SBD/Issue 64/Franchises

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  • NHL Inks Letter Of Intent To Sell Coyotes To Ice Edge Holdings

    Ice Edge Has Said It Plans To Keep Coyotes
    In Glendale, But Play Five Games In Canada
    The NHL has “signed a letter of intent to sell” the Coyotes to Ice Edge Holdings, which said that it “plans to remain in Glendale but wants to be able to play five home games annually in Canada,” according to Carrie Watters of the ARIZONA REPUBLIC. Sources said that Ice Edge is “expected to pay the league in the $140[M] range, about the amount the NHL spent” to purchase the team out of bankruptcy in November. Ice Edge officials said that they “have an agreement in principle with Glendale,” which owns Jobing.com Arena. The team has “more than two decades remaining on its lease, which Ice Edge has said it does not plan to break.” The group has said that it “would propose to play five home games in Saskatoon, Saskatchewan.” They said that the games would be “non-playoff games and a way to generate more revenue.” Ice Edge will have five majority owners: Chair Keith McCullough, CEO Anthony LeBlanc, COO Daryl Jones, CFO Todd Jordan and former Coyotes investor John Breslow. Jones said that he “hoped to close the deal within the next few months” (ARIZONA REPUBLIC, 12/12). Jones: “This is huge progress. Six months ago I never would have thought we’d get to this point.” He added, “We believe that hockey can thrive in Phoenix and look forward to proving that” (GLOBE & MAIL, 12/12). LeBlanc noted, “We do not have an escape clause. We’re here for the long run.” He added, “Hockey is in our blood. We’re about as passionate as you can get when it comes to the sport of hockey” (AZCENTRAL.com, 12/12).

    WILL DEAL GET DONE? ESPN.com’s Pierre LeBrun wrote while some NHL governors are “relieved there’s finally a buyer, others are skeptical that the Ice Edge group has the financial wherewithal to pull this off.” One governor said, “Unless I am presented with evidence to show me the contrary in terms of their finances, I’m probably going to vote against it.” However, another governor said, “This is great news; this is a blessing. I mean, what’s the alternative, the league continuing to run the team? These Ice Edge guys have said and done all the right things so far. I’m OK with them.” Jones said, “Our financing is the least of our worries. We feel like we have more than enough money to do it.” LeBrun noted Ice Edge “plans to reach out to Wayne Gretzky as early as this weekend to see whether” the former Coyotes Managing Partner and coach “wants to be part of their ownership group or managing structure once/if the purchase of the team is completed” (ESPN.com, 12/13).

    VICTORY FOR BETTMAN: In Toronto, Damien Cox wrote if the deal gets done, it “would mean vindication” for NHL Commissioner Gary Bettman, who “always vowed to keep the team in Phoenix and fought a pitched battle in bankruptcy court against” RIM co-CEO Jim Balsillie’s attempt to move the team to Hamilton. Cox: “Even if sold, the Coyotes won’t be making money any time soon. Maybe not ever. But they’ll still be in Arizona, which is what Bettman fought for all along” (TORONTO STAR, 12/12). YAHOO SPORTS’ Greg Wyshynski wrote the NHL “has now spent time and treasure for the better part of 2009 propping up the team and extending its stay in the desert.” If “conditions don’t improve under Ice Edge, it’s hard to envision the league doing it again” (SPORTS.YAHOO.com, 12/12).

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  • Jim Crane Emerges As Frontrunner To Purchase MLB Rangers

    Hicks Once Again Has Three Groups To Choose
    From In Deciding Who Ultimately Buys Rangers
    Houston businessman Jim Crane is the favorite to win the MLB Rangers when a winner in the team's auction is scheduled to be selected tomorrow, sources said. Crane had dropped out of the bidding, but last week resubmitted an offer, which will keep current Owner Tom Hicks in as a minority investor. Hicks is selling the team after defaulting on his $525M of U.S. sports debt on March 31. He is selling the Rangers to cure that default, but has also been looking for a way to stay involved with the team. MLB shot down his joint bid with former agent Dennis Gilbert, who now appears out of the running, though he is still one of three finalists, the sources said. The third bid is from Pittsburgh sports attorney Chuck Greenberg, who is meeting with Hicks later today, one of the sources said. Greenberg's bid is notable because Rangers President Nolan Ryan is part of it. However, the sources said Crane's bid was financially superior and would offer the best terms to the banks. The purchase price is in excess of $500M, the sources said (Daniel Kaplan, SportsBusiness Journal). MLB.com's T.R. Sullivan noted the winning bidder "won't automatically get the team, but will enter into exclusive negotiating rights with Hicks." Ryan said the process is "still very much in Tom's hands." Ryan: "From the organization's standpoint, we'd like to have this resolved so we can go into the new year not having it hanging over our heads" (MLB.com, 12/11).

    STILL FAR FROM A DEAL? In Dallas, Evan Grant noted while the "supposed deadline for identifying a winning bidder remains" tomorrow, sources said that they do not believe "a winner will be announced then." Hicks is "trying to find a way to hold on to control of the team and the more time he buys himself, the more ability he has to scramble and find investors to back him." Also, once a bidder is "selected to then negotiate exclusively and directly" with Hicks to try and complete a deal, there is "still a huge sticking point: the real estate" around Rangers Ballpark in Arlington. Grant: "In particular, I'm talking about the 12,000 parking spots in lots around the park. Those lots are becoming more and more lucrative with the opening of Cowboys Stadium." Grant noted the Rangers are "charging anywhere from $20 to $60 spots in those lots for events at" Cowboys Stadium, making it a "very profitable segment of the operation and one that any new owner is going to want to control" (DALLASNEWS.com, 12/11).

    TIME FOR A RESOLUTION: In Ft. Worth, Jennifer Floyd Engel wrote by "failing to execute a sale in a timely fashion," Hicks has "hamstrung his very talented president and GM from making moves capable of really catapulting a team on the verge." Ryan: "It is frustrating. It's because we have dealt with this so long and there is still no resolution to it. ... We are kind of in a position that, until we get a resolution here and get the defined ownership group that is going to be here, can we really start doing some other things?" But Engel wrote Ryan and GM Jon Daniels have "put on a clinic in turning chicken spit into chicken salad." Daniels: "We have really taken the approach of 'It is what it is.' We talked about the ownership situation at the beginning of the meetings, and it wasn't really a topic of conversation after the opening meeting." Meanwhile, Engel wrote among the bidders Greenberg "is the smartest," as he "got Ryan on board." Engel added if the bidding was "about what is best for the Rangers, MLB would have given them the wrap-it-up finger twirl a long time ago." Engel: "It has the right. It has paid a few bills. Certainly everybody at The Ballpark has grown weary of the uncertainty, and fans deserve better going into what could be a watershed year for this franchise" (FT. WORTH STAR-TELEGRAM, 12/12).

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  • Capitals Announce Deal With Ticket Futures Company OptionIt

    Capitals Offering Tickets Through OptionIt
    For Five Regular-Season Games, Playoffs
    The Capitals has announced a partnership with ticket futures start-up OptionIt Inc. The Capitals will make 100 ticket per game available through OptionIt in the upper and lower bowls of Verizon Center during five regular-season games over the rest of the '09-10 season. The five games are on January 29 (Panthers), March 8 (Stars), March 24 (Penguins), April 1 (Thrashers) and April 21 (Bruins). The team and OptionIt will then make 300 tickets per home playoff game available on the platform. OptionIt, which has struck deals with several NFL, NHL and NBA clubs over the past six months, including the Celtics, Ravens and Sharks, seeks to forge a niche between the primary and secondary markets in which the options traded are good for the purchase of a face-value ticket to that game. The Capitals sold out their playoff games last year, but team execs said this help allow fans to secure tickets in advance. Ticketmaster, the Capitals' primary ticket provider, will fulfill the ticket options. Capitals VP/Ticket Sales Jim Van Stone said, "For us, it's really just another outlet for our fans to get access to tickets. Time management is tough and people don't know what their schedules are like, so this will give people an opportunity to secure tickets without making a commitment." OptionIt, however, does expect most Capitals options purchasers to exercise them, as utilization rates are exceeding 90% for the company's other team deals. The company is additionally seeking out concert promoters and musicians to expand its operational focus beyond just sports. OptionIt CEO Mark Mastalir: "The Capitals are a top-notch organization, and I expect they will firmly get behind this program. Consumers are adopting the model, and this is a very strong addition to our portfolio."

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  • Predators' Financial Health Worries Metro Sports Authority

    Could Predators Leave
    Nashville Next Year?
    A "cascade of questions surrounding" the Predators' financial health left Nashville's Metro Sports Authority (MSA) members "publicly speculating on Friday about whether the team might be in a position to leave town next year," according to Nate Rau of the Nashville TENNESSEAN. The MSA finance committee met to discuss a $3.3M federal tax lien against Predators Owner David Freeman and its "impact on the personal financial guarantees the team's ownership group provides the city as security." MSA Vice Chair Steve North: "We are sort of hostage to somebody that comes along and makes a better deal in terms of another city. If we take the most negative, worst-case scenario, I want to know how we're looking in terms of guarantees." North added that the Predators' creditors "might be caught in a 'rush to the bank' for who gets paid." However, Freeman on Friday said that his tax lien "would be resolved in January." Freeman: "As long as Metro keeps all of its commitments to this club, then the Predators will remain a very stable franchise." Rau noted a provision of the Predators' Sommet Center lease agreement with MSA "allows the team to exercise an early termination clause beginning May 1, 2010, if it has incurred a cumulative operating loss of $20[M] and fails to average 14,000 fans per game in paid attendance that season." The team through November averaged 12,913 fans per game, though attendance numbers "typically grow as the NHL season progresses." If the early termination clause "were exercised, the Predators would owe the city" $20M (Nashville TENNESSEAN, 12/12).

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  • MLB Franchise Notes: McCourt Unhappy With Fuller's Taiwan Trip

    In L.A., Bill Shaikin reported Dodgers Owner Frank McCourt is "threatening legal action" after Jeff Fuller, the driver with whom Frank alleges his estranged wife Jamie had an affair, last week met "with a Taiwanese legislator interested in strengthening ties with the Dodgers." Fuller presented Justin Chou with a Dodgers jacket and baseball signed by manager Joe Torre, and Chou in turn invited Jamie McCourt to visit Taiwan. Chou said that he was "unaware that neither Fuller nor Jamie McCourt currently work" for the team. Dodgers VP/PR & Broadcasting Josh Rawitch said that Fuller's visit "was not on behalf of the club," which is in discussions to play exhibition games in Taiwan in March. Frank McCourt's attorney Marshall Grossman said that he is "reserving the right to take 'whatever legal steps are necessary' to prevent Fuller and Jamie McCourt from presenting themselves as representatives of the Dodgers" (L.A. TIMES, 12/12).

    Rays' Overextended Budget Heading Into
    This Year Could Mean Reductions In '11
    THE FUTURE IS NOW: Rays officials Friday indicated that "pushing the payroll to, and possibly beyond," a franchise-record $70M to "make a run at the playoffs this season could lead to potentially significant reductions in 2011 and beyond." Rays President Matt Silverman said the high payroll is "well above our comfort level." Silverman: "We extended last year, we're overextending heading into this year. We'll see the effect on this in the future." He added, "This season we will be gunning again for that league-average attendance. There is that connection between the revenues that we generate and the investment we can make" (ST. PETERSBURG TIMES, 12/12).

    SAME OLD STORY? In Pittsburgh, Bob Smizik noted the Pirates yesterday "shockingly non-tendered Matt Capps, who was scheduled to fill the important role of closer," which offers more evidence that "profit trumps everything in the Pirates organization and any kind of financial risk must be assiduously avoided." Not only is the team now "left without a closer, it received nothing in return." The decision "was a shocker, but when it comes to finances, really, no one should be surprised by anything the Pirates do" (POST-GAZETTE.com, 12/13). Also in Pittsburgh, Ron Cook writes, "It is incomprehensible how the Pirates can give away one of their few commodities without getting anything in return" (PITTSBURGH POST-GAZETTE, 12/14).

    MOTOWN BLUES: In Detroit, Jerry Green wrote baseball has become the "saddest of all our sports," because the game "no longer is a sport of competition." The Tigers are "victims of the ruling realism of the era." It is "just too expensive in today's baseball to be able to win." The club last week traded CF Curtis Granderson and P Edwin Jackson, and "despite their denials and copouts, the Tigers can no longer afford to compete with the elite clubs" (DETROIT NEWS, 12/12).

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  • Franchise Notes

    Heisley's Local Minority-Share Partners
    Fail To Meet His Capital Call Again
    In Memphis, Ronald Tillery reported Grizzlies Owner Michael Heisley "recently made a capital call on his local minority-share partners as a way to convert more debt into equity." But the local owners "refused to meet the call -- just as they did on a previous call in March 2008 -- and as a result their ownership share has again dropped." The share fell from 30% to 5.8% in '08, and "now is below" 3% (Memphis COMMERCIAL APPEAL, 12/12).

    MONEY MATTERS: Mavericks Owner Mark Cuban has confirmed a CBSSports.com report that his "operating revenues have taken a hit." Cuban said that it is "because of lower ticket prices." Cuban: "We give out a lot of group rates. And we dropped prices on a lot of tickets. Long-term, it's better to have a full house. Of course, it's costing me money. But I'd like to have less money than no money. It's just part of the economy right now. Plus, we've lowered ticket prices the last four years" (DALLAS MORNING NEWS, 12/13). Meanwhile, in Phoenix, Paul Coro noted the report also showed that the Suns had the league's "fourth-biggest drop in gate receipts" (23.8%) from last season. But the Suns had "played only six home games when the documents were released." Suns President & CEO Rick Welts: "That (gate-receipt drop) really has to do more with where we've been than where we are. We're expecting it to improve over the balance of the season" (ARIZONA REPUBLIC, 12/12).

    NEVER TOO LATE TO APOLOGIZE: In L.A., Helene Elliott reported Ducks Owner Henry Samueli "got a near-apology Friday from NHL Commissioner Gary Bettman, who had suspended Samueli from June 2008 until last month." Samueli was cleared last week of criminal charges in a case involving the backdating of stock options at Broadcom Corp. Bettman in a statement said, "In retrospect, it is regrettable and unfortunate that the circumstances at that time caused the Samuelis and the Anaheim Ducks to endure any suspension." Samueli responded in a statement, "I very much appreciate Commissioner Bettman's comments and I fully understand and respect his difficult decision last summer" (L.A. TIMES, 12/12).

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