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Commentary for June 24, 2009:
I want to place this video (see bottom of article) of the June 2, 2009 interview Ron McLean had with NHL Commissioner Gary Bettman again, because it brings to light some very interesting aspects of the league development that could be very key to the Phoenix Coyotes case.
Correct me if I am wrong, but there was pressure ‘way back when’ to build state of the art arenas, with large luxury boxes for corporate partners that would ensure that with the high player salaries in the NHL, the revenues could come in line to ensure financial viability of the team.
Now, it seems a little strange for the situation in Winnipeg, in retrospect.
Winnipeg was a city filled with devote fans but a smaller, ‘non-state-of-art rink’. But devote fans in a proven hockey mad market. So much so, that the heartwrenching view of
35,000 filling the streets of Winnipeg in support of a hope to save the franchise, still brings a tear to the eye. Just watch the video if you haven’t. I am sure you will agree.
Commissioner Bettman, in his discussion with Ron McLean in the interview on June 2nd, explained that the NHL allows an owner rights to a franchise located in a given place (in this case Phoenix), and does not have rights to relocate the franchise to another location.
As Mr. Bettman put it, he would argue with the court that the owner does not own the franchise, but rather it belongs to the partners as a whole.
Ron McLean spoke of the owners in the league as a consortium. Mr. Bettman argued the owners were partners.
How this notion ties in to the situation in Phoenix is very interesting. There could be more “partners” than we know. The partners may be more than just the owners, and likely extends to the developers of the arenas, the financiers of the arenas, and in Phoenix, arguably, the City of Glendale, and the larger infrastructure of the entire Westgate area.
Where do we draw the line, where the NHL is not responsible for the larger infrastructure growth of a city? Has the NHL hopped into bed, so to speak, with more partners than it should? And, if so, how does this negatively impact on a partner like Jerry Moyes, who seems to have less rights than other partners, those of whom are not even part of the league?
Interesting to say the least.
We are talking specifically about the Phoenix Coyotes. The other day, I had a visit to this site (makeiteighteh.com) from Vieste LLC, a ‘partnering’ firm to International Facilities Group (IFG). The visited article was on the topic of the potential that Jerry Moyes was victim of a ‘squeeze play’ by the apparent friends of Glendale. Should we call them ‘partners‘ too? Why not? It would seem they have enough pull that shortly thereafter, the NHL head office visited my site and viewed the same article. I think we are getting a picture where the ‘partnerships’ extend.
And, when Jerry Reinsdorf says he isn’t getting in a bidding war, why bother when you might have a few friends willing to accomodate you:
Reinsdorf’s proposal carries several conditions, including a new arena lease and concessions from creditors. “He doesn’t want to pay a whole lot for this team. He’s not going to get into any sort of bidding war,” said a source close to the auction.
Mr. Bettman, who would argue the league controls the location of franchises, required Mr. Moyes to sign proxies relinquishing all rights, including the right to relocate the franchise. So, are we to believe Mr. Moyes did indeed have rights before or despite the proxies? I would argue yes.
And, why don’t we have a look at a segment of the SOF Investment loan to Mr. Moyes (the secured $80 million loan held by Michael Dell), a little more closely, specifically at this significant part:
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.
I’m sorry, did that say ‘relocation fees’?
Mr. Bettman himself has discussed teams potential relocations in the past himself (including Pittsburgh), and we do not need to look up how many hockey teams have relocated or changed ownership in the past; suffice it to say there is both precedent and argument to do so. Was the issue with Pittsburgh due in part by needing a new ‘state of the art’ arena perchance? A pattern here?
So, why now would the rules change? Which partner(s) don’t want this franchise to relocate?
Would it be the City of Glendale, that stands to be left with a hefty sales tax bond nightmare (on the buy now, pay dearly later plan)? Would it be the bondholder, who loses his lucrative deal with said City, and will be mad as all get out if his or her income stream disappears? To that person I say, keep watching the Phoenix CityNorth case, and see if it will fly anyhow. Or, could it be a developer that may have lined up some of these lucrative projects, and investors whose reputation may suffer, and truths that may come to the surface? To all of them, I say too bad. Get over it.
Who cared about another partner, who put a great deal of his personal wealth in to save the franchise? Remember Mr. Moyes, the one who stands to lose the most ‘honest’ money? Hmmm….?
When Mr. Bettman talks about the bankers, the question is who are the bankers ? It brings back the same question of who holds the Jobing.com bond? The bond that is holding the City of Glendale captive, the NHL captive, and Jerry Moyes in Chapter 11 ? The same bond that holds a four times value penalty to break. Sounds like the investment was based on sales tax related revenues.
What if these bankers were also involved in other aspects of the Coyotes’ operations, in unrelated areas? Would that present a conflict of interest and give special power and abilities to exercise control? Would they be able to exercise control in other than ‘non-biased’, non-arms length way? I would argue yes, yes, and yes. Is this starting to add up in a disturbing way?
Would this create opportunity to abuse other partners by exercising fiduciary control, and in essence, ‘squeeze out’ another partner? Again, yes.
And, just to add another significant possibility. Why would the City of Glendale refuse to renegotiate the lease with Jerry Moyes? Well, their goal has always been land development. When Ellman and Moyes broke up the partnership, Jerry Moyes did not represent land development anymore. Ah, but there are parties in place with connections to land development, namely Michael Dell and his new relationship as shareholder with Related Companies (CityNorth) . And, further development opportunities will require capital infusion from MSD Capital into it’s partnership arrangement with Related Companies. Could this be the new opportunity for growth that Glendale is looking for? What would the new group have that Jerry Moyes could not offer?
So, we need to ask ourselves a very important question. Which partners are we talking about? I would say it extends beyond the owners and players in the league, and dangerously treads into areas that conflict with the true owner’s rights.
This might explain why a developer/investment firm would be contacting the NHL within 27 minutes of looking at a pretty touchy article. And, might suggest a partnership that is unhealthy to the detriment of the league and its’ owners. How many angles are there? How many partners? What happened to the game of hockey?
I would suggest that the video below be watched with a careful eye, and attentive ear. You may just hear things this time around, that didn’t make sense before.
Ron McLean asked, “If the partners, the owners, came to you and said, ‘what’s your recommendation Gary?'”
Mr. Bettman replied, “I would tell them before I would tell you”.
The question is, which ‘partner’ does Mr. Bettman mean? Could it be the partner that might have contacted him or someone else in the NHL offices just 27 minutes after reading an article? Wouldn’t it be great to know who ‘them’ are?