The Ongoing Coyotes Sale Thread

[sureLoss]

ESPN reporting that Glendale is about to sue the Blackwater Institute:
http://sports.espn.go.com/nhl/news/story?id=6185492

The City of Glendale, faced with what they estimate will be more than a half-billion dollars in lost revenue, taxes and jobs if the Phoenix Coyotes relocate, is expected to file suit Monday against the Goldwater Institute and specific members of the public watchdog's board, multiples sources told ESPN.com Saturday.


The lawsuit is expected to allege the Goldwater Institute was guilty of a legal form of interference when the institute reached out to potential buyers of municipal bonds, the sale of which are crucial to the City of Glendale's new lease agreement with Chicago businessman Matthew Hulsizer, and warned them off purchasing the bonds.

...
If the municipal bonds are not sold, multiple sources have told ESPN.com that the lease agreement cannot be finalized and the sale of the team to Hulsizer by the National Hockey League will fall apart.

[Lester]

ROFL

this is desperation of the highest order.

[Lester]

the more i think about it, with the damages being so high i think this is end game.

this is it.

if GWI doesn't back off, and this goes to court.. the bonds WONT sell, and the NHL wont allow the sale to go thru. lawsuits take years/months. the league will move the coyotes to winnipeg by months end or maybe even weeks end.

if GWI backs off, it allows the sale to go thru.

maybe trout can comment but this seems like the last card in the deck for glendale... this move either works for them or they try and recoup team losses thru GWI.

[troutman]

I don't understand why Hulsizer can't buy the team without a subsidy from Glendale

http://www.winnipegfreepress.com/spo...117457748.html

Hulsizer also said on air: "We're prepared to close, but we'd really like to do it by saving the city some money. This deal is going to close." That lends credence to further suggestions from sources who say that before this deal reaches an endgame with the NHL, the would-be owner will be asked to top up the transaction -- possibly the shortfall in bond sales -- with his own capital.

If that's within a matter of a few days, then Hulsizer will be meeting again soon with his investors' group (they huddled last weekend) to decide to close or abandon the effort.


http://www.azcentral.com/community/glendale/articles/2011/03/01/20110301phoenix-coyotes-buyer-glendale-goldwater-lawsuit-threat.html

She said Glendale has "unlimited options" to avoid a Goldwater lawsuit. "For instance, Hulsizer could get a private loan to buy this team like most businesses do," she said. "They finance their investments not on the backs of taxpayers but take the risk privately where it belongs."

No one, lawyers included, can predict what will happen, but I think we will have an answer this week.

[Lester]

Why would he want to? It's a money pit

I agree tho. Next week is end game. Lawsuit will be threatened on Monday, and I think by Wednesday or so GWI will have an answer. If they refuse to step down, the Coyote experiment is over. If they step down, it's on to Atlanta for the Thrashers.

[Parallex]

Originally Posted by ESPN

The lawsuit is expected to allege the Goldwater Institute was guilty of a legal form of interference when the institute reached out to potential buyers of municipal bonds, the sale of which are crucial to the City of Glendale's new lease agreement with Chicago businessman Matthew Hulsizer, and warned them off purchasing the bonds.

?

So does that make any financial adviser/talking-head that recommends anyone not buy any particular stock or bond liable for damages? Barring some information that hasn't been made public seems pretty flimsy/frivolous to me (more like an intimidation tactic actually).

[troutman]

CBC Hot Stove:

This thing is almost toast.

[Sidney Crosby's Hat]

I say Goldwater backs down by Tuesday and the Coyotes are sold to Hulsizer by Friday or next Monday.

[Lester]

Originally Posted by Sidney Crosby's Hat

I say Goldwater backs down by Tuesday and the Coyotes are sold to Hulsizer by Friday or next Monday.

I would hope GWI doesn't give in to strong arm tactics like this.What they're doing is legal.

[afc wimbledon]

Originally Posted by Sidney Crosby's Hat

I say Goldwater backs down by Tuesday and the Coyotes are sold to Hulsizer by Friday or next Monday.

I think GI will nulify the threat by announcing it believes the deal is illeagal and so will be suing, I suspect the fact that the city is talking about suing the GI's executive, some of the richest most right wing families in the state, will backfire.

[Cowperson]

Originally Posted by Lester

the more i think about it, with the damages being so high i think this is end game.

this is it.

if GWI doesn't back off, and this goes to court.. the bonds WONT sell, and the NHL wont allow the sale to go thru. lawsuits take years/months. the league will move the coyotes to winnipeg by months end or maybe even weeks end.

if GWI backs off, it allows the sale to go thru.

maybe trout can comment but this seems like the last card in the deck for glendale... this move either works for them or they try and recoup team losses thru GWI.

Just a guess, but the basis of the suit would probably the "tortious interference" complaint Glendale was thought to be contemplating against Jim Balsillie . . . . . but likely now directed at Goldwater and specific individuals within that group.

http://en.wikipedia.org/wiki/Tortious_interference

I would say Goldwater and its principals, who like to boast they've been sued before, had better be right about the alleged illegality of this deal and need to hope they were careful in what they've said privately and publicly about this.

It's probable this deal would have closed at an interest rate of 5% or 6% without Goldwater's interference . . . but if the deal is now commanding a risk premium over those rates - rumoured to be 8% to 9% now, essentially making the economics somewhat untenable (although less than $3 million per year over 30 years) - simply because of the moral suasion brought forward by Goldwater . . . . . well, it does look like they may have interfered.

But were they on the right side of the line?

Mayor Scruggs of Glendale a few days ago accused Goldwater of "significantly hindering" the sale of the bonds.

That's probably why Goldwater and its principals have apparently been careful not to publicly say they will or will not sue. But we can't know what they said to potential buyers of the bonds when they contacted them directly, which I seem to remember happening.

Saying something is a crappy investment is different than telling a potential buyer you'll sue if they buy the issue.

As before, tortious interference will be laughed at by the Calgarypuck legal team as a rarely enforced occurrence.

Still . . . . . we are sitting in the peanut gallery and can contemplate stuff as we wish.

I will put my Monopoly Money on this particular play and, to be perfectly honest, I hope this whole thing never goes away. It's endlessly entertaining.

Cowperson

[tjinaz]

http://sports.espn.go.com/nhl/news/story?id=6185492

Its put up or shut up for GWI. Appears their board will have skin in the game now. Plus the have the Diamondbacks angle with the board member being married to a owner. I think Sidney's hat has the correct call. GWI will politely and grudgingly back down.

I think GI will nulify the threat by announcing it believes the deal is illeagal and so will be suing, I suspect the fact that the city is talking about suing the GI's executive, some of the richest most right wing families in the state, will backfire.

Everyone is a hero when they are not risking anything of their own. By naming the board itself they are significantly upping the stakes. Its fine and dandy to go up against attorneys that work for municipalities and government for "the good of the people" but if you think for a minute the board will risk their personal assets against the collection of sharks Hulisizer will bring to bear you are sadly mistaken. I think the GWI board is on a conference call right now that began with the words "H0ly Sh$T!".

The other angle is that of public perception. GWI bills itself as a "advocacy" group. They risk being losing any status they have as the good guys with the mere inference of conflict of interest as one of their board members is married to an owner of the Diamondbacks that coincidentally got public funding for their stadium. They stand to benefit by eliminating a competitor for the sports dollar in the local market. The press and other business leaders have already come out in favor of the city of Glendale and this is just another turn of the ratchet. Even if GWI wins, they lose in the court of public opinion and that is the domain where they really need to be seen in a positive light.

[Resolute 14]

I think a hilarious ending to this would be for the Coyotes to move to Houston (just to piss off the Jetsowners), and for Glendale to successfully sue Goldwater for enough money to pay off the arena. End result would be that the city would have a debt-free building and not require public funds to get to that point. Would that then become a win or a loss for Goldwater?

[tjinaz]

I will put my Monopoly Money on this particular play and, to be perfectly honest, I hope this whole thing never goes away. It's endlessly entertaining.

Cowperson

This is soooooo much better than the end of BSG. You just can't make this stuff up.

[Ducay]

I just don't get how this deal is at all legal. Looks like he is almost being paid to buy the team; something just doesn't sit right with me.

Why not let Balsille buy it for something ridiculous (say $300M). He pays off the arena, Glendale and the NHL. Have a clause where he has to keep the team in Glendale for 5-years or something. Coyotes get 5 years to turn things around, and even if not, everyone comes away happy.

[taxbuster]

Originally Posted by tjinaz

http://sports.espn.go.com/nhl/news/story?id=6185492

Everyone is a hero when they are not risking anything of their own. By naming the board itself they are significantly upping the stakes. Its fine and dandy to go up against attorneys that work for municipalities and government for "the good of the people" but if you think for a minute the board will risk their personal assets against the collection of sharks Hulisizer will bring to bear you are sadly mistaken.

My bet is that is quite unlikely. These folks are neither neophytes, nor stupid - and they have attorneys of their own. One can 'name' anyone in a lawsuit one wishes. Keeping them named on the suit is an entirely different matter. Unless one can show why the individual named is not acting properly in his/her capacity as (say) a board member, their personal assets are safe. No different there than here. Only if the individual acts outside of such capacity would they have engaged in some form of tortious conduct.

If the City of Glendale has acted in a manner that is (ultimately) found to be illegal, ALL aspects of the deal, including the poison pill, are likely to be struck by the courts.

I would also expect that an organization of that sort (GI) carries significant D&O insurance just to cover such a risk. Operating in a public policy venue would be recognizable as a significant area of risk and would undoubtedly be insured. (Their insurers, however, may be none too pleased....)

[taxbuster]

Originally Posted by Ducay

I just don't get how this deal is at all legal. Looks like he is almost being paid to buy the team; something just doesn't sit right with me.

Why not let Balsille buy it for something ridiculous (say $300M). He pays off the arena, Glendale and the NHL. Have a clause where he has to keep the team in Glendale for 5-years or something. Coyotes get 5 years to turn things around, and even if not, everyone comes away happy.

Because Gary Bettman would then look like the proverbial horse's rear end. And that he will not allow to happen.

[tjinaz]

My bet is that is quite unlikely. These folks are neither neophytes, nor stupid - and they have attorneys of their own. One can 'name' anyone in a lawsuit one wishes. Keeping them named on the suit is an entirely different matter. Unless one can show why the individual named is not acting properly in his/her capacity as (say) a board member, their personal assets are safe. No different there than here. Only if the individual acts outside of such capacity would they have engaged in some form of tortious conduct.

I think that is the basis of the claim. By taking no action but claiming they might they are damaging COG and through this action they have a board member that stands directly to gain. The other battle in the court of public opinion will hurt GWI where it hurts in the donations and fundraising. I don't think Glendale will press the claim, what they want is a declaration one way or another on a position so they can get the bonds sold. I would not be surprised if all of the sudden Hulsizer comes in with an additional 30m or so and drops the debt to 70 and then both sides (COG and GWI) declare victory.

[Lester]

if GWI takes their time in responding, that will only make things worse for the NHL and CoG. There's no official drop dead date but this wont help the bonds interest rate, and the NHL sure as hell is aware they have a time frame to get the team to Winnipeg. They aren't going to pay the bills for the Coyotes for whole second season.

Also, i wonder is this the CoG trying to cover the cities asses? If they lose the Coyotes, they could be doing this to try and win back some money for the city. This could be a white flag from the city

[Sidney Crosby's Hat]

Originally Posted by tjinaz

I think that is the basis of the claim. By taking no action but claiming they might they are damaging COG and through this action they have a board member that stands directly to gain. The other battle in the court of public opinion will hurt GWI where it hurts in the donations and fundraising. I don't think Glendale will press the claim, what they want is a declaration one way or another on a position so they can get the bonds sold. I would not be surprised if all of the sudden Hulsizer comes in with an additional 30m or so and drops the debt to 70 and then both sides (COG and GWI) declare victory.

It should be noted the purchase price is now $210 so Hulsizer is already putting in an additional $40 million.