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The Final Countdown?
Posted By Shane Hoopfer On Mar 4 2011 @ 5:48 pm In Featured | 9 Comments
Relocation has been the big story of the last few days in the NHL. Phoenix is at a crossroads regarding the sale of the Coyotes. The Atlanta Thrashers are up for sale and there are questions on if local ownership can be found. Winnipeg is clamoring for a return of the Jets, and Quebec City will soon break ground on a new facility in hopes of landing an NHL team of their own. With all the stories out there it can be tough to sort through what is fact and what is hype both positive and negative. So lets go through what we know regarding all these situations.
Phoenix Coyotes - The NHL has owned the Coyotes for two years now in hopes of finding local ownership for the team. It appeared that the NHL had found their buyer in Matthew Hulsizer, however a taxpayer watchdog group called The Goldwater Institute has threatened a lawsuit against the City Of Glendale regarding the sale. Here is why… Hulsizer and the CoG have agreed to the CoG purchasing the parking rights to jobing.com arena for $100M and will also pay Hulsizer another $97M in arena management fees. for a total of $197M. Hulsizer would then pay the NHL $170M for the Phoenix Coyotes and agree to keep the team in Glendale for the next 30 years. He can also move the team but would have to pay the CoG $250M to do so. The CoG will sell bonds to raise the $116M at a rate of 9%. Which could cost the city $200M over the next 30 years.
The Goldwater Institute has claimed that the CoG already owns the parking rights so needless to say would be buying them from themselves. They also claim that even if the CoG does not own these rights they have overvalued them by upwards of $40M not including the interest they would have to pay. So the money being payed to Hulsizer would be considered a gift. This violates the Arizona constitution and the Goldwater Institute has not come off of their position that they will sue over this. Which could make the bonds valueless, so it has scared away investors.
CoG Mayor Elaine Scruggs held a press conference at jobing.com arena (which no one in Phoenix covered) and accused the Goldwater Institute of “significantly hindering,” the sale. and refused to take questions. They did however run out the usual employees for their tearful statements of how their lives will be affected if the Coyotes leave. The Goldwater Institute refused to back down and responded with the following letter that was made public…
Dear Mayor Scruggs:
Thank you for your interest in meeting with the Goldwater Institute.
We have discussed our concerns and met repeatedly and at length with Jordan Rose and the city of Glendale’s attorneys. Our concerns have not changed since these discussions and meetings were held, except when the City decided to pledge sales tax revenues to repay the bonds. That places the taxpayers in the position of having massive liability if the team fails again. We also shared this concern with the city.
As you know, the Gift Clause requires a tangible quid pro quo for payments made to a private company or individual. The crux of the deal is the City obtaining parking rights in exchange for giving a payment of $100 million to the purchaser. We believe the City already owns the parking rights. We have examined all of the documents the City contends prove the opposite, and those documents fortify our conclusion. If the City owns the parking rights, then there is no consideration and the deal is unquestionably invalid.
Even if the team owns the parking rights, they must be worth the $100 million the City is paying. We believe the revenues will be insufficient to repay the debt. If they are insufficient or if the team fails, the taxpayers, not the purchaser, is liable. That is where we believe the deal should be restructured to avoid an illegal gift. If the parking rights are as valuable as the City apparently believes, then the purchaser should borrow the money necessary to make the purchase, not the City.
We continue waiting on the City to provide us with the remaining documents that are relevant to this arrangement, per the Court order. Once we have those documents, we will review them. At that time, we would be glad to offer additional analysis. At this point, however, we have no new analysis to offer. If the City chooses to restructure the deal, we will also be pleased to review it.
The NHL has said that this situation needs to be dealt with immediately and expects by the end of next week that a final decision will be made on THIS SALE it is important to note the phrase ‘this sale’ as it doesn’t guarantee that the team would immediately pack up and move to Winnipeg for next season. It just means that a sale to Matthew Hulsizer would be done and probably not pursued any further. However it does leave the NHL in a position again with no owner, and only the group in Winnipeg ready and able to take the team immediately.
Mark Chipman and David Thomson will need a decision on the future of the team soon if they are to purchase the team and move it to Winnipeg. The MTS Center which hosts the AHL’s Manitoba Moose must fill in their schedule in the next few months, and also give the Vancouver Canucks and the Manitoba Moose time to work out a deal to either stay in Winnipeg or move to a new city. Saskatoon is one city that has been rumored as a new home for the Moose.
That is the current situation with the Phoenix Coyotes. Time is running out on the Hulsizer deal and decisions must be made soon. Now onto Atlanta.
Atlanta Thrashers – The Atlanta Thrashers have struggled since returning to the NHL. The ownership situation has finally settled all their legal hassles and are able to move forward. But now the Atlanta Spirit group that owns the Thrashers no longer has the stomach to absorb a $40M a year loss, and is looking to sell the team, and per NHL policy must try and sell the team to local ownership, and the group has done so but is finding at best lukewarm interest as the NHL appears to have failed again in Atlanta.
The Atlanta Thrashers are an easier team to move because they are not tied to a lease in Atlanta and can be moved at anytime. I think the other reason it is easier to move the Thrashers is the fact that this is Atlanta’s second chance at an NHL team.
There will not be much news in the next week or two on the Atlanta situation as the Phoenix Coyotes drama will hog the headlines, but when Phoenix is dealt with one way or the other all eyes will turn to Atlanta and what to do with that franchise.
The City Of Winnipeg - Winnipeg is ready and waiting to bring a NHL team back. They have a beautiful new facility in the MTS center that currently seats 15,024 people with 47 luxury suites. As I have been informed the building could be expanded a little bit to possibly to get over the 16,000 seat mark. It would be small by NHL standards but it is big enough to make it work having the team as a mid-cap team. There is little doubt that the building would sell out, and be supported by the community. The ownership group of True North has a combined net worth of $19B so stability should not be an issue.
Quebec City - Quebecor Inc., The City of Quebec, and the Province have agreed to the funding of a new $400M building and Quebecor Inc. would also be the new buyer for an NHL team and have the financial backing to easily do so. The building is scheduled to break ground by the end of 2012 and be ready for play in 2015. Much like Winnipeg, Quebec City will have all the tools in place to be a stable NHL franchise. Fan support would be over the top, and there is enough corporate support to just make it work.
The NHL – The NHL has no desire to move either Atlanta or Phoenix and their position is understandable. Atlanta and Phoenix are two very large television markets in the USA and the NHL’s TV deals are coming up for negotiation this year, but that is not the only reason. The NHL would also love to expand the league by two teams in the near future. With a estimated price tag of $400-500M for an expansion franchise it is a lot of money that the NHL would be able to get from the potential Winnipeg and Quebec City owners.
There is also the rumored specter of Jim Balsille and his deep pockets that would be willing to buy an expansion team. The problem with a deal with the Blackberry CEO is he wants a team in Southern Ontario. The Toronto Maple Leafs and Buffalo Sabres have gone out of their ways to ensure that this will never happen. So it’s another concern the league may venture into dealing with in the next 5 years.
So What Will Happen? - If anyone tells you that this team will move or that team is going to this city they are lying to you! No one has any idea what will happen for sure. My best guess is that somehow the Phoenix Coyotes will stay in Phoenix and focus will quickly moved to the Atlanta Thrashers situation and you could see the Atlanta Thrashers moved quickly to Winnipeg. What this does is would move the Atlanta/Winnipeg franchise to the Western Conference, thus finally allowing the Detroit Red Wings to move to the Eastern Conference which they have desperately been asking for for years. I suspect after that the Quebec City and another American group will get expansion teams in time for 2015.
At the end of the day I do truly believe that Canada will have eight teams in the NHL within the next four years. I believe the city of Winnipeg will have an NHL team soon! Also the NHL will have 32 teams in it. What do you think will happen and how soon?
Have a good one!
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