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Originally Posted by rage2
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Griffiths was just a bad businessman. Eyes bigger than his wallet, and tried to do too much too quickly, and got eaten by a bigger fish, who came out of it fine.
Going bankrupt almost 20 years after the fact because of another failed venture with some crooked characters isn't really an indictment on the arena financing process.
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The McCaw family was originally invited into the fold to invest in the new Vancouver Grizzlies organization. Arthur figured an NBA franchise would make an excellent second tenant for his new arena, but the $100 million expansion fee was a bit daunting on top of the arena construction costs. In 1994, John and Bruce McCaw had sold their cellular phone business to AT&T for a whopping $11.5 billion (U.S.), so they were flush with cash and looking for something to do. Nevertheless, the brothers' reclusive tendencies led Arthur to believe that he had found the perfect silent partners' to invest in his business. The McCaws said they weren't interested in the Grizzlies unless they could also have a stake in the arena, so that meant involving the hockey club, too. Orca Bay was founded to satisfy those terms, and the Griffiths were originally supposed to maintain 70 percent of the stock, with 30 percent falling to the McCaws.
Naturally, with uncertain financing and NBA franchise payments due on top of ballooning arena construction costs and revenue lost during the 1994 NHL lockout, the Griffiths' soon found themselves short of cash. The McCaws were quick to step up and offer all the money they needed. So while Arthur and his sister Emily had contributed $44 million in equity to Orca Bay by February of 1995, that was good for only a 20 percent interest in the company. It may be great to have a partner with deep pockets when you need his money, but that partner's investment can only come to mean ultimate control in the end.
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$44M for 20% is all they could muster. And Emily wanted to sell her stake when another part of the family business was struggling and they were in a big legal battle over it. These aren't big game players.
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Griffiths would eventually go to the banks on three different occasions. The first was for $100 million for the construction of GM Place. The second was for $60 million to cover the NBA expansion fees. And the third was to buy out the shareholders from his father’s holdings.
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https://theprovince.com/sports/wille...-sports-legacy
Construction costs higher than expected. NBA expansion fee nearly twice than expected. Also trying to buy out his siblings. Then the NHL lockout stopping revenue, an NBA lockout, Canadian dollar tanking. Guy was over-leveraged of his own doing trying to add a hundred+million team and couldn't cover the equity. That's not a failing of the arena, that's a failing of over-leveraging yourself. He wasn't a billionaire or some big tycoon. He was a guy who took over his family business trying to be that guy and was hoping a couple billionaires would bail him out but let him run everything the way he wanted.
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I’ve cited sources. Feel free to cite sources that privately funded Canadian NHL arenas are financially successful outside of Toronto, and I’ll be more than happy to continue the discussion.
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Between 1996 and 2012, NHL sale values;
Philadelphia Flyers (1996): $150M
Toronto Maple Leafs (1997): $165M valuation? It's complicated
New York Rangers (1997): $195M
Buffalo Sabres (1998): $150M* valuation? Rigas bought out other owners
Pittsburgh Penguins (1999): $107M*
Washington Capitals (1999): $85M
Colorado Avalanche (2000): $202M
Montreal Canadiens (2001): $230M
San Jose Sharks (2002): $147M*
Buffalo Sabres (2003): $92M* - out of bankruptcy
Ottawa Senators (2003): $92M - out of bankruptcy
Vancouver Canucks (2004): $207M
Anaheim Ducks (2005): $75M*
Nashville Predators (2007): $193M*
Edmonton Oilers (2008): $170M
Minnesota Wild (2008): $225M*
Montreal Canadiens (2009): $575M
Tampa Bay Lightning (2010): $93M*
Buffalo Sabres (2011): $165M*
Dallas Stars (2011): $240M*
Winnipeg Jets (2011): $170M (includes the relocation fee)
St. Louis Blues (2012): $180M*
Then after that the Rogers TV deal was made which helped buoy franchise values.
* denotes a team playing in a publicly funded and owned arena
But even without adjusting for inflation, despite the crippling arena financing, the Habs had the #1 and #2 sale prices in that time period. The Canucks were #4. Being in a publicly or privately funded arena doesn't seem to have much of an impact on franchise values. George Gillett saw in increase in value of over a quarter billion in his eight year ownership. Molson Brewery saw a $160M increase in value from when they bought the team in 1978 until they sold their 80% stake. Made another $115M after the sale to the Molson Family. Franchise has increased in value since, the club is putting in over a hundred million into Bell Centre upgrades as well. A shaky start during the low Canadian dollar, pre-lockout era, but turned out to be a pretty big success. The Habs were paying crazy property taxes during this time as well, adding to the burden of the arena, yet still came out with pretty good returns. Owners doing fine, city came out great.
The McCaws didn't do great. Sold at bad times. But their original stake in Orca Bay was valued at $220M, they had sold everything off for $367M less than a decade later. So not great, but also not all that bad considering the supposedly ruinous venture arena financing is. Had they held on through the lockout they would have done a lot better, too.
Manitoba getting scared into giving up gambling money to the Jets isn't surprising, but that doesn't mean it is necessary. Just that politicians can make stupid moves. Or in this case, create more mechanisms of a voluntary gambling tax and giving the Jets a cut. Kind of a soft subsidy, going to a club who is partly owned by the wealthiest man in Canada with real estate interests around the arena.
In short: aside from Ottawa, which was a terrible move whether there was private or public money involved in building in the middle of nowhere, privately financing arenas hasn't been a problem for the wealthy team owners.
