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Joyce Clark Unfiltered

For "the rest of the story"

Leblanc

Anthony LeBlanc

Ever since the NHL principals and Renaissance Sports and Entertainment group (RSE) principals descended upon Glendale on Tuesday, May 28, 2013 new speculation blossoms. On May 30, 2013 Forbes online posted an article by Mike Ozanian entitled Phoenix Coyotes $170 million sale to be partially funded by NHL. Here’s the link: http://www.forbes.com/sites/mikeozanian/2013/05/30/phoenix-coyotes-170-million-sale-to-be-partially-funded-by-nhl/. The article appears to be factually correct and correlates with the information learned several days ago about the Renaissance deal. Thank God, at least it’s not a hatchet job from the Arizona Republic (or as it is fondly called in some circles, the Arizona Repulsive).

Bettman

Gary Bettman

Breaking it down RSE gets a $120M loan (or 70% of the purchase price of $170M) from Fortress Investment group. Unconfirmed sources say the interest rate is 9% but I have no information on the length of the loan.  It gets another loan from the NHL of $80M (50% but no info on rate or length of time) and RSE puts in $45M (26% equity investment). Sources indicate that George Gosbee’s participation is $10M with minor investors contributing approximately $4M – $5M each to cover the $35M balance. But those figures total $250M you say…more than the purchase price of $170M. What’s the extra $80M for? To cover losses incurred over several years. Oh, and by the way, RSE doesn’t have to start paying the NHL for five years and they have been assured by the NHL that their revenue sharing will be “healthy.” This is a very, very sweet deal for RSE.

The best analogy I can come up with is this. You buy a $1700 refrigerator. You put $1200 of it on your credit card and you kick in $450 cash. Oh, and by the way, the company you are buying the fridge from doesn’t require payment for 5 years (of course, the interest is piling up) AND it will rebate you $800 that you can use for repairs, etc.

Now, you have three cousins, Darin (Pastor), Greg (Jamison) and Matt (Hulsizer) but the dealer will only offer his spectacular deal to one of the four of you. Darin is willing to pay $500 in cash; Greg is willing to put up $550 in cash and Matt is willing to pay $600 in cash. You would think that one of your three cousins was a lock to get the refrigerator deal but that’s not the case. Perhaps you and the dealer have an “understanding” and you end up with the deal. Go figure.

Bettman

NHL Commissioner
Gary Bettman

Daly

NHL Deputy Commissioner
Bill Daly

On May 24 media sources announced that the NHL has chosen a bride-to-be owner of the Phoenix Coyotes – Renaissance Sports and Entertainment led by George Gosbee and Anthony LeBlanc. It was also widely reported that Commissioner Bettman and Deputy Commissioner Daly along with Gosbee/LeBlanc will do a “walk around” with the Mayor and City Council on Tuesday morning, May 28th. The term “walk around” is a slang expression. It means that meeting all seven of the council at one time would violate the Open Meeting Law unless they were making a presentation at a public council workshop or meeting. To avoid violation of the Open Meeting Law these gentlemen will meet in groups of no more than 3 councilmembers (4 councilmembers would trigger a violation).

Craig Morgan is accurate in his May 24th article for Fox Sports Arizona entitled Sources: Gosbee/LeBlanc group has agreement to purchase Coyotes when he says, “ Bettman, Daly and RSE will meet with Glendale Mayor Jerry Weiers and then will hold two separate meetings, each to be attended by three councilmembers.” Here is the link: http://www.foxsportsarizona.com/nhl/phoenix-coyotes/story/Sources-GosbeeLeBlanc-group-has-agreemen?blockID=905273&feedID=3702 .

Paul Giblin’s piece for the Arizona Republic of May 24th entitled NHL may lay out Coyotes ownership deal Tuesday, mayor says reports the same saying, “Bettman, Daly and RSE will meet with Glendale Mayor Jerry Weiers and then will hold two separate meetings, each to be attended by three councilmembers.” Here is the link: http://www.azcentral.com/community/glendale/articles/20130524nhl-expected-lay-out-coyotes-ownership-deal-tuesday-mayor-says.html .

So far, so good. They both report the very same fact. From here on in, read carefully, very carefully. Morgan, in his article says, “If RSE is not able to reach an agreement with Glendale, sources (my bold) have said that John Kaites’ group is still a possibility to purchase the team, as would be Greg Jamison’s group if it could gather the necessary investors. But multiple sources (my bold) have said that the NHL is no longer interested in dealing with Darin Pastor, whose bid was recently rejected by the league.” These sources with no attribution are dealing in speculation. Could be fact. Could be fiction.  Giblin, in his article, says, “Sherwood said he believes (my bold) any potential owners will want to be paid substantially more than $6 million a year, which is the figure that’s been earmarked in numerous proposed city budgets for the arena management fee.” One person’s belief, especially in this instance, is not fact when there are 6 other councilmembers who may, or may not share that belief.

board-gosbee

George Gosbee

Leblanc

Anthony LeBlanc

What have we learned that we did not already know?  Bettman, Daly, Gosbee and LeBlanc will meet the Glendale city council on Tuesday, May 28th. It appears that RSE will become the NHL’s choice as owner. That is an assumption until the NHL makes a formal announcement. Public release of the facts of the deal are essential. Questions need answers, such as:  Is there an opt-out or relocation clause? What is the time period for either? What is the ratio of equity to debt? Councilmember Sherwood stated publicly that we will hear the deal parameters at the council workshop on Tuesday, June 4, 2013.

There is another fact that is being ignored and perhaps it will be ignored permanently as the city has the discretion to ignore all or part of the Beacon RFP– and that is the Beacon Sports/City of Glendale RFP requirements on page 5:

Minimum Requirements/Qualifications for Managers.

In order to have its response evaluated, a Manager (or if an affiliate, its parent company) must demonstrate at least one of the following requirements:

i. Is a nationally or regionally recognized facility management company which manages publicly or privately-owned public assembly and/or sports and entertainment facilities;

ii. During the past three years, has successfully managed at least one NHL or National Basketball Association (“NBA”)/all-purpose arenas with a seating capacity of at least 10,000 persons; or;

iii. The Manager must have current experience in operating such a facility on behalf of a public entity, such as the City of Glendale;

The Renaissance Sports and Entertainment group was organized only recently for the express purpose of attempting to purchase the Coyotes. They have no demonstrable experience as a fledgling group in managing any sports or entertainment facilities, much less an NHL or NBA all-purpose arena.

Coalition 1 photo

Glendale City Council
CM Alvarez absent

I applaud Bettman and Daly having finally made a decision in terms of ownership but what were they thinking? The NHL must be ready to use its muscle with a “take it or leave it” strategy. Do they seriously think a MAJORITY of this council will accept as an arena manager a newly formed group with no track record in managing an arena? And do they think a MAJORITY of this council will expend more than the $6M budgeted in the soon-to-be-approved city’s Fiscal Year 2013-14 Budget? Councilmember Sherwood says he has a plan but will it turn out to be an acceptable one? Not unless this council is suddenly willing to listen to the likes of Ken Jones, Arthur Thruston and Andrew/Darcy Marwick berating them for subsidizing a sports team during the Public Comment period at every council meeting –forever.

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deadline 1True to form, a deadline in not really a deadline when it comes to the Coyotes saga. Every Coyotes fan, hanger-on or anyone associated  with the Coyotes is waiting anxiously for May 31,2013 as if it is magical. The deadline that everyone is awaiting is the May 31st deadline to respond to the Beacon Sports/City of Glendale RFP. It is arbitrary and irrelevant because it presupposes any and all bidders for the team will submit by that date. That will probably not happen as there may be one or two bidders (or re-bidders) that will not submit to the NHL until May 31st.

The city in an attempt to cover any possible contingency made sure it has an out-clause on page 7 of the RFP, “City reserves the right to amend, cancel or reissue the RFP at its sole discretion. This includes the right to change the Response Due Date and Contract Award Date.”

A scenario could develop whereby a bidder for the team submits after May 31st. If a bid submitted to the NHL after May 31st turns out to be the best bid it will not be influenced by the Beacon RFP deadline and the NHL will be bringing them in tow to meet with whomever in Glendale when they are ready to do so. The NHL certainly hasn’t set an arbitrary deadline of May 31st. Why should it?

Of course, there is the issue of the General Manager’s and Coach’s contracts but unfortunately, they will not be determinants.

approveNo one knows what the bidders’ deals look like except the NHL and no one knows what will be acceptable to it. Maybe the “Shadow knows” (those of you who remember radio shows before TV came along, will recognize the phrase). Without knowledge of the NHL criteria no one knows if there is even a would-be bride out there.

I would think any deal heavily debt-laden with very little equity would make the NHL very, very nervous. No one, least of all the NHL, wants to repeat this ordeal (for that is what it has become) for a very long time. A deal with a lot of debt opens the door for the possibility of a repeat performance.

So we wait. It will happen – or not – when it happens but don’t hang your hat on an arbitrary deadline. It’s like “where’s the pea?” The deadline can be under any of the shells and none of them may be labeled May 31st.

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Speculation and a nickel won’t buy a cup of coffee

Posted by Joyce Clark on May 13, 2013
Posted in City of Glendale  | Tagged With: , , , , , | 6 Comments

Coyotes logoI have been following all of the public speculation since the Renaissance group (LeBlanc/Gosbee) and the Pastor group have submitted bids to the NHL. There are some opining right this minute on which bid is better. How can anyone possibly know? There is only one entity, the NHL, that has the complete package of information and they’re not telling. It is interesting, when you think about it, that neither bid has been blessed by the NHL to date. If either bid was that spectacular trumpets would be blaring. I suspect there are a few more bidders out there. Why declare a winner when all of the contestants haven’t signed in yet? Information is leaking slowly like a punctured tire but only the positive stuff that the groups believe will advance their bid before the public eye. That’s not the eye with which they should concern themselves. The Pastor group’s blitz with the media and fans may have earned them a few new friends but not the ones that count.

ouijaUntil such time as we can see whom the NHL blesses and the kind of deal it is I, like everyone else, will just have to wait it out. Some of you will relate to this analogy.  It’s like being pregnant. Your due date is June 1. You’re in the home stretch. You’re tired of being miserable and you just wish this baby would get on with it, quit fooling around and be born. I know the fans are stretched thin and are just wishing this baby would be born. Until then speculation is about as good as using a Ouija board.

Post Script: Just learned NHL rejected Pastor bid. This makes the case that speculation is useless. NHL has their own agenda and will accept a bidder that most closely meets that agenda. Do you know what the NHL’s agenda is? If so, would you please share it with all of us?

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Numbers don’t lie…

Posted by Joyce Clark on May 10, 2013
Posted in Jobing.com arena  | Tagged With: , , , , | 2 Comments

There has been a great deal of furor since Paul Giblin of the Arizona Republic came out on May 5, 2013 with a number that Glendale would have to pay to run the arena of $5.1 to $5.5M per year. See this link: http://www.azcentral.com/community/glendale/articles/20130502phoenix-coyotes-jobing-arena-costs.html .

jobing.com arena

Jobing.com arena

On August 8, 2012 (9 months ago), Lisa Halverstadt, a former reporter with the Arizona Republic stated, “If the team stays, the city estimates it will cost about $12.2 million a year, or $54 per resident, when costs and revenue are factored. That’s in addition to the roughly $13 million a year to retire the debt on the arena in about 20 years. But the city says it would face even steeper financial challenges without the Coyotes. If the team leaves, Glendale will still be on the hook for the arena debt. But the city also projects it will then need to come up with millions of dollars a year to pay an arena manager and other expenses if there is no anchor tenant for the arena. The city estimates that would cost $15.8 million, or $70 per resident. With that in mind, Glendale projects it would save about $3.5 million annually by keeping the team.” Here is the link: http://www.azcentral.com/community/glendale/articles/20120801glendale-few-options-jobing-arena.html .

Even the vaunted Arizona Republic is not consistent in the numbers it offers to its readers. Nine months ago $12M a year to operate the arena was a good number. Now, apparently $5M is the number you should believe.

Below are the numbers from 2006 and 2007 when Jerry Moyes owned the team. Annual revenues were $6.4M to $7.1M. Total expenses were $13.4M to $12.9M. Net loss was $6.9M to $5.7M.

The auditor’s report shows the following :

…………………………………………………………..2006                                   2007

Revenues……………………………………………. $7,142,000                    $6,499,000

Expenses:

Event…………………………………………………. $5,616,000                    $4,413,000

General and Administrative……………………. $ 7,303,000                    $ 9,052,000

Total expenses……………………………………… $12,919,000                  $13,465,000

Net Loss……………………………………………..  ($5,777,000)                ($6,966,000)

These numbers from 6 years ago track with the current NHL numbers of revenues of approximately $6M; expenses of approximately $12M; and loss of approximately $6M.

numberFor months  I have consistently used these very same numbers obtained under a Freedom of Information request from the city. Moyes’ numbers come from an auditor’s report and the NHL numbers were submitted monthly to the city. There is no doubt in my mind that it takes approximately $12M to operate Jobing.com arena annually with revenues of approximately $6M and debt of $6M. The numbers don’t lie.

 

 

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Warfare erupting

Posted by Joyce Clark on May 9, 2013
Posted in Jobing.com arena  | Tagged With: , , , , , | No Comments yet, please leave one

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