AP Source: NFL stadium sites explored in Toronto

[YoloinOhio]

@JohnKryk: ICYMI: Answers to 5 vital Qs about the state of the Toronto group bidding on the #Bills, via my sources: http://t.co/MdNZtNBlFB

[Fingon]

@JohnKryk: ICYMI: Answers to 5 vital Qs about the state of the Toronto group bidding on the #Bills, via my sources: http://t.co/MdNZtNBlFB

Most relevant portions

 

3. DO THEY HAVE THE MONEY?

In breaking the news last Friday that the Toronto trio have roughly equal one-third investment stakes in their bid, I reported that Bon Jovi “is worth much more than has been reported or is believed by financial experts, and similarly is more cash flush than people realize.”

Two other sources have backed that up.

One claims Bon Jovi’s net worth instead of being $300 million, as Forbes reported last year, actually is closer to $500 million, And that Tanenbaum is worth considerably more than the $1.2 billion attributed to him last fall by Canadian Business magazine; he’s worth closer to $2 billion, the source says.

What’s more, the Rogers family finances are even more complicated than we reported last week. Edward, his three sisters and mother do not alone control their reported $7.6-billion fortune. Instead a trust oversees it, which includes Toronto business people. Sizeable chunks of cash outlays must be approved by that trust. Which might well be why Edward could not bid alone.

So, the big question: Does the trio have the money to win the bid?

Yes, sources say, up to and probably a bit over a $1-billion sale price.

But at some point soon thereafter, especially if the sale price approaches $1.5 billion, they’ll be out.

 

4. HOW MUCH WILL THEY BID?

Indicative (first, non-binding) bids are due on Tuesday at 5 p.m. EDT. Expect all bidders to submit just minutes before that deadline.

Last week I reported that groups are expected to lowball their first bids, probably in the $800-million to $900-million range.

Word is the Toronto group could go as high as $1 billion next week.

Then presumably by the end of next week, the trust — as advised by investment bank Morgan Stanley — will select a small group of finalists, who they’ll meet individually in formal management presentations between Aug. 4 and 15.

After more financial revelations by both sides, finalists will submit binding, final bids. By late September, or perhaps sooner, there likely will be a presumptive new Bills owner, awaiting approval by 24 of the NFL’s other 31 owners at the fall owners meeting in Detroit, Oct. 6-8.

5. DO THEY HAVE ANY HOPE OF WINNING?

Depends who you ask. Here’s what I have gleaned:

* If the price goes sky-high? No.

[Mr. WEO]

If the previous owner signed an onerous deal (for whom?) the bidders would be fully aware of the terms before they submitted their bids. So no one can make the claim that a lease deal is too onerous because the solution is simple: Don't bid on a project you can't handle. As you are well aware the Wilson trustees are allowing serious bidders to examine their financial books on a limited basis for the first screening of serious bidders, and then when the list is culled a more detailed examination of the books will be allowed to the top remaining bidders. Thus from a legal standpoint no one has a standing that the terms of the deal are unfair and should be altered.

 

 

For the new buyer--the lease is a pretty good deal for the county (although they are getting almost nothing in rent). Potential buyers all know the terms of the lease. But let's say that a dying Ralph and the county singed a 50 year lease. You don't think that would prompt a new owner to challenge that lease? (a general question).

 

As JohnC said, it's the buyer's responsibility to do proper due diligence. The stadium lease is part of the documents that Morgan Stanley prepared for all bidders to examine. The terms of the lease are ironclad until 2019. Any buyer can try to renegotiate a contract after they win. But the other party to the contract has to agree, and I don't think Erie County & NYS are in a negotiating mood.

 

I agree. The County is deperate to keep the Bills. They wouldn't renegotiate.

[JohnC]

What is not being emphasized in these discussions and should be is that the future owner will also be expected to assume a sign

ificant finacial responsibility in upgrading the current facility or more likely contributing to the building of a new facility. It seems to me that Pegula, especially compared to the Toronto group, is the most liquid bidder. He recently sold some assets in order to have a large amount of cash on hand. That makes him not only an appealing suitor to the Wilson trustee but also to the NFL.

 

As stated in the referenced story Rogers would have to contend with trustees to tap into the family trust and JBJ, who does have assets, but would have to liguidate most of his portfolio to have cash on hand. As the article indicates there is a breaking point from a finacial perspective that will be a bridge too far for the Canadian group. When the price tag is in the $1 B plus range then it becomes a risky business venture for them.

 

The Canadian stadium exploration may not really be a jeopordizing act because it happened some time ago. But from a "perception" standpoint it certainly doesn't enhance their standing with the Wilson trustees or the market they intend to enter.

 

What is encouraging is that the auction process "seems" to be steadily moving forward. It hasn't become a fiasco like the NBA Clipper sale with Donald Sterling engaged in legal sabotaging warfare. As stated in the article by August or a little later a new owner will be selected and the league will be ready to sanction the sale. I for one will be glad that this enormous transaction will be over and the focus will be mostly on the field.

Edited July 26, 2014 by JohnC

[JohnC]

 

 

For the new buyer--the lease is a pretty good deal for the county (although they are getting almost nothing in rent). Potential buyers all know the terms of the lease. But let's say that a dying Ralph and the county singed a 50 year lease. You don't think that would prompt a new owner to challenge that lease? (a general question).

 

 

 

I agree. The County is deperate to keep the Bills. They wouldn't renegotiate.

 

Anyone bidding on the Bills has excellent access to the "financials" associated with the franchise, including the lease situation. If someone buys into a situation with full knowledge of the situation then there is no basis to challenge the situation that one was willing to enter. (Cumbersome wording but accurate in the sequencing.)

 

Is a Billionaire businessman/(group) who has a history of makiing many complicated and large business deals going to make an after the fact claim that he was "hoodwinked" in a deal that he had full knowledge of? If you fail in executing "due diligence" then it is your failure. If you get involved in a bad deal for you then it is your bad deal that you signed on to. There is a non-legal term for hustling yourself: It's called stupidity.

 

What it comes down to is if you buy a house with a roof that has a large hole in it then don't complain when the rain drenches you when you are in your comfortable chair watching a repeat of Seinfeld.

 

As you smartly noted the County and State did an excellenct job in protecting their interest in the lease deal. It was a fair deal for them and it was a fair deal for Ralph Wilson, a known tough negotiator. He got what he wanted out of the deal and so did the public authorities. They should be commended.

Edited July 26, 2014 by JohnC

[ICanSleepWhenI'mDead]

But let's say that a dying Ralph and the county singed a 50 year lease. You don't think that would prompt a new owner to challenge that lease? (a general question).

Your hypothetical assumes that Ralph owned the Bills in his individual capacity. In fact, Ralph owned shares of the corporation that owns the Bills, and the corporation is the entity that signed the lease with the state/county. The corporation survives even when Ralph dies, so the corporation remains obligated to comply with the terms of the lease both before and after the guy who owned the corporation's shares dies.

 

Apart from the fact that the corporation that owns the Bills is closely held rather than publicly traded with thousands of shareholders, the situation is similar to what would happen if Exxon's CEO had a heart attack and died. Exxon would still be obligated to comply with the terms of any contract that CEO signed, even after that CEO died.

[BuffaloBrad]

For the new buyer--the lease is a pretty good deal for the county (although they are getting almost nothing in rent). Potential buyers all know the terms of the lease. But let's say that a dying Ralph and the county singed a 50 year lease. You don't think that would prompt a new owner to challenge that lease? (a general question).

As others have said, change of ownership doesn't affect the lease. That said, a new owner could challenge the lease, just as Ralph could have challenged it the day after he signed it. A court could theoretically allow the new owners to break the lease paying far less than the $400 million penalty that the agreement specifies, but that would be after a long, drawn out court battle that would be awful PR for the NFL. Also, there's no guarantee that the new owners wouldn't be libel for the entire $400 million penalty. If a new owner wants to move the team, their only option is to wait out the lease.

The Jaguars are encumbered by a 35 year lease signed when the Jags were owned by Wayne Weaver that has significant penalties for early termination. Many believe the current owner is waiting out that lease to move the team,.

[Hplarrm]

From my review of the many threads to date, the bottomline simply is that the team stays here:

 

1. Many observer seem caught up in a belief the team will (or even must) be sold to the highest bidder the Wilson trust can get. No this is not true. The Wilson trust has pretty clear bias to sell to someome vested in keeping the team here. Most important the NFL has several contractual vetos over who wins the bid and is almost certainly motivated by what makes the teams the most money. Clearly the most money comes to the NFL teams not by having the Buffalo franchise move to Toronto but by adding a new Toronto franchise AND by maintaining the Buffalo franchise.

 

2. Ralph did the region a favor by building in language that keeps the team here until roughly 2020. Even if a Toronto group buys the team in order to move they would have to lie to their future partners and engage in 7 year or so of incredible whining and bad publicity as the teams strategizizes and acts to leave.

 

The true source of NFL money, the TV nets will hate this bad storytelling.

 

3. There appear to be viable local bidders in Pegula and Golisano who can bid high.

 

4. The team stays in Buffalo and one can pretty much take that to the bank.

[Mr. WEO]

Anyone bidding on the Bills has excellent access to the "financials" associated with the franchise, including the lease situation. If someone buys into a situation with full knowledge of the situation then there is no basis to challenge the situation that one was willing to enter. (Cumbersome wording but accurate in the sequencing.)

 

Is a Billionaire businessman/(group) who has a history of makiing many complicated and large business deals going to make an after the fact claim that he was "hoodwinked" in a deal that he had full knowledge of? If you fail in executing "due diligence" then it is your failure. If you get involved in a bad deal for you then it is your bad deal that you signed on to. There is a non-legal term for hustling yourself: It's called stupidity.

 

What it comes down to is if you buy a house with a roof that has a large hole in it then don't complain when the rain drenches you when you are in your comfortable chair watching a repeat of Seinfeld.

 

As you smartly noted the County and State did an excellenct job in protecting their interest in the lease deal. It was a fair deal for them and it was a fair deal for Ralph Wilson, a known tough negotiator. He got what he wanted out of the deal and so did the public authorities. They should be commended.

 

It was a hypothetical question John...

 

What is not being emphasized in these discussions and should be is that the future owner will also be expected to assume a sign

ificant finacial responsibility in upgrading the current facility or more likely contributing to the building of a new facility. It seems to me that Pegula, especially compared to the Toronto group, is the most liquid bidder. He recently sold some assets in order to have a large amount of cash on hand. That makes him not only an appealing suitor to the Wilson trustee but also to the NFL.

 

As stated in the referenced story Rogers would have to contend with trustees to tap into the family trust and JBJ, who does have assets, but would have to liguidate most of his portfolio to have cash on hand. As the article indicates there is a breaking point from a finacial perspective that will be a bridge too far for the Canadian group. When the price tag is in the $1 B plus range then it becomes a risky business venture for them.

 

The Canadian stadium exploration may not really be a jeopordizing act because it happened some time ago. But from a "perception" standpoint it certainly doesn't enhance their standing with the Wilson trustees or the market they intend to enter.

 

What is encouraging is that the auction process "seems" to be steadily moving forward. It hasn't become a fiasco like the NBA Clipper sale with Donald Sterling engaged in legal sabotaging warfare. As stated in the article by August or a little later a new owner will be selected and the league will be ready to sanction the sale. I for one will be glad that this enormous transaction will be over and the focus will be mostly on the field.

 

Expected by whom? The County?, State? NFL?

[JohnC]

 

 

It was a hypothetical question John...

 

 

 

Expected by whom? The County?, State? NFL?

 

The county, state and taxpayers will not be primarily bearing the burden of the cost of an upgraded stadium or a new stadium. It is a political impossibility. If a new stadium is built a "significant" portion of the cost will be incurred by the new owner. The politcal and fiscal environment has changed where billionaires will no longer be dictating the terms of their own subsidy. Both the county executive and the governor have already expressed reluctance to pay for a costly new stadium. Both seemed to suggest that the current stadium, with upgrades, would be a good alternative to a new stadium project. My preference is for a new stadium mostly financed by the beneficiaries of the facility. I'm an avid football fan but I understand and generally agree with the sentiment that public money should be sparingly used to promote the businesses of billionaires.

 

The NFL doesn't care how new stadiums get built as long as they get built. Although it does or did (not sure if the program stil exists) offer attractive financing for new stadium projects.

 

 

Once the ownership issue is resolved the next major hurdle is addressing the feasibility of a new facility. That is going to be a much tougher and intense issue than the sale of the franchise. Settling on a site is not going to be an easy matter to come to an agreement on.

 

 

 

 

I understand that your original question was hypothetical. I was just trying to answer it in a way that relates to the current ownership issue. Sometimes I get carried away and become too verbose. Sorry about that.

Edited July 26, 2014 by JohnC