For the bullet summary, please go here.
Is it just me, or is it hard to ‘trust’ anything or anyone anymore in the circus known as the court case that is the Phoenix Coyotes? When the bankruptcy trustee came into play, the concern was the NHL meddling to stop other bidders to Reinsdorf, because as we know, that was the ‘partnership’ of choice.
Now, we have a new Canadian group that want to keep the team in Phoenix (a la, ‘see Jim, this is how you should be as Canadian!’). And to add the icing to that idea, an ex co-worker to Jim at RIM. Hollywood, are you listening? We have some new material you could use in your daytime soaps to keep you busy for a long time. These guys are good! No, there is definitely something fishy with the new rabbit pulled from the hat. Strikingly similar in many ways to the Reinsdorf offer in monetary amount, and renegotiation demands. And, it also makes you wonder if this is like the old wrestling matches where you get the opponent in a headlock, and reach over to tag your buddy to finish him off. May explain the Reinsdorf lawyer saying that they would not get in a bidding war. Why would you? As long as one of us takes it, who cares, right?
We must not forget that to the City of Glendale, the Phoenix Coyotes represented growth and development. Hockey was just a means to an end. Glendale has been striving to solve it’s tax woes, and the thought of losing the Coyotes would dish a blow to the long term vision of building sales tax revenue, residential tax revenue, commercial tax revenue, and resident attraction, all adding to the communities tax base and viability.
But, with housing prices plummeting and foreclosures on the rise, Arizona, including Glendale is likely experiencing a ‘back tax’ nightmare, creating an opposite to growth, a cash crisis. The old saying of a penny saved is a penny earned also applies in another way – taxes collected are taxes not lost. And, when as a City you cannot collect taxes due to homeowners’ losing work and getting behind on their property tax, infrastructure growth worries become a luxury. Collecting what is due becomes a greater priority.
Since sports development represented the promise of taxes and infrastructure growth in better times for Glendale, perhaps someone could use the hockey team to bring relief from uncollected taxes in the current downturned economy.
Could Research Edge LLC bring the cash flow relief that Glendale needs? Would this be a potential draw to both the City and Research Edge? Looking at the Coyotes as a stand alone opportunity has got to be secondary, even a ‘loss leader’ so to speak. It could be a situation where a company says,‘ Ok, let’s partner in a couple of ways. We take on the Coyotes, and we work an alliance to buy properties for back taxes, or we take tax lien certificates’ (described here and here).
Now, to throw this out there out of the blue without any proof would not be prudent. But there are a couple of pieces of evidence to support the fact that Research Edge may have some thinking in this area.
Anthony LeBlanc, representing the new Canadian contingent, and former employee of RIM, had this to say:
Mr. LeBlanc believes the club can be successful. He cites small changes such as charging for parking, putting a restaurant in the arena and changing marketing tactics as first steps. “We honestly feel that with low-hanging fruit we can get this thing to within a grasp of being a zero-deficit operation within a year to two years maximum,” he said. The city’s economy is showing signs of life, he added, and Canadians are snapping up foreclosed properties by the hundreds.
Now, if the ‘boys’ are thinking parking lot, please don’t tell me my spot will be worth close to $ half a million. Please don’t, I’d sooner not know.
Interesting choice of words. ‘Canadians are snapping up’ real estate in Arizona?
This site shows just how lucrative this process is as an investment opportunity. It cites an example property, bought for the back taxes of $9,350, and sold for $210,350, a profit of $186,276 (and represents a profit 19 times the initial investment). This gives the City of Glendale the tax payment, and a new owner guaranteeing to pay future taxes. A win for Glendale. This gives the investor the obvious huge profit in buying low and selling incredibly high. Maybe there will be a huge influx of Canadians to Arizona as a result.
The other option is to take the tax lien certificate. In Arizona, this certificate is worth a guaranteed 16% interest rate. The municipality gets it’s taxes paid by the certificate holder, and the holder, as an investment obtains the 16% interest. A win – win yet again.
So, as we can see, in this economy, the way to hedge your ability to ensure profits is to use municipalities, land, and tax strategies to either buy low, and sell high, or provide a guaranteed rate of return, backed by the government to produce a very lucrative return. Try that in the global stock market today!
Now, for these strategies to work, you would have to believe that the market is ripe for an upturn in real estate. Well, according to Keith McCullough (see video below) of Research Edge, the market is bound to come back, in his prediction, the second quarter of this year (right now). Please see the video as provided on their site. If you listen attentively, you will hear Keith mentioning people should ‘put away the crackberry’. Was that kind of ironic, considering the circumstances, or what?
Embedded video from CNNMoney.com Video
As we heard from Keith McCullough, the real estate market will hit bottom in the second quarter, and this corresponds to a great opportunity to enjoy significant investment opportunities for investors and real estate buyers. It also represents collected taxes for the City of Glendale.
The theme is the same for Glendale. The approach by Research Edge LLC may be a little ‘out of the box’ as they may say, but it does make one wonder what the real attraction to Glendale is for Research Edge. As we learned before, things aren’t as they appear on the surface. Would this be why they need time to ensure they are able to place a bid on the Coyotes? It may not be as clear cut as just looking at a ‘hockey’ team.
So, while the Reinsdorf bid, and the bid by Research LLC are similar in requesting concessions for Jobing.com arena, and in dollar amount offered, there are potential, subtle differences as to how they may see land opportunities. Restaurants and parking lot concessions are shared ideas between Reinsdorf and the Canadians. Thinking outside the box may have something yet again to do with land and taxes.
It’s hard to imagine the draw for the simple sake of hockey alone, considering the grave losses of past years. And again, it returns us to the questions of why the terms of the lease and the SOF Investment loan held Jerry Moyes in a financial stranglehold he could not escape. Perhaps he didn’t offer the City a way to enhance it’s tax base.
Someone should have told Jerry Moyes it was never just about hockey.
(next article……just how much of a stranglehold did the SOF loan represent)