Taro T Posted March 25, 2014 Report Share Posted March 25, 2014 (edited) Silver Point and Monarch are real entities. They really do exist. And they really do buy distressed debt and then move that debt around so that some are profitable and others become sacraficial lambs. I'm not passing a judgement on it, just saying that it is real and that it happens. It just always surprises me when everyone jumps on the guy in the oven room making 12 bucks an hour and gets his pension stolen for being unreasonable. Yet we look up to the silver-spooned douche sitting in his black glass office building in New Haven making millions. As alluded to above, there was no issue with MAKING twinkies at a competitve price. The issue was TRANSPORTING the twinkies at a competitive price. Edited March 25, 2014 by Taro T Quote Link to comment Share on other sites More sharing options...
SwampD Posted March 25, 2014 Report Share Posted March 25, 2014 As alluded to above, there was no issue with MAKING twinkies at a competitve price. The issue was TRANSPORTING the twinkies at a competitive price. See, you know how to take the reservation, you just don't know how to hold the reservation and that's really the most important part of the reservation. Quote Link to comment Share on other sites More sharing options...
Taro T Posted March 25, 2014 Report Share Posted March 25, 2014 See, you know how to take the reservation, you just don't know how to hold the reservation and that's really the most important part of the reservation. While that was a great episode, not sure what it has to do with the teamsters having unreasonable contract demands in this instance. Quote Link to comment Share on other sites More sharing options...
SwampD Posted March 25, 2014 Report Share Posted March 25, 2014 While that was a great episode, not sure what it has to do with the teamsters having unreasonable contract demands in this instance. Nothing really, just made me think of it. See, you know how to bake the Twinkie, you just don't know how to ship the Twinkie and that's really the most important part of the Twinkie. I also want to add that the contracts offered to the unions were just as unreasonable as the unions demands. "They" wanted bankruptcy to be the only option,... and for the unions to take the fall. Quote Link to comment Share on other sites More sharing options...
Taro T Posted March 25, 2014 Report Share Posted March 25, 2014 Nothing really, just made me think of it. See, you know how to bake the Twinkie, you just don't know how to ship the Twinkie and that's really the most important part of the Twinkie. I also want to add that the contracts offered to the unions were just as unreasonable as the unions demands. "They" wanted bankruptcy to be the only option,... and for the unions to take the fall. Not the unions' demands; the UNION's (singular) demands. The bakers and management were on the same page. Quote Link to comment Share on other sites More sharing options...
SwampD Posted March 25, 2014 Report Share Posted March 25, 2014 Not the unions' demands; the UNION's (singular) demands. The bakers and management were on the same page. Yeah, my ' key took a little break there. Quote Link to comment Share on other sites More sharing options...
Stoner Posted March 25, 2014 Report Share Posted March 25, 2014 While that was a great episode, not sure what it has to do with the teamsters having unreasonable contract demands in this instance. Swamp, I got it instantly. I thought it was brilliant. FWIW. Quote Link to comment Share on other sites More sharing options...
Doohicksie Posted March 25, 2014 Report Share Posted March 25, 2014 And what does any of this have to do with Ted Nolan? Quote Link to comment Share on other sites More sharing options...
LastPommerFan Posted March 25, 2014 Report Share Posted March 25, 2014 No. It took 4 years because no credible buyer was interested in owning them based on the financial risk/reward proposition. First, with the pro league equity requirements, the pool of potential buyers is extremely limited. Especially in 2009-2013. You're selling an asset with a cash-equity ownership requirement at a time when a huge chunk of North American equity in general had just vanished. On top of that you have a municipality that can't say with a clear voice that they will assume the real risk of the franchise. Neither of these negate the fact that in MOST situations, for the small group of people who meet the various pro league equity requirements, there is little real risk in owning a sports franchise. Which is why none of these franchises has disappeared despite the total number of pro franchises increasing by 15% in the last 20-ish years. If it was a risky asset, there would be abandoned properties, just like you see with all the other assets on the market with inherent risk. Quote Link to comment Share on other sites More sharing options...
Ghost of Dwight Drane Posted March 25, 2014 Report Share Posted March 25, 2014 Hamister comes immediately to mind, and I think there were other interested parties, too, but I can't take the time to dig through 2002 news today. Can we change the thread title to "some things about Ted Nolan, some things about Twinkies, and some other stuff"? (Just kidding. I know we have a long-standing tradition of thread divergence here and I like it.) Golisano was the preferred guy and was able to get the debt load on the arena waived. I am sure there were others interested, but who was going to have the cash and connections to get the same deal? I'm glad you said it though....that's why I always cringed when people would bow down to Golisano for "saving" the team. Quote Link to comment Share on other sites More sharing options...
nfreeman Posted March 25, 2014 Report Share Posted March 25, 2014 Golisano was the preferred guy and was able to get the debt load on the arena waived. I am sure there were others interested, but who was going to have the cash and connections to get the same deal? I'm glad you said it though....that's why I always cringed when people would bow down to Golisano for "saving" the team. I agree that sainthood is not warranted, but he wasn't "preferred." The NHL sold him the team because he was the only one who had enough cash to close. He negotiated a bargain-bin price in the same way that any buyer would've done. Quote Link to comment Share on other sites More sharing options...
Stoner Posted March 25, 2014 Report Share Posted March 25, 2014 Hamister's "money man" ended up in prison, no? Quote Link to comment Share on other sites More sharing options...
nfreeman Posted March 25, 2014 Report Share Posted March 25, 2014 First, with the pro league equity requirements, the pool of potential buyers is extremely limited. Especially in 2009-2013. You're selling an asset with a cash-equity ownership requirement at a time when a huge chunk of North American equity in general had just vanished. On top of that you have a municipality that can't say with a clear voice that they will assume the real risk of the franchise. Neither of these negate the fact that in MOST situations, for the small group of people who meet the various pro league equity requirements, there is little real risk in owning a sports franchise. Which is why none of these franchises has disappeared despite the total number of pro franchises increasing by 15% in the last 20-ish years. If it was a risky asset, there would be abandoned properties, just like you see with all the other assets on the market with inherent risk. I agree that in most situations for the NFL and the NBA, the risk is currently low. But not for the NHL or MLB. There are plenty of teams in those leagues losing tons of money and the demand to buy teams like that is minimal. As for abandoned assets, ask Atlanta Thrashers fans or Seattle Supersonics fans about that. In any case, the broader point is that you can't use a phrase like "in most situations" and wash away all risk. Stuff happens, whether it's an internet bubble bursting, a housing implosion, a terrorist attack, a major currency exchange fluctuation, a need for cash due to underperformance by other businesses you own, etc. If you've just paid top-of-the-market price for a sports team and you need to sell at the wrong time -- your potential losses are huge. Quote Link to comment Share on other sites More sharing options...
LastPommerFan Posted March 25, 2014 Report Share Posted March 25, 2014 I agree that in most situations for the NFL and the NBA, the risk is currently low. But not for the NHL or MLB. There are plenty of teams in those leagues losing tons of money and the demand to buy teams like that is minimal. As for abandoned assets, ask Atlanta Thrashers fans or Seattle Supersonics fans about that. In any case, the broader point is that you can't use a phrase like "in most situations" and wash away all risk. Stuff happens, whether it's an internet bubble bursting, a housing implosion, a terrorist attack, a major currency exchange fluctuation, a need for cash due to underperformance by other businesses you own, etc. If you've just paid top-of-the-market price for a sports team and you need to sell at the wrong time -- your potential losses are huge. The demand so far has ALWAYS exceeded supply. Neither of those teams were abandoned assets. They both still exist and make money for their owners. I'm not washing away all risk (although in some cases that happens, like Cincinnati) I'm saying that the purchases and agreements usually have public support and risk mitigation as a pre condition. You have to recognize that sports franchise ownership is exceptionally low risk given it's potential returns and that this low risk is primarily provided through public financing of the franchises largest assets and expenses. Quote Link to comment Share on other sites More sharing options...
nfreeman Posted March 25, 2014 Report Share Posted March 25, 2014 Silver Point and Monarch are real entities. They really do exist. And they really do buy distressed debt and then move that debt around so that some are profitable and others become sacraficial lambs. I'm not passing a judgement on it, just saying that it is real and that it happens. It just always surprises me when everyone jumps on the guy in the oven room making 12 bucks an hour and gets his pension stolen for being unreasonable. Yet we look up to the silver-spooned douche sitting in his black glass office building in New Haven making millions. Yes, Silver Point and Monarch are real entities. They bought Hostess (or, more specifically, they bought its secured debt and then foreclosed, becoming the owners of the company) and, like any owner of any money-losing company, sought to make it profitable. They were unable to do so primarily due to the transport union's demands, so they took it into bankruptcy and then sold off the assets. There was nothing unusual or sinister about any of that -- no "moving debt around," no "sacrificial lambs" and no "stolen pensions." It's worth noting, btw, that most funds like Silver Point and Monarch, in making investments like the one they made in Hostess, are investing money entrusted to them by (among others) corporate and government pension funds -- so they are effectively working to secure the retirement incomes of millions of middle-class workers. There is no reason that those workers' pensions should take an economic hit in order to benefit the Teamsters. Quote Link to comment Share on other sites More sharing options...
nfreeman Posted March 25, 2014 Report Share Posted March 25, 2014 The demand so far has ALWAYS exceeded supply. Neither of those teams were abandoned assets. They both still exist and make money for their owners. I'm not washing away all risk (although in some cases that happens, like Cincinnati) I'm saying that the purchases and agreements usually have public support and risk mitigation as a pre condition. You have to recognize that sports franchise ownership is exceptionally low risk given it's potential returns and that this low risk is primarily provided through public financing of the franchises largest assets and expenses. Again: nobody wanted to buy the Sabres until the price dropped to a screaming deal. The same is true of the Predators. Nobody wanted to buy the Coyotes for 4 solid years. Nobody wanted to buy the Thrashers and keep them in Atlanta -- and while that team still exists, in a sense, it sure didn't make money for the Atlanta owners. You are right that historically, sports teams have been able to extort plenty of public money out of their host cities. However, with most city and state governments hovering near insolvency (due largely to unfunded pension liabilities, but that's another story), the trend has -- thankfully IMHO -- moved well away from that type of greenmail. Most stadiums now are build primarily or entirely with private financing. You aren't going to see a sweetheart deal like the Ravens got from Baltimore again anytime soon. And there is NFW any US city is going to guarantee a profit to any NHL team. Quote Link to comment Share on other sites More sharing options...
LastPommerFan Posted March 26, 2014 Report Share Posted March 26, 2014 Again: nobody wanted to buy the Sabres until the price dropped to a screaming deal. The same is true of the Predators. Nobody wanted to buy the Coyotes for 4 solid years. Nobody wanted to buy the Thrashers and keep them in Atlanta -- and while that team still exists, in a sense, it sure didn't make money for the Atlanta owners. You are right that historically, sports teams have been able to extort plenty of public money out of their host cities. However, with most city and state governments hovering near insolvency (due largely to unfunded pension liabilities, but that's another story), the trend has -- thankfully IMHO -- moved well away from that type of greenmail. Most stadiums now are build primarily or entirely with private financing. You aren't going to see a sweetheart deal like the Ravens got from Baltimore again anytime soon. And there is NFW any US city is going to guarantee a profit to any NHL team. The Hawks/Thrashers enterprise made significant money for the owners, and the Thrashers sale was for nearly half the purchase price from TW 6 years earlier. I am reasonable certain that the Thrashers were not appraised as half the value of the initial purchase, so the asset appreciated in value. Assuming the operating debts were corporate in nature (this is a safe assumption), rather than personal loans by the owners, the capital gain on the sale is the only relevant number. Their relocation is irrelevant to the Atlanta owners, other than it's approval allowed for an increased value for the franchise. In addition, the Atlanta deal could have been more lucrative had the owners not been caught up in litigation with each other. The franchise does not exist "in a sense" it exists completely as the same appreciating asset it was before. Only the colors and currency have changed. Most of what is in this second paragraph is not accurate. Marlins Park, Target Field, The hostage situation in Pittsburgh forcing the state to forfeit potential casino revenues to keep the team, the Devils really got theirs when they were forced to agree to pay $100M of a $375M Prudential Center. While I agree that cities should stand up against this, even Glendale pays the Coyotes $15M a year to stay and allow them to move should they accrue more than $10M/yr in operating losses (It should again, here, be pointed out that operating losses result in organizational debt, not real losses for the owners, only the profits and capital gains/losses matter to the bottom line of the owner as an individual person.) Quote Link to comment Share on other sites More sharing options...
SwampD Posted March 26, 2014 Report Share Posted March 26, 2014 Yes, Silver Point and Monarch are real entities. They bought Hostess (or, more specifically, they bought its secured debt and then foreclosed, becoming the owners of the company) and, like any owner of any money-losing company, sought to make it profitable. They were unable to do so primarily due to the transport union's demands, so they took it into bankruptcy and then sold off the assets. There was nothing unusual or sinister about any of that -- no "moving debt around," no "sacrificial lambs" and no "stolen pensions." It's worth noting, btw, that most funds like Silver Point and Monarch, in making investments like the one they made in Hostess, are investing money entrusted to them by (among others) corporate and government pension funds -- so they are effectively working to secure the retirement incomes of millions of middle-class workers. There is no reason that those workers' pensions should take an economic hit in order to benefit the Teamsters. I'm done discussing this. Do some more research. This absolutely happened here. Quote Link to comment Share on other sites More sharing options...
nfreeman Posted March 26, 2014 Report Share Posted March 26, 2014 The Hawks/Thrashers enterprise made significant money for the owners, and the Thrashers sale was for nearly half the purchase price from TW 6 years earlier. I am reasonable certain that the Thrashers were not appraised as half the value of the initial purchase, so the asset appreciated in value. Assuming the operating debts were corporate in nature (this is a safe assumption), rather than personal loans by the owners, the capital gain on the sale is the only relevant number. Their relocation is irrelevant to the Atlanta owners, other than it's approval allowed for an increased value for the franchise. In addition, the Atlanta deal could have been more lucrative had the owners not been caught up in litigation with each other. The franchise does not exist "in a sense" it exists completely as the same appreciating asset it was before. Only the colors and currency have changed. Most of what is in this second paragraph is not accurate. Marlins Park, Target Field, The hostage situation in Pittsburgh forcing the state to forfeit potential casino revenues to keep the team, the Devils really got theirs when they were forced to agree to pay $100M of a $375M Prudential Center. While I agree that cities should stand up against this, even Glendale pays the Coyotes $15M a year to stay and allow them to move should they accrue more than $10M/yr in operating losses (It should again, here, be pointed out that operating losses result in organizational debt, not real losses for the owners, only the profits and capital gains/losses matter to the bottom line of the owner as an individual person.) The funding for Marlins Park was approved in 2009. Target Field and the Igloo were 2006. Prudential Center -- 2004. My point is that those days are over. The new Giants Stadium was 100% privately funded, as was the new arena in Brooklyn. The Islanders are leaving LI because there was no public money for them to get a new arena. As for your point about corporate losses vs. personal losses -- I must respectfully state that you are completely wrong on this. No sports team (and no other kind of company, for that matter) is acquired with only borrowed money. The cash equity that the owners contribute towards the purchase price is substantial -- well over 1/3 of the purchase price in NHL purchase agreements I have seen -- and it is "first loss" money -- i.e. that is the money that is burned off to cover operating losses. And when the operating losses are substantial and consistent? No lender will pump more money into a losing business like that, so the owners are forced to keep funding more equity in order to make payroll and keep the lights on. Accordingly, saying that the owners of the Thrashers and Coyotes did anything other than lose their shirts is wildly inaccurate. I'm done discussing this. Do some more research. This absolutely happened here. Instead of doing any more research, I will invite you to spend a little time on learning basic financial system concepts instead of randomly throwing around "boogeyman" jargon that doesn't relate to reality. Quote Link to comment Share on other sites More sharing options...
LastPommerFan Posted March 26, 2014 Report Share Posted March 26, 2014 The funding for Marlins Park was approved in 2009. Target Field and the Igloo were 2006. Prudential Center -- 2004. My point is that those days are over. The new Giants Stadium was 100% privately funded, as was the new arena in Brooklyn. The Islanders are leaving LI because there was no public money for them to get a new arena. As for your point about corporate losses vs. personal losses -- I must respectfully state that you are completely wrong on this. No sports team (and no other kind of company, for that matter) is acquired with only borrowed money. The cash equity that the owners contribute towards the purchase price is substantial -- well over 1/3 of the purchase price in NHL purchase agreements I have seen -- and it is "first loss" money -- i.e. that is the money that is burned off to cover operating losses. And when the operating losses are substantial and consistent? No lender will pump more money into a losing business like that, so the owners are forced to keep funding more equity in order to make payroll and keep the lights on. Accordingly, saying that the owners of the Thrashers and Coyotes did anything other than lose their shirts is wildly inaccurate. That cash equity is included in the purchase price and it becomes a capitalized asset of the corporation, and is recuperated at the capital transaction upon sale. Are you arguing that an corporation owner can involuntarily incur annual financial losses as a result of operating deficits? This is essentially why the incorporation system was set up: to protect owners from corporate liabilities. If the losses cannot be incurred involuntarily, there is no operating loss risk for the owner, only a potential capital loss. While not likely common, it's not unimaginable for a franchise to incur debts up to 50-75% of their appraised value. And the debts are almost always transferred to the new ownership during a sale. I can't find a single sports franchise in the last 30 years that depreciated from one sale to another. So if there is de jure no risk of annual losses, and de facto little risk of depreciation, there is essentially negligible financial risk in sports franchise ownership. I think the bigger risk, as you have pointed out is the frustration and delay in sale resulting from league imposed rules. I don't think most sports franchises are cash machines, but I don't think these owners are generally putting their necks on the line in ownership either. Between public financed arenas/stadiums, sweetheart lease deals, corporate liability shields, and anti-trust exemptions, they're pretty well covered from loss. Quote Link to comment Share on other sites More sharing options...
SwampD Posted March 26, 2014 Report Share Posted March 26, 2014 (edited) Instead of doing any more research, I will invite you to spend a little time on learning basic financial system concepts instead of randomly throwing around "boogeyman" jargon that doesn't relate to reality. Believe me, I know more than I care to about all of this and it's not that deep. All there is to know is that more, is more than less. There are greedy azzholes on both sides, but I'll always choose the side of the worker, over those who make their money by the transfer of ownership. Edited March 26, 2014 by SwampD Quote Link to comment Share on other sites More sharing options...
Andrew Amerk Posted March 26, 2014 Report Share Posted March 26, 2014 With this roster, it's the only place the bar can be set. The bar is the best place to watch this roster. Quote Link to comment Share on other sites More sharing options...
nfreeman Posted March 26, 2014 Report Share Posted March 26, 2014 That cash equity is included in the purchase price and it becomes a capitalized asset of the corporation, and is recuperated at the capital transaction upon sale. Are you arguing that an corporation owner can involuntarily incur annual financial losses as a result of operating deficits? This is essentially why the incorporation system was set up: to protect owners from corporate liabilities. If the losses cannot be incurred involuntarily, there is no operating loss risk for the owner, only a potential capital loss. While not likely common, it's not unimaginable for a franchise to incur debts up to 50-75% of their appraised value. And the debts are almost always transferred to the new ownership during a sale. I can't find a single sports franchise in the last 30 years that depreciated from one sale to another. So if there is de jure no risk of annual losses, and de facto little risk of depreciation, there is essentially negligible financial risk in sports franchise ownership. I think the bigger risk, as you have pointed out is the frustration and delay in sale resulting from league imposed rules. I don't think most sports franchises are cash machines, but I don't think these owners are generally putting their necks on the line in ownership either. Between public financed arenas/stadiums, sweetheart lease deals, corporate liability shields, and anti-trust exemptions, they're pretty well covered from loss. You are right that the owner of a corp cannot be legally forced to fund more equity, but if he doesn't want to do so, his only choice is to walk away and let the corp/team go bankrupt, which almost guarantees losing all of the equity -- which is what Moyes did. If he doesn't want that to happen, and there are operating losses, he needs to fund more equity -- which is what the owners of the Thrashers and just about every other money-losing team did and do. The equity is only recaptured (or, if you prefer, "recuperated") upon sale IF the purchase price is sufficent to zero out the debt AND repay the equity that has been invested. There is no guarantee that this will happen -- it sure has heck didn't happen in the cases of the Coyotes and the Thrashers. As for whether debt is transferred to new ownership -- this is a negotiated point -- and in any case is factored into the purchase price -- so e.g. a $150MM purchase price could be made up of $100MM in cash and $50MM in assumption of debt. And when the assumed debt is a material amount, it almost always means there is little to no equity "recuperation" benefitting the seller. As for appreciating franchise values -- since your premise about operating losses is flawed, you are missing the real economic picture. If someone buys a team for $100MM, has to cover $75MM in operating losses over the next 10 years, and then sells the team for $140MM -- that's not a $40MM gain, it's a $35MM loss. Let me ask you this: do you think there will be a number of bidders for the Bills at, say, an $800MM purchase price IF said bidders do not receive assurances from the NFL that they can move the team? Quote Link to comment Share on other sites More sharing options...
bunomatic Posted March 26, 2014 Report Share Posted March 26, 2014 (edited) Soooo. About this Ted Nolan fella... Does he like twinkies ? Edited March 26, 2014 by bunomatic Quote Link to comment Share on other sites More sharing options...
Taro T Posted March 26, 2014 Report Share Posted March 26, 2014 Believe me, I know more than I care to about all of this and it's not that deep. All there is to know is that more, is more than less. There are greedy azzholes on both sides, but I'll always choose the side of the worker, over those who make their money by the transfer of ownership. But yet you talk about 'the guy in the oven room ... getting his pension stolen' when that didn't happen at all. The guys in 'the oven room' were on the same page w/ management. The drivers lost. So when workers are on opposite sides, which side do you choose? Soooo. About this Ted Nolan fella... Does he like twinkies ? Who doesn't. (Though they can't hold a candle to a Ho-Ho. ;)) Quote Link to comment Share on other sites More sharing options...
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