Losing less by not playing, eh?

[M. Beaux-Eaux]

The Denver Business Journal - 10:18 AM MST Monday

Pepsi Center debt on Rating Watch Negative

The cancellation of the NHL season has forced a second look at the Denver Arena Trust, the organization responsible for the debt at the Pepsi Center sports arena. Fitch Ratings has placed about $110 million in outstanding arena-revenue notes, series 1999, on Rating Watch Negative. The trust currently has an "A" rating.

Fitch determined that the cancellation of the 2004-2005 National Hockey League season would weaken sports debt connected with an NHL team. The Pepsi Center is open to the Colorado Avalanche of the NHL and the Denver Nuggets of the National Basketball Association.

The NHL season was canceled Feb. 16 after players and the league were unable to come up with common ground about a new collective bargaining agreement.

The Denver Arena Trust is responsible for all debt-service payments. The security comes from the naming rights agreement with PepsiCo Inc., from luxury suite licenses of the arena's 94 suites, and from the founding partner agreements with Qwest Communications International Inc. and the Coors Brewing Co.

Fitch said athletes not playing is among the major credit risks associated with sports finance debt and takes that into account in all of its sports-related ratings.

- denver.bizjournals.com/denver/stories/2005/03/07/daily3.html

*

March 07, 2005 01:54 PM US Eastern Timezone

Fitch Places LA Arena Funding, Staples Center, California on Rating Watch Negative

NEW YORK--(BUSINESS WIRE)--March 7, 2005--Fitch Ratings has placed the approximately $280,000,000 outstanding L.A. Arena Funding LLC (Staples Center, Los Angeles) arena-revenue backed notes, series 1999, on Rating Watch Negative. L.A. Arena Funding LLC is currently rated 'A'. In a press release dated Feb. 11, Fitch determined that the complete cancellation of the 2004-2005 National Hockey League (NHL) season would undoubtedly weaken all rated sports arena debt associated with an NHL team. The Staples Center currently plays host to the NHL's Los Angeles Kings, National Basketball Association's Los Angeles Lakers, and the Los Angeles Clippers and annually hosts a number of concerts and other events.

On Wednesday, Feb. 16, the NHL's commissioner Gary Bettman announced the cancellation of the NHL's 2004-2005 season after the NHL and the National Hockey League Players' Association (NHLPA) were unable to reach common ground regarding a new collective bargaining agreement. Although numerous proposals were submitted from Bettman and the NHLPA's executive director Bob Goodenow since the beginning of the work stoppage in September and several concessions were given from both sides, a final deal failed to come to fruition.

The L.A. Arena LLC is the obligor for all debt service payments. Security is derived from the following: the assigned revenue rights from the STAPLES Center's naming agreement with STAPLES Inc.; the 10 corporate founding-partner agreements; the two concessionaire agreements; the premier-seat revenues; the ticket-sales contract; and the license revenues of 101 of the STAPLES Center's 160 luxury suites.

Work stoppage risk is among the major credit challenges associated with sports finance debt, and this risk has been reflected in all Fitch sports ratings. Although the Staples Center continues to host a solid number of sporting events, such as NBA games, and other events, such as concerts and family shows, some generalizations regarding the effects of work stoppages should be noted. Work stoppages in professional sports have the potential to alienate a sport's fan base, as evidenced by the significantly lower attendance and weaker television ratings immediately after Major League Baseball's last work stoppage in 1994-1995 (MLB's leaguewide securitization facility is rated 'A-' by Fitch). To the extent the work stoppage continues for more than one year, there may be a reduction in the future value of certain contractually obligated revenue (COR) agreements such as the luxury suites and sponsorship agreements that support debt payments.

- tinyurl.com/3svlo

[Habs_fan_in_LA]

There are thirty teams:
Some are losing less and some are losing more.
Some want to sell the league for $3.5M, some are valued much higher.
Some are conglomorates with Cable TV interests and some are family owned.
Some are in established traditional markets and some vie with tractor pulls for fans.
Thirty very different teams, values and budgets following the leadership (ugh) of Gary Bettman and negotiating with (Ugh Ugh) Bob Goodenow.
Good luck and don't hold your breath!

[M. Beaux-Eaux]

I (likely) wouldn't have bothered posting the quotes and links if it were Carolina and Pittsburg who had been flagged. The fact that Colorado and LA were the franchises made it more noteworthy IMO.

The banks are starting to twitch. Bain Capital and GamePlan make a buyout offer for the entire league (when was the last time that happened?).

Fins are appearing in the water at the owners' end of the beach.

Can they hold out longer than the players? Certainly some of them can.

Will Goodenow wait until there is a shift in the power axis of the NHL BOG? Why not?

[blaise]

The players have lost X dollars in salary. How long would it take them to recoup their losses, assuming an average 20% raise over their 2003-04 salaries in their next 2-year contract (that is, if they're still playing in the NHL beyond the expiration of that contract)? It could work out just fine for the young players but badly for many of the older veterans.

Players on the bubble would be particularly hard hit. Let's take Dagenais, for example. He didn't collect his $500,000 this past season. If the lockout were to continue into the 2005-06 season, it's probable he wouldn't be offered a contract at all because of the crop of prospects coming up. So he wouldn't have any nest egg. I'm reasonably sure he'd feel bitterness rather than rejoicing over union solidarity.

[M. Beaux-Eaux]

Blaise said:

The players have lost X dollars in salary. How long would it take them to recoup their losses, assuming an average 20% raise over their 2003-04 salaries in their next 2-year contract (that is, if they're still playing in the NHL beyond the expiration of that contract)? It could work out just fine for the young players but badly for many of the older veterans.

That doesn't seem to be the issue.

None of these players, being good enough to play in their sport's elite league, need to worry about starving. They will make good money no matter where they play - NHL, WHA, European leagues.

This is, and has been, about more than money.

If you've played you know the BS threats you can give and get during a game. The two things you don't do are to let it get to you or to back down when words come to push come to shove.

Players on the bubble would be particularly hard hit. Let's take Dagenais, for example. He didn't collect his $500,000 this past season. If the lockout were to continue into the 2005-06 season, it's probable he wouldn't be offered a contract at all because of the crop of prospects coming up. So he wouldn't have any nest egg. I'm reasonably sure he'd feel bitterness rather than rejoicing over union solidarity.

For better or for worse there will be casualties on both sides; players out of work and franchises folded.

This isn't a bloodless war. The color of the blood just happens to be green.

[blaise]

M. said:

That doesn't seem to be the issue.

None of these players, being good enough to play in their sport's elite league, need to worry about starving. They will make good money no matter where they play - NHL, WHA, European leagues.

This is, and has been, about more than money.

If you've played you know the BS threats you can give and get during a game. The two things you don't do are to let it get to you or to back down when words come to push come to shove.


For better or for worse there will be casualties on both sides; players out of work and franchises folded.

This isn't a bloodless war. The color of the blood just happens to be green.

Because a hockey career is finite, the typical North American playes would lose big time if he were to play somewhere other than in the NHL for several years. With a lifespan of, say, 75 years, and the lack of a college education, most players couldn't amass enough to live comfortably for the next 50 years off their savings + a salary from an ordinary job.

[M. Beaux-Eaux]

Blaise said:

Because a hockey career is finite, the typical North American playes would lose big time if he were to play somewhere other than in the NHL for several years. With a lifespan of, say, 75 years, and the lack of a college education, most players couldn't amass enough to live comfortably for the next 50 years off their savings + a salary from an ordinary job.

Oh, I'm sure they're all better aware of that than you and I. If for some reason they haven't figured it out for themselves they've had it explained to them.

However, you can't lose what you don't have and, since they are currently unemployed, they have nothing to lose.

It should be heartening to those who have considered the players to be greedy that they seem to be fighting for less money rather than more money.

Onward and forward with the good fight.

[Bob]

M. said:

However, you can't lose what you don't have and, since they are currently unemployed, they have nothing to lose.

Oh, but they are losing time. And in an industry where careers are short, time is something that is very difficult to make up.

And I do believe the players should fight for what is fair and reasonable. However, someone has convinced them that fair and reasonable is something far different than what the owners AND the fans consider fair and reasonable.

Meanwhile the clock is ticking and for many players, a good chunk of their total potential earnings has been flushed.

Some are probably chewing away at their savings, too.

And if they lose enough time they have lost their careers that promised an easy life. For some the alternatives will not be pretty.

It might not be right but it is reality.

[blaise]

M. said:

Oh, I'm sure they're all better aware of that than you and I. If for some reason they haven't figured it out for themselves they've had it explained to them.

However, you can't lose what you don't have and, since they are currently unemployed, they have nothing to lose.

It should be heartening to those who have considered the players to be greedy that they seem to be fighting for less money rather than more money.

Onward and forward with the good fight.

I see more of Don Quixote than I would have imagined in your thoughts. Apparently so does Bob. The players need not have been unemployed. They were led astray by a Pied Piper who succeeded in convincing them that a salary cap is tantamount to submitting to being shackled.

[M. Beaux-Eaux]

Bob said:

Oh, but they are losing time. And in an industry where careers are short, time is something that is very difficult to make up.

They are not losing time by their own volition. They have been locked out of work and apparently won't be back until an "agreement" is "negotiated" on the NHL's terms. What can you do? It's a tough break for sure.

And I do believe the players should fight for what is fair and reasonable. However, someone has convinced them that fair and reasonable is something far different than what the owners AND the fans consider fair and reasonable.

But they are after all negotiating for themselves, not the owners and the fans. And perceptions of what is fair and reasonable are naturally bound to vary from group to group.

Whatever starts bringing the maximum amount of revenue is fair to the owners. Whatever has the players performing with the fewest games canceled is fair to the fans.

But what is fair to the players?

That question, believe it or not, has been puzzling me for a while now. My initial backing of the NHLPA on this board began as an exercise in playing devil's advocate, since the vast majority were on the owners' side.

Of course now I am seen as Renfield to Evil Bob's Dracula. Fair enough.

In reality I have slid over to the players' side. Not because I believe that they are guardians of virtue in any way, but because they for me represent David whereas the owners are Goliath.

Ultimately, I hope the struggle goes on as long as possible and results in the destruction of the NHL as we know it. The Game can only benefit from having the prison it has been confined in razed to the ground.

Meanwhile the clock is ticking and for many players, a good chunk of their total potential earnings has been flushed.

Some are probably chewing away at their savings, too.

Unless they've been absolute idiots with their money they should be OK for a while yet.

Each NHL Players Association member can draw 24 months’ of lockout compensation pay, up to $10,000 per month. - www.ocweekly.com/ink/05/20/news-roos.php

Plus there is work playing hockey wherever.

And if they lose enough time they have lost their careers that promised an easy life. For some the alternatives will not be pretty.

It might not be right but it is reality.

So, life may not be as easy. Some players end up as paupers even after having made millions. Working for a living isn't so bad, we all do it. C'est normal..

I'm certainly not feeling sorry for either side in this dispute.

[blaise]

M. said:

That question, believe it or not, has been puzzling me for a while now. My initial backing of the NHLPA on this board began as an exercise in playing devil's advocate, since the vast majority were on the owners' side.

Of course now I am seen as Renfield to Evil Bob's Dracula. Fair enough.

In reality I have slid over to the players' side. Not because I believe that they are guardians of virtue in any way, but because they for me represent David whereas the owners are Goliath.

I'm certainly not feeling sorry for either side in this dispute.

Well at least you've come down from your quixotic view of the players as upholding chivalric ideals by conceding that neither side is squeaky clean.

I shouldn't have to point out to you that David hardly represents virtue. The bible reveals he was a conniver. I won't go into his relationship with Saul or with his son Absalom. I'll just mention that his plotting to gain Bathsheba was as low as it gets.

The labor movement is replete with crooked unions that have put employers out of business. There have been ties between unions and the Mafia. The police PBAs in some communities have virtually extorted huge sums from taxpayers. Hardly anyone considers unions to be progressive nowadays.

What about the NHLPA? Since the advent of free agency and especially the signing of the recently expired CBA, all NHL players have fared very well despite the existence of owners one can hardly sympathize with. Siding with the NHLPA because they're the litle guys produces a reflexive guffaw.

[Anardil1]

Esteemed Beaux-Eaux..... David fought Goliath and just as happened in the Bible, David won again in 1995.

[M. Beaux-Eaux]

Blaise said:

Well at least you've come down from your quixotic view of the players as upholding chivalric ideals by conceding that neither side is squeaky clean.

You are confusing me with someone else. I never made any such claim.

I shouldn't have to point out to you that David hardly represents virtue.

You don't, and you're not going to, are you?

The bible reveals he was a conniver. I won't go into his relationship with Saul or with his son Absalom. I'll just mention that his plotting to gain Bathsheba was as low as it gets.

Dear God, you did. And you left out the juicy bits. Oh well.

The labor movement is replete with crooked unions that have put employers out of business. There have been ties between unions and the Mafia. The police PBAs in some communities have virtually extorted huge sums from taxpayers.

Shocking, absolutely shocking. Crooks everywhere it seems.

Hardly anyone considers unions to be progressive nowadays.

It depends which unions you're talking about and what your station in life is.

What about the NHLPA? Since the advent of free agency and especially the signing of the recently expired CBA, all NHL players have fared very well despite the existence of owners one can hardly sympathize with.

That Evil Bob Badenough sure did a bang-up job didn't he? And the player agents? Boy, did they ever play the owners' greed like a finely tuned instrument during contract negotiations, or what?

Siding with the NHLPA because they're the litle guys produces a reflexive guffaw.

Now that was reflexive.

[M. Beaux-Eaux]

Anardil1 said:

Esteemed Beaux-Eaux..... David fought Goliath and just as happened in the Bible, David won again in 1995.

Yeah, like a lot of people I'm curious to see how the rematch turns out.

[Habs_fan_in_LA]

Blaise said:

Because a hockey career is finite, the typical North American playes would lose big time if he were to play somewhere other than in the NHL for several years. With a lifespan of, say, 75 years, and the lack of a college education, most players couldn't amass enough to live comfortably for the next 50 years off their savings + a salary from an ordinary job.

Irony!! I find myself agreeing with Blaise on this one.
Just as the Red Wings and Predfators have very different financial interests and values;
Dagenais and Yzerman have completely different motivations.
They both have about the same number of NHL games left in them? perhaps.
Yzerman has his Hummer, mortgage paid off, and prospects after he retires.
Dagenais can't follow Houle into selling Molson's door to door and becoming GM of the team. Dags Hummer and house aren't paid off. Dags needs to play. SteveY can retire with lots of momentos to auction off after a great career, or play another two years until his knees fuse.
Ribeiro is in the flowering years of a good career, Langdon is cashing his last big paychecks, Ryder is establishing his negotiating value, These guys don't want to lose a year playing in Europe. They are not better off not playing than playing. The banks are downgrading the Kings and Avalanche when they are not playing. The Leafs and Bruins made much more money playing than not playing.

[M. Beaux-Eaux]

M. said:

I (likely) wouldn't have bothered posting the quotes and links if it were Carolina and Pittsburg who had been flagged. The fact that Colorado and LA were the franchises made it more noteworthy IMO.

The banks are starting to twitch. Bain Capital and GamePlan make a buyout offer for the entire league (when was the last time that happened?).

Fins are appearing in the water at the owners' end of the beach.

Can they hold out longer than the players? Certainly some of them can.

Will Goodenow wait until there is a shift in the power axis of the NHL BOG? Why not?

Several clubs on verge of penury

By DAVID SHOALTS
Thursday, March 10, 2005 Updated at 12:20 AM EST

From Thursday's Globe and Mail

Some National Hockey League teams are using deposits from season-ticket holders, suite holders, club-seat holders and sponsors as operating capital instead of dipping into lines of credit at their banks or the lockout fund each team has deposited with the league. This could lead to serious financial trouble.

If a large number of those creditors suddenly demand their money back, a possibility now that the 2004-05 season has been cancelled, more than one team could face a financial crisis if the amount owed is greater than what the team has left in its $10-million (all figures U.S.) lockout fund and lines of credit.

"I would suggest that any team that is using [its] work-stoppage fund and using that future revenue, that would not be a good position to be in," one NHL executive said. "If they're spending it and they don't have their [lockout] fund, that would be dangerous."

Documents obtained by The Globe and Mail show that the Florida Panthers already have a potential liability of almost $16-million, which is greater than their lockout fund. One year ago, in an independent audit of Arena Operating Company Ltd., the Panthers' subsidiary that runs the Office Depot Center, Deloitte & Touche said the financial condition of the club "raises substantial doubt about its and the Operator's ability to continue as going concerns."

There are also troubling signs with the Nashville Predators, who have spent at least some of their customers' money and also dipped into their lockout fund.

This could explain why the NHL invited the NHL Players' Association back to the bargaining table tomorrow. If there is a season this fall with the participation of the NHLPA, the teams can hang on to their customers' money.

- tinyurl.com/5o22a

[Doc Holliday]

The owners can't afford to lose another season. That to me is quite clear and that is why many have guaranteed hockey next October. The NHL have waited as much as it could.

24% roll back
40mil CAP with a 100% tax up to 45
No floor
No linkage
2 way arbitration
80% qualifying offers

Get it done.

[M. Beaux-Eaux]

Dance, Nay-Bob, dance!

[Habs_fan_in_LA]

M. said:

Several clubs on verge of penury

By DAVID SHOALTS
Thursday, March 10, 2005 Updated at 12:20 AM EST

From Thursday's Globe and Mail

Some National Hockey League teams are using deposits from season-ticket holders, suite holders, club-seat holders and sponsors as operating capital instead of dipping into lines of credit at their banks or the lockout fund each team has deposited with the league. This could lead to serious financial trouble.

If a large number of those creditors suddenly demand their money back, a possibility now that the 2004-05 season has been cancelled, more than one team could face a financial crisis if the amount owed is greater than what the team has left in its $10-million (all figures U.S.) lockout fund and lines of credit.

"I would suggest that any team that is using [its] work-stoppage fund and using that future revenue, that would not be a good position to be in," one NHL executive said. "If they're spending it and they don't have their [lockout] fund, that would be dangerous."

Documents obtained by The Globe and Mail show that the Florida Panthers already have a potential liability of almost $16-million, which is greater than their lockout fund. One year ago, in an independent audit of Arena Operating Company Ltd., the Panthers' subsidiary that runs the Office Depot Center, Deloitte & Touche said the financial condition of the club "raises substantial doubt about its and the Operator's ability to continue as going concerns."

There are also troubling signs with the Nashville Predators, who have spent at least some of their customers' money and also dipped into their lockout fund.

This could explain why the NHL invited the NHL Players' Association back to the bargaining table tomorrow. If there is a season this fall with the participation of the NHLPA, the teams can hang on to their customers' money.

- tinyurl.com/5o22a

I can think of an NHL owner who financed his current cash defecit borrowing by selling his future Stadium naming revenues.
Will the Bain Capital offer assume the teams debts? If so I'd sell future years advertising, naming, and sell coupons for beer in the year 2008 at half price if the season ticket holders that purchase today. What about the debts the teams have?
A deal to buy 30 teams in 2 countries, four provinces, multiple states, each team with different debt structures and liabilities.......... Negotiating a collective bargaining agreement is childsplay compared to this; and we know how well Bettman handles childsplay.

[Habs_fan_in_LA]

Players lose less by not playing,
teams lose less by not operating,
farmers lose less by not planting,
power utilities lose less by not not expanding:

All the above are short term gains.
A dairy farmer may artificially keep prices high by spilling his milk, but eventually he loses customers to margarine producers, citrus juice, competitors and alternate sources.
Whatever the NHL owners saved is lost on diminished future revenues.
If the NHL pays their players 24% less in 2005 - 2006 and their revenues drop 50%, what have they saved?

[M. Beaux-Eaux]

Predators, Panthers could feel the pinch
Documents show two NHL teams may be facing financial pressure

By DAVID SHOALTS

Thursday, March 17, 2005 Page S4

Two of the most hard-line supporters of the National Hockey League's demand for a hard salary cap on player salaries are Craig Leipold, the owner of the Nashville Predators, and Alan Cohen, the majority owner of the Florida Panthers. A look at their clubs' financial records show the reason why.

Documents obtained by The Globe and Mail indicate the Panthers and Predators could face financial pressure next season if the lockout continues or replacement players -- who are unlikely to generate the same type of gate revenues as regular NHL players -- are used.

- tinyurl.com/5zgz2

[Habs_fan_in_LA]

Doc_Holliday said:

The owners can't afford to lose another season. That to me is quite clear and that is why many have guaranteed hockey next October. The NHL have waited as much as it could.

24% roll back
40mil CAP with a 100% tax up to 45
No floor
No linkage
2 way arbitration
80% qualifying offers

Get it done.

I agree that it's good for the league but;

1. Do the players have to buy their own jerseys?
2. Do the players pay their own airfare to games?
3. Do the players still get a meal allowance that they use to share a coupon reduced pizza?
4. Who pays for the sticks and who gets to sell game worn jerseys?
5. Nike or CCM, who decides and who skims the licensing baksheesh?

Actually the players don't have it so bad, do they?

[M. Beaux-Eaux]

...A Garden spokesman would not comment on its financial losses.

Cablevision's quarterly and annual filings with the Securities and Exchange Commission do not provide a vivid glimpse of the Knicks' and the Rangers' finances, partly because the Madison Square Garden division also includes the arena, the WNBA's Liberty, Radio City Music Hall, the MSG Network and Fox Sports New York.

But one financial marker during the second quarter of each year -- from April to June, during the playoffs -- shows some consistency: the Garden division's revenues, as high as US$193.9 million in 2000, when the Knicks played eight home playoff games, fell to US$133.2 million in 2003, when there were no playoff games.

During last year's second quarter, when the division's revenue jumped to US$165.8 million, the Garden benefited from US$6 million in higher Knicks revenues, US$4.2 million in higher MSG Network revenues and a US$10.3 million bonus from the Charlotte Bobcats expansion fee. The Garden also recorded a windfall when the Mets paid US$54 million to get out of their Fox Sports New York contract after 2005; the Garden then gave itself a US$41.8 million credit to reverse a liability tied to the TV deal.

Other pieces of the financial puzzle, gleaned from the filings, show that:

-- The financial impact of losing the Rangers to the lockout is IS$42.7 million.

-- Through the first three months of 2004, the Knicks posted higher revenue of US$2.2 million and the Rangers generated an extra US$1.5 million; then only the Knicks made the playoffs.

-- In 2002, when the Knicks and the Rangers missed the playoffs, the Garden attributed a US$6.4 million decrease in revenue from the year before to the "absence of ticket sales from Knicks playoff games." There was no mention of the Rangers' failure.

-- The drop in revenue in the second quarter of 2003 was laid in part to "lower average Knicks paid attendance" and fewer Garden and Radio City events, but there was no mention of the Rangers, as if they were not culpable for the event shortfall.

-- In 2001, one of the culprits for a dip in Garden sales was "lower Knicks playoff revenues" because of their first-round elimination. The Rangers, that had not earned a playoff cent since early in Bill Clinton's second term.

- www.taipeitimes.com/News/sport/archives/2005/04/23/2003251687

[blaise]

Cablevision, the owner of all those properties, may be sold. If James Dolan sells the cable business but retains MSG , the sports and entertainment stump will remain gangrenous, especially if the projected Jets stadium is built. It would drain convention and exhibition business from MSG in no uncertain terms. So would a new Devils arena,

[M. Beaux-Eaux]

Here's a shocker:

Agencies may pull plug on hockey

By KEITH MCARTHUR

Monday, May 16, 2005 Updated at 3:06 AM EDT

From Monday's Globe and Mail

Advertisers are preparing to abandon the National Hockey League for the early part of the 2005-2006 season, unless the league reaches a settlement with players in the next month.

The next few weeks are the most critical period of the year for advertisers and media buyers as they plan and commit their advertising dollars for the fall television season. This week, the U.S. networks are presenting their fall schedules in New York. Canadian networks will do the same early next month in Toronto.

Doug Checkeris, president of Media Company in Toronto, said that if the NHL can't commit to a fall season by mid-June, advertisers will have little choice but to commit their dollars elsewhere.

"Every day that goes by, the league probably loses some money," said Mr. Checkeris, who buys television time for advertisers.

"This is the moment for them to announce they have an agreement to maximize their television revenue for the fall ..... Most people don't think it's an issue until the fall, but really all of the dollars are all getting committed now."

Advertising Age, a leading U.S. trade magazine, estimated that the NHL lost at least $400-million (U.S.) in potential advertising revenue last year when its decision to lock out the league's players resulted in the cancellation of the entire season.

- tinyurl.com/dvclr

[blaise]

There might not be a league TV contract but that would not preclude local or regional broadcasts.

[Habs_fan_in_LA]

Reminds me of the millionaires in Los Angeles who buy yachts and save gas money by leaving ithem tied up at the dock in Marina del Rey.
They still have to make the payments and dock fees, but it costs them less to not run them.