What's the past relationship between Markstrom and Huberdeau such that Tree would ask for his input on him? Have they played together?
Also there was that noise that "other players wanted out" when all this was happening. I wonder if Tree had to assure his key guys in those stressful days.
What's the past relationship between Markstrom and Huberdeau such that Tree would ask for his input on him? Have they played together?
Also there was that noise that "other players wanted out" when all this was happening. I wonder if Tree had to assure his key guys in those stressful days.
Markstrom would've played with him in Florida before he went to Vancouver
What's the past relationship between Markstrom and Huberdeau such that Tree would ask for his input on him? Have they played together?
Also there was that noise that "other players wanted out" when all this was happening. I wonder if Tree had to assure his key guys in those stressful days.
Then you want the Flames to go out of business. Understood – but don't go telling Murray Edwards to go blowing his money on a losing proposition.
By the way, ‘can't control its own expenses’ is an insufferably moralistic way of phrasing the problem. The Flames don't have control over their own expenses, because the CBA dictates how much money they have to spend on player salaries. If they don't abide by those rules, they don't have a team in the National Hockey League. They aren't just spending money because they're too stupid to be cheap.
The value of the Flames' franchise is an opinion, nothing more, unless the team is actually sold. It would be a foolish lender who accepted such an obviously illiquid and intangible asset in lieu of hard collateral.
As for the intrinsic value of the building, there really isn't one. Privately funded arenas in Canada have a history of going bankrupt, because those arenas are very expensive to operate and can't be repurposed without losing most of their revenue potential.
Every major Canadian city has seen major-league arenas turn into white elephants. Some of those buildings are kept empty and maintained at considerable expense; some of them have been demolished at far greater expense. Two of them have been repurposed. Maple Leaf Gardens is now a supermarket with a university arena above it; the Montreal Forum is a multiplex theatre. Neither one of those uses generates anything like enough free cash flow to justify converting a $500 million building. Those sites are only economic to maintain because the construction costs in the 1920s and 1930s were much smaller, the buildings had long since been paid for and written off, and the repurposed structures only had to pay for the cost of the renovations.
In a city the size of Calgary, building an arena with private money is a stupid investment and everyone in the industry knows it.
Are you suggesting that the Flames have no value whatsoever?
Lenders secure loans against hard assets owned by the business or individual. They rarely lend against business value. They can take hard asset collateral - real estate, machinery and sell it. Can’t do that easily with a business, especially one with special sale restrictions like an NHL team. What’s more, the major owner is non-resident making it more challenging.
Private debt financing is an option but would be very costly.
Lenders would take the new building as collateral and the corporate guarantee of the Flames as an owner operator of the facility. If that is insufficient they would ask for additional guarantees or cash from whatever assets or entities the Borrower and Lender might agree is appropriate.
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Sounds like Markstrom wasn’t too impressed with how the 2 Allstars handled the contract situation. Not in a bad way but perhaps he’s in the same opinion that you either want to be here or GTFO.
Good for Marky, I support his honesty.
I'm sure some of the Flames players felt a little rejected by the duo. I think most understand the nature of free agency and why Johnny may have left but Tkachuk's reasoning indicates he just wanted to get out of Calgary which may have rubbed some players the wrong way. Either way they are part of the past and the Flames may be better off for it.
Are you suggesting that the Flames have no value whatsoever?
I'm suggesting they have no value as collateral against a half-billion-dollar loan.
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Originally Posted by BoLevi
Lenders would take the new building as collateral and the corporate guarantee of the Flames as an owner operator of the facility. If that is insufficient they would ask for additional guarantees or cash from whatever assets or entities the Borrower and Lender might agree is appropriate.
The building is worth very little without a primary tenant. The primary tenant's ‘corporate guarantee’ means very little without hard assets to back it. I'm quite sure those things would be insufficient, so we're down to the guarantees and cash. Which means Edwards either has to mortgage his other businesses to supply the guarantee, or sell off big blocks of stock to raise the cash.
Which is exactly what I said the problem was all along.
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Last edited by Jay Random; 08-24-2022 at 11:24 PM.
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I'm suggesting they have no value as collateral against a half-billion-dollar loan.
The building is worth very little without a primary tenant. The primary tenant's ‘corporate guarantee’ means very little without hard assets to back it. I'm quite sure those things would be insufficient, so we're down to the guarantees and cash. Which means Edwards either has to mortgage his other businesses to supply the guarantee, or sell off big blocks of stock to raise the cash.
Which is exactly what I said the problem was all along.
So the fans are expecting *someone* to build a facility that has no value for a business which has no value (yet somehow pays two dozen employees $80 million per year).
So the fans are expecting *someone* to build a facility that has no value for a business which has no value (yet somehow pays two dozen employees $80 million per year).
The facility has little value as collateral because it has essentially only one profitable use. If the Flames can't pay their bills, foreclosing on the arena won't help the lenders, because they won't be able to find another tenant that can pay the bills.
The business has no value as collateral because it has no hard assets. Again, if the Flames can't pay their bills, foreclosing on the team won't help the lenders. At best it will cause the team to go into bankruptcy, whereupon the receivers may have to sell the franchise to another location – leaving the arena as an expensive white elephant. After the league takes the inevitable relocation fee out of the sale price, there is no guarantee that enough money will be left to repay the loan.
The fact that the players are paid $80 million a year is a negative, not a positive. It means the business has enormous fixed costs that have to be paid whether the revenue is there to sustain them or not. NHL clubs have been known to lose as much as $30 million a year in the past. What's worse, those costs are only expected to go up once the escrow debt is paid off.
All this changes if local government pays part of the cost, because it reduces the borrowing requirement and puts a partner in the deal that does have hard assets and guaranteed revenues.
The question in that case is whether the benefits to the public are worth the cost in the given circumstances. City Council decided that they were, and made an agreement with CSEC on that basis. That agreement will have to be revisited now in light of drastically increased costs, and the answer to the question may not be the same. But the question still needs to be asked.
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Strong case.
The fact that you can't understand the case does not justify you in dismissing it with sarcasm.
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I know what you mean. And it's pretty clear that you think he has that kind of money just sitting around. He hasn't.
There are only two ways Murray Edwards could pay for a new arena himself. He could mortgage everything he owns, and risk going bankrupt if the share prices of his businesses crater. That's a real danger: his net worth dropped by round about a billion dollars a few years back.
Or he could sell off his businesses, which means dumping huge blocks of stock on a market that knows he will no longer be involved in running those companies, and getting back a fraction of their current market value.
The only people in the world with the resources and liquidity to simply blow half a billion dollars on a hobby project are Jeff Bezos and Elon Musk, and they have other hobbies – such as building their own spaceships and scaring the staff of Twitter.
Hahahaha.. you think the obscenely wealthy use cash for anything? He’d borrow the money for a cut of the profit. At least that’s what he should do if it were any other business. You don’t build a building with your own money.
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Who is in charge of this product and why haven't they been fired yet?
The facility has little value as collateral because it has essentially only one profitable use. If the Flames can't pay their bills, foreclosing on the arena won't help the lenders, because they won't be able to find another tenant that can pay the bills.
The business has no value as collateral because it has no hard assets. Again, if the Flames can't pay their bills, foreclosing on the team won't help the lenders. At best it will cause the team to go into bankruptcy, whereupon the receivers may have to sell the franchise to another location – leaving the arena as an expensive white elephant. After the league takes the inevitable relocation fee out of the sale price, there is no guarantee that enough money will be left to repay the loan.
The fact that the players are paid $80 million a year is a negative, not a positive. It means the business has enormous fixed costs that have to be paid whether the revenue is there to sustain them or not. NHL clubs have been known to lose as much as $30 million a year in the past. What's worse, those costs are only expected to go up once the escrow debt is paid off.
All this changes if local government pays part of the cost, because it reduces the borrowing requirement and puts a partner in the deal that does have hard assets and guaranteed revenues.
The question in that case is whether the benefits to the public are worth the cost in the given circumstances. City Council decided that they were, and made an agreement with CSEC on that basis. That agreement will have to be revisited now in light of drastically increased costs, and the answer to the question may not be the same. But the question still needs to be asked.
The fact that you can't understand the case does not justify you in dismissing it with sarcasm.
If the viability of the building comes from the Flames as a tenant then simply charge the Flames sufficient rent to cover the financing costs (along with the concerts etc).... And now we're back to square one.
