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March 16, 2011
Coyotes sale to face Goldwater lawsuit
Remember how the libertarian-conservative Goldwater Institute threatened to sue to block Glendale's $197 million subsidy of Matthew Hulsizer's purchase of the Phoenix Coyotes? Well, they're threatening it again:
The Goldwater Institute announced on Tuesday that it will file a legal challenge to the agreement between the City of Glendale and prospective owner Matthew Hulsizer to subsidize the purchase of the Phoenix Coyotes, once that agreement is closed. In a statement released by the institute on Tuesday, Goldwater announced that the challenge comes after the Goldwater Institute examined more than 1,000 pages of documents provided by the City of Glendale under court order. ...
The Goldwater Institute, which prevailed in a similar case against corporate subsidies last year, states they plan to take action because it determined the agreement violates two prohibitions of the Arizona Constitution. The Constitution requires no Arizona government "shall ever give or loan its credit in aid of, or make any donation or grant, by subsidy or otherwise, to any individual, association, or corporation."
Clearly Arizona has subsidized corporations before, so it's not clear how far the constitutional argument will go. That said, the Hulsizer deal looks especially egregious, if only because Glendale would be paying $197 million to subsidize the purchase of an NHL franchise that's only worth $170 million — you could make an excellent argument that the city could save money just by buying the team itself. Except, of course, that the NHL wouldn't allow that. But at least then the Goldwater Institute could file an antitrust suit, too.
Given the recent bargain sale of the Tampa Bay Lightning ($70-$100M reportedly) I'd say the 'Yotes are only worth $100M imho. I thought Forbes factored in the stadium/arena value into the team's worth? The team doesn't own Jobing.com arena.
Posted by Dave on March 16, 2011 02:54 PM
That's not from Forbes - $170m is what Hulsizer is actually paying for the team.
Posted by Neil deMause on March 16, 2011 04:21 PM
The value of the team 'in situ' appears to be about $70 million, which is what Hulsizer is paying. The city of Glendale is tossing in another $100 million (why aren't they the majority owners? You tell me.) This is quite a bit less than Jim Balsillie was willing to pay, and in addition he was actually going to throw in $50 million as a farewell fee to Glendale.
Now the city is stuck paying for (but not owning) the team, and in a few years will be in the same position: a bankrupt team and empty arena, but $100 million deeper in debt. And to city officials and local hockey fans, that actually sounds like a great deal!
Oh, in addition to the up-front gift, Hulsizer gets a sweetheart arena management deal on a no-bid contract. This is probably to cover his expected losses for a few years; can't have rich guys from Chicago losing money on a hockey team in Arizona, can we?
Posted by Dave Boz on March 16, 2011 07:34 PM
Thanks Neil!
But what I was trying to say (and failed to eloquently word), was that this $170M price tag is a bit silly. Why doesn't the NHL take a hit and sell at a lower price - the actual value (certainly not $170M).
Seems like it's unacceptable for the League to lose a dime, but individual owners can lose their shirt and sell at a loss.
If the league truly believed Phoenix was viable, they'd take the hit financially and sell the team at a price point that didn't force the city to obscenely subsidize the purchase.
Or they could sell to Hulsizer for $70M and withhold $100M in TV/Merch revenues over the next ten years to recoup their money.
Posted by Dave on March 17, 2011 05:19 AM
Dave:
In this case, it won't be Mr. Hulsizer losing money. He has what amounts to an iron clad guarantee that he can't lose money in the first five years (thanks to the equally egregious arena management deal).
And, if the city fails to meet even one payment, as I understand it he is free to relocate.
Any council member with even a smidgen of intelligence would be trying to reverse this deal as we speak. But this is Glendale.
Posted by John Bladen on March 17, 2011 02:13 PM
John,
I'm sorry, but Re a modicum of intelligence in a city council.
Our City of Santa of Santa Clara council is the dumbest.
I give you my "Ironclad"tm. guarantee of that!
Sincerely,
santa clara jay
Posted by SANTA CLARA JAY on March 17, 2011 03:12 PM
Glendale, AZ: The city that LOST over TWO MILLION DOLLARS hosting Super Bowl XLII.
Man, those guys are tough! They take a beating on a Super Bowl that's supposed to be a can't-miss license to print your own dough - and they're *still* willing to take a flyer on a hockey franchise's subsidy, too.
Please don't believe the booster blather about "economic impacts" of SB XLII in Glendale. Those "impacts" are not profits and in fact are not even revenues. The hard loss to the city of Glendale is what they spent on that Super Bowl over what they made. Taxpayers there ended up covering the costs of everyone else's tailgate parties.
Regards,
Bill Bailey, Treasurer,
SantaClaraPlaysFair dot Org
-=0=-
I happened to watch the show "Parks & Recreation" lately and it came out that one of the characters had previously been mayor of a small town that went bankrupt because of his ice rink project. I took that as a poke at Glendale but I keep forgetting they are impervious to bankruptcy. How many lawsuits surrounding the Fiesta Bowl, the NFL Cardinals, the NHL Coyotes, the local casino developer will it take to knock some sense into the voters there?
Posted by Doug on March 18, 2011 12:58 PM