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Joyce Clark Unfiltered

For "the rest of the story"

Disclaimer: The comments in this blog are my personal opinion and may or may not reflect an adopted position of the city of Glendale and its city council.

In 2009 when Jerry Moyes put the Coyotes into bankruptcy NHL Commissioner Gary Bettman was desperate to save the situation. His worst nightmare would have come true if Moyes had succeeded in selling the team to Jim Balsille and the team was moved to Canada.

Then, as now, someone or something, had to be thrown under the bus…because, of course, it’s never the League’s fault or a team’s fault when a team goes south. Back then, Jerry Moyes went under the bus but deservedly so. Mr. Bettman said at the time, “The team hasn’t been particularly well run.” This time, Mr. Bettman, has no problem throwing Glendale under the bus, undeservedly.

What a difference a few years can make. A 2009 Financial Post story said, “There is a brand-new building in Phoenix,” Bettman said of the Jobing.com Arena, the Coyotes’ home in Glendale, a Phoenix suburb. “There are people that are supportive of the franchise and want to keep it there.” Here is the link: http://www.financialpost.com/m/bettman+coyotes+situation+phoenix+fixable/1617384/story.html .

Bettman also said at the time, “What you don’t do is just abandon places to go somewhere else because somehow you think you have a divine right to a franchise in a particular place.”  Doesn’t that beautifully sum up exactly what IceArizona has been doing? That certainly has been IceArizona’s attitude and why? Because LeBlanc, et.al., became angry and vengeful when Glendale pulled the plug on their annual $15 million dollar subsidy. It was not a “divine right.”

I’m not sure the general public knows where Glendale’s annual $15 million payment went. The ink was not even dry on the Glendale/IceArizona contract when IceArizona sent a letter to Glendale directing that the $15 million be sent directly to Fortress Investment Group, a major entity that loaned IceArizona money to buy the team. Did you know IceArizona’s owners put relatively little of their own cash up to buy the team? Between the 10 or so investors they managed to raise $45 million toward the purchase price of $170 million with the balance of the purchase funded by two loans–one from Fortress and one from the NHL.

It is finally beginning to dawn on everyone, including the media, where the real problems lie and it’s not the location of the team. It appears as if the management (owners) has literally been systematically raping the team of all of its talent. This is reflective of a string of poor management decisions occurring over the last several years creating a poor product on the ice. This is not to demean the players for there are some very talented men on Gila River ice. However, collectively, they don’t appear to “jell.”

Perhaps the last straw was the recent trade of Martin Hanzal. Martin Hanzal and Shane Doan were buddies…more than buddies, like brothers. They worked the same line on the ice for the team for years. They were a team and could read each other’s moves instinctually. Trading Hanzal had to have been a major shock and wake up call for Doan, indisputably the icon and unique symbol of this franchise. No wonder he is reported to have said that if the right offer were to be made, he would have to give it serious consideration. If and when Doan leaves or retires, his loss will cause many fans to abandon the team.

What about IceArizona’s marketing efforts? Do you remember when they first took over the franchise, there were major media buys and you couldn’t go through a day without seeing at least one Coyotes TV ad, and often more. Today, I bet most of us cannot remember the last time we saw a TV ad for the team. They’ve disappeared from the media market. It is simply a symbol of the lack of time, money and talent being employed to advertise the team and grow the fan base.

Bettman’s ultimatum sent shock waves throughout the Valley. He angered long-term, committed fans who are now voicing remarks like, “leave” or “bye-bye.” He has created enmity where there was none and the actions and comments of IceArizona have split the Valley apart. They have created a bitter pill that no one wants to swallow.

© Joyce Clark, 2017               

FAIR USE NOTICE

This site contains copyrighted material the use of which is in accordance with Title 17 U.S. C., Section 107. The ‘fair use’ of any such copyrighted material as provided for in Section 107 of the US Copyright Law and who have expressed a prior interest in receiving the included information for research and educational purposes. For more information material on this site is distributed without profit to those who have not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democratic, scientific and social justice issues, etc. We believe this constitutes a ‘fair use’ of any such material. For more information go to http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use,’ you must obtain permission from the copyright owner.

The other night I was surfing, trying to find the Coyotes/Blues game. I’m sure it was there but I simply couldn’t find it. The backup plan had me watching the Glendale City Council meeting. Now that council is allowing citizen comments at the beginning of the meeting we are seeing the usual citizen suspects resurfacing at the podium. Andy and Darcy Marwick, residents of Phoenix and dyed-in-the-wool Coyotes haters, opined on their usual complaints. Not to be missed was Glendale resident Bill Dempsky, a former City of Glendale employee, with his usual lament. Ken Sturgis, a Glendale resident, has also started to use this bully pulpit on a regular basis lately. Later in the council meeting Vice Mayor Knaack commented about these usual suspects and their constant references to past history. She felt it was time to stop referring to the past and she urged these citizens to look to Glendale’s future. She suggested that it was time to go back to the old agenda order and place citizen comments at the end of the meeting. We’ll see if that comes to pass.

Citizen Ken Sturgis offered some rather interesting comments. He referred to a “contract” between the city and IceArizona. He claimed that the city’s payment of $15 million dollars a year for arena management was going directly to Fortress and the NHL with IceArizona as merely a pass-through.. Those are the two groups who lent IceArizona the money to buy the team.

I decided to do some checking. Sure enough, I found the “contract.” Actually it’s a notification letter dated September 4, 2013 from IceArizona to the city declaring that as arena manager it had assigned its rights to Fortress and the NHL. Here is the link: http://www.glendaleaz.com/Clerk/Contracts.cfm  . It is C-8584. The letter is signed by Daryl Jones, Chief Operating Officer for the team.

In it IceArizona acknowledges that an assignment of the arena manager notice must be given within 30 days. The sale of the team was recorded on August 5, 2013 and we can assume the assignment of rights was executed the same day. IceArizona notified the city one day before the 30 notification period ended requiring Ice Arizona to formally do so.

What does it all mean? Well, Mr. Sturgis was correct. The assignment of rights, including the $15 million a year for arena management, goes to Fortress and the NHL. That raises other questions. If the $15 million a year is going to their lenders and not IceArizona, how is IceArizona earning enough revenue to cover the arena operations and maintenance costs? The money they borrowed from these two entities went to pay the purchase price of the team. That means IceArizona must rely on revenue sources of ticket sales, suite sales, a percentage of the concessions, the first $20K in every event’s parking revenues, NHL revenue sharing (which are rumored to be as much as $20M a year for the team) and media contracts. It will be difficult to plug in the numbers for these revenue streams as some of it is proprietary. We will not get a full picture until after the end of the Fiscal Year, June 30, 2014.  It is generally assumed that annual O&M costs are in the range of $20 million a year. Don’t forget that IceArizona also must come up with $9 million a year to be paid to the city. The city budgeted $6 million a year for arena management, not $15 million and IceArizona has pledged to cover the difference — $9 million a year. That $9M comes from the ticket surcharge, parking revenues after the first $20K per event and if necessary, the supplemental ticket surcharge. Are these revenue sources enough to cover IceArizona’s expenses? We, the public, don’t know. I suspect IceArizona knows.

© Joyce Clark, 2014

FAIR USE NOTICE

This site contains copyrighted material the use of which is in accordance with Title 17 U.S. C., Section 107. The material on this site is distributed without profit to those who have not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democratic, scientific and social justice issues, etc. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in Section 107 of the US Copyright Law and who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use,’ you must obtain permission from the copyright owner.

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.