Even The Bidwills Are Against The Reinsdorf Plan

((HT: 12 News Phoenix/Brahm Resnik))

The Arizona Cardinals are firing shots at a bailout plan for the bankrupt Phoenix Coyotes that could force Cards fans to pitch in with tax dollars.

"I've heard from quite a few fans that have told me, 'Why would they do that on the backs of Cardinals' fans to finance the hockey problem?'" CEO Michael Bidwill told 12 News Flagstaff.

A potential Coyotes buyer group led by Jerry Reinsdorf, owner of the Chicago White Sox and Chicago Bulls, says the hockey team won't survive unless the group gets up to $23 million a year in revenue from the Coyotes' arena lease with the City of Glendale, according to new court filings.

One of the potential cash-generators proposed by Reinsdorf: a special taxing district including Jobing.com Arena, Westgate City Center and the unbuilt Main Street development. The taxing district would assess "voluntary surcharges" of up to 11.5 percent on sales. It's not clear how "volunteers" would be found.

Westgate is across the street from the Cardinals' University of Phoenix Stadium, and is a popular pre- and post-game destination.

"It's a bad idea, we're not for it," Bidwill said.

Information on the Reinsdorf plan is contained in a document that was filed Friday by attorneys for Coyotes owner Jerry Moyes, but was later pulled back because attorneys said it was confidential.

The document indicates Glendale officials have not agreed to the concessions proposal.

But the filing does give the first glimpse of the dollar value of lease concessions being discussed by the city.

The city has fought a lawsuit filed by the Goldwater Institute seeking documents that would shed light on negotiations. Goldwater has threatened to sue the city if it hands out tax dollars to a buyer.

The document also underlines what several experts have said in court: the money-losing Coyotes are a very tough sell.

Court documents show the Reinsdorf group, the NHL's apparent favorite to buy the team, has not lined up any financing for a purchase. And the dollar value of the bailout plan suggests his group has little intention of putting much money down.

Other elements of the Reinsdorf group's concessions plan:
• The taxing district would yield an estimated $23 million in payments the first year, and $15 million by the fifth year, in 2014. The court filing says those payments could continue after 2014.
• If the team was losing money after five years, the Reinsdorf group could demand an additional $15 million a year from the city.
• If the city refused, the Reinsdorf group could sell the Coyoyes and move them, without paying a penalty.

Back in mid-July, when reports of Reinsdorf's desire for $15 million a year in concessions surfaced, Glendale Mayor Elaine Scruggs told 12 News: "That's far beyond anything we would be willing to do regardless of our means."

City officials could not be reached for comment Sunday.

All this comes as the court-ordered auction of the Coyotes scheduled for Wednesday has run off the rails.

At an emergency hearing Monday afternoon, the National Hockey League and the City of Glendale will ask Bankruptcy Judge Redfield T. Baum to delay the auction until mid- to late-September.

The city and league argue, in part, that there has not been enough time for potential bidders to negotiate with the city or large creditors. Court documents show the Reinsdorf group has been talking to Glendale for at least six months.

But attorneys for Moyes and the Coyotes respond that the Reinsdorf group and a Canadian-led group that also wants to keep the team here have failed to qualify as bidders under court rules.
They want to move now to an open auction that could allow the re-entry of Blackberry billionaire Jim Balsillie, who wants to move the team to Hamilton.

The most significant player Monday is a name known largely to insiders: MSD Capital, the investment arm of Dell computer founder Michael Dell.

Bankruptcy court is all about putting money back in the hands of creditors, so creditors have the most clout. MSD is the Coyotes' largest secured creditor -- owed more than $80 million. On Friday, MSD's attorneys spoke for the first time, in a court filing.

MSD agrees none of the bidders has qualified under court rules. It is open to a Balsillie bid, which promises MSD the most cash upfront. And MSD is willing to give the potential bidders more time -- but it wants the auction held no later than Sept. 10.

Here's Resnik's package on the delay of the auction...thanks to our friends at News 12...

Dog Days In Glendale...

Following up on the Scott Burnside piece on the creative financing the Phoenix Coyotes ((pictured, thanks Deirdre Hamill/Arizona Republic)) are using to stay, ahem, afloat these days David Shoalts in the Globe and Mail has come across some really disturbing stuff.

Shoalts has some documents that lay out what's left of the team's money- most of which is tied up in something called "SOF Investments LP." SOF is a subsidiary of the MSD Capital hedge fund which is controlled by Michael Dell.

Yes that "Dell..."

The team's collateral covers, according to the article, close to US$80-million toward MSD and SOF. Got all that...?

We're not done...

Remember we talked about the team and the city butting heads over the screwy lease agreement the Coyotes have with the city...? The only way the team can break the lease ((if it were to get to that point)) would be to declare bankruptcy. Then the Dogs could relocate to Kansas City, Hamilton, or any other possible league-approved suitor's home base.

Are you paying attention Jim Balsillie...?
Of course you are... you wouldn't be the shrewd businessman you are if you weren't.

The key paragraphs from the Shoalts piece are at the bottom...

"The Coyotes began borrowing money from SOF in 2003, and increased its collateral in succeeding years, according to documents obtained by The Globe and Mail. According to a Uniform Commercial Code financing statement filed with the state of Delaware, the Coyotes pledged everything from ticket revenue, broadcast revenue, concessions, future NHL expansion payments, player contracts, insurance policies, arena revenue and merchandise sales as collateral.

A series of financing statements were filed over the years as the Coyotes continued their relationship with SOF. On January 17, 2007, another document contained a single sentence: "The collateral consists of all assets of the debtor."

The timing of that document suggests the Coyotes increased their loan from SOF in order to pay off one to another New York hedge fund, Fortress Credit Opportunities LP.

In a statement filed on November 6, 2008, which extended the loan from SOF until Dec. 29, 2013, almost all of the Coyotes' assets were listed as collateral."

What it appears Jerry Moyes has done is mortgage his future to fund his present...
We think the hourglass is running out of desert sand...