((HT: GlobeSports/Waldie))The Phoenix Coyotes expect to lose nearly $17-million (all currency U.S.) on operations during the next few weeks while the club’s future is determined by a bankruptcy court in Arizona.
The Coyotes filed a budget in court this week as part of their request for emergency financing to get through the Chapter 11 process.
The budget lists weekly revenue and expenses until July 25 and shows a cumulative shortfall of $16.7-million. The club expects to pull in around $275,000 most weeks, reflecting corporate sponsorships and ticket sales to various events at the Jobing.com arena, which the Coyotes manage, according to the filing. Expenses range from $680,000 to more than $3-million during one week as various bills come due.
One of the largest single expenses involves a payment to Wayne Gretzky ((pictured, thanks GlobeSports file)) , a part owner and the team’s head coach.
The budget filed this week includes a line that reads “revenue sharing – WG comp.” There is one payment under that heading – $625,000 this week. An earlier version of the budget filed in court shortly after the club filed for protection showed a second payment of $650,000 during the last week of June. That payment is not shown on the latest budget.
Gretzky paid $1-million for a 1.5-per-cent stake in the Coyotes and was entitled to receive a 14-per-cent cut of any profits, according to documents filed in court. That was a far better deal than other investors received. For example, another investor, Jim Wikert, also paid $1-million for a 1.5-per-cent share but was entitled to just 1 per cent of profits, the documents showed. And John Breslow who spent $2-million for a 3-per-cent stake, was supposed to receive a 2-per-cent share.
It is unlikely that any of them received profit sharing at all because club executives have said in court filings that the Coyotes never made money since moving from Winnipeg in 1996. The club expected to lose $29.1-million on operations during this fiscal year, which ends on June 30, according to documents filed in court.
The NHL has agreed to finance the club during the bankruptcy-protection process. The NHL has already lent the Coyotes $13.4-million under a line of credit set up in February. The Coyotes will continue to draw on that line of credit, which is unlimited, according to court filings.
Canadian businessman Jim Balsillie was going to provide up to $17-million in so-called “debtor in possession” financing when the Coyotes filed for protection on May 5. But the NHL and another creditor objected because Balsillie’s loan would be given priority over other loans. There were also concerns about Balsillie providing financing while also making a bid to buy the club. All sides reached a deal out of court that left the financing in the hands of the NHL.
Balsillie has offered to pay $212.5-million for the Coyotes and move the club to Hamilton. Under his offer, Gretzky would receive as much as $22.5-million. The league has opposed Balsillie’s bid, saying it violates league rules governing relocation.
The budget filed in court also showed that the club pays about $200,000 a week to cover a loan from MSD Capital LP, which manages money for computer magnate Michael Dell. The Coyotes owe MSD roughly $80-million.
The Coyotes have 50 players under contract, filings show, and they have all been paid for the 2008-09 season. The budget shows four payments labelled “player signing bonus.” Three of the payments are in July and are $357,500, $700,000 and $150,000. One payment is in June, $65,000. It is not clear who the money goes to.
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