Post by jamiebez on Jan 13, 2005 12:14:23 GMT -5
From the Globe and Mail:
www.theglobeandmail.com/servlet/story/RTGAM.20050113.wcoyotes13/BNStory/Sports/
What can I say, revenge is sweet!
=================
The Phoenix Coyotes have $60-million (all figures U.S.) in debt registered against the team, loan documents obtained by The Globe and Mail indicate, an amount that appears to be unusually high for a National Hockey League club.
But team owners Jerry Moyes and Steve Ellman say the $60-million registered against the team is not a debt, per se, but $60-million in "credit facilities," such as a line of credit. Ellman said the Coyotes can "draw up to $60-million and we do not owe $60-million to our lenders today."
If the team has substantially drawn down on $60-million, and given that NHL franchise values have decreased in recent years, this could mean there is little equity left in the club for Moyes and Ellman.
"Sixty million dollars is a high debt load for an NHL team," said a source in the financial community who is familiar with NHL finances, adding he thinks the Coyotes "are not worth much more than $70-million."
The Globe and Mail reported two weeks ago that the Coyotes had quietly been put up for sale because of the club's financial situation. Moyes and Ellman both denied the report.
The franchise's debt is registered against Coyotes Hockey LLC, which owns the hockey team but not its arena, although the Coyotes manage Glendale Arena and receive revenue from all its events.
Ellman would not say how much the Coyotes owe their lenders.
"Actually, we have one of the more favourable interest rates on our debt financing in the NHL today," Ellman said. "We were very fortunate to find this available.
"Most [NHL] teams have $60-million [in debt registered] on them," he added. "You can check around."
Bill Daly, the NHL's chief legal officer, said the NHL was aware of the Coyotes' debt and that it was within the league's limits.
Financing issues have been part of the Coyotes' story since Ellman bought the club in February, 2001, for $90-million. Moyes became majority owner shortly after, when Ellman could not obtain $60-million in loans on his own.
With Moyes, who founded one of the largest trucking companies in the United States, in the picture, banks signed off on the loans.
Moyes assumed the loans after they were arranged. He also provided funds to get the arena built and to cover operating losses, which reports have said are more than $100-million since the purchase.
Last November, Moyes stepped down as president of Swift Transportation Co. after an announcement by the U.S. Securities and Exchange Commission that it is investigating some stock trades he made. He was also named in a class-action lawsuit over alleged illegal insider trading.
Moyes has said he used at least some of his 35-per-cent stake in Swift as collateral for loans to prop up the hockey team and the real-estate development around the arena.
A deed of trust dated Dec. 31, 2003, states that Coyotes Hockey LLC entered into a "credit agreement" with MSD Capital, a large investment fund, for $40-million. The deal was made through a subsidiary of MSD called SOF Investments LP. The document refers to the Coyotes as the "borrower" and SOF as "the lender."
A second deed of trust, dated May 13, 2004, states that Fortress Credit Opportunities "entered into that certain loan agreement" for $20-million. Fortress Credit Opportunities LLP is a subsidiary of Fortress Credit Corp., which describes itself on its website as a lender for distressed real estate.
Ellman said Fortress did not make the loan in this case.
He said Fortress acted as an agent for a Japanese bank, which he declined to name. The loan document does not mention such a bank, only Fortress.
The timing of the transactions suggests they were made to raise $60-million to pay Moyes for taking over the team's original loans. Shortly before the debts to SOF and Fortress were registered, Moyes terminated two similar security agreements against the team on Dec. 9, 2003.
Ellman said Moyes was "paid off" for his original loans to the team, but denied the money came from the $60-million advanced by SOF and Fortress. In fact, Ellman said, there was a total of $80-million in debt from the purchase of the team in 2001, and it has all been paid off.
"We paid that debt down to $60-million and we have since paid that down and now we just have the credit facilities," he said.
When asked how he managed that despite the operating losses and difficulties in starting the real-estate development that saw him run into more financial trouble, Ellman said the money came "from Mr. Moyes's and my own pockets."
"Mr. Moyes has more than $200-million invested in the team and the project and I have more than $60-million invested," Ellman said.
He refused to go into any more detail about their financing.
"I really don't think Mr. Moyes would like to discuss his finances in The Globe and Mail," he said.
Wayne Gretzky is listed as managing partner of Coyotes Hockey, but the size of his holding is not clear. He does not have a share of Coyotes Holdings, the parent company of Coyotes Hockey and other companies that manage Glendale Arena and are trying to develop the real estate around it.
Moyes owns 70 per cent of Coyotes Holdings, while Ellman has 30 per cent.
Several NHL teams have changed hands in recent years and values have been dropping since the mid-1990s, when they were rising steadily.
In April, 2003, the Buffalo Sabres were sold separately from their arena. The team was rescued from bankruptcy by Thomas Golisano in a deal that was announced as being worth $92-million. That included a contract to manage HSBC Arena, which is owned by New York state's Erie County.
However, most of the sale price represented assumed debt and Golisano told reporters at the time of the sale that his cost was closer to $70-million. His actual cash outlay, according to a banking source, was about $40-million.
Eugene Melnyk bought both the Ottawa Senators and the Corel Centre out of bankruptcy in separate deals for a total of $72-million in June, 2003.
An argument could be made that the Atlanta Thrashers' value was practically zero when they were purchased along with the National Basketball Association's Atlanta Hawks and the operating rights to the Philips Arena by a group of businessmen in April, 2004, for $250-million.
While the Hawks' woeful on-court record and sparse attendance made them one of the worst franchises in the NBA, recent team sales suggest most, if not all, of the purchase price reflects the value of the Hawks, not the Thrashers.
Last August, the New Jersey Nets were sold for $300-million, a few months after Black Entertainment Television founder Robert Johnson paid the same price for the Charlotte Bobcats expansion team.
www.theglobeandmail.com/servlet/story/RTGAM.20050113.wcoyotes13/BNStory/Sports/
What can I say, revenge is sweet!
=================
The Phoenix Coyotes have $60-million (all figures U.S.) in debt registered against the team, loan documents obtained by The Globe and Mail indicate, an amount that appears to be unusually high for a National Hockey League club.
But team owners Jerry Moyes and Steve Ellman say the $60-million registered against the team is not a debt, per se, but $60-million in "credit facilities," such as a line of credit. Ellman said the Coyotes can "draw up to $60-million and we do not owe $60-million to our lenders today."
If the team has substantially drawn down on $60-million, and given that NHL franchise values have decreased in recent years, this could mean there is little equity left in the club for Moyes and Ellman.
"Sixty million dollars is a high debt load for an NHL team," said a source in the financial community who is familiar with NHL finances, adding he thinks the Coyotes "are not worth much more than $70-million."
The Globe and Mail reported two weeks ago that the Coyotes had quietly been put up for sale because of the club's financial situation. Moyes and Ellman both denied the report.
The franchise's debt is registered against Coyotes Hockey LLC, which owns the hockey team but not its arena, although the Coyotes manage Glendale Arena and receive revenue from all its events.
Ellman would not say how much the Coyotes owe their lenders.
"Actually, we have one of the more favourable interest rates on our debt financing in the NHL today," Ellman said. "We were very fortunate to find this available.
"Most [NHL] teams have $60-million [in debt registered] on them," he added. "You can check around."
Bill Daly, the NHL's chief legal officer, said the NHL was aware of the Coyotes' debt and that it was within the league's limits.
Financing issues have been part of the Coyotes' story since Ellman bought the club in February, 2001, for $90-million. Moyes became majority owner shortly after, when Ellman could not obtain $60-million in loans on his own.
With Moyes, who founded one of the largest trucking companies in the United States, in the picture, banks signed off on the loans.
Moyes assumed the loans after they were arranged. He also provided funds to get the arena built and to cover operating losses, which reports have said are more than $100-million since the purchase.
Last November, Moyes stepped down as president of Swift Transportation Co. after an announcement by the U.S. Securities and Exchange Commission that it is investigating some stock trades he made. He was also named in a class-action lawsuit over alleged illegal insider trading.
Moyes has said he used at least some of his 35-per-cent stake in Swift as collateral for loans to prop up the hockey team and the real-estate development around the arena.
A deed of trust dated Dec. 31, 2003, states that Coyotes Hockey LLC entered into a "credit agreement" with MSD Capital, a large investment fund, for $40-million. The deal was made through a subsidiary of MSD called SOF Investments LP. The document refers to the Coyotes as the "borrower" and SOF as "the lender."
A second deed of trust, dated May 13, 2004, states that Fortress Credit Opportunities "entered into that certain loan agreement" for $20-million. Fortress Credit Opportunities LLP is a subsidiary of Fortress Credit Corp., which describes itself on its website as a lender for distressed real estate.
Ellman said Fortress did not make the loan in this case.
He said Fortress acted as an agent for a Japanese bank, which he declined to name. The loan document does not mention such a bank, only Fortress.
The timing of the transactions suggests they were made to raise $60-million to pay Moyes for taking over the team's original loans. Shortly before the debts to SOF and Fortress were registered, Moyes terminated two similar security agreements against the team on Dec. 9, 2003.
Ellman said Moyes was "paid off" for his original loans to the team, but denied the money came from the $60-million advanced by SOF and Fortress. In fact, Ellman said, there was a total of $80-million in debt from the purchase of the team in 2001, and it has all been paid off.
"We paid that debt down to $60-million and we have since paid that down and now we just have the credit facilities," he said.
When asked how he managed that despite the operating losses and difficulties in starting the real-estate development that saw him run into more financial trouble, Ellman said the money came "from Mr. Moyes's and my own pockets."
"Mr. Moyes has more than $200-million invested in the team and the project and I have more than $60-million invested," Ellman said.
He refused to go into any more detail about their financing.
"I really don't think Mr. Moyes would like to discuss his finances in The Globe and Mail," he said.
Wayne Gretzky is listed as managing partner of Coyotes Hockey, but the size of his holding is not clear. He does not have a share of Coyotes Holdings, the parent company of Coyotes Hockey and other companies that manage Glendale Arena and are trying to develop the real estate around it.
Moyes owns 70 per cent of Coyotes Holdings, while Ellman has 30 per cent.
Several NHL teams have changed hands in recent years and values have been dropping since the mid-1990s, when they were rising steadily.
In April, 2003, the Buffalo Sabres were sold separately from their arena. The team was rescued from bankruptcy by Thomas Golisano in a deal that was announced as being worth $92-million. That included a contract to manage HSBC Arena, which is owned by New York state's Erie County.
However, most of the sale price represented assumed debt and Golisano told reporters at the time of the sale that his cost was closer to $70-million. His actual cash outlay, according to a banking source, was about $40-million.
Eugene Melnyk bought both the Ottawa Senators and the Corel Centre out of bankruptcy in separate deals for a total of $72-million in June, 2003.
An argument could be made that the Atlanta Thrashers' value was practically zero when they were purchased along with the National Basketball Association's Atlanta Hawks and the operating rights to the Philips Arena by a group of businessmen in April, 2004, for $250-million.
While the Hawks' woeful on-court record and sparse attendance made them one of the worst franchises in the NBA, recent team sales suggest most, if not all, of the purchase price reflects the value of the Hawks, not the Thrashers.
Last August, the New Jersey Nets were sold for $300-million, a few months after Black Entertainment Television founder Robert Johnson paid the same price for the Charlotte Bobcats expansion team.