The Deal won't happen...

[Diesel]

http://www.sportsbusinessnews.com/index.asp?story_id=29462

This is what I see.

I see no reason to change Turner's original deal with the city....

In reply to:

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While McDavid would be on the hook for the annual payments under his proposed purchase,

Turner has to replace the collateral in order to sell an unencumbered team, as likely would be required by McDavid's lender, according to people familiar with the negotiations.

According to arena bond documents, substitute collateral can be accepted by the bond trustee "at the direction" of the city and county

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To me, it sounds like McDavid can't convince a bank that he can make this team profitable as long as they have the debt hanging on them. I take it that a financial institution look at the 12 million per year as being the Hawks debt being that the Hawks are the Collateral that Turner used to buy the arena.

Business wise, it doesn't make sense to me. It suggests what I have said all along... McDavid doesn't have the money. Yes he has some money, but the original deal was made with the intent that he would have all the money....

In reply to:

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McDavid signed a letter of intent April 30 to buy the teams and arena rights in a deal valued at approximately $375 million, but negotiations have lasted months longer than the parties expected.

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Coming to the party with only 195 Million suggestion that you are 180 Million short.

Also...

In reply to:

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A key appears to be for the deal to be crafted in such a way that Turner and AOL Time Warner remain responsible for the bond collateral. Shifting responsibility from a large company to an individual would be problematic, experts said.

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It seems to me like McDavid want to purchase the teams but leave the debt with AOL/TW. However, it's the collateral deal that AOL/TW made that allowed them to reap all the benefits of the profits of the arena. If McDavid wants to do that, he's crazy.

I think what would probably work out for both parties... is:

McDavid buys the Thrashers.

The Hawks/Philips Arena Remain the property of AOL/TW.

Or McDavid buy the Hawks/Thrashers for like 250 million and then AOL keep the Phil. They could quickly pay off the debt it owes to the city... and then make pure profit off of it.

However, it sounds to me like McDavid is trying to swindle AOL/TW and the good people of Atlanta. He wants the fruit but is not willing to dig.

[Blunt91]

Don't blame McDavid for not wanting to take on some stupied agreement that Truner made 7years ago, they should have told him of thos provisions from the start. If I were McDavid I would say to [censored] with this deal.

[Diesel]

http://www.bizjournals.com/dallas/stories/.../05/daily3.html

In reply to:

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Dallas businessman David McDavid will pay about $230 million for the Atlanta Hawks and Thrashers and operating rights to Philips Arena, should the transaction come to fruition, a source said.

He also will pick up the $140 million of outstanding debt on Philips Arena and assume all other team and arena-related obligations on the shoulders of current owner AOL Time Warner.

Turner Broadcasting, a division of AOL Time Warner, released a statement last week confirming that McDavid has signed a letter of intent providing for an exclusive negotiation period to complete the transaction. Turner spokesman Greg Hughes said the deal is expected to close by the end of June.

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This whole time, McDavid has known of this debt. IN fact, he signed the letter of intent with his eyes wide open.

My thought on the matter is that he signed the letter of intent so that Checkettes or Turner would not be able to sign it... Now, he is posturing hoping that the debt can be resolved to AOL/TW. He realizes that the longer he hold up the deal, the more debt they incur so he's probably willing to hold up the deal for the year... Because it's not his debt.

It's very low if you ask me. If I were AOL/TW, I would drop this chump and start negotiations with Jordan or some other guy who wants to become the new Owners of the Hawks and the Phil.

[Watchman]

Where did I miss the "coming to the party with only $195 million?" Where was that mentioned in the article?

McDavid was to come up with $230 million and then assume $140 million of AOL's debt as it relates to the arena.

Are you saying he only came up with $35 million of his own capital? ("$195 million short...")

What is the source of your information?

McDavid has every right to purchase an unencumbered asset (the Hawks). AOL diminished the value of the team by pledging it as collateral for the arena debt. Therefore, AOL should replace the collateral or reduce the selling price accordingly. Simple business sense.

[Watchman]

$180 million short, rather than $195 million short. I guess McDavid is only coming to the table with $50 million. ($230 million less the $180 million shortage.)

[Diesel]

First off, the Hawks alone are worth 200 Million on the market.

So the thought that he can get all three (including the gold mine called the Phil) is ridiculous. I think the real deal was that McDavid was to pay 375 Million for the WHOLE thing... Which also includes 140 Million dollars in bond debt for the Phil.

Isn't it only right that if he owns the Phil, he get both the profits and the losses.

Now, if you really believe that he can get the Phil, The thrashers, and the Hawks for 230 Million dollars, then me and Steve Beckett and Black Hawk Down and Hotlanta dude and Traceman and Chillz should have pooled our resources and bought the team.

Here, read this....

http://money.cnn.com/2003/04/09/news/companies/aol_sports/

In reply to:

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There have been reports that Dallas car dealer David McDavid bid $200 million for AOL's Hawks and Thrashers, as well as for the long-term lease to the arena in which they play and Turner South.

One major investment banker specializing in sports team sales said he would be surprised if AOL would accept such low offers, even though he believes all three Atlanta franchises are losing money.

"That [$200 million bid] for all the other properties, that's much too low," said the investment banker. "I don't think you can buy an NBA franchise for less than $140 million, even the Hawks. The building is worth $25 million to $30 million. Turner South is making money. What's that putting for the value of the Thrashers?"

The investment banker says that AOL Time Warner has yet to hire an investment banker to shop any of the teams, or even put together a so-called book, which is a document detailing the value of the asset for sale for potential buyers.

"For AOL to take a pre-emptive bid of $200 million for all those assets without shopping them would be moronic," he said.

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I think that the deal was made at 375 Million. That's with the PHIL and with the debt that the Phil carries.

[Snaggle]

So you think McDavid knew everything financial about the team when he signed the letter of intent. I went through a similar situation last year about this time and I learned a whole lot about the process and that the deal isn't done until the papers are signed and anything can happen. The company I worked for had a letter of intent from a potential buyer. Many factors needed to be worked out, not just putting up money. Agreements had to be made with Ford, GM, and Northrup Grumman. The city had to consider tax abatements. In house contracts had to be approved by the United Postal Service, UPS and FedEx. In other words, there were so many factors beyond signing on the dotted line and handing over money. It dragged on for months. We kept hearing that things were being ironed out. And one of the "ironed out" issues was for the company to file Chapter 11 bankruptcy before the sale so the new company would not acquire the enormous debts of the company. The major corporations had agreed and we had passed the big hurdles. Millions of dollars were involved and the sale was just weeks away from being finalized. At the 11th hour the letter of intent was withdrawn. It came down to 6 million that couldn't be agreed upon. After 6 months we were at square one. By the way, this was the 2nd letter of intent to be offered and withdrawn in the last year.

What I am saying, is that there are so many factors in the sale of a company this size. (The company I worked for wasn't nearly this large.) So many parties are involved and all issues are not realized, addressed or resolved before the letter of intent is offered. ANYTHING can happen. An outside influence can make or break this sale and it isn't always going to be what's best for the company. In fact, I lot of time it's not. Let's just hope this sale doesn't end up like the company I worked for.

[mdawg]

Where do you get the idea that the Hawks are worth $200 million? The world champion Anaheim Angels sold earlier this year for $180 million. The Hawks are worth $110-$125 million at the most, and that is a generous estimate. I don't care what an investment banker says, if the Hawks can get $200 million for everything, they should take the money and run.

[Diesel]

http://www.forbes.com/forbes/2002/0204/nba_print.html

These are the old numbers...

It is estimated by Forbes that the Hawks are now worth 206 Million. Some feel that that number is a little high... However, Bob Johnson bought the Bobcats for 300 Million dollars. So go figure.

[Watchman]

the article stated that he was to pay $230 million plus assume the $140 million in debt (thus relieving AOL of the debt). He therefore has a purcahse price of $370 million.

Hello.

The $60 million pledge is not a part of the purchase price, it is simply a contingent liability which decreases the potential value of the team. McDavid's lenders do not want to hold a lower priority on the team as the team was used previously as an outstanding guaranty on the bonds.

Think of it this way, if you bought a car from someone, the bank would not want to loan the money on the car if the previous owner had pledged the vehicle as collateral on his mortgage, and not done anything to release the car as collateral on the his mortgage once he sold the car to you.

Try to read the article first before you go off in left field on some tangent.

[Diesel]

actually, I did read the article and I said...

It makes no sense.

Forbes has the Hawks being worth 206 Million.

They had the Thrashere being worth 134 Million.

Together that's 340 Million. If the bid of 230 Million for these 2 entities go... (110 Million less than their appraisal) that still means, that he is getting a Gold mine (the Phil) for NOTHING. Basically, AOL is saying... "You can have the Phil, just keep up the payments.".

However, my problem is that NOW it seems that McDavid is saying...

"I still want the Phil, but I don't want to make those payments".

is that right? I mean, does he really expect to get all three entities for 230 Million dollars and does he really expect AOL to keep the debt on the Phil to themselves.

Watchman,

All I have really said is that IF he wants the Philip Arena, then he should expect to also take the debt that the Phil brings. And that the fact that he is not willing to manage that debt the same way that it has been managed is a huge question mark.