any scenario for that that I come up with involves either the NHL or Glendale giving away more candy than either have shown a desire to do so far.
by J. Michael Neal on Dec 14, 2009 11:33 AM CST up reply actions
I would love to a spreadsheet that makes the numbers work on this at $140M-$150M with no escape clause.
The reason people are so skeptical of this deal at face value is because at face value it makes zero sense.
Doesn`t make sense! Bad market, bad arena location, bad economy and the offer of 140MM does not include the30MM losses this year alone. Everyone wants to blame the Coyote futility on past owners, not the case, the people are not interested in driving an hour to an OK arena in the middle of nowhere. Simply, this is just another sunbelt town that does not have hockey culture no matter how many canadiens live in the area. They don`t care about Coyote hockey! Get alife everyone who thinks this will work, you are delusional.
Not a bad market....
But from day 1 if there was a bad decision available, folks took it.
-When the downtown arena was proposed, Suns owner Jerry Colangelo specifically designed it so it couldn’t accommodate hockey because he didn’t want the competition.
-The lease terms offered to the Jets were about as bad as you could get, yet were better than what they had in Winnipeg.
-They had everything lined up in Scottsdale(90% of season ticket base lived within 10 miles of Los Arcos) and the city council said no after they said yes.
-At that point the payday lender wanted out and the property developer came on board.
-Property developer chooses Glendale because land is free and Coyotes are the magnet. Doesn’t matter that he loses money on them, he’ll be selling soon enough and make a killing on the property.
- Gretzky is brought on board to be the magnet even though he isn’t on the ice, pay through the nose for him.
- For weeknight games it can take up to 90 minutes to get to the rink from the East side so you have to leave work immediately to get for a 7pm puck drop, but a 7:30 puck drop would cut the drive to under an hour. Do they change the start time even though games are shorter since the lockout? Noooo.
-—————————————————————————————————-
Using the data provided from the BK hearings I put together a spreadsheet to try and calculate what it would take for the Coyotes to be profitable:
-Bring the payroll to the salary floor
-Ditch Gretzky
-Cut 20% across the board elsewhere
-Increase attendance, merch and concessions by 30%
Doing that gets you to about break even, profits would come from making the playoffs
When the team was downtown they drew 14k+, the Roadrunners back in the days of the “I” routinely drew 12k on weekends when the city had a million fewer people. The market isn’t great, but it’s workable. They can’t move the building, they can’t go back downtown short of completely re-doing the coliseum. They just need to get people in the building. If having a handful of dates in Saskatoon and Winnipeg can help provide cash and promote scarcity driving up average attendance for the rest of the games? I’m all for it.
But weeknight games need to start @ 7:30(it’s why I gave up my season tix.) I like the 6pm weekend starts, but 1pm weekend starts wouldn’t be bad either.
I mean, if they have $140M laying underneath their sofa, then great, I’m not going to tell anyone how to spend their money.
But could you imagine pitching this investment to somebody else? “Ya, we want to drop $140M on a hockey team that burns through $20M-$40M in cash a year and was left to die by the previous owner pretty much gutting it of any goodwill it might have built up with the community. This investment is so attractive that approximately nobody wanted in on it two months ago. You in or what?”
“Oh, and we can probably reduce those losses by $4-5 million a year by playing 12% of the games a couple of thousand miles away, which should help us rebuild that fan loyalty.”
by J. Michael Neal on Dec 14, 2009 2:56 PM CST up reply actions
Hey, here’s a revolutionary thought – do you not think that MAYBE the team burned through $20-40MM a year BECAUSE of the previous owner?
You are validating my inherent mistrust of strangers.
Not entirely, the poor market environment had as much to do with the loss as the ownership. Hockey does not work in Glendale!
Exclamation points are cruise control for sarcasm. Or trolling. Or stupid.
SNN Sports - A theoretical Oilers blog (i.e. theoretically, I write stuff there). Link now 100% less broken.
You’re close to the action, zyllyx. What do you think Moyes, et al, did to burn through 20 to 40 mil a year, if that’s the case?
Please allow me to adjust my pants, so that I may dance the good time dance, and lead the onlookers and innocent bystanders into a trance.
Payroll, poor attendance
Take out Gretzky’s salary and all of a sudden the losses are manageable, but their payroll didn’t match revenues. Concessions took a hit as the Westgate took off as food and drinks were half the price outside. That the team was in perpetual rebuilding mode didn’t help things.
If the club keeps on playing like they are the club should start seeing attendance really pick up starting after the all star break.
Gretzky was deferring a lot of his salary anyway. That is not the answer.
Blogging on hockey at fromtherink.com
by James Mirtle on Dec 16, 2009 5:22 PM CST up reply actions
I'm just talking the accounting from when things were "good".
Obviously it’s not on the books now, but then again they’re not even drawing half of what they used to even 2 years ago. Mighty big hole to dig out of, but I’m guessing the league will have to eat that one.
Maybe if Bettman had twisted Jerry’s arm back when he 1st stepped into the job he could’ve been ahead of the curve as a former NBA “genius”, but what do I know?
I’m really curious as to how the NHL is arriving at the conclusion that they’re breaking even on this deal. Yes, the price they are trying to sell the team for is the same price they bought it for. However, that ignores two things:
1) Transaction costs. Buying and selling a major sports franchise isn’t cheap. There are a lot of lawyers and accountants who are sending bills to the NHL offices because of this, and I bet that they are easily into the seven figures at this point, even ignoring the NHL’s costs of participating in the bankruptcy process outside of its actual purchase.
2) Operational losses. Unless someone wants me to believe that the Coyotes have broken even since the NHL bought them, and will continue to do so until the close, that’s another large chunk out the door. I suppose that the purchase agreement could be written in such a way that all of those losses get dumped into the lap of Ice Edge, but that makes me more skeptical of their numbers.
by J. Michael Neal on Dec 17, 2009 11:10 AM CST reply actions
I posted this on another site, but i will reproduce it here for your convenience.
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
I am simply aware of the court proceedings and the nature of the final deal struck with Moyes as approved by Baum J. You will get nowhere relying on commercial matters from the sports media (outside of James’ wonderful blog, of course).
They own the unsecured creditors’ claims and they have a $15 million personal guarantee against Moyes (reduced from its original amount of $30 million).
I wonder why Bettman just doesn’t say this is where the funds are coming from when talking about breaking even.
The thing is, the league was covering the team’s losses for nearly the entire season last year. Surely the losses were higher than you’ve pegged them at here.
Blogging on hockey at fromtherink.com
by James Mirtle on Dec 17, 2009 9:27 PM CST up reply actions
The league expended a little over $30 mil prior to the acquisition of the team just recently. Any other advances were simply distributions of HO’s portion of central revenue and advances on revenue sharing for last year.
As for what Bettman says or doesn’t say, as a professional reporter you know the answer, James. An interviewee – ANY interviewee – is simply answering questions put to him. The specific answer will always be dictated by the specific question and the context in which it is asked. for obvious reasons, only the answer is quoted, and the question is paraphrased (assumig it is referenced at all).
So, in other words, the answer to your wondering query is probably in the question and the way it was asked.
Yes, i do have a source – the purchase and sale documentation and docs filed with the AZ courts. Did you miss something?
Well, some time ago i found the site for the litigation where everything is posted and shared it with the community through HFBoards and Tyler’s site and here. I welcome you to go there and find the supporting documentation.
It also helps to know a bit about the bankruptcy process.
Again, what are you missing?
I think my credibility has been demonstrated sufficiently around here.
You know, I think I’m done with FTR for now. Your unbelievable arrogance, coupled with your ridiculous self-assurance that not only are you a legal guru, but a business, hockey, and logical titan is annoying at the best of times and downright sickening at all the rest. You make no points and act as if you’ve turned the world on its head. Your ego is out of check, and frankly, that’s just too bad, since it brings down the rest of this site with it.
Arrogance? Sorry if you see it that way, but the fact is that whatever “self-assurance” I have is well earned by putting in the work to know my stuff. If you feel offput by that, maybe it is because you feel like you don’t know your stuff nearly as well. I cannot control that. no one can, except for you. Don’t go playing the victim; get up to speed by asking questions, rather than thinking that, just because it’s the internet and you have a keyboard just like everyone else’s, your views are equally meritorious. If one of us is full immersed in the facts and the other is not and somehow feels “bad” because of it, the other should take responsibility and come to terms with the feeling that they are giving themselves.
For that matter, frankly, I don’t appreciate your snarky tone either, asking for “sources” as if I need to back up my knowledge with quotes from a newspaper despite having reviewed the actual documentation (with due respect to James). You think I am making stuff up? Ask around to see whether that is my MO. For that matter, why would I even do that?
Something to say? Choose one of these options to log in.
On Facebook? Use Connect to join SB Nation. Share insights with fans and friends.- » Create a new SB Nation account
- » Already registered with SB Nation? Log in!
Secondary Sidebar
Related FanPosts on From The Rink
FanPosts
Community blog posts and discussion.
Recent FanPosts
In Association With
Latest Puck Daddy - NHL from Yahoo! Sports
- NHL 2010-11 Season Preview: Wrestling with Atlanta Thrashers
- Chris Pronger's contract accepted; why NHLPA could have advantage
- Pass or Fail: When 'Jersey Shore'-level celebs invade hockey arenas
- NHL's ultimatum: Amend CBA or reject Kovalchuk, Luongo deals?
- Report: Matthew Hulsizer is Coyotes' mystery ownership candidate
Certain photos copyright © 2010 by Associated Press or Getty Images. Any commercial use or distribution without the express written consent of Associated Press and Getty Images is strictly prohibited.
