Local hacks take a whack

by Dirk Hoag on Aug 17, 2007 3:56 PM EDT

Thanks to a miserable hatchet job at the Tennessean, Predators fans are left with another round of caterwauling from critics who want to see the team relocated either to Kansas City or Southern Ontario.

Thursday afternoon, the Tennessean broke a "news update" that the prospective ownership group was negotiating changes to the Sommet Center lease that could have Nashville taxpayers paying "$5 million more per year to keep the Predators in Nashville," and "the buyers tried to keep the details from the public." Friday morning the paper came out with a further article which revised the $5 million figure down to $3 million, and included PDF's of the proposal (obtained via a public records request) and two emails, each addressed to the mayoral campaigns of Karl Dean and Bob Clement (obtained by the paper, but how?).

The implication was twofold: first, that the local group was seeking deeper subsidy from the city, and secondly, they were doing it in secret.

Tackling the second issue is straightforward - this is a proposal that's being laid out by the new ownership team, and isn't yet in a finalized form that goes up for public debate. The outgoing mayor of Nashville basically has nothing to do with this process other than to provide some analytical support, so the back-and-forth negotiation hasn't even truly gotten rolling.

The first issue, that being the charge that the new owners are simply looking for handouts from the city, is a much more complicated affair. The biggest oversight in the Tennessean's report is the omission of a critical part of the propsal: that in exchange for management fees from the city, the owners would take over the risk of operating loss at the Sommet Center [note: correction made here].

Quoth the proposal:

"Under the [ed: current] Management Agreement, the Sports Authority is responsible for virtually all capital and operating expenses associated with the operation of the Sommet Center. If "Operating Expenses" for a particular period exceed "Operating Revenues" for that period, the Sports Authority is responsible for that "Operating Loss". If "Operating Revenues" exceed "Operating Expenses", the Sports Authority is entitled to that "Operating Income" for such period. Since entering into the Management Agreement, the Sports Authority has experienced only Operating Losses."

According to the Nashville City Paper, those Operating Losses have averaged $5 million per year. In the next section down, the proposal says that the Manager (the new ownership group's corporate body, PHC) would be responsible for all Operating Expenses and entitled to all Operating Revenues, subject to some terms that are spelled out in lugubrious detail. David Freeman has also gone on record saying that they are attempting to tie the source and scale of that Management Fee to revenue streams generated by hockey, such as sales tax generated by the facility, etc., rather than simply drawing out of general funds. It's not as simple as them asking for an $X million check to be written to underwrite their hockey team.

The Tennessean makes no mention of the removal of a $5 million Operating Loss from Metro's shoulders as a result of this proposal, only the cost of the Management Fee being requested. Rather than present in practical terms how the deal would likely shake out (which is difficult because some areas are still left open to negotiation), the Tennessean only focuses on what the ownership group is asking for, not what they are offering in return.

Now, of course, the broader portion of the hockey world is picking up the Tennessean's story and writing another round of "hockey can't work in Nashville, why are these locals getting the team instead of Jim Balsillie" articles. For a paper that is trimming staff, perhaps this was a desperate ploy to sell papers with a "businessmen are secretly conspiring to steal your tax dollars!" angle, but even in the best case scenario, they've lined the city up for a repeat of the negative press it's been getting all summer long.

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Comments

Great analysis. Thanks for digging into this. I hadn't had a chance yet, but i knew we weren't getting the whole story.

I also thing that there is a Paper vs Paper aspect to this, not just a pure readership grab. The City Paper is owned by a company that is run by one of the partners in the local ownership group. They are going to keep getting scoops on the Predators as a result, making the Tennessean look even worse than it does on its own. So the Tennessean has to dig up dirt and call foul as often as possible.

by Paul Nicholson on Aug 17, 2007 4:28 PM EDT reply actions

The ship is sinking in Nashville. You are a good fan and don't deserve to go through it, but the market isn't strong enough.

Its tax incentives and a ready building that brought a team to Nashville in the first place and that turns out to be not enough to keep them there.

I would be surprised to see NHL hockey in Nashville in 3 years.

by The Puck Stops Here on Aug 17, 2007 4:29 PM EDT reply actions

"The city's analysis of the "ask," as the group's lawyer calls the request in an e-mail, said it would increase annual public support of the arena from $13 million to $18 million."

I'm not sure it can be made any clearer than that; you can paint this as a media outlet with a vendetta, but then why is the city's analysis coming up with these figures?

Once again you're attributing statements to me (via a link) that I didn't make, as I make no mention of Balsillie and/or Kansas City in my post.

I think it's fairly clear to most where bias is being shown here.

by James Mirtle on Aug 17, 2007 4:58 PM EDT reply actions

James: My point is that the both the Tennessean article and the city's analysis (which is also included in the article) leave out the fact that the local ownership is offering to take on the risk of operating loss, which has averaged $5 million a year and makes a big difference in the final amount of public support.

As to my including the link to your blog, that was in reference to the phrase "picking up the Tennessean's story." It is Cox's article that is linked with the Nashville-can't-work angle. I apologize for any confusion there, and I'm not accusing you of any bias. What I am saying is that the Tennessean only put half the story out there.

by The Forechecker on Aug 17, 2007 5:31 PM EDT reply actions