Monthly Archives: July 2009

In yesterday’s post, I asked the question whether or not Jerry Moyes could have been the victim of a ‘squeeze play’.

Was Mr. Moyes intentionally setup for financial failure in the venture for ownership of the Phoenix Coyotes?

Is there possibility of ‘Collusion‘ amongst more players in this case is the question – beyond the ‘bidders’, and extending far deeper?

Would there be a connection between an investment company, the league, and the City of Glendale?

We can only observe evidence.

Yesterday, after posting the article on the ‘squeeze play’, three significant visits were made in this order, and at these times, to makeiteighteh.com (this site):

• 2:06 PM EST – Vieste LLC (Chicago, IL)
• 2:33 PM EST – NHL Enterprises (New York, NY)
• 5:44 PM EST – City of Glendale (Glendale. AZ)

The NHL had not prior visited the site to our knowledge, and their visit came just 27 minutes after Vieste, LLC’s. Vieste LLC had visited the site on a prior date, before yesterday’s story.

Today, the lawyer for Jerry Moyes will deposition Commissioner Gary Bettman, and Bill Daly for four hours.

If you are inclined, it may be a good time to wish Jerry well, to say a prayer for him, and to hope that justice will prevail.

I believe Jerry Moyes deserves to walk away at the end of the day, with head held high. It takes courage to stand up and face some pretty tough times. Jerry Moyes has plenty of courage.

For the bullet summary, please go here.

All baseball fans know the term ‘squeeze play’.

Well, in business, the term ‘hostile takeover’ is familiar, especially after the movie, ‘Wall Street’ hit theatres many years ago. If we are not careful, we risk ‘dating ourselves’. Oh well, with age comes wisdom; something at least we benefit from as the years sail along.

Jerry Moyes

When I think of Jerry Moyes, I think of a man that obviously fell on difficult times when the gas prices made trucking a nightmare. Moyes was not alone in this problem, as truckers, both independent, and the larger companies, like Mr. Moyes’ were hit hard with shrinking cash flow and profit margins. There is one thing about the trucking industry though, the people are downright genuine. There is not too much hidden that you cannot  read in the eye. Something to be admired. A hard life, but a simple life. These men and women really do earn their money in an honest way.

When things started to go bad, Moyes did what he could to save the Coyotes team, and poured a good chunk of his personal wealth into the franchise. It just goes to show you, that in business, passion beats logic. We don’t want to lose what we place our identity in. I think it is fair to say, Jerry Moyes was honest and passionate about the Phoenix Coyotes, evidenced by his willingness to lose much to keep the team afloat. Even going as far as buying a 1000 tickets a game to get the attendance to 14,000. Sounds like a man that took pride in his team. Not perfect, but the evidence is in the money poured from out of his pockets to the team.

Looking at the current court fiasco with the Phoenix Coyotes, I can’t help but reflect on the presumptuous nature of the ‘stay home’ bid placed by Jerry Reinsdorf. This, of course, started long before learning of the close relationship that his son Michael Reinsdorf shares with the City of Glendale. And, before learning of Michael Dell’s involvement with CityNorth in Phoenix, that is now in the Supreme Court being challenged for the ‘Gift’ laws which prohibit private corporations from taking advantage of the taxpayers, and relates to sales tax based land subsidies. In short, it means taxpayers pay many times over for a given project. As the example cited, the $480,000 single parking spot. As argued, the person could be taken by helicopter cheaper!

And, as we learned, it would seem that Michael Reinsdorf is responsible for a fair bit of sports facility development in Glendale, a strong reason to want to ensure it succeeds. Michael Dell, involved in land development, and also land ownership (in Glendale)  seems to have deep roots in the infrastructure growth in parts of Phoenix as well.

So, again, on the outside looking in, we would be led to believe that Jerry Reinsdorf was ‘courted’ by the City of Glendale and the NHL because he was a succesful, knowledgeable sports magnate, and that would be true. But, it is only when we look at the ‘bid’ that we start to question how on earth he would expect it to satisfy the court, the City of Glendale, and the secured creditors.

The City of Glendale has ‘partnerships’ with business people like Michael Reinsdorf to consult and manage, and with wealthy people that are willing to invest in the land development projects.  If there is one thing to be learned, these projects have promise of huge revenue streams for the investors, and what better way to ensure payment, than when the arrangement is with a municipal government like Glendale, backed by the taxpayers?

We can see that land development is a competitive issue, as other municipalities in Phoenix area, and Arizona would compete to try to get the same investors to build in their cities. What would win the prize in all liklihood is a generous offer from the municipality, and a high price tag to the taxpayer. International Facilities Group (IFG), owned by Michael Reinsdorf, was responsible for the negotiation and consultation on the Arizona Cardinals Stadium, and the competition was described as ‘fierce’. As I mentioned before, I would like to know how lucrative the offer to those investors was.

Here lies the problem. As a government, when you get in deep with private corporations that provide infrastructure growth, are you at risk of favoritism? I would argue, and I am sure the Goldwater Institute, and the Supreme Court for that matter would argue the same. Correct me if I am wrong, but shouldn’t government be run in a non-biased, fair to all bidders way? I would again argue yes.

Otherwise, what may happen, is the private corporations will acquire too much power through the relationships with the municipality. And, by the nature of the debt obligations that the City would be on the hook for, the private corporations start to have too much say, and voila, we have a municipality at the mercy of private corporate influence, a taxpayer’s nightmare.

Is this what is happening in parts of Arizona? In Phoenix which has led to the benchmark CityNorth case in the Supreme Court? In Glendale? I would have to say, absolutely. And, will it continue to happen if the court or political battles don’t stop it? Yes again.

O.K., so having rambled on, how on earth does this apply to the Phoenix Coyotes? How can I question the state of the Coyotes, and the worry that Jerry Moyes has been victim of a ‘squeeze play’? Good questions. I submit these facts for your consideration.

It is well documented that the Phoenix Coyotes have been bleeding red ink since their time in Phoenix, even before being moved to Glendale. When the Jobing.com arena was built, International Facilities Group (IFG) was responsible for the project. They even had a full time employee on site after the arena was built for ongoing consultation.

IFG also professes to be experts in lease negotiations and management. It begs the question, that if you built the arena, wouldn’t you suggest you be the consultant for the lease? And, if the municipality decided to go it alone, wouldn’t you suggest they get the professional direction you as a company would offer? You bet. I would.

There remains the questions. Who holds the Jobing.com bonds, and who is responsible to ensure the negotiations for the lease ‘suit the needs of the client’ and the tenants? To date, I cannot uncover that information. I wonder if someone else might be able to add some light in these important areas. The reason the bond is of significance, is in the ‘sales tax’ portion. Would that make it a ‘subsidy’ as is issue in CityNorth in Phoenix?

The reason the arena lease management is significant, is because the Coyotes were not doing well in aspect of paying the lease, or the expenses as a whole, and you would hope someone would jump up and shout, “let’s help Jerry, it isn’t working”? To my knowledge, the City of Glendale wasn’t helping Jerry much.

And here is the real kicker. We keep coming back to Michael Dell for some odd reason. Dell who runs SOF Investments, and is the secured creditor for $80 million.

Well, what is most significant with the loan to Jerry Moyes from Dell isn’t the amount. It is the terms that David Shoalts outlines very well :

Almost everything the Phoenix Coyotes own or earn is pledged as collateral to SOF Investments LP of New York, according to financial documents obtained by The Globe and Mail……

Further, all revenue is pledged to SOF, except $2.5-million annually in arena-naming rights, $1.50 a ticket owed to the city of Glendale (for paying $180-million toward the $220-million arena) and $9 a ticket for “all NHL hockey events” to the club. Other revenue includes NHL broadcasting rights, any share of future expansion or relocation fees, revenue sharing, merchandise sales, concessions, sponsorship contracts and practice facility rentals.

The $9 cut from ticket sales does not go far. Through 21 home games, the Coyotes ranked 26th among the NHL’s 30 teams in attendance with an announced average crowd of 14,789 a game.

The Coyotes received a reported $15-million in revenue sharing last season from the NHL’s wealthiest clubs, the most of any franchise that qualified for the handout.

Rocket science doesn’t have to assist us here. Pulling out the calculator supports definitively what Forbes and others are saying. With the current state of the finances, loans, lease, gate receipts, salary floor, etc., etc., the stand alone viability of the Phoenix Coyotes is a no brainer. It isn’t going to fly.

The immediate question is this. If the City of Glendale knew the lease was not working why didn’t they help? If Michael Dell knew the loan terms put Jerry Moyes in financial suicide mode, why didn’t he alter the loan terms? It wasn’t working, that was obvious. Was there a collusion between the City of Glendale, and the others involved to ensure the financial stranglehold on Jerry Moyes?

If Jerry Reinsdorf is going to take over this team why is Glendale negotiating with him when they wouldn’t with Moyes? If Jerry Reinsdorf needs to rework/renegotiate the SOF loan with Michael Dell, why would Dell do it for Reinsdorf and not Moyes?

From the outside looking in, one might speculate there are a couple of things likely here. Favoritism based on relationship, and favoritism based on a business network that exists

The results of the succesful 'squeeze play' in baseball

between these parties and the City of Glendale. Jerry Moyes just wasn’t in on the party!

There is one thing about baseball and the ‘squeeze play’. The team doing it all know their roles, and how it will come off. It takes the whole team to make it successful! Perhaps now we know what lawyer for the coalition, John Kaites meant, when he said 

“It’s a robust group, and that is what it’s going to take to save the team,” .

May common sense and justice  prevail –  for the sake of the game, for the sake of the taxpayer, and even for Jerry Moyes, faults and all.

For the bullet summary, please go here.

All baseball fans know the term ‘squeeze play’.

Well, in business, the term ‘hostile takeover’ is familiar, especially after the movie, ‘Wall Street’ hit theatres many years ago. If we are not careful, we risk ‘dating ourselves’. Oh well, with age comes wisdom; something at least we benefit from as the years sail along.

Jerry Moyes

When I think of Jerry Moyes, I think of a man that obviously fell on difficult times when the gas prices made trucking a nightmare. Moyes was not alone in this problem, as truckers, both independent, and the larger companies, like Mr. Moyes’ were hit hard with shrinking cash flow and profit margins. There is one thing about the trucking industry though, the people are downright genuine. There is not too much hidden that you cannot  read in the eye. Something to be admired. A hard life, but a simple life. These men and women really do earn their money in an honest way.

When things started to go bad, Moyes did what he could to save the Coyotes team, and poured a good chunk of his personal wealth into the franchise. It just goes to show you, that in business, passion beats logic. We don’t want to lose what we place our identity in. I think it is fair to say, Jerry Moyes was honest and passionate about the Phoenix Coyotes, evidenced by his willingness to lose much to keep the team afloat. Even going as far as buying a 1000 tickets a game to get the attendance to 14,000. Sounds like a man that took pride in his team. Not perfect, but the evidence is in the money poured from out of his pockets to the team.

Looking at the current court fiasco with the Phoenix Coyotes, I can’t help but reflect on the presumptuous nature of the ‘stay home’ bid placed by Jerry Reinsdorf. This, of course, started long before learning of the close relationship that his son Michael Reinsdorf shares with the City of Glendale. And, before learning of Michael Dell’s involvement with CityNorth in Phoenix, that is now in the Supreme Court being challenged for the ‘Gift’ laws which prohibit private corporations from taking advantage of the taxpayers, and relates to sales tax based land subsidies. In short, it means taxpayers pay many times over for a given project. As the example cited, the $480,000 single parking spot. As argued, the person could be taken by helicopter cheaper!

And, as we learned, it would seem that Michael Reinsdorf is responsible for a fair bit of sports facility development in Glendale, a strong reason to want to ensure it succeeds. Michael Dell, involved in land development, and also land ownership (in Glendale)  seems to have deep roots in the infrastructure growth in parts of Phoenix as well.

So, again, on the outside looking in, we would be led to believe that Jerry Reinsdorf was ‘courted’ by the City of Glendale and the NHL because he was a succesful, knowledgeable sports magnate, and that would be true. But, it is only when we look at the ‘bid’ that we start to question how on earth he would expect it to satisfy the court, the City of Glendale, and the secured creditors.

The City of Glendale has ‘partnerships’ with business people like Michael Reinsdorf to consult and manage, and with wealthy people that are willing to invest in the land development projects.  If there is one thing to be learned, these projects have promise of huge revenue streams for the investors, and what better way to ensure payment, than when the arrangement is with a municipal government like Glendale, backed by the taxpayers?

We can see that land development is a competitive issue, as other municipalities in Phoenix area, and Arizona would compete to try to get the same investors to build in their cities. What would win the prize in all liklihood is a generous offer from the municipality, and a high price tag to the taxpayer. International Facilities Group (IFG), owned by Michael Reinsdorf, was responsible for the negotiation and consultation on the Arizona Cardinals Stadium, and the competition was described as ‘fierce’. As I mentioned before, I would like to know how lucrative the offer to those investors was.

Here lies the problem. As a government, when you get in deep with private corporations that provide infrastructure growth, are you at risk of favoritism? I would argue, and I am sure the Goldwater Institute, and the Supreme Court for that matter would argue the same. Correct me if I am wrong, but shouldn’t government be run in a non-biased, fair to all bidders way? I would again argue yes.

Otherwise, what may happen, is the private corporations will acquire too much power through the relationships with the municipality. And, by the nature of the debt obligations that the City would be on the hook for, the private corporations start to have too much say, and voila, we have a municipality at the mercy of private corporate influence, a taxpayer’s nightmare.

Is this what is happening in parts of Arizona? In Phoenix which has led to the benchmark CityNorth case in the Supreme Court? In Glendale? I would have to say, absolutely. And, will it continue to happen if the court or political battles don’t stop it? Yes again.

O.K., so having rambled on, how on earth does this apply to the Phoenix Coyotes? How can I question the state of the Coyotes, and the worry that Jerry Moyes has been victim of a ‘squeeze play’? Good questions. I submit these facts for your consideration.

It is well documented that the Phoenix Coyotes have been bleeding red ink since their time in Phoenix, even before being moved to Glendale. When the Jobing.com arena was built, International Facilities Group (IFG) was responsible for the project. They even had a full time employee on site after the arena was built for ongoing consultation.

IFG also professes to be experts in lease negotiations and management. It begs the question, that if you built the arena, wouldn’t you suggest you be the consultant for the lease? And, if the municipality decided to go it alone, wouldn’t you suggest they get the professional direction you as a company would offer? You bet. I would.

There remains the questions. Who holds the Jobing.com bonds, and who is responsible to ensure the negotiations for the lease ‘suit the needs of the client’ and the tenants? To date, I cannot uncover that information. I wonder if someone else might be able to add some light in these important areas. The reason the bond is of significance, is in the ‘sales tax’ portion. Would that make it a ‘subsidy’ as is issue in CityNorth in Phoenix?

The reason the arena lease management is significant, is because the Coyotes were not doing well in aspect of paying the lease, or the expenses as a whole, and you would hope someone would jump up and shout, “let’s help Jerry, it isn’t working”? To my knowledge, the City of Glendale wasn’t helping Jerry much.

And here is the real kicker. We keep coming back to Michael Dell for some odd reason. Dell who runs SOF Investments, and is the secured creditor for $80 million.

Well, what is most significant with the loan to Jerry Moyes from Dell isn’t the amount. It is the terms that David Shoalts outlines very well :

Almost everything the Phoenix Coyotes own or earn is pledged as collateral to SOF Investments LP of New York, according to financial documents obtained by The Globe and Mail……

Further, all revenue is pledged to SOF, except $2.5-million annually in arena-naming rights, $1.50 a ticket owed to the city of Glendale (for paying $180-million toward the $220-million arena) and $9 a ticket for “all NHL hockey events” to the club. Other revenue includes NHL broadcasting rights, any share of future expansion or relocation fees, revenue sharing, merchandise sales, concessions, sponsorship contracts and practice facility rentals.

The $9 cut from ticket sales does not go far. Through 21 home games, the Coyotes ranked 26th among the NHL’s 30 teams in attendance with an announced average crowd of 14,789 a game.

The Coyotes received a reported $15-million in revenue sharing last season from the NHL’s wealthiest clubs, the most of any franchise that qualified for the handout.

Rocket science doesn’t have to assist us here. Pulling out the calculator supports definitively what Forbes and others are saying. With the current state of the finances, loans, lease, gate receipts, salary floor, etc., etc., the stand alone viability of the Phoenix Coyotes is a no brainer. It isn’t going to fly.

The immediate question is this. If the City of Glendale knew the lease was not working why didn’t they help? If Michael Dell knew the loan terms put Jerry Moyes in financial suicide mode, why didn’t he alter the loan terms? It wasn’t working, that was obvious. Was there a collusion between the City of Glendale, and the others involved to ensure the financial stranglehold on Jerry Moyes?

If Jerry Reinsdorf is going to take over this team why is Glendale negotiating with him when they wouldn’t with Moyes? If Jerry Reinsdorf needs to rework/renegotiate the SOF loan with Michael Dell, why would Dell do it for Reinsdorf and not Moyes?

From the outside looking in, one might speculate there are a couple of things likely here. Favoritism based on relationship, and favoritism based on a business network that exists

The results of the succesful 'squeeze play' in baseball

between these parties and the City of Glendale. Jerry Moyes just wasn’t in on the party!

There is one thing about baseball and the ‘squeeze play’. The team doing it all know their roles, and how it will come off. It takes the whole team to make it successful! Perhaps now we know what lawyer for the coalition, John Kaites meant, when he said 

“It’s a robust group, and that is what it’s going to take to save the team,” .

May common sense and justice  prevail –  for the sake of the game, for the sake of the taxpayer, and even for Jerry Moyes, faults and all.

Buy Now…… Pay (‘dearly’) later!…….Land Development Subsidies and ‘How the Rich get Richer’

‘With all the talk of the Phoenix woes with the land subsidy scandal related to CityNorth (as discussed in this previous article), could it be that Glendale is a closer neighbour to Phoenix in more than just geography? Has the City of Glendale sold out to private corporation usury in land development subsidies that grossly inflate the payments that otherwise ‘should be’ made on infrastructure projects?

Mayor Elaine Scruggs in 'better times' with Wayne Gretzky

And, as it relates to the Phoenix Coyotes court case, what incentive would this situation ‘add’ to the City of Glendale’s desire to keep things quite ; to ensure some truths don’t come out? So much so, that the City has turned on it’s relationship with Wayne Gretzky, and are questioning his being owed some pretty significant money?

In our last post, we mentioned some players in this hockey game that extends off the ice, and into the investment arena.

Michael Dell, and his MSD Capital Corporation, is implicated in the Supreme Court battle in Phoenix on the CityNorth

Michael Dell (Dell Computer)

subsidies, where the bottom line is the City is on the hook for approximately $480,000 for a place to park a car. There were 200 parking spots paid by taxpayers to the tune of $97 million dollars. Great deal for the private corporations lending effort to help a city develop it’s land. But, the cost to the taxpayers is significant. It’s like buying furniture with no money down, and no payments for 12 months, only to find when the interest rate comes into play, you are left scrambling to find a banker to  save you from the ridiculous amount the financer expects you to pay. If you do the math, you might be able to buy the same item if you ‘had the cash’ with a small fraction of the total obligation.

Why would Glendale get itself involved in something like this? Well, you would think once you make this kind of decision, you likely would consider it ‘going for broke’. Broke in this case may be the operative word.

From the Sports Economist:

Several years ago, Phoenix suburb Glendale paid about $180 million to build a hockey stadium for the Coyotes. The Coyotes had already been in the Valley for several years, losing money all the while, and had shed one ownership team for another fronted by Wayne Gretzky. It was shear madness to build them a stadium, as their chances of financial success were almost non-existant. It was already clear at this point that hockey was not going to be a big draw in Arizona. For this reason, Scottsdale and Phoenix both ended up passing on subsidizing the team before Glendale, out to prove it was a “real” city, stepped up to the plate with a wad of taxpayer money.

Bond details: $180 million (of which $150 million is in the form of  ’sales tax’ bonds). The ‘sales tax’ issue may be where a subsidy issue lies, similar to the CityNorth fiasco.

There is some confusion in reporting as to how much the City of Glendale must pay on the arena bonds, and what the total debt obligation may be.

The City’s reported payment figure of $9 million per year doesn’t make sense if the  $720 million lease penalty is an indicator of total obligation. Would that suggest the bond is costing much more? Sounds more like that $480,000 parking ‘spot’ doesn’t it? And, it may explain the huge penalty, and ‘long term’ requirements of Jobing.com to produce sales tax revenues.

If the true overall cost of the lease obligation to the City is $720 million , that would be the equivalent of building Jobing.com arena four times over:

Glendale spokesman Gary Husk confirmed the $720-million penalty clause and added the municipality expects it to be paid should the Coyotes vacate the arena, built three years ago at a cost of $178 million.

Is this penalty reasonable? It lends itself to much speculation as to what the bond terms are, in light of the facts.

The big question that comes to mind is, when companies see  great profit opportunities like CityNorth, would they be inclined to continue to build relationships with the municipality, and look for other great subsidy opportunities? You would think so. And it also makes you wonder what they are feeding us, when they say it will just hurt the restaurants and bars surrounding the Jobing.com arena? Wait, aren’t those the same restaurants and bars that the new owners would seek concessions from?

Well, it’s interesting to note that again, the secured creditor in the Phoenix Coyotes case, Michael Dell, has more land involvment in the Phoenix area, interestingly in Glendale:

The Bidwill family helped put Glendale on the world’s sporting stage when it moved the Arizona Cardinals to the West Valley last year.

Now, in the Bidwills’ first plunge into a major private development, Arizona’s NFL dynasty plans to build a 4.4 million-square-foot corporate district just south of University of Phoenix Stadium, The Arizona Republic has learned.

cbd101 - The Next Great Subsidy Deal?

The development, called cbd101, would bring Glendale its first skyscraper, an iconic tower reaching upward of 40 stories, rivaling Arizona’s tallest buildings.

And the article continues:

The Bidwills are plunking down $55 million to purchase the land from MSD Capital, an investment firm owned by computer magnate Michael Dell. The first phase of the development could break ground as early as 2009.

City Manager Ed Beasley said the Bidwills’ plans wouldn’t compete with other nearby developments but

City Manager, Ed Beasley

 rather would fulfill one of the Glendale’s primary goals: luring high-end jobs. “The possibilities now become extremely exciting,” Beasley said.

The city has experience working with team owners on commercial development.

Well, we are starting to see how Glendale, Phoenix and likely Arizona are using private corporations to mortgage the taxpayers’ future. But, has it and will it actually do what it is supposed to do…increase growth, jobs, and attract residents? That is another story.

It should be noted, that Michael Reinsdorf”s company, International Facilities Group (IFG) built the Bidwills the Cardinals Stadium, and note the level of involvement as described in the company website:

AZ Cardinals Stadium

IFG has been involved in multiple aspects of the 1.7 million square foot stadium. During the bidding phase, every major City in the Phoenix metropolitan area was involved in a fierce competition to host the state-funded facility. IFG was retained as the representatives for the City of Glendale to provide expertise on the financing and operational questions that were elements of the City’s proposal. After the proud day when Glendale was announced as the host, IFG continued to advise the City during its negotiations with the Cardinals and the State of Arizona.

In mid-2004, IFG was chosen to be the operator of the stadium, in a joint venture with Global Spectrum. IFG now advises the design and construction team on operational issues, ensuring that the stadium will operate efficiently and economically.

 So, how did Glendale win the bid amongst  the ‘fierce competition’ that IFG claims? It must have been a great offer to the developer, beating all other municipalities. I’d be interested to see the nature of that deal. According to IFG their involvement was ‘to provide expertise on the financial and operational questions.’

It is very obvious to this reader, that there is a growing network of key private corporation players in Glendale that are responsible for consulting, financing, land development and ongoing recommendations. An economy of it’s own would be a way to describe it. 

Glendale, it would seem, is in deep with ‘sales tax’ related land subsidies with private corporations. Land development subsidy opportunities abound in Glendale, and it is obvious to see the opportunity for several key players. Quite simply, it’s like taking candy from a baby.

Getting back to hockey and the Phoenix Coyotes, the important question has always been, why would the City of Glendale want to keep the infrastructure arrangements alive, and why would it have sought Jerry Reinsdorf out as the new owner of the Coyotes? Well, it would seem to be a case of  a networking of business alliances, in a strategic manner that are truly partners in growth, with the City of Glendale.

So, why would Michael Dell be OK with reworking of his $80 million creditor stake? How would Jerry Reinsdorf know it would likely be accepted? I think we are starting to see a picture here.

Having Michael Reinsdorf in tight with the City of Glendale doesn’t hurt either.

Maybe now we can stop wondering why Jim Balsillie is having trouble with a bid so high that you could build a library with the difference?  Or, ironically (even prophetically), it is pretty close to the sale price in 1996 when Barry Shenkarow, then owner of the Jets, sold the team to Richard Burke and Steven Gluckstern ($65 million).

Jim Balsillie of RIM

 The ‘club’  (NHL Board of Governors) that Jim Balsillie needs to break into isn’t the big issue here.

The real problem is  the club of private corporate friends to the City of Glendale  he needs to consider.  It may be the ‘$64.5 million question’, and we are likely getting closer to the answer. 

The ‘ah ha’ moment likely lies in the mystery to ‘who holds the Jobing.com bonds’.  And, if there is a ‘common friend’ responsible for lining up all these ‘fat deals’ for the wealthy investors? 

 The truth might then explain why Gary Bettman was rushing  that day, to ensure Jerry Moyes didn’t go through with the

NHL Commissioner Gary Bettman

 bankruptcy…proxy or no proxy.  Twenty minutes from finding an owner? Ya, right?

For the bullet summary, please go here.

The Phoenix Coyotes hockey team was never truly just a hockey franchise.

And, in bankruptcy court, the bidders are playing ‘shorthanded’.

When the Coyotes were moved to Glendale, the expectations of huge tax revenue and area development went along with it.

The City of Glendale didn’t necessarily care if the team won, as long as the tax revenues and Westgate District and related commercial and residential growth was assured. If the team was .500, that probably would have been good enough.

In 2003, when the arena was set to open, there was much hope from mayor Elaine Scruggs, who said:

Jobing.com (soon to be 'White Elephant'?)

“This is a huge victory for the city of Glendale, Glendale residents and for hockey fans throughout Arizona,” said Glendale Mayor Elaine M. Scruggs. “The arena and surrounding development will positively impact Glendale and will eventually become the heart of the West Valley.

“This project came down to a business decision that represented an incredible economic development engine for the western area of our city. What especially makes this a win-win situation for us is that Ellman will also redevelop the site currently occupied by the Manistee Town Center shopping mall at 59^th and Northern avenues into a mixed-use commercial center.”

From a Canadian perspective, we don’t necessarily get wind of all the issues that affect the future of this hockey team. We might be inclined to look at the case as a simple question of the City of Glendale being able to grant subsidies to the new owner and keep the team in it’s Jobing.com home, or not. Well, it would seem to be a ‘whole lot more’ complicated than that.

Looking again at the ‘players’ in the game, we know that Jerry Reinsdorf has been approached by the City of Glendale and the NHL to be the new ‘White Knight’ to save the franchise. And, let’s not forget about the growing suspicion surrounding the ‘oh ya, we were going to tell you that part later’, Michael Reinsdorf factor, reiterated in this piece from:

Brahm Resnik 
2009-07-17 13:04:37

The younger Reinsdorf’s connection does raise questions about whether the Reinsdorf bid group has gained an unfair advantage during the auction process. Michael Reinsdorf’s company is also a registered client of John Kaites, the lobbyist heading the $148 million Reinsdorf bid. The bankruptcy trustee has already challenged the NHL’s obvious desire to steer the team to Reinsdorf.

Ah, it does support the Glendale City Hall Reporter, Rebekah Sanders piece that talked about the ‘Tangled Web’. She missed the part about where the real money lies though. Should we ask ourselves how she got a hold of the $5,000 figure and the $48,000 figure? Nah, after all, the Goldwater Group would be embarrased, because they have had to sue the City of Glendale to get any information. Whoever provided these facts to Rebekah had better stay off the radar for a while.

We also know that a major creditor in the case, Michael Dell (founder of Dell Computer Corp.) is in the mix, as the team owes his investment company, SOF Investments, over $80 million (see details of arrangement). We, from Canada might think it would be a no brainer. Why wouldn’t Michael Dell stand up and say, “heck, give me the deal where I get my money, and I’m outta here”? Well, again, it’s not that simple.

Remember the offer from Reinsdorf, that claims it will need to rework and renegotiate the secured debt? Well, that would mean Reinsdorf would have to convince Michael Dell to take his payments back over time from a franchise that is in doom and gloom mode. Again, why would he consider this? Crazy right? Has Jerry lost it? Or, did Jerry know that it would likely be ‘A O K’ with Dell?

The attraction to the Coyotes hockey team has always been an issue of land development opportunites and great deals with government, and the profits that would go along with them. Nobody in their right mind would take this team with the clear math currently in place. As soon as Moyes and Ellman broke up the land from the ice, that’s when the ‘Coyote’ should have chased the Roadrunner out of town.

Are we to believe, as mentioned by the Reinsdorf camp, and now even by the new Canadian/American mixed coalition represented by Daryl Jones (Research Edge LLC) that trying to share in a little bit of food and parking is going to cut the mustard? ‘Little things add up’ is the argument? Were we  born yesterday?  And, if I might add, if Daryl Jones and his group thinks they are going to break into this game with nickel and dime thinking, they had better think again. Like all politics, what would make sense from a genuine, honest angle usually doesn’t win the prize.

So, to the point. Again, us Canucks haven’t necessarily been fed all the true reasons here as to what the implications and tight weave may be, but here are some interesting facts.

There is a development called CityNorth, off Loop 101 in Phoenix that is in a huge legal battle with the city of Phoenix and a coalition of investors over subsidies. Now, when I say subsidies, this brings to mind the case in Glendale, right? Exactly. The bottom line is this:

CityNorth

The Arizona Supreme Court said June 2 it would hear the CityNorth case, which looks at the legality of a $97.4 million tax subsidy the city of Phoenix wants to offer Chicago developer Klutznick Co. to help get the mixed-use development built.

The Wall Street Journal adds:

Two years ago, the city signed a contract with developer Thomas J. Klutznick, who is building an outdoor mall. The city has to rebate to him $97.4 million in sales taxes over the next 11 years, in return for which it gets 200 parking spaces for commuters catching a municipal bus. The mall, called CityNorth, will be home to an Ann Taylor Loft and other retailers, as well as residential apartments that are already being rented. Arizona Republic columnist Laurie Roberts summed up the deal earlier this year by noting the city will spend about $487,000 for each commuter parking spot. “Wouldn’t it be cheaper to just chopper them in to work?” she wrote.

 Here in Canada, where we just want more hockey, what is important is this:

But Susan Freeman, a Phoenix attorney representing Balsillie in the bankruptcy proceedings, said the CityNorth case could hinder’s Glendale’s ability to offer incentives and aid to the Coyotes.

Important to note, is the fact that our friends in the Goldwater Institute are all over this one as well:

The Goldwater Institute watchdog group is challenging the legality of the CityNorth incentive in court, saying it violates the state’s gift clause rules.

Freeman said if the Arizona Supreme Court rules against the CityNorth subsidy from Phoenix and puts greater restrictions on such incentives, that could hamstring economic concessions Glendale might be able to offer the Coyotes. The NHL team has lost more than $300 million since moving to the Phoenix market in 1996 from Winnipeg.

In previous posts we looked at possibilities that the attraction to Glendale had to be in land development, and the coalition that was ‘in the wings’ was not being presented. As such, it was a bit of a question and a mystery. And, as the lawyer for the ‘group’, John Kaites had said, it will take a lot of people to make the Coyotes succesful. I think we know the real truth. It will take a lot of people hungry to feed off the land subsidies that will make this deal fly, right?

The truth is, as a standalone opportunity, in light of the tax crunch the City of Glendale has had with the failing team, there is little to no room to share tax revenues with the new owners, regardless of the CityNorth results.

But, it is very interesting to examine another aspect of this case that brings us back to the question, “Why would anyone want a piece of this team, or want to wait to be paid as creditor?”. The answer lies in private corporations proffiting off the backsides of the taxpayers. Governments are a great source of ‘easy money’, and the problem governments get into, is they start to rely on private corporations to fund infrastructure and land development opportunities. When the private corporations and investors become too powerful, and the municipalities too desperate, this breeds the possibility of taxpayer exploitation.

The players in this game again are Jerry Reinsdorf as the proposed new owner, and his ability to rework the debt, including Michael Dell’s share.

Well, Michael Dell may have a lot of reasons to continue to support this cause, as he is in pretty deep already, with one of his other companies, MSD Capital. You see, MSD Capital is one of the investors in the CityNorth deal for subsidies.

This comment from the article says it best:

No doubt about it: Phoenix is broke. Mayor Phil Gordon is flying to Washington to beg for federal bailout bucks so frequently, he should probably register as a lobbyist.

Michael Dell

So it’s downright bizarre that, in the midst of this nightmare, city leaders are fighting desperately to give away $97 million to wealthy investors. Never mind all the neighborhoods in this burg that have lost senior centers, bus routes, and library hours — we’re hoping to give our money away to an Arab emirate, a wealthy Saudi family, and even Michael “Dude, You’re Getting a” Dell.

So, when Jerry Reinsdorf came in with what we would consider a ‘no brainer’, are you kidding offer, we weren’t necessarily privy to the real sale here. We were’t advised that this wasn’t about the Phoenix Coyotes, Jim Balsillie, Gary Bettman, or the dude getting a ‘Dell’, it was all about the big money……how private corporations, and the players in that game, make lots of money from average taxpayers like you and me.

I guess things really aren’t as they would seem. And, isn’t it nice that there are people that don’t mind keeping the Coyotes in Glendale? Golly gee, shucks! Unfortunately, it is not likely for reasons that we would expect from the next ‘White Knight’. And, note to Daryl Jones and Research Edge, you might have to learn as did Jim Balsillie ; logic doesn’t always prevail.

Obama

Now things become a little clearer perhaps, when Ron McLean interviewed Gary Bettman on HNIC. When Bettman said it wasn’t about Hamilton vs. Phoenix, or Jim Balsillie, or Gary Bettman (himself), it was about the powers that be. Well, it may not have been about the powers that we would expect. That is, within the NHL Board of Governors. It may be an issue for the  U.S. Government to deal with. It is a fair bet that when Ron McLean spoke of the ‘Investment Bankers’ that would build arenas for free, and Gary (Bettman) said he wasn’t sure what he was talking about, I think it’s fair to say he knew exactly what he was talking about.

At first,  it struck me as odd when I heard it mentioned that the U.S. Senators were behind the Coyotes staying in Glendale. I could not understand why politics would play a role. But, with taxpayer dollars at risk, it does become a political issue.

Could this story be touching on a ‘much bigger’ question? Time and some more political wrangling may tell.

 Maybe I was wrong. Maybe this is just as good as the O.J. Simpson trial.

As for our efforts to bring the NHL back to Canada where it would be important for the pure  and simple sake of hockey enjoyment and it’s true fans, I will agree with Jim Balsille.  Where politics is involved, the only way in is through the ‘side door’ .

Glendale City Hall

For a bullet summary, please go here.

The residents of Glendale in a recent poll suggested that 72% would prefer to not have subsidies granted to a new owner of the Phoenix Coyotes, in order to keep the team in Glendale.

The Goldwater Institute has sued Glendale over keeping records private regarding the negotiations with Jerry Reinsdorf, the NHL’s new Coyotes’ favorite. A good summary of the situation complete with alternate links exists here.

In a nutshell, the Goldwater Group has a valid argument. The taxpayers of Glendale deserve full and transparent disclosure on the negotiations with Jerry Reinsdorf. Mr. Reinsdorf is no doubt looking into revenue streams that exist beyond the Jobing.com arena, and this affects the taxpaying public.

Further, the ‘cozy relationship’ that the Reinsdorf family enjoys with the City of Glendale is not one that has had a lot of public disclosure, and when rumours started to fly, an article was filed by a Glendale City Hall reporter to downplay the relationships as a ‘so what, it’s small money anyhow’ fluff off.

Could it be considered an insult  to the public, that suddenly a reporter is privy to a few tidbits of actual cash figures of Michael Reinsdorf’s IFG dealings with Glendale, when the Goldwater Institute is forced to sue the City for lack of disclosure? Sounds a little closed lipped and fishy doesn’t it? I guess the City of Glendale will tell us just enough to get the dogs off the trail and see if that works. My, my, my!

In a previous lawsuit filed against Jerry and Michael Reinsdorf by David Schwartz, West Coast Arena Ventures, the contentious point that was important to the case was outlined:

“Since professional sports is usually a Monopolized and Antitrust protected business, the issue as to whether Mr. Reinsdorf and his companies, ‘play’ fair on a level playing field, or use their family, contacts, and name, to unfairly compete and to dominate Sports Development, is certainly of interest to Sports Fans around the world,” said West Coast Arena Ventures, CEO, David Schwartz.

It should be argued that it should also be very significant to the taxpayers that may foot any costs or subsidies enjoyed by a private sector corporation, which brings us back to the significant role the Goldwater Institute plays in this case.

As reported before in this article, there is strong relationships between the Reinsdorf father and son (Michael) in Glendale to warrant full disclosure of all considerations being made to this family. Also, notes to further to investigate issues related to International Facilities Group (IFG) can be found here.

The fact that the City of Glendale refuses to give detail because they say it is not in the best interest of the taxpayer is being presumptuous at the very least, and puts the city in a position of suspicion for ‘needing’ secrecy.

What is wrong with filling in the public on considerations for the public’s tax dollars?

Transparency in today’s world is becoming increasingly important. The court case argument from Jerry Moyes’ attorney stress this, and the Goldwater Institute is stressing it too.

The real fear in a case like this is the potential for collusion and corruption of government. When you have a private corporations (in this case two corporations) that are related to each other, working negotiations with a municipality, one would think that “a public hearing” at the very least would be in order to answer questions and field taxpayer concerns. But, according to the City of Glendale, their attitude is one of ‘knowing what is good for you (as taxpayers), so let us handle it’. Hardly a democratic process.

And, the real problem with the timing of the bankruptcy proceedings and the attitude of the City of Glendale is that once the deal is made (if it is), it will be made in secrecy, and it will be too late for the taxpayers to have a voice. Kind of like the ‘mushroom theory’ (keep us in the dark, and feed us a steady diet of….(you know the rest).

I would hope the Goldwater Institute prevails in their quest to put a suspension to this, in light of the potential for private corporation profitting off the backsides of taxpayers.

If it all works out to be supported by the members of the City in majority, then fine. But, if as reported, it has been suggested that 72% of residents would sooner the team leave than compensate private corporations, then that is a more serious violation of human rights.

The Project manager, David Perez:

Glendale Arena-Glendale, AZ
David acted as a full time on-site consultant on the Glendale Arena project, representing the City of Glendale before, during and after development of the Arena. The Glendale Arena is a 17,600-seat arena which hosts the Phoenix Coyotes of the NHL. The overall development will include two million square feet of retail, residential and entertainment development. The City of Glendale funded $180 million toward the development toward the arena and hired IFG to represent their interests throughout development.

Questions: 1) What was the revenue from the City of Glendale for this ‘full time’ representation? 2) Who is in charge of development and ongoing support for the two million square feet of ‘retail’, ‘residential’, and ‘entertainment’ development? 3) What is the fee if IFG is involved in this development opportunity? 4) Would Jerry Reinsdorf be given favourable position with the family relationship with the City to take advantage of development and revenue? 5) Why would Jerry Moyes not have had the opportunity to do the same as in 4), in the development of the retail, residential and entertainment revenue sharing or creation? 6) In short,  would these opportunities be part and parcel of the negotiations of the proposed new owner of the Coyotes and the city of Glendale? 7) Why were negotiations refused with previous tenant, Jerry Moyes? 8 ) Was IFG involved, and would they still be involved in the consultant role for the arena lease? 9) If IFG was not retained to monitor the arena lease, who was? And, if the lease is not being consulted on, and IFG, having completed the project, with expertise in arena lease services and consulting, did not offer their services, would they be considered negligent – especially in light of the failing, very high rate, unsustainable nature of the lease. 10) How will Jerry Reinsdorf be treated as far as lease negotiations are concerned in direct comparison to Jerry Moyes? And, if Mr. Reinsdorf has better success in negotiating a favourable overall deal, could this be construed as favoritism? Could it be based on relationship and not non-biased client need? Was Mr. Moyes treated with similare consideration for need as a client? 10) Are favourable revenue sharing or land development deals ‘just because’ of hockey relationship justifying private profits from municipal projects? 11) Wouldn’t the Glendale taxpayers deserve full disclosure of the nature of the hockey negotiations before the hockey team auction of Aug 5th?

From Rebekah L. Sanders, AZCentral, from Glendale City Hall PR:

The world of professional sports is small. At least it looks that way in Glendale.

According to city records, Glendale has been relying on Jerry Reinsdorf’s son to help size up the Phoenix Coyotes’ dismal financial situation. Michael Reinsdorf’s company, International Facilities Group, earned $5,000 last year by making an “initial assessment” of operations at Jobing.com Arena for the city.

Michael’s firm also pointed Glendale to Beacon Sports Capitol Partners, which, for $48,000, came up with recommendations on how the Coyotes could trim expenses and increase revenue.

Father Jerry Reinsdorf is the sports magnate offering to buy the bankrupt Phoenix Coyotes and keep the hockey team in Glendale. He has a cozy relationship with the city already, besides being the only person that seems to have a real chance at keeping the Coyotes local. The elder Reinsdorf moved his Chicago White Sox team’s spring training to Glendale this year. The city took on $200 million in debt to build the spring training ballpark.

The younger Reinsdorf, who graduated from University of Arizona, also has close ties to Glendale. Michael’s company was a project manager for Glendale while Jobing.com Arena was being built in 2003, according to city officials and IFG’s Web site. The company also did similar work for the city on infrastructure – surprise! – around the White Sox spring training park and on University of Phoenix Stadium.

Now IFG, which counts projects at Bank One Ballpark and other facilities as well, is working with Glendale on the construction of the downtown city court house, records show.

In the future, Glendale may be dealing even more with the father-son duo. A recent Chicago Tribune story says Michael may play a role in the Coyotes, if the U.S. Bankruptcy judge rules in favor of his dad’s bid.

Wednesday, July 15, 2009 at 12:46 PM

 

 WHO monitored the lease agreement and consulted the viability of the lease to suit the needs of the hockey team over all those failing years!!!!!! Did the City of Glendale do it solo, or did they use the services of IFG, that profess to be experts in this field? Would it be fair to say, that if the City of Glendale did not use an expert service to negotiate and alter the viability of the lease with Moyes, that they would be negligent to their client, especially since the services would have been readily accessible from Michael Reinsdorf, and IFG?

So, two possibilities: 1) no consulting company to assist in the negotiations and viability, or 2) a consulting company was involved. Who was it? (Rebekah, can you give us this information in more than a PR fashion – aka true reporting of facts?)

 Is the nonchalant attitude toward potential risk of collusion with private sector corporations, as suggested by the City Hall reporter in the above article  a representation of the attitude and nature of the professional structure of the City of Glendale in general? I would think the public is more scrutinizing than would be inferred by this article.

The Project manager, David Perez:

Glendale Arena-Glendale, AZ
David acted as a full time on-site consultant on the Glendale Arena project, representing the City of Glendale before, during and after development of the Arena. The Glendale Arena is a 17,600-seat arena which hosts the Phoenix Coyotes of the NHL. The overall development will include two million square feet of retail, residential and entertainment development. The City of Glendale funded $180 million toward the development toward the arena and hired IFG to represent their interests throughout development.

Questions: 1) What was the revenue from the City of Glendale for this ‘full time’ representation? 2) Who is in charge of development and ongoing support for the two million square feet of ‘retail’, ‘residential’, and ‘entertainment’ development? 3) What is the fee if IFG is involved in this development opportunity? 4) Would Jerry Reinsdorf be given favourable position with the family relationship with the City to take advantage of development and revenue? 5) Why would Jerry Moyes not have had the opportunity to do the same as in 4), in the development of the retail, residential and entertainment revenue sharing or creation? 6) In short,  would these opportunities be part and parcel of the negotiations of the proposed new owner of the Coyotes and the city of Glendale? 7) Why were negotiations refused with previous tenant, Jerry Moyes? 8 ) Was IFG involved, and would they still be involved in the consultant role for the arena lease? 9) If IFG was not retained to monitor the arena lease, who was? And, if the lease is not being consulted on, and IFG, having completed the project, with expertise in arena lease services and consulting, did not offer their services, would they be considered negligent – especially in light of the failing, very high rate, unsustainable nature of the lease. 10) How will Jerry Reinsdorf be treated as far as lease negotiations are concerned in direct comparison to Jerry Moyes? And, if Mr. Reinsdorf has better success in negotiating a favourable overall deal, could this be construed as favoritism? Could it be based on relationship and not non-biased client need? Was Mr. Moyes treated with similare consideration for need as a client? 10) Are favourable revenue sharing or land development deals ‘just because’ of hockey relationship justifying private profits from municipal projects? 11) Wouldn’t the Glendale taxpayers deserve full disclosure of the nature of the hockey negotiations before the hockey team auction of Aug 5th?

From Rebekah L. Sanders, AZCentral, from Glendale City Hall PR:

The world of professional sports is small. At least it looks that way in Glendale.

According to city records, Glendale has been relying on Jerry Reinsdorf’s son to help size up the Phoenix Coyotes’ dismal financial situation. Michael Reinsdorf’s company, International Facilities Group, earned $5,000 last year by making an “initial assessment” of operations at Jobing.com Arena for the city.

Michael’s firm also pointed Glendale to Beacon Sports Capitol Partners, which, for $48,000, came up with recommendations on how the Coyotes could trim expenses and increase revenue.

Father Jerry Reinsdorf is the sports magnate offering to buy the bankrupt Phoenix Coyotes and keep the hockey team in Glendale. He has a cozy relationship with the city already, besides being the only person that seems to have a real chance at keeping the Coyotes local. The elder Reinsdorf moved his Chicago White Sox team’s spring training to Glendale this year. The city took on $200 million in debt to build the spring training ballpark.

The younger Reinsdorf, who graduated from University of Arizona, also has close ties to Glendale. Michael’s company was a project manager for Glendale while Jobing.com Arena was being built in 2003, according to city officials and IFG’s Web site. The company also did similar work for the city on infrastructure – surprise! – around the White Sox spring training park and on University of Phoenix Stadium.

Now IFG, which counts projects at Bank One Ballpark and other facilities as well, is working with Glendale on the construction of the downtown city court house, records show.

In the future, Glendale may be dealing even more with the father-son duo. A recent Chicago Tribune story says Michael may play a role in the Coyotes, if the U.S. Bankruptcy judge rules in favor of his dad’s bid.

Wednesday, July 15, 2009 at 12:46 PM

 

 WHO monitored the lease agreement and consulted the viability of the lease to suit the needs of the hockey team over all those failing years!!!!!! Did the City of Glendale do it solo, or did they use the services of IFG, that profess to be experts in this field? Would it be fair to say, that if the City of Glendale did not use an expert service to negotiate and alter the viability of the lease with Moyes, that they would be negligent to their client, especially since the services would have been readily accessible from Michael Reinsdorf, and IFG?

So, two possibilities: 1) no consulting company to assist in the negotiations and viability, or 2) a consulting company was involved. Who was it? (Rebekah, can you give us this information in more than a PR fashion – aka true reporting of facts?)

 Is the nonchalant attitude toward potential risk of collusion with private sector corporations, as suggested by the City Hall reporter in the above article  a representation of the attitude and nature of the professional structure of the City of Glendale in general? I would think the public is more scrutinizing than would be inferred by this article.

In the article from the SportsBusiness Daily, March 26, 2009:

                       A poll released yesterday by Americans for Prosperity indicated that support for the Coyotes “may be faltering among the team’s closest neighbors, the residents of Glendale,” according to Rebekah Sanders of the ARIZONA REPUBLIC. The poll indicated that “less than a quarter of Glendale voters surveyed said they would support spending taxpayer money to keep the financially struggling team from leaving the city’s Jobing.com Arena.” But the survey “appears to be partisan-driven and touches on a bailout scenario that city leaders say is off the table.” Virginia-based Republican survey research firm Public Opinion Strategies “conducted phone interviews with 300 Glendale voters on March 23.” When asked whether Glendale “should give the Coyotes” $3-15M each year to keep the team or allow the team to move, 72% polled said to “let the NHL team leave.” Americans for Prosperity Arizona Dir Tom Jenney said the answer is to “let the Coyotes fend for themselves.” Jenney: “If they can make a successful venture, more power to them. But don’t do it with taxpayer subsidies.” Coyotes President & COO Doug Moss said, “I feel it would be inappropriate to comment on a study or survey that’s based on erroneous … reporting” (ARIZONA REPUBLIC, 3/26).

 So, the question remains, should concessions be negotiated with the proposed owner, Jerry Reinsdorf, if the majority of taxpayers are not interested in giving away any of their money?

According to the LexisNexis News:

Reinsdorf has a good relationship with Glendale officials, who lured his White Sox from Tucson to Glendale as a spring tenant by building a plush training facility/ballpark, Camelback Ranch, that the White Sox share with the Los Angeles Dodgers. 

The documents also suggest Reinsdorf’s group will seek more control of non-hockey events at the arena, which should produce additional revenue ”It’s a bad lease — the team doesn’t make as much as it should off parking, concessions and other potential revenue streams like the restaurants outside the building,” the source said. “Glendale has to be amenable to reworking it. Otherwise they lose their major tenant and their building becomes a white elephant.” 

Just how good a relationship with Glendale officials does Jerry Reinsdorf have?

Well, with son Michael Reinsdorf continuing to gain from his company’s contract with Glendale for services including consulting on issues related to Jobing.com arena, it may be better than we think. But, would it be an appropriate arrangement for father Jerry to further benefit from the City when Michael already is?  Would  it lend itself to speculation that the Reinsdorf factor would give an unfair advantage by name and current business relationships?

And, if Michael is responsible for any aspect of consulting on the arena lease, how could he continue to do so, without accusations of favoritism? This would likely not be viewed as a “non arms length” arrangement. For the 72% of taxpayers already not convinced their money is well spent in Jobing.com on the Coyotes, I’m sure this would raise some eyebrows.

Further, it would stand that if Michael was involved with aspects of the current lease arrangement with Jerry Moyes, how could he now support a better deal to dear ‘ol dad? If concessions can be granted, why weren’t they made for Jerry Moyes?

How could Michael agree that the prior lease was fair, and then turn around and then say, “yes, it needs to be adjusted”. Not going to fly.

This leads us to the underlying meat behind the endless possibilities in this case.

If the City of Glendale is under the microscope by the Goldwater Group over potential tax concessions, it would stand to reason that under normal conditions, the only help a city official could give an owner is the suggestion that ticket prices be raised. Anything else, even according to city officials reported in AZCentral, is supported as not being in the cards:

Glendale officials say concessions were never on the table, and instead the team should have cut expenses and raised ticket prices to survive.

However, an attorney for Chicago sports mogul Jerry Reinsdorf said in bankruptcy court this week that Reinsdorf, who is interested in buying the Coyotes, has been in negotiations with Glendale over the arena lease. City attorney Craig Tindall called the Reinsdorf talks informal “discussions.”

But with influence in hand, the name Reinsdorf may bring with it enough credibility and strength to have much influence in Glendale. After all, isn’t Jerry the man who owns two succesful teams already, and isn’t Michael savy in complex development, financing, and management?

And, let’s not forget what might be very obvious in light of today’s economic reality. With property values taking a hit, and the tax base shrinking, Glendale must be looking at it’s current financial picture and the threat of losing a fairly lucrative lease arrangement, and getting worried as the days go by.

So, with the team of Reinsdorf and Reinsdorf, and all that success and experience, is it little wonder a little municipality like Glendale would welcome such a powerful promise of success? Sure, they should.

The Camelback project must be in relative infancy, and I would imagine there is plenty of room to create revenue opportunities outside of hockey, that could benefit both the new owner’s need to make up revenue, and the same for the ailing City of Glendale. A perfect union, and a suitable suitor!

Oh, remember, we are talking about the Phoenix Coyotes not land development, remember? Right. Let’s get back on track here.

Hockey, ah yes. The struggling Phoenix Coyotes. The Coyotes that Jerry Moyes has been said to have been the poor owner with poor vision. Those Coyotes. Forbes ranked the Coyotes a must leave Phoenix type team, as shown here.

In the rating, Forbes accurately gives us:

The skinny
The plans to expand the NHL to the southwest and ignite economic growth in Glendale, Arizona by meshing a new multi-purpose arena with 6.5 million square feet of new real estate development has been a catastrophe. Under the leadership of Steven Ellman, Jerry Moyes and Wayne Gretzky, the Coyotes have been a dysfunctional and under-capitalized hockey franchise that Gretzky, the team boss, has been unable to get a grip on. Westgate City, in part tied to the success of people showing up for hockey games, has been a bust. As a result of their consistent losses on and off the ice the Coyotes have struggled to draw fans to Jobing.com Arena since the building opened in December 2003. If it were not for the huge fee the team would have to pay as stipulated by their lease if they were to move, it would make sense for the Coyotes to bolt Phoenix.

It makes you wonder who is truly in charge of giving direction to the details of that huge fee lease that is financially impossible. The same lease that Jerry Reinsdorf  knows coming in is unworkable. That is, unless you speak with Gary Bettman, who believed the team was never in jeopardy, should never have gone into bankruptcy, and the notion is well, ‘silly’!  So who do we believe? Jerry Reinsdorf that owns two teams and knows, or Gary Bettman who believes non-traditional hockey markets can fly as long as you produce a winner? I’d take the common sense of Reinsdorf.

But, who was there to help the previous tenant, Jerry Moyes? He was paying the going rate. After all, he did not have the experience in sports management and development enjoyed by Jerry and son, Michael Reinsdorf. Again, might be excusable except for the fact that Michael must have had some infuence when Jerry Moyes was in charge, and may well be when his dad arrives. One could suggest that Moyes was taken to the cleaners on the unfair lease. And, Moyes himself, in anger might believe he was being setup for financial failure and takeover, an ugly possibility, and one we don’t even want to entertain. But with the goings on in Tampa Bay the last few days, it seems to be a game of ‘put up or shut up’. Ugly, ugly, ugly!

For Jerry Moyes, it must have felt like being an employee that was being ‘set up’ to be fired. The irony is he was the boss. Supposedly. That would be in a normal business, but the NHL today is looking anything but normal.

According to John P. Kaites, a Phoenix attorney putting together the group of investors:

Hours before Jerry Moyes put the Phoenix Coyotes into bankruptcy court Tuesday and agreed to sell the team to a Canadian millionaire, Glendale was working on a deal to have Chicago sports executive Jerry Reinsdorf, along with other investors, take over the hockey franchise.

 Ed Beasley, Glendale city manager, said Wednesday. “We are working with the (NHL) league and will aggressively work to keep this team in Glendale and the state of Arizona.”

Ed Beasley, Glendale City Manager

“The city of Glendale is working with interested parties and one of those parties we had a conversation with was Mr. Reinsdorf,”

 

According to Kaites, the ‘thinking’ was in the works for a much longer time:

Phoenix attorney John Kaites said that he began putting together a team of investors and approached the city and team six months ago about taking over and keeping the Coyotes in Glendale.

Kaites, who represents the White Sox among other sports teams, declined to say who or how many investors were involved.

“It’s a robust group, and that is what it’s going to take to save the team,” he said.

I would be inclined to ask why a robust group would be necessary if the team was viable as a standalone, revenue generating machine? Obviously the inference is there is more to salvaging this team than standard hockey operations. Would it be relocation strategies, as in the name Tony Tavares? Or would it be in capital infusion in projects outside the hockey operation?

Nevertheless, it would seem the railroading of Jerry Moyes, and the inside scoop no doubt enjoyed by the father and son team of Reinsdorf and Reinsdorf gave plenty of time to formulate a plan. But, that’s another story. When Ron McLean asked Gary Bettman if he had used the term, “saved him from embarassment” (Moyes) , Bettman first denied, then confirmed it once McLean pulled out the actual transcript. It leaves one with a terrible feeling that if you don’t live up to the expectations, and come through to plan, you are cast off and replaced, owner or not.

You don’t have to go much further than the Great One, Wayne Gretzky to know that it’s a cruel, no holes barred battle of the almighty dollar in this league. Even the best to have played the game is expendable. And you can see Gretzky’s distaste in this interview.

But, calming down, and getting back to the cash flow issues, it is important to note that revenue streams outside of hockey are not part of the hockey revenues reported. So, an owner that knows his team will always be close to bottom ten in revenue, would be foolish to get up too high in the ranking, and jeopardize the very favourable revenue sharing arrangement of the NHL. The sunbelt teams are able to charge less for tickets to attract fans, while the revenues are made up from the higher ticket prices charged in better hockey markets. But, it does mean that hockey towns like Glendale, must allow the owners to dip into the taxpayers pockets somehow to succeed. The problem again, is the lack of support, and the potential conflict of interest to go with it in this case.

Gary Bettman has said that every team’s situation is a little different. Now, it would seem to be obvious why. When you have a son with a relationship with a municipality and lots of connections of your own, you may be able to sustain some hockey losses if you can make it up somewhere else. And, without having to jeopardize your revenue sharing deal. Sweet! It might be suggested that Goldwater check out the White Sox lease as well.

But, if hockey cannot sustain itself by the demand for hockey alone, there is almost something unclean about this notion. It just doesn’t seem like a wholesome sell. When Gary Bettman says that the Coyotes were never in jeopardy, are we to truly believe this? Well, if Gary was infering that a man like Jerry Reinsdorf was in the wings, with plan in hand, we might. But, it would not be for the black and white math that spelled disaster for the inexperienced Jerry Moyes. Perhaps it would have been nice to fill him in on how things work now, instead of waiting ’till the well ran dry. Live and learn in the ‘new’  NHL, where you have to make certain improvisations  to remain under the sun.

With the current power play that seems to be taking place between Bettman and certain owners, it makes you wonder who is working for who? Is the Board of Governors really in charge, or are they only as good as long as they toe the ‘Bettman’ line? Reminds me of the characteristics of a dictator. If you squawk too much, you are disposed of or replaced.

Bettman claims on the one hand that is the individual owner’s responsibility to ensure their team remains viable, but with the other hand, treats them like children when they apparently don’t get it right. And, one might ask why Moyes had to sign a ‘proxy’ to relinquish all rights. Another conflict in conversation, as Bettman may not have as much control as he would want. The bankruptcy court could teach him a thing or two about bullying.

The franchise ownership issue is an important one, and it plays right into the issue in the court today of owner’s rights. It will be interesting to see if the court can challenge the league.

And, perhaps Mr. Bettman should call Forbes and correct them too on  the ‘true’ factors that go into assessing a team’s viability.  We could call it ‘Bettmanomics’!

In the article from the SportsBusiness Daily, March 26, 2009:

                       A poll released yesterday by Americans for Prosperity indicated that support for the Coyotes “may be faltering among the team’s closest neighbors, the residents of Glendale,” according to Rebekah Sanders of the ARIZONA REPUBLIC. The poll indicated that “less than a quarter of Glendale voters surveyed said they would support spending taxpayer money to keep the financially struggling team from leaving the city’s Jobing.com Arena.” But the survey “appears to be partisan-driven and touches on a bailout scenario that city leaders say is off the table.” Virginia-based Republican survey research firm Public Opinion Strategies “conducted phone interviews with 300 Glendale voters on March 23.” When asked whether Glendale “should give the Coyotes” $3-15M each year to keep the team or allow the team to move, 72% polled said to “let the NHL team leave.” Americans for Prosperity Arizona Dir Tom Jenney said the answer is to “let the Coyotes fend for themselves.” Jenney: “If they can make a successful venture, more power to them. But don’t do it with taxpayer subsidies.” Coyotes President & COO Doug Moss said, “I feel it would be inappropriate to comment on a study or survey that’s based on erroneous … reporting” (ARIZONA REPUBLIC, 3/26).

 So, the question remains, should concessions be negotiated with the proposed owner, Jerry Reinsdorf, if the majority of taxpayers are not interested in giving away any of their money?

According to the LexisNexis News:

Reinsdorf has a good relationship with Glendale officials, who lured his White Sox from Tucson to Glendale as a spring tenant by building a plush training facility/ballpark, Camelback Ranch, that the White Sox share with the Los Angeles Dodgers. 

The documents also suggest Reinsdorf’s group will seek more control of non-hockey events at the arena, which should produce additional revenue ”It’s a bad lease — the team doesn’t make as much as it should off parking, concessions and other potential revenue streams like the restaurants outside the building,” the source said. “Glendale has to be amenable to reworking it. Otherwise they lose their major tenant and their building becomes a white elephant.” 

Just how good a relationship with Glendale officials does Jerry Reinsdorf have?

Well, with son Michael Reinsdorf continuing to gain from his company’s contract with Glendale for services including consulting on issues related to Jobing.com arena, it may be better than we think. But, would it be an appropriate arrangement for father Jerry to further benefit from the City when Michael already is?  Would  it lend itself to speculation that the Reinsdorf factor would give an unfair advantage by name and current business relationships?

And, if Michael is responsible for any aspect of consulting on the arena lease, how could he continue to do so, without accusations of favoritism? This would likely not be viewed as a “non arms length” arrangement. For the 72% of taxpayers already not convinced their money is well spent in Jobing.com on the Coyotes, I’m sure this would raise some eyebrows.

Further, it would stand that if Michael was involved with aspects of the current lease arrangement with Jerry Moyes, how could he now support a better deal to dear ‘ol dad? If concessions can be granted, why weren’t they made for Jerry Moyes?

How could Michael agree that the prior lease was fair, and then turn around and then say, “yes, it needs to be adjusted”. Not going to fly.

This leads us to the underlying meat behind the endless possibilities in this case.

If the City of Glendale is under the microscope by the Goldwater Group over potential tax concessions, it would stand to reason that under normal conditions, the only help a city official could give an owner is the suggestion that ticket prices be raised. Anything else, even according to city officials reported in AZCentral, is supported as not being in the cards:

Glendale officials say concessions were never on the table, and instead the team should have cut expenses and raised ticket prices to survive.

However, an attorney for Chicago sports mogul Jerry Reinsdorf said in bankruptcy court this week that Reinsdorf, who is interested in buying the Coyotes, has been in negotiations with Glendale over the arena lease. City attorney Craig Tindall called the Reinsdorf talks informal “discussions.”

But with influence in hand, the name Reinsdorf may bring with it enough credibility and strength to have much influence in Glendale. After all, isn’t Jerry the man who owns two succesful teams already, and isn’t Michael savy in complex development, financing, and management?

And, let’s not forget what might be very obvious in light of today’s economic reality. With property values taking a hit, and the tax base shrinking, Glendale must be looking at it’s current financial picture and the threat of losing a fairly lucrative lease arrangement, and getting worried as the days go by.

So, with the team of Reinsdorf and Reinsdorf, and all that success and experience, is it little wonder a little municipality like Glendale would welcome such a powerful promise of success? Sure, they should.

The Camelback project must be in relative infancy, and I would imagine there is plenty of room to create revenue opportunities outside of hockey, that could benefit both the new owner’s need to make up revenue, and the same for the ailing City of Glendale. A perfect union, and a suitable suitor!

Oh, remember, we are talking about the Phoenix Coyotes not land development, remember? Right. Let’s get back on track here.

Hockey, ah yes. The struggling Phoenix Coyotes. The Coyotes that Jerry Moyes has been said to have been the poor owner with poor vision. Those Coyotes. Forbes ranked the Coyotes a must leave Phoenix type team, as shown here.

In the rating, Forbes accurately gives us:

The skinny
The plans to expand the NHL to the southwest and ignite economic growth in Glendale, Arizona by meshing a new multi-purpose arena with 6.5 million square feet of new real estate development has been a catastrophe. Under the leadership of Steven Ellman, Jerry Moyes and Wayne Gretzky, the Coyotes have been a dysfunctional and under-capitalized hockey franchise that Gretzky, the team boss, has been unable to get a grip on. Westgate City, in part tied to the success of people showing up for hockey games, has been a bust. As a result of their consistent losses on and off the ice the Coyotes have struggled to draw fans to Jobing.com Arena since the building opened in December 2003. If it were not for the huge fee the team would have to pay as stipulated by their lease if they were to move, it would make sense for the Coyotes to bolt Phoenix.

It makes you wonder who is truly in charge of giving direction to the details of that huge fee lease that is financially impossible. The same lease that Jerry Reinsdorf  knows coming in is unworkable. That is, unless you speak with Gary Bettman, who believed the team was never in jeopardy, should never have gone into bankruptcy, and the notion is well, ‘silly’!  So who do we believe? Jerry Reinsdorf that owns two teams and knows, or Gary Bettman who believes non-traditional hockey markets can fly as long as you produce a winner? I’d take the common sense of Reinsdorf.

But, who was there to help the previous tenant, Jerry Moyes? He was paying the going rate. After all, he did not have the experience in sports management and development enjoyed by Jerry and son, Michael Reinsdorf. Again, might be excusable except for the fact that Michael must have had some infuence when Jerry Moyes was in charge, and may well be when his dad arrives. One could suggest that Moyes was taken to the cleaners on the unfair lease. And, Moyes himself, in anger might believe he was being setup for financial failure and takeover, an ugly possibility, and one we don’t even want to entertain. But with the goings on in Tampa Bay the last few days, it seems to be a game of ‘put up or shut up’. Ugly, ugly, ugly!

For Jerry Moyes, it must have felt like being an employee that was being ‘set up’ to be fired. The irony is he was the boss. Supposedly. That would be in a normal business, but the NHL today is looking anything but normal.

According to John P. Kaites, a Phoenix attorney putting together the group of investors:

Hours before Jerry Moyes put the Phoenix Coyotes into bankruptcy court Tuesday and agreed to sell the team to a Canadian millionaire, Glendale was working on a deal to have Chicago sports executive Jerry Reinsdorf, along with other investors, take over the hockey franchise.

 Ed Beasley, Glendale city manager, said Wednesday. “We are working with the (NHL) league and will aggressively work to keep this team in Glendale and the state of Arizona.”

Ed Beasley, Glendale City Manager

“The city of Glendale is working with interested parties and one of those parties we had a conversation with was Mr. Reinsdorf,”

 

According to Kaites, the ‘thinking’ was in the works for a much longer time:

Phoenix attorney John Kaites said that he began putting together a team of investors and approached the city and team six months ago about taking over and keeping the Coyotes in Glendale.

Kaites, who represents the White Sox among other sports teams, declined to say who or how many investors were involved.

“It’s a robust group, and that is what it’s going to take to save the team,” he said.

I would be inclined to ask why a robust group would be necessary if the team was viable as a standalone, revenue generating machine? Obviously the inference is there is more to salvaging this team than standard hockey operations. Would it be relocation strategies, as in the name Tony Tavares? Or would it be in capital infusion in projects outside the hockey operation?

Nevertheless, it would seem the railroading of Jerry Moyes, and the inside scoop no doubt enjoyed by the father and son team of Reinsdorf and Reinsdorf gave plenty of time to formulate a plan. But, that’s another story. When Ron McLean asked Gary Bettman if he had used the term, “saved him from embarassment” (Moyes) , Bettman first denied, then confirmed it once McLean pulled out the actual transcript. It leaves one with a terrible feeling that if you don’t live up to the expectations, and come through to plan, you are cast off and replaced, owner or not.

You don’t have to go much further than the Great One, Wayne Gretzky to know that it’s a cruel, no holes barred battle of the almighty dollar in this league. Even the best to have played the game is expendable. And you can see Gretzky’s distaste in this interview.

But, calming down, and getting back to the cash flow issues, it is important to note that revenue streams outside of hockey are not part of the hockey revenues reported. So, an owner that knows his team will always be close to bottom ten in revenue, would be foolish to get up too high in the ranking, and jeopardize the very favourable revenue sharing arrangement of the NHL. The sunbelt teams are able to charge less for tickets to attract fans, while the revenues are made up from the higher ticket prices charged in better hockey markets. But, it does mean that hockey towns like Glendale, must allow the owners to dip into the taxpayers pockets somehow to succeed. The problem again, is the lack of support, and the potential conflict of interest to go with it in this case.

Gary Bettman has said that every team’s situation is a little different. Now, it would seem to be obvious why. When you have a son with a relationship with a municipality and lots of connections of your own, you may be able to sustain some hockey losses if you can make it up somewhere else. And, without having to jeopardize your revenue sharing deal. Sweet! It might be suggested that Goldwater check out the White Sox lease as well.

But, if hockey cannot sustain itself by the demand for hockey alone, there is almost something unclean about this notion. It just doesn’t seem like a wholesome sell. When Gary Bettman says that the Coyotes were never in jeopardy, are we to truly believe this? Well, if Gary was infering that a man like Jerry Reinsdorf was in the wings, with plan in hand, we might. But, it would not be for the black and white math that spelled disaster for the inexperienced Jerry Moyes. Perhaps it would have been nice to fill him in on how things work now, instead of waiting ’till the well ran dry. Live and learn in the ‘new’  NHL, where you have to make certain improvisations  to remain under the sun.

With the current power play that seems to be taking place between Bettman and certain owners, it makes you wonder who is working for who? Is the Board of Governors really in charge, or are they only as good as long as they toe the ‘Bettman’ line? Reminds me of the characteristics of a dictator. If you squawk too much, you are disposed of or replaced.

Bettman claims on the one hand that is the individual owner’s responsibility to ensure their team remains viable, but with the other hand, treats them like children when they apparently don’t get it right. And, one might ask why Moyes had to sign a ‘proxy’ to relinquish all rights. Another conflict in conversation, as Bettman may not have as much control as he would want. The bankruptcy court could teach him a thing or two about bullying.

The franchise ownership issue is an important one, and it plays right into the issue in the court today of owner’s rights. It will be interesting to see if the court can challenge the league.

And, perhaps Mr. Bettman should call Forbes and correct them too on  the ‘true’ factors that go into assessing a team’s viability.  We could call it ‘Bettmanomics’!