On when to pull the plug
by James Mirtle on May 14, 2009 5:31 AM CDT
in Special features
110 comments
Gary Bettman has been relatively silent the past week or so, choosing instead to have his deputy in Bill Daly — and the NHL's lawyers — do much of the league's talking as the legal process begins in the desert.
At the moment, we're all simply waiting for Tuesday and the first shoe to drop in the mess that is the team's bankruptcy case.
Back in February, before this whole fiasco with the Coyotes had blown right open and onto front pages across this country, the commissioner had a lengthy sitdown with Hockey Night in Canada's Jeff Marek to talk about, among other things, the future of the NHL in Phoenix. It was a candid discussion, and in hindsight, incredibly interesting given where things have gone since.
Bettman even brought up two relocations that have been talked about a lot lately by Canadians — Quebec and Winnipeg — and his thoughts on why those teams failed:
Marek: How do you know when a franchise has actualized? At what point does Gary Bettman say, you know what, we’ve hit critical mass here?
Bettman: Well the two times that come most vividly to mind are what happened in Quebec and in Winnipeg and I think we’re better at dealing with these problems now than we were at the time. But at the time, you had two franchises playing in somewhat smaller markets in older buildings, there was no prospect of a new arena coming in either place, the owners then of the franchises said "we don’t want to own this team any more." They couldn’t find anybody else to invest in the team or buy it — which may be the critical mass point — and therefore there was no future for the team there because nobody wanted to own the team there.
The fact is, the biggest litmus test ultimately was nobody wanted to own a team there. And when the marketplace decides that it doesn’t want to own a team there, it has no future.
The biggest litmus test hasn't changed, 14 years later, and more than the quality of the fans (or the market) and the location of the arena, the most pertinent factor when it comes to the Coyotes surviving in Phoenix is if the league can find someone to cover the team's losses.
On that front, it appears we're down to one potential saviour.
Given all of the attention and all of the leaks to this point, I'd be very surprised if there are legitimate bids for the team other than the much-talked about Jerry Reinsdorf offer. Yesterday, the Toronto Star reported that bid to be approximately $130-million — about $80-million shy of Jim Balsillie's — and that it would be conditional on the City of Glendale providing concessions "worth an estimated $15-20 million per season."
There are also reports that Reinsdorf will have an out clause after one or two years of serving as a caretaker for the team – a walkaway that would likely come if the losses continued to mount.
As has been widely reported, Balsillie's ownership comes with its own big condition in the form of a move to Hamilton, meaning, in effect, neither of the two bidders to date have any interest in footing the bills Jerry Moyes has been stuck with the past four-plus years.
And it's no wonder given the current economic climes.
There are two options left for the league: (a) make the team more palatable to own by renegotiating the lease and then find a buyer, or (b) relocate.
People can dump on the fan base in Phoenix or point to the team's lack of on-ice success all they want, but those two outcomes are the bottom line – and they're not particularly pretty for most of the parties involved.
Glendale will get squeezed either way. Coyotes fans will either lose their team or attempt to keep the faith under Reinsdorf with few assurances the team is staying put long-term. And the NHL is set to take a major hit in the PR department should this sorry saga end up with the team finding a home in Kansas City — or some other locale — after a lame-duck season under league ownership. Moyes, well, he's already lost his shirt (and pants) on this team, and Balsillie won't get a sniff of owning a team under Bettman's watch should these shenanigans fall short.
The Coyotes desperately need a white knight, and I just can't see where they're about to find one. Not in this economy, not in a market hammered by the recession and not with that franchise's track record.
Without a new owner signing on for the long haul, it's only a matter of time before the team formerly known as the Winnipeg Jets finds its third home. In Gary Bettman's own words, "it has no future."
Only places to go.
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I wonder if Bettman would be more receptive to a move if it was anyone other than Balsillie bidding on the team? The animosity has just become so personal between them, that I’m not sure a clear-headed business decision can be made anymore.
When you lay out the case that starkly, I don’t see how the Coyotes can survive in Phoenix more than a year or two more – and good luck selling tickets if everyone knows the team is just killing time until they move. If the economy wasn’t mired in recession they might be able to find someone who could take on the losses to stoke his vanity, but that isn’t happening now. Sad for the Coyotes fans. :(
"A vacuum is a hell of a lot better than some of the stuff that nature replaces it with." -- Tennessee Williams
by Baroque on May 14, 2009 6:02 AM CDT reply actions 0 recs
I wonder if Bettman would be more receptive to a move if it was anyone other than Balsillie bidding on the team?
While I do agree with this statement, I would think it would only go from a 0% chance to a 1% chance. I really think Bettman wants to keep that team there and will exhaust EVERY option, including having the league run the team for year(s). More receptive? Sure, but still highly unlikely.
Shut up when you're talking to me!
by Afino on May 14, 2009 7:33 AM CDT up reply actions 0 recs
remember tho
bettman’s just a figurehead for the other owners. those 29 other interests probably don’t care to keep the coyotes afloat long-term.
by passive_voice on May 14, 2009 12:52 PM CDT up reply actions 0 recs
I can’t see it being a realistic option for the league to run the team … the costs would rack up for the other owners and the fan base would likely stop coming out as the press reported how the Coyotes were the latest version of baseball’s Expos.
They could maybe prop them up for one year, but they need an owner.
Blogging on hockey at fromtherink.com
by James Mirtle on May 14, 2009 12:55 PM CDT up reply actions 0 recs
Well, I don’t think it’s realistic either. But it’s better than either:
- Running to Balsillie with their tails between their legs, or
- The major PR disaster that would result from folding the Coyotes completely
Shut up when you're talking to me!
by Afino on May 14, 2009 1:22 PM CDT up reply actions 0 recs
What’s the long-term goal then if the league’s running the team for two years? What changes in 2011?
Blogging on hockey at fromtherink.com
by James Mirtle on May 14, 2009 1:32 PM CDT up reply actions 0 recs
Well the economy will almost certainly be better. Buying time might be enough.
by GOOLIAN on May 14, 2009 2:14 PM CDT up reply actions 0 recs
Will this be the last team they need to buy time for though?
by dzuunmod on May 14, 2009 3:36 PM CDT up reply actions 0 recs
Probably not, but they sure need it for this one.
by GOOLIAN on May 14, 2009 4:29 PM CDT up reply actions 0 recs
good luck selling tickets if everyone knows the team is just killing time until they move
Isn’t that basically the problem the Jets had at the end? Dead Man Walking syndrome?
SNN Sports - A theoretical Oilers blog (i.e. theoretically, I write stuff there)
by Doogie2K on May 14, 2009 7:49 AM CDT up reply actions 1 recs
Bettman may have been more receptive to a move if the bidder was not JB, however I really doubt he would be in agreement with a move to Southern Ontario. As hockey’s last untapped market, Bettman probably expects to be able to collect hefty expansion fees to put a franchise there – if the Coyotes were to move there straight up, he can forget about this 400$M. Not sure that’s what he wants…
by Habs on May 14, 2009 10:20 AM CDT up reply actions 0 recs
I wonder if he is ever going to be able to collect the expansion fees – if it isn’t just a mirage.
If he is waiting to expand the league by two teams to have an even number, then he needs an additional acceptable market and two sets of owners with deep pockets – and as long as there are several struggling teams to choose from, why would anyone pony up an enormous expansion fee, plus any costs for territorial concessions and arena upgrades or costs, when it would be more practical financially to buy a basket case and move it? If prospective owners have patience, I don’t see two groups emerging anytime soon to start up expansion teams, and if the option is to keep struggling teams limping along bleeding money indefinitely .. I can’t imagine many owners are on board with that 100%.
"A vacuum is a hell of a lot better than some of the stuff that nature replaces it with." -- Tennessee Williams
by Baroque on May 14, 2009 10:59 AM CDT up reply actions 0 recs
Also…do we really need or want 32 teams? Hell, half the hockey fanbase is still trying to get over the move from 21 to 26 to 30.
SNN Sports - A theoretical Oilers blog (i.e. theoretically, I write stuff there)
by Doogie2K on May 14, 2009 12:51 PM CDT up reply actions 0 recs
No, they really should have stayed at 26 and moved a struggling team into Minnesota. At least until stronger ownership groups could be found.
Blogging on hockey at fromtherink.com
by James Mirtle on May 14, 2009 1:00 PM CDT up reply actions 0 recs
Leipold wasn’t a bad owner for Nashville, McConnell was good for Columbus, and Atlanta’s didn’t implode until a few years in (and it’s also the same group that owns the Hawks and the arena, so it’s not like we’re talking a Boots Del Baggio SNAFU here).
The bad owners were largely found in the 22-26 team range.
Hockey blogging can't get any flatter.
by saskhab on May 14, 2009 1:04 PM CDT up reply actions 0 recs
I just don’t think there are enough strong markets/owners for a 30-team hockey league. If you were to move one of the existing franchises, there aren’t a lot of options for places to go.
Blogging on hockey at fromtherink.com
by James Mirtle on May 14, 2009 1:10 PM CDT up reply actions 0 recs
Leipold
While I’ve only been in Nashville 5 years, my impression is that Leipold was a good man in the wrong place. He’s much better off in hockey mad Minnesota where all he has to do is sign the checks, than in building something from the group up.
He was terrible for Nashville in the sense that he did nothing to grow the game at a junior level, live in/become part of the community and market the team in an effective way. He did more to turn off corporate sponsors than anything and very nearly killed the sport in this market. Thankfully he is gone.
By contrast, the new owners (David Freeman et al) have done a much better job at building the sport in this town from the grass roots and are now doing the corporate outreach that should have happened long ago and corporations are responding.
With revenue sharing, it’s been reported this team actually has made money the last two seasons (just a little, but far better than before). Attendance is growing and Nashville has a fighting chance now.
A far different situation than what’s happened in Phoenix.
by oilerdago on May 14, 2009 1:53 PM CDT up reply actions 0 recs
What’s preventing this from happening in Phoenix?
There’s the arena lease, which by all accounts looks like it will be re-negotiated with the city. The rest of the issues facing the Coyotes are rather like what was happening in Nashville 2-3 years ago.
Bettman knows that of course, and if really the Preds started turning a profit under the new management group, however small that profit may be, Gary will be sure to use that to his advantage.
by Habs on May 15, 2009 12:24 AM CDT up reply actions 0 recs
San Jose, Ottawa and Anaheim?
Tampa Bay wasn’t in terrible financial straits until a few years ago either. Not sure I agree with you on this one.
by GOOLIAN on May 14, 2009 2:17 PM CDT up reply actions 0 recs
Ottawa was a nickel and dime operation until Melnyk stepped up a couple years ago. Anaheim… things didn’t go so well for ABC-Disney in the 1990s (and Eisner lost millions with the Mighty Ducks). Tampa had tons of problems throughout the 1990s ownership wise… it was constantly changing hands. Florida was by far the more stable of the two franchises, 2004 kind of changed perception considerably.
San Jose never had problems. But each of the other ones sure had.
Hockey blogging can't get any flatter.
by saskhab on May 14, 2009 3:36 PM CDT up reply actions 0 recs
This is all true, but unstable ownership is as much an effect of a marginal franchise as it is a cause.
by J. Michael Neal on May 15, 2009 1:46 AM CDT up reply actions 0 recs
no
stable ownership means ownership that should be able to absorb some losses over a few lean years without shitting their pants. nobody in their right minds owns pro sports teams as a serious investment; it’s a hobby/prestige thing, and good owners need to have a fairly stable financial situation beyond their sports investments.
by passive_voice on May 15, 2009 10:56 AM CDT up reply actions 0 recs
“nobody in their right minds owns pro sports teams as a serious investment;”
Except NFL teams.
by dzuunmod on May 15, 2009 12:10 PM CDT up reply actions 0 recs
Yes, Really
(The German word for my comment title is, “Doch,” which is a word I really wish had an English equivalent.)
Marginal franchises end up with unstable ownership because the stable owners are smart enough not to get involved. You are absolutely, dead wrong when you say that no one buys sports teams as investments. The Mark Cuban/Ted Turner kind of hobbyist is a distinct minority in the business. Do you think the Tribune Company bought the Cubs out of the goodness of its (literally non-existent) heart? How about Disney and the Ducks? Jeff Loria clearly isn’t concerned about winning. I think Mike Illitch has been a great owner, but I have no illusions about how involved he’d be if he didn’t think there was potential to at least break even owning teams.
The number of people who can afford to lose millions of dollars a year running a sports team is extremely limited. The number of people who both can do so, and want to do so, was much smaller than that. You can not now, and never will in the future, be able to rely on those sorts of owners to fill out your league. The Coyotes need to be able to establish secure financial footing. The only people who are going to buy the team are ones who think that. Given the situation in Phoenix , they are only going to get conditional offers, such as the ones from Reinsdorf and Ballsillie, or they are going to get bids from people who are wrong, or are such thrill seekers that they don’t care, as is the case in Tampa.
by J. Michael Neal on May 15, 2009 5:03 PM CDT up reply actions 0 recs
Haven’t we been at 30 for as long as there ever were exactly 21 teams by now? I’m guessing that period was 1979-91, so I guess we’ll get there by the end of 2011-2012. The 1990s were definitely a ridiculous pace of growth.
I definitely think the NHL will find a sucker or two out there for a Western USA based expansion franchise within a couple of years. There are already some positive signs that the worst of the recession occured during this past winter. The early 1990s expansion came immediately following a recession, so I don’t believe this past one will keep too many groups away.
Hockey blogging can't get any flatter.
by saskhab on May 14, 2009 1:02 PM CDT up reply actions 0 recs
I wonder if Bettman would be more receptive to a move if it was anyone other than Balsillie bidding on the team?
It’s not Balsillie, its location. The League desperately doesn’t want to move a team from the US to Southern Ontario, and Balsillie desperately does. That’s the only issue.
If Balsillie was from Nevada and wanted to move a team to Las Vegas there would be no problem.
by FourFeetOfCurl on May 14, 2009 11:58 AM CDT up reply actions 0 recs
Another way of stating it...
It basically sounds like building that arena out in the boonies at such an expense was a terrible business idea. So far, Moyes has taken the brunt of the losses, and going forward, that’s going to change.
Either the city of Glendale is going to pick up enough of that burden to make the operation palatable to a new owner, or the team will move. Option B there is probably even worse for Glendale, however, so I’m guessing they’ll end up making the necessary concessions (eventually) to get a deal done.
More fun than a stick to the face!
On the Forecheck is SB Nation's blog covering the Nashville Predators.
by Dirk Hoag on May 14, 2009 7:58 AM CDT reply actions 0 recs
It does raise some questions about Moyes business acumen when he agreed to take on the team and the lease on the new building and his cost/benefit calculation missed so badly.
by The Falconer on May 14, 2009 11:59 AM CDT up reply actions 0 recs
He probably made the same kind of economic assumptions that so many others made – the economy was going to keep growing and none of the bubbles were going to pop, although they might gently deflate and give fair warning so everyone coudl find another bubble.
Although I wonder what he thought the prospects were for the hockey team – was he given assurances (by someone) that it would grow and be successful, or was he planning on hanging on to it for a few years and then flipping it to a new owner to realize a profit?
"A vacuum is a hell of a lot better than some of the stuff that nature replaces it with." -- Tennessee Williams
by Baroque on May 14, 2009 12:25 PM CDT up reply actions 0 recs
Glendale’s already footing the bill for the arena mistake, but not the tune they’ll need to. Can they really afford to cover more than $20-million a year to subsidize the team more? The taxpayers there certainly don’t seem onboard with that idea.
Blogging on hockey at fromtherink.com
by James Mirtle on May 14, 2009 1:02 PM CDT up reply actions 0 recs
The taxpayers there certainly don’t seem onboard with that idea.
That was one of the things that struck me about the Nashville situation – the comments regarding the articles in the paper were quite venomous. “No one likes hockey here, my tax dollars should go to real problems, we can just fill the arena with otehr events, good riddance” – it got pretty nasty.
If whoever is going to be outwardly responsible for the decision needs to be elected soon, they will have to tread very carefully and spin like a figure skater.
"A vacuum is a hell of a lot better than some of the stuff that nature replaces it with." -- Tennessee Williams
by Baroque on May 14, 2009 1:26 PM CDT up reply actions 0 recs
I’m seeing the same things in Phoenix. On hockey-only forums, you don’t get to hear from the non-hockey fans, but if you look at the comments over at the Arizona Republic, there are a lot of them who aren’t very happy with Glendale officials right now.
Blogging on hockey at fromtherink.com
by James Mirtle on May 14, 2009 1:28 PM CDT up reply actions 0 recs
I’m not surprised. It’s one thing to market a city government paying for a sports facility as a matter of civic pride when the numbers are less eye-popping; when the prices go higher and higher, and then there is the cost of PSLs and such for the fans who buy the tickets … The new Yankee Stadium cost over $1 billion and wiped out a lot of neighborhood parks that still haven’t been replaced, despite promised from the Yankees that they would be. There is a fiar amount of resentment there because the kids don’t have anywhere to play, and the residents feel as though their concerns are being ignored by another big-money, impersonal corporation.
In a bad economy, it’s a lot harder to justify why money is being spent to build a sports facility when schools are laying off teachers and families are dealing with paycuts if they are lucky, layoffs if they aren’t.
"A vacuum is a hell of a lot better than some of the stuff that nature replaces it with." -- Tennessee Williams
by Baroque on May 14, 2009 2:17 PM CDT up reply actions 0 recs
So i guess i don’t understand the stadium deal in Phoenix very well.
My impression is that Gelndale foot the bill for the new over-priced excessive arena, and in return gets the concessions in order to recoup some of that tax money used to build the arena.
Partially because they can’t have concessions and parking money the Coyotes are losing money faster than they can print it.
Seems like there isn’t a good solution here at all.
by Jibblescribbits on May 14, 2009 3:29 PM CDT up reply actions 0 recs
Nope, that is not accurate, with respect to hockey-related concessions.
by Gerald on May 14, 2009 3:58 PM CDT up reply actions 0 recs
Gerald probably means that the money spent to build the arena is a sunk cost. No matter what happens with the Coyotes, that money is spent and gone. It is not, or at least, with rational decision makers (in the economic sense of “rational”) it is not, a factor in whether or not Glendale agrees to give up the concessions revenue going forward.
by J. Michael Neal on May 15, 2009 1:50 AM CDT up reply actions 0 recs
No, what I am saying is what the team has said in its filings:
“[The team] is entitled to receive and retain revenues from the sale of Phoenix Coyotes merchandise, all payments received from concessionaires that are directly attributable to hockey events held in [the arena] and other specified event revenues. Payments made by concessionaires in connection with all other events held in [the arena] are to be paid to [Moyes’ wholly-owned subsidiary that runs the arena] as part of [the arena’s] operating revenue.
Long story short – Moyes got the concessions revenue.
by Gerald on May 15, 2009 1:50 PM CDT up reply actions 0 recs
Question
can the NHL actually own the team? Or would it just be some sort of lender-financing-control arrangement with a captive owner?
Glen Sather is a Hockey Genius.
http://glensathersucks.com/
http://twitter.com/ThGeneralissimo
by poploser on May 14, 2009 8:10 AM CDT reply actions 0 recs
The optics of the league owning the team for an extended period would be terrible. Not to mention costly for the other owners.
Blogging on hockey at fromtherink.com
by James Mirtle on May 14, 2009 1:03 PM CDT up reply actions 0 recs
MLB owned the Expos for over 2 years before the move to DC.
Hockey blogging can't get any flatter.
by saskhab on May 14, 2009 1:05 PM CDT up reply actions 0 recs
That worked out well.
That’s also a much wealthier league, so they’d be better able to foot the bill. How can you expect NHL owners already losing money in markets like Atlanta and Nashville to pay to prop up a club in Phoenix for two years?
Blogging on hockey at fromtherink.com
by James Mirtle on May 14, 2009 1:11 PM CDT up reply actions 0 recs
Put a 2nd team in Toronto, one way or another.
If anything, the NHL needs to expand by two more teams. Put one in KC, put one in Hamilton or Toronto. Problems solved, the league and owners get the extra money from the expansion fees, and the league gets the money to prop Phoenix up until the economy rebounds.
Shut up when you're talking to me!
by Afino on May 14, 2009 1:25 PM CDT up reply actions 0 recs
Is there an ownership group in Kansas City, or just an arena?
"A vacuum is a hell of a lot better than some of the stuff that nature replaces it with." -- Tennessee Williams
by Baroque on May 14, 2009 1:28 PM CDT up reply actions 0 recs
The arena is owned by Philip Anschutz, owner of Anschutz Entertainment Group, who already own the Staples Center and the LA Kings.
Finding out all this though, brings a question: can a single corporation own 2 separate teams? If not, can a single corporation own 2 NHL arenas? To me that’s just opening the door for some conflicts of interests.
by Habs on May 15, 2009 12:31 AM CDT up reply actions 0 recs
AEG is also involved in arenas in Europe – such as the one in London that was used for season-opening games last year. They have their fingers in a lot of properties.
"A vacuum is a hell of a lot better than some of the stuff that nature replaces it with." -- Tennessee Williams
by Baroque on May 15, 2009 5:27 AM CDT up reply actions 0 recs
That depends: has the NHL updated its COI policies since the Norrises owned half the League? I would assume so, if Boots had to sell his stake in San Jose to buy into Nashville.
SNN Sports - A theoretical Oilers blog (i.e. theoretically, I write stuff there)
by Doogie2K on May 15, 2009 11:11 AM CDT up reply actions 0 recs
No, a group/individual cannot own two teams in the same league. That’s definitely in the NHL’s bylaws. Anschutz would have to divest himself of the Kings if he wanted a team in KC.
by dzuunmod on May 15, 2009 12:11 PM CDT up reply actions 0 recs
AEG does not own that arena, if memory serves. It had an operating agreement.
by Gerald on May 15, 2009 1:51 PM CDT up reply actions 0 recs
That’s correct. The city owns it, but I believe AEG is losing money on the building without a full-time tenant.
Blogging on hockey at fromtherink.com
by James Mirtle on May 15, 2009 2:33 PM CDT up reply actions 0 recs
That may be the way they go, but the NHL hardly needs two more teams.
Blogging on hockey at fromtherink.com
by James Mirtle on May 14, 2009 1:29 PM CDT up reply actions 0 recs
Not disagreeing with you there.
Shut up when you're talking to me!
by Afino on May 14, 2009 3:51 PM CDT up reply actions 0 recs
the economy was fine for years, and Phoenix still lost money, right?
Glen Sather is a Hockey Genius.
http://glensathersucks.com/
http://twitter.com/ThGeneralissimo
by poploser on May 14, 2009 4:18 PM CDT up reply actions 0 recs
Correct.
Blogging on hockey at fromtherink.com
by James Mirtle on May 14, 2009 4:31 PM CDT up reply actions 0 recs
This is exactly why...
I hope there is a real debate going on among the owners about what to do in Phoenix. What is the cost-benefit analysis to blocking Are they thinking that “if we can support Phoenix long enough and find an owner who won’t come back to us for more in 2 years, then we will get to slice up the next round of expansion $$$s.”? Is someone saying “how much money do I have to throw into a pot for another team, before that support drags my franchise values down?”
And Id still love to find out all the legal details on what rights the NHL, has, an entity, to step in and actually own a team. What does the NHL’s governing documents say about that, if anything?
Glen Sather is a Hockey Genius.
http://glensathersucks.com/
http://twitter.com/ThGeneralissimo
by poploser on May 14, 2009 4:17 PM CDT up reply actions 0 recs
We’ve seen what happens in professional sports when the league owns and runs a team. Remember the Expos? Threatened to move, threatened with contraction – killing what was left of their fanbase. Then the league (running the team) slashed the budget for players as well as support staff and importantly, scouting. What a mess.
I wish Balsillie would buy it and run it in Phoenix with some concessions from Glendale. Great arena, good young talent … it’d be a shame for them to move to Hamilton.
Let Hamilton get an expansion team (quickly) or the league should move Atlanta – that’s never going to work there.
by LarsPGH on May 14, 2009 9:23 AM CDT reply actions 0 recs
I wish Balsillie would buy it and run it in Phoenix with some concessions from Glendale. Great arena, good young talent … it’d be a shame for them to move to Hamilton.
The logical thing to do would be to negotiate a deal with Balsille similar to the one they are negotiating with Reinsdorf, where Balsille is a caretaker and steward until another owner can be found. As a reward Balsille would be granted an expansion franchise in So. Ontario. If one can’t be found in 2 years, and the concessions from Glendale can’t be reached, then Balsille could be given the option of buying the team outright and moving the team to wherever he wants.
Of course this plan hinges on two powerful men with Napoleon complexes swallowing their pride and realizing that as much as they don’t like each other they both would benefit from a partnership, and then offering humbling concessions… so it’s not likely to happen.
by Jibblescribbits on May 14, 2009 9:54 AM CDT up reply actions 0 recs
that solution is so smooth and logical
that it has a 2% chance of ever happening. eat my dick, nhl.
by passive_voice on May 14, 2009 12:59 PM CDT up reply actions 0 recs
So logical
it may work……if it wasn’t Bettman running the show.
Best idea I’ve heard yet. Even includes expanding the league, like I suggested in my last comment.
Shut up when you're talking to me!
by Afino on May 14, 2009 1:26 PM CDT up reply actions 0 recs
A lot of people are wondering what would have happened if Balsillie simply bought the team without the condition of moving it. Could he have propped up the Coyotes for two years and then moved them? Would the league allow it? Or would he simply have lost $50-million without any compensation coming in return?
Blogging on hockey at fromtherink.com
by James Mirtle on May 14, 2009 1:30 PM CDT up reply actions 0 recs
I’m not sure JB would have risked buying the team without some form of assurances he would be able to move it, whether it be now or later.
by Habs on May 15, 2009 12:33 AM CDT up reply actions 0 recs
Let Hamilton get an expansion team (quickly) or the league should move Atlanta – that’s never going to work there.
Really? How is Atlanta different from the Coyotes? Why is it ‘never going to work there’ ? I think that’s a really unfair call. Either you agree that a struggling team can relocate or you don’t, but to start picking teams arbitrarily that ‘can work’ and ’can’t work’, I can’t agree with that.
by Habs on May 14, 2009 10:24 AM CDT up reply actions 0 recs
Arbitrary? Sure, but I’m a Coyotes fan. That Thrashers team has no fans, a market that doesn’t care about them and no hope of winning in the future. Dead on the vine. If you can keep one of the two, make in Phoenix.
http://www.ajc.com/sports/content/sports/thrashers/stories/2009/02/15/hockey_atlanta_thrashers.html
http://www.fromtherink.com/2008/10/21/639757/thrashers-attendance-plummhttp://www.sportsnetwork.com/merge/tsnform.aspx?c=sportsnetwork&page=nhl/teams/141/attendance.aspx?team=141
by LarsPGH on May 14, 2009 1:28 PM CDT up reply actions 0 recs
That Coyotes team has no fans, a market that doesn’t care about them, and no hope of winning in the future.
This is fun.
SNN Sports - A theoretical Oilers blog (i.e. theoretically, I write stuff there)
by Doogie2K on May 14, 2009 1:54 PM CDT up reply actions 0 recs
I really don’t know how you can affirm that the Coyotes have more fans than the Thrashers…?
The second like you posted isn’t working but I researched it. Here’s the ESPN home attendance data for 2008-2009:
Phoenix: total (41 games) 609,907, average per game 14,875
Atlanta: total (41 games) 599,673, average per game 14,626
So, on the strength of exactly 249 less people per game attending, the Thrashers have ‘no fans’?
a market that doesn’t care about them
If you are from Phoenix and read the local newspapers, you should know that this market really doesn’t care about them.
by Habs on May 15, 2009 12:39 AM CDT up reply actions 0 recs
I remember their “home games” in the Caribbean – that team’s travel schedule was a travesty. And I believe they also weren’t able to call up any players from the minors when rosters expanded at the end of the year, because the other 29 owners didn’t want to pay fro additional payroll. I wasn’t even as Expos fan, and I was furious at how they were treated. Very unprofessional.
"A vacuum is a hell of a lot better than some of the stuff that nature replaces it with." -- Tennessee Williams
by Baroque on May 14, 2009 11:01 AM CDT up reply actions 0 recs
MLB claimed that the “home” games in PR would help the team’s revenues, and they’d be better able to compete. So how about this? The Coyotes stay in Phoenix and play 1/4 of their “home” games in Hamilton. Y’know, to help them pad their revenues. So as to be more competitive. Ha.
by dzuunmod on May 14, 2009 3:44 PM CDT up reply actions 0 recs
That’s an interesting idea… 2 teams share a hockey team!
by Habs on May 15, 2009 12:40 AM CDT up reply actions 0 recs
not totally unprecedented
there was a basketball team that played home games in both Kansas City and Omaha in like the 70’s i think. then they moved to Sacramento.
by passive_voice on May 15, 2009 11:00 AM CDT up reply actions 0 recs
Also kinda like the Green Bay Packers who played some of their “home” games in Milwaukee as late as the 90s. Or the Bills playing “home” games in Toronto now.
by dzuunmod on May 15, 2009 12:13 PM CDT up reply actions 0 recs
That was actually the original plan with the Alberta Oilers: 20 games in Calgary, 20 games in Edmonton. The idea fell through before the first year of the WHA, however, and they wound up playing all 40 home dates in Edmonton, before changing their name to reflect their situation the following year.
SNN Sports - A theoretical Oilers blog (i.e. theoretically, I write stuff there)
by Doogie2K on May 15, 2009 11:13 AM CDT up reply actions 0 recs
You can get crazy...
…thinking about all the problems there would be of the NHL owning a team. Who would make decisions on the “team’s” behalf on league matters? The NHL couldn’t possibly think it could have Bill Daly acting as the Coyotes’ representative on the BOG, could it? Would it hire a management team, somehow independent of the NHL? Can you imagine the fan conspiracies that would fly around if the NHL-owned Coyotes were involved in the lottery? Or had a player subject to supplementary discipline?
It seems to be the thing the NHL wants to happen as quickly as possible is to find an independent, self-sufficient owner, who is willing to absorb significant risks of financial loss, and who is willing to keep the team in Phoenix. Maybe the best the NHL can get is 2 out of 3.
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by poploser on May 14, 2009 4:23 PM CDT up reply actions 0 recs
Quote from the globe and mail
But one NHL owner disputed this, saying there is no way to know this definitively until the final numbers are tallied in July. He said the league showed a drop in average revenue, while the Coyotes were up "4 to 5 per cent" from last season, which indicates they will not take a cut in their allotment.
The accountant in me is skeptical about this owner’s words.
In actuality I hope he is lying because nothing says this won’t work more than a 4-5% increase in revenues, and widening losses.
by cubanpuckstopper on May 14, 2009 9:56 AM CDT reply actions 0 recs
No one said that the losses were widening this year.
by Gerald on May 14, 2009 1:06 PM CDT up reply actions 0 recs
Let’s validate or refute this fact pattern.
Revenue increase +4/5 %
Loses last year $30M, estimated loses this year $30M
Payroll last year $42, this year $37.
Without taking down payroll would loses this season have been $35M ?
by cubanpuckstopper on May 15, 2009 9:44 AM CDT up reply actions 0 recs
The salary floor this year was $40.7-million though. Were the Coyotes really under it?
Blogging on hockey at fromtherink.com
by James Mirtle on May 15, 2009 12:21 PM CDT up reply actions 0 recs
I need a correction here
My $37M figure lifted form here was through 3/4/09 http://www.nhlscap.com/teamnumbers.htm
Through 5/14/09 Salaries = 43.6M http://www.hockeybuzz.com/cap-central/
I believe last year Coyotes salaries were 44.8M
by cubanpuckstopper on May 15, 2009 3:04 PM CDT up reply actions 0 recs
Bettman is a hypocrite
As a Winnipeger I’m completely disgusted by Bettman’s flat out lies and hypocrisy.
Bettman claims:
“They couldn’t find anybody else to invest in the team or buy it — which may be the critical mass point — and therefore there was no future for the team there because nobody wanted to own the team there.
The fact is, the biggest litmus test ultimately was nobody wanted to own a team there. And when the marketplace decides that it doesn’t want to own a team there, it has no future."
This is a bold faced lie and completely untrue. In fact, Winnipeg did have investors wanting to buy the team and a serious local interest in keeping the Jets here. The reality was, they didn’t have as much money to pay for the team, so they couldn’t compete with the higher bids coming from those who wanted to move the franchise.
Deja vu anyone? So why is it that the NHL didn’t fight whatsoever to keep the team in Winnipeg and was gladly willing to sell the franchise to the highest bidder despite their intentions of ripping the team out of the community? This is exactly what Balsille wants to do with Phoenix, but instead of allowing the owner’s to accept the largest bid, Bettman and his cronies are willing to fight it and force the Phoenix ownership to take a different bid that is worth a fraction of the larger one?
Isn’t anyone else outraged and disgusted by this pathetic double standard?
I know people may think I am a bitter Jet’s fan, and while this is true, I am simply interested in the facts and the truth. Bettman continues to twist history until it’s a completely unrecognizable fairy tale.
I’m not saying whether Winnipeg could or couldn’t support a franchise right now. Personally I believe this city of 700,000 people has enough support, both fan and corporate, that it could work. Regardless of one’s belief on that it’s obvious that this team should be leaving the Phoenix sports market. The first day of the Coyotes bankruptcy hearing, 2 fans showed up! 2 fans! You can’t tell me that Winnipeg would have had more than 2 fans show up! We had 35,000 fans show up at the Forks to show their support for the Jets when they left. It’ll be interesting to see how many so-called hockey fans show up to support the Coyotes this weekend at their “fan rally”. Despite how many more people Phoenix’s has compared to Winnipeg, I can guarantee it won’t be anywhere close to 35,000.
by royal_ on May 14, 2009 1:10 PM CDT reply actions 0 recs
Sing it, brother!
It’s worse than that. The NHL stacked the deck against any local owners by insisting they come up with a reserve fund to cover the team’s losses while the proposed arena in Winnipeg was being built, to the tune of an additional $30M Cdn, IIRC. I noticed this provision was strangely absent when Pittsburgh went through alomst the exact same situation a couple of years ago. No sour grapes, the Pens deserved to stay put and I’m glad they did, but the rules were different for them.
In the end, I don’t think there would have been enough money in Winnipeg to keep the team there over the long haul – considering that salaries continued to rise sharply up until the lockout, and the Cdn dollar sank even lower. And I’m pretty skeptical it could work today (although not totally unconvinced). But there’s no doubt in my mind the NHL stacked the deck to ensure that the scenario would unfold as it did.
Bettman painting himself as the saviour of franchises galls me to no end.
by jamiebez on May 14, 2009 1:27 PM CDT up reply actions 0 recs
The first day of the Coyotes bankruptcy hearing, 2 fans showed up! 2 fans! You can’t tell me that Winnipeg would have had more than 2 fans show up!
It’ll be interesting to see how many so-called hockey fans show up to support the Coyotes this weekend at their "fan rally".
If having a small group of rabid fans was enough to keep a hockey team the Jets never would have left Winnipeg. Clearly that’s not enough.
by GOOLIAN on May 14, 2009 2:41 PM CDT up reply actions 0 recs
So 35,000 people showing up in a park to show support for a hockey team is now referred to as a “small group”? I would be blown away if any of Phoenix, Atlanta, Nashville, Florida, or Tampa Bay could come up with half the number of people Winnipeg did to show support for the team. The Jets never had a problem selling tickets. The problem was the escalating salaries, the lack of revenue sharing, and Bettman’s complete hatred of small market Canadian teams.
The Jets are comparable to Minnesota. A loyal fan base who lost their team due to ownership issues and an old building. Sure, MN has 5 times the population as Winnipeg, but they also have to support 4.25 time the professional sports games (say Winnipeg had an NHL team with 41 home games – MN has NHL, NBA, MLB, and NFL for approx 170 home games and that doesn’t include University/College sports events). The NHL would be the only game in town for the city and for corporate support (CFL wouldn’t affect much as it’s fairly small potatoes and only happens over the summer). For those who say their is no corporate support in Winnipeg they’re simply uninformed and by into the myths that Winnipeg is a small town.
And while the MTS Centre is smaller than Xcel Energy, 15,000 seats at an average ticket price of $60 (usd) is $900,000 in gross revenue per game from tickets. You think Phoenix makes close to a million dollars a game in gross ticket sales? Even if they COULD get 15,000 fans a game to PAY to see the Coyotes (which they’re not), they’re only charging $37.50 for an average seat. That’s only $562,500 per game in gross revenue. Hell, Winnipeg sells 9000 tickets a game for the Manitoba Moose at an average price of $25. That’s a gross of $225,000 a game to see exhibition hockey. It doesn’t even attract the main hockey fans in this city that are still addicted to the NHL game.
by royal_ on May 14, 2009 5:31 PM CDT up reply actions 0 recs
Bettman’s right about one thing, Winnipeg needed an owner. If they had a homegrown billionaire like Balsillie willing to foot all the bills, then the city may have a chance.
You do need a bigger building than the MTS, however. The costs associated with a team have skyrocketed to the point that luxury suites and sponsorships are a huge portion of revenues, and you can’t make it up entirely by jacking up individual ticket sales.
Plus, a season’s ticket at $60 a seat would cost $2,500. Can they really sell 12,000 of those in Winnipeg?
Blogging on hockey at fromtherink.com
by James Mirtle on May 14, 2009 6:10 PM CDT up reply actions 0 recs
that’s 2.5k yankee doodle dollars, too. why did they build the MTS at only 15k? anybody ever get a reason for this?
by passive_voice on May 14, 2009 6:13 PM CDT up reply actions 0 recs
Although the dollar’s up to about 86 cents lately. Where it really hurts is at about 60.
Blogging on hockey at fromtherink.com
by James Mirtle on May 14, 2009 6:41 PM CDT up reply actions 0 recs
• Minnesota is not even closely comparable to Winnipeg. The Twins and Vikings hardly compete with the Wild, being that the Vikings have 8 home games a season and the Twins play 90% of their games off-season. One ingredient you’re missing is local television revenues. I’m not sure how much it is, but FSN-North certainly pays for the rights to Wild games, and since Minnesota’s population is 5x bigger FSN-North would garner a lot more advertising revenue. Plus revenue generated from merchandise.
• For those who say their is no corporate support in Winnipeg they’re simply uninformed and by into the myths that Winnipeg is a small town.
Calling a city a small town is not a myth when it’s the same size as Akron Ohio.
Minnesota is home to Target, 3M, Cargill, Best Buy, General Mills, Northwest Airlines and 12 other Fortune 500 companies.
I can’t find anything on this list that even comes close to those Minnesota companies (Other than Cargill, which is really based in MN).
And while the MTS Centre is smaller than Xcel Energy, 15,000 seats at an average ticket price of $60 (usd) is $900,000 in gross revenue per game from tickets. You think Phoenix makes close to a million dollars a game in gross ticket sales? Even if they COULD get 15,000 fans a game to PAY to see the Coyotes (which they’re not)
Those corporations, which Winnipeg lacks, are the one’s buying luxury boxes, along with Arena naming rights, etc. These are huge revenue drivers.
FWIW Phoenix drew 14,875/game, and I think in this economy you’d have trouble with $60/ticket anywhere but Toronto. The Senators have an average of $48.82*. I’d imagine Winnipeg would be around $45.
- The “average ticket price” is a joke in and of itself. Premium seats aren’t included, but the team gets to decide what are premium seats. In Colorado that means every single lower bowl seat, which has an average price of $119/seat so you have to be careful with those numbers. Phoenix “premium” seats are $129/seat, and I have no idea how many seats that consists of, or how many of those are sold a game.
You’re argument above is essentially: Winnipeg’s maximum capacity for supporting an NHL team is equal to Phoenix’s current capacity, minus the potential for corporate support and luxury boxes. I’m more convinced than ever that Winnipeg is not a viable NHL town.
by Jibblescribbits on May 14, 2009 6:12 PM CDT up reply actions 0 recs
i agree that minny≠mani
but it is important to consider that the wild ARE competing with the twins and vikings (and t-wolves….for now). people might like to spend entertainment over the course of the year, but they still have limited entertainment spending. money spent on a season’s ticket for the twins is $$ that can’t be spent on wild tix, merch, etc. similarly, ad money is finite.
as for big companies in winnipeg, again, you’re right that it’s not the twin cities. but it’s not barren (canwest global’s a big sumbitch). it’s important to consider that canadian headquarters of multinationals (in this case, Old Dutch, Boeing, Monsanto, Cargill) still like to play up their canadian connections, and would almost definitely back the team.
by passive_voice on May 14, 2009 6:23 PM CDT up reply actions 0 recs
“Plus, a season’s ticket at $60 a seat would cost $2,500. Can they really sell 12,000 of those in Winnipeg?”
Short answer, yes there are. People are desperate for NHL hockey. It’s like $200 a month. There are a lot of people in Winnipeg that can support that. You have to look at the population by POPULATION OF HOCKEY FANS. Winnipeg has like 250,000 hockey fans, whereas you’d be tough to find 50,000 in Phoenix. People simply love hockey in Winnipeg and would support the team greatly. Much like when Minnesota got their team back, you don’t know what you have until it is gone. We wouldn’t let it fail again.
by royal_ on May 14, 2009 7:53 PM CDT up reply actions 0 recs
Being better than Phoenix really isn’t enough. The Coyotes at the moment are in the hole $25-million a year, so Winnipeg would have to significantly ahead of them and find very strong ownership.
I don’t think it’ll ever happen that Winnipeg gets a team, but we’ll see. Perhaps that’s more of a possibility if a second Southern Ontario team is a big hit?
Blogging on hockey at fromtherink.com
by James Mirtle on May 14, 2009 8:20 PM CDT up reply actions 0 recs
I respectfully disagree. The NHL in its current incarnation is unsustainable. You can’t have a healthy league when 6 to 8 of the teams are struggling to survive. The idea that the southern US will even love hockey is a mirage. People simply can’t be passionate for more than 2 or 3 sports, and they already have football, baseball, and soccer. As the economic situation worsens, the NHL will have no choice but to embrace the small markets that have true fans. Revenue sharing and Canadian TV money will allow places like Winnipeg to become part of the NHL again. Sure the NHL in Winnipeg may not make money, but they’ll certainly lose far less money than many current US markets. Most teams “lose” money anyway, that’s the reality of professional sports. Winnipeg would simply need to lose less money.
by royal_ on May 14, 2009 10:03 PM CDT up reply actions 0 recs
There are quite a few successful teams in the U.S. sunbelt. Dallas, San Jose and Anaheim all did very well at the gate this season and would significantly outperform Winnipeg in terms of revenue. Crowds in Carolina have been excellent for the playoffs.
Only five of the bottom 10 revenue teams were in warm-weather climes last season, so it’s not simply a matter of the south vs. the north. Should the league also move the likes of Buffalo, Columbus and the Islanders because they’ve struggled?
Blogging on hockey at fromtherink.com
by James Mirtle on May 14, 2009 10:10 PM CDT up reply actions 0 recs
I believe that depends on a few things. I think cities can only be passionate for a few teams, regardless of their size. It’s probably best to put teams in cities that will have a passion to support the team and one that isn’t overextended. People talk about how Southern Ontario is an underserved market that needs another NHL team, yet they only draw half the fans to their AHL games as Winnipeg. Inevitably someone will make the “minor league teams in a major league market” argument, yet somehow that argument isn’t true for Winnipeg? I know Winnipeg doesn’t have a million people, I know their is a stigma associated with the city due to it’s remoteness from everything else, but the reality there are enough passionate hockey fans in this market that love the game and will support the team through and through. We won’t need a perennial contender like some southern belt teams that will abandon ship as soon as they miss the playoffs 2 seasons in a row (St. Louis, cough, bandwagon, cough). It’d be the ONLY game in town and people would make it work if we ever got a second chance. With Bettman in charge of the NHL, it won’t happen, but perhaps they’ll wake up and give the job to someone that loves the game of hockey.
by royal_ on May 15, 2009 8:07 AM CDT up reply actions 0 recs
whoa whoa whoa
st. louis had good attendance both last year and this year, even before their amazing shot up the standings.
by passive_voice on May 15, 2009 11:03 AM CDT up reply actions 0 recs
I agree with passive_voice – that shot at St. Louis was unwarranted. For a team that’s been in existence 42 years and hasn’t won a Stanley Cup (and which, for that matter, hasn’t made the Finals in 39 years), St. Louis is a pretty good hockey market.
by dzuunmod on May 15, 2009 12:16 PM CDT up reply actions 0 recs
St. Louis finished dead last in league attendance in 2007 with 12,500 fans per game.
http://sports.espn.go.com/nhl/attendance?year=2007
And that’s announced attendance, which we all know if inflated by at least 10%. You think Edmonton or Calgary would ever fall to even the bottom 5 of league attendance with a team at the bottom of the standings? I highly doubt it.
The fans in these places are fickle. I keep hearing about how Carolina and Tampa did great, but all it took was a run to the Stanley Cup. If that’s what it takes to make Phoenix and Nashville work, they could be waiting a long time. At best a team is only going to make the finals once a decade, other than the few dynasty teams. Needing a constant winner to succeed simply can’t work. You need a dedicated fan base willing to stand by the time through thick and thin.
by royal_ on May 15, 2009 1:20 PM CDT up reply actions 0 recs
There are a lot of Canadian teams on the bottom right here. Vancouver is there a year after a run to the finals.
Blogging on hockey at fromtherink.com
by James Mirtle on May 15, 2009 1:25 PM CDT up reply actions 0 recs
And that’s announced attendance, which we all know if inflated by at least 10%. You think Edmonton or Calgary would ever fall to even the bottom 5 of league attendance with a team at the bottom of the standings? I highly doubt it.
I remember the late Pocklington years. Which is to say, yes. (James’s link corroborates this, with the Oilers specifically fifth from the bottom.)
SNN Sports - A theoretical Oilers blog (i.e. theoretically, I write stuff there)
by Doogie2K on May 15, 2009 3:19 PM CDT up reply actions 0 recs
I should have rephrased – does anyone honestly believe that the Oilers or Flames will be in bottom five attendance in the next 20 years? Those records don’t go back that far, but Minnesota also had sub-par attendance during the 90s along with a lot of other teams. The reason for this was old buildings and poor ownership. For Phoenix we may be able to make the poor ownership argument, but I doubt anyone would make it for Nashville, who despite strong ownership and a competitive team, had struggled for years to hit minimum attendance targets outlined in their lease.
My main point is that you can’t build a lasting franchise out of “if they win, they will come”. You have to have more depth than that to get you through the rebuilding years that inevitably come to ever franchise. Look at Colorado right now, they used to be a powerhouse but now they are struggling to win games (although they’re still somewhat competitive). Their attendance has dropped steadily since the lockout and could continue to decline this season. I guess we shall see how great fans are in Denver when they face a three or four season playoff drought.
by royal_ on May 15, 2009 4:05 PM CDT up reply actions 0 recs
I should have rephrased – does anyone honestly believe that the Oilers or Flames will be in bottom five attendance in the next 20 years?
Yes. It’s happened before and it’ll happen again.
Pension Plan Puppets: A Toronto Maple Leafs blog and a group therapy session.
by PPP on May 19, 2009 11:20 AM CDT up reply actions 0 recs
Last week on Hot Stove
Pierre LeBrun said talking to his anonymous source on the Board of Governors noted that the BOG realizes now that allowing Winnipeg and Quebec to move without a hint of support from the league was a mistake.
Bettman regards Canadian hockey fans as nothing more than a cash generating nuisance.
If it wasn’t for the money, he’d have total antipathy for us.
by Exit716 on May 14, 2009 2:30 PM CDT reply actions 0 recs
I’ve been saying for days now that I think the Reinsdorf offer is vapor. If it’s really $80 million less than Ballsillie’s, dependent upon huge lease concessions, and not really a commitment to own the team at all, then there’s nothing there. If the NHL loses on whether the bankruptcy is valid, I think that they have a real problem if this is the best offer they can come up with.
by J. Michael Neal on May 14, 2009 3:21 PM CDT reply actions 0 recs
The big benefit, though is that for now it would keep the biggest creditor (the city) whole on its lease. It would be naive to think that this very local consideration will not play a substantial role in a judge’s thinking, as well as the 350 local jobs that will be saved.
by Gerald on May 14, 2009 4:01 PM CDT up reply actions 0 recs
Would it play into the judge’s thinking as much if Reinsdorf had an out and could leave after only a year or tow, though. I wonder if the judge is elected or appointed and if that would factor into it.
"A vacuum is a hell of a lot better than some of the stuff that nature replaces it with." -- Tennessee Williams
by Baroque on May 14, 2009 5:04 PM CDT up reply actions 0 recs
It depends upon the specifics of the deal. If Reinsdorf backing out would simply re-open all of the issues, he probably would take it into consideration. If the NHL agrees that it will step in and take on the liabilities that Reinsdorf backs out on, then he probably wouldn’t.
by J. Michael Neal on May 15, 2009 2:04 AM CDT up reply actions 0 recs
If i am the judge, an “out” for Reinsdorf would certianly go into my consideration.
by Gerald on May 15, 2009 1:59 PM CDT up reply actions 0 recs
Gerald, I’ve yet to see it reported and I wonder about the city becoming a creditor … if the lease is essentially voided by the bankruptcy, how can there be that penalty for breaking the lease? And would that then mean that Moyes receives substantially less of the purchase price given he has to split it with Glendale?
Blogging on hockey at fromtherink.com
by James Mirtle on May 14, 2009 5:23 PM CDT up reply actions 0 recs
It all depends upon what the bankruptcy settlement is, which the judge has to agree upon.
by J. Michael Neal on May 15, 2009 2:02 AM CDT up reply actions 0 recs
I would love to give an easy answer, but there is not one. The US law is slightly muddled on this.
If the lease is rejected, then the lease is deemed to be in breach and the city cna sue for damages. However, section 502 of the Bankruptcy Code provides limitations on the damages for rent going forward. It is the greater of 1 year or (effectively) 15% of the remainder of the term, with a max of three years. in this case, it would be three years.
However, it seems from my brief research that the cap applies to rent but does not apply to certian other obligations under the lease. A prototypical example is repair costs for the premises. another example MAY be liquidated damages. I cannot say one way or the other on that, though. It probably depends on how the lease is worded. Often, for other reasons related to quick enforcement of arrears, landlords often structure everything payable under the lease as “rent”. The problem then is that puts them under the Section 502 limits if a bankruptcy happens. These issues are not new, though, so one might hope that the city’s solicitors didn’t blow it.
by Gerald on May 15, 2009 2:06 PM CDT up reply actions 0 recs
Bankruptcy judges are federal no? I believe that all federal judges are appointed.
As for your point, it’s a valid one, but one would think that there’s going to be some interest on the judge’s part in seeing the local businesses and Moyes get some money back as well. Somebody’s going to take a pretty big hit if Reinsdorf’s offer basically stiffs all of the other local unsecured creditors (which I suspect it does) and Balsillie’s offer stiffs nobody but the city.
by mc79hockey on May 15, 2009 12:38 AM CDT up reply actions 0 recs
Bankruptcy is federal. Judges are appointed. They are less likely to let local issues sway them, in part because they have to get backed up by the 9th Circuit Court of Appeals, which doesn’t even meet in Arizona.
by J. Michael Neal on May 15, 2009 2:00 AM CDT up reply actions 0 recs
If the Reinsdorf bid is contingent upon large lease concessions, how is the city made whole on the lease? This is some definition of “made whole” of which I am completely unaware.
by J. Michael Neal on May 15, 2009 1:58 AM CDT up reply actions 0 recs
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