** Part three of a four part series **
TEMPE, Ariz. – “If you build it, they will come” is the often misquoted but popular line from 1989’s Field of Dreams, the story of an Iowa farmer who hears a voice in his cornfield accompanied by a vision of a baseball field.
10 years ago, the future was looking bright for Global Entertainment Corporation, whose own field of dreams was made up of sheets of ice, to be laid out in multi-purpose entertainment venues the company could build, manage, market and provide food and ticketing services – an all-inclusive package for cities who would buy in to the idea that financing the facilities would be a good investment in their future growth.
In most cases, Global could guarantee a minor professional hockey team, which would serve as an anchor tenant. Global’s primary subsidiary, the Western Professional Hockey League had recently entered into a joint operating agreement with its chief competitor for players and markets, to operate a 16-team league known as the Central Hockey League.
The agreement provided International Coliseums Company, another Global subsidiary, the sole and exclusive right to construct arena facilities for participation in the league. ICC was already contracted to develop a new facility in Hidalgo, Texas and another would soon follow in Loveland, Colorado – each would house CHL expansion teams.
The company’s pitch was impressive and city leaders indeed bought in. Bonds were issued to pay for the facilities and between 2001 and 2011, Global built and opened 10 arenas in the United States, nine more than any of its competitors within the same timeframe. Eight included expansion hockey teams as anchor tenants.
Somewhere during the past decade however, the dream turned into a nightmare for virtually all of the cities Global had been involved with. Left behind were a trail of high quality facilities and the burden of debt when the numbers quoted in Global’s proposals failed to materialize and operating losses began to mount. Three of the expansion hockey teams folded and Global was discharged as managers of nine of the venues.
On April 14, 2011, Global’s Quarterly Report was filed with the Securities and Exchange Commission, presenting the harsh reality that is the result of the company’s fall from grace over the course of the past 10 years.
Global reported a net loss of approximately $1.2 million (for the nine months ending February 28, 2011), and that operating activities during the same period used cash of approximately $983 thousand. The company reported a total stockholders’ deficit of approximately $667 thousand and accumulated losses (from inception) of approximately $11.6 million.
The report went on to state that, in Global’s words, “The uncertainty regarding our ability to generate sufficient cash flows and liquidity to fund operations raises substantial doubt about our ability to continue as a going concern.”
Of interest is the following statement, “As of April 12, 2011, we have borrowed approximately $1.7 million on the BPR facility.”
The BPR facility refers to the line of credit and security agreement with Boston Pizza Restaurants (USA), Inc. which allowed the company to borrow up to $2 million, subject to certain limitations on the amount and frequency of borrowings – specifically, that borrowings can occur no more than once per month and must occur on or prior to April 30, 2011, and all outstanding amounts must be repaid in full by June 30, 2011.
Under the terms of the agreement Global has the right to two successive six-month extensions, provided that the company pays an extension fee of $20 thousand for each such extension. Interest on the outstanding principal balances is computed daily at the rate of 12.75%.
The agreement is secured by all of the accounts receivable of the company and its subsidiaries and by a pledge of all of the company’s interest in the wholly-owned subsidiaries Global Entertainment Ticketing, a Nevada corporation and Western Professional Hockey League, Inc., a Texas corporation.”
To get a sense of why this is of particular interest, it’s important to look at the beginning; the idea that became the Western Professional Hockey League and eventually Global Entertainment Corporation itself and the relationships that developed the idea – specifically, the relationship to the Boston Pizza Restaurants empire.
The WPHL was co-founded by former Phoenix Roadrunners assistant coach Rick Kozuback and a player he once coached, defenseman Brad Treliving, who had just retired after playing five pro seasons, primarily in the ECHL.
Nearing the end of his contract with the Roadrunners, Kozuback was contemplating a job with the Huntington Blizzard; an ECHL franchise in based in West Virginia, but what he really wanted to do was to take advantage of the explosive growth of minor professional hockey in the U.S. during the early 1990’s and start a new league; specifically, a new league in a non-traditional hockey market.
Kozubach and Treliving traveled to British Columbia to present the idea to Treliving’s father Walter J. (Jim) Treliving and his business partner George Melville, who co-owned Boston Pizza International, the largest casual dining chain in all of Canada.
The two bought in to the idea and suggested the league be modeled as a franchise organization, similar to Boston’s Pizza. A group of investors was formed, including New York Rangers defenseman Kevin Rowe and former Vancouver Canucks forward Darcy Rota.
The group provided $300 thousand in startup capital, with the first $10 thousand earmarked for a road trip taken by Kozuback, Treliving and Treliving’s longtime friend, Ralph Backstrom, who played 21 season of pro hockey and had won six Stanley Cups with the Montreal Canadiens.
Searching for the right location for the new league, the trio travelled throughout California and Texas for about a month, meeting with local business leaders and touring every facility they could find that might house an ice hockey team.
In the end, they agreed upon Texas. Although most of the buildings they looked at were traditionally used for rodeo and agricultural events, they could be converted to allow for regulation-sized ice rinks. The trio believed that as hockey season began near the end of the state’s wildly popular high school and college football season, the new league would provide a winter sport for local communities.
The new league was to be called the Western Professional Hockey League and WPHL Holdings, Inc. was incorporated in British Columbia in June of 1995 with its headquarters in Tempe, Arizona.
The league’s original six teams, the New Mexico Scorpions, El Paso Buzzards, Central Texas Stampede, Waco Wizards, Austin Ice Bats and Amarillo Rattlers began play in the 1996-97 season with Rick Kozuback serving as the league’s President and Brad Treliving serving as the league’s Vice-President and Director of Hockey Operations. Ralph Backstrom continued his involvement as a consultant to the league and eventually founded the Colorado Eagles franchise in 2003.
In 1998, Jim Treliving and business partner George Melville set their sights on expansion of the Boston Pizza empire “South of the border” in the United States. They changed the company’s name to Boston’s The Gourmet Pizza and a U.S. headquarters was set up in Dallas, Texas with Treliving moving to the area to personally oversee the expansion.
In August of 1998, Treliving organized Global II, a Nevada corporation, with its headquarters in Tempe, Arizona. In December, the first Boston’s Pizza restaurant in the U.S. opened, also in Tempe.
In April of 2000, Global II acquired all of the outstanding shares of the Western Professional Hockey League, Inc. from WPHL Holdings, Inc. and then changed its name to Global Entertainment Corporation.
In July of 2000, the Western Professional Hockey League formed a joint venture with Nustadia Developments to build small arenas and bring primary sports tenants to those venues under the umbrella of Global Entertainment Corporation using the name International Coliseums Co. LLC. One of the venture’s first contracts was for the Sol Communications Coliseum (the future Dodge Arena) in Hidalgo, Texas.
By the end of the 2000-01 season, the WPHL had expanded to 10 teams in three states (Texas, New Mexico, Louisiana and Mississippi and Tennessee), including the Fort Worth Brahmas, San Angelo Outlaws, Corpus Christi IceRays, Bossier-Shreveport Mudbugs, Lubbock Cotton Kings, Monroe Moccasins, Odessa Jackalopes, Tupelo T-Rex and Lake Charles Ice Pirates (the Waco Wizards folded in 2000).
In July of 2001, the WPHL entered into a joint operating agreement with its rival and competitor for players and markets, Central Hockey League Inc., to operate and manage the resulting 16-member league, continuing under the moniker, Central Hockey League.
10 WPHL teams merged into the new CHL. Four others folded, including the Central Texas Stampede, Lake Charles Ice Pirates, Monroe Moccasins and Tupelo T-Rex. Two of the 11 existing CHL teams went to the ECHL – the Columbus Cottonmouths and Macon Whoopie. Three others folded, including the Fayetteville Force, Topeka Scarecrows and Huntsville Tornado.
Four of the CHL’s original six teams (which began play in the 1992–93 season), the Oklahoma City Blazers, Tulsa Oilers, Wichita Thunder and Memphis RiverKings as well as the San Antonio Iguanas and Indianapolis Ice, combined with the WPHL’s remaining 10 teams and began playing in the 2001-02 season with Brad Treliving serving as the combined league’s first commissioner.
The joint operating agreement also provided Global’s International Coliseums Company the “sole and exclusive right to construct arena facilities for participation in the league.”
So the idea, which was a sound one, was to grow the league and thereby Global, by proposing new event centers to strategically targeted cities with the idea that the facilities would attract sports teams, nationally known musicians, large conventions, trade shows and other events. Global could build the venue, place a hockey team there, book events and sell tickets for the team as well as and manage the facility.
Rick Kozuback became the voice in the cornfield, so to speak, as principle pitchman for the company, selling his and Global’s own Field of Dreams – “If you build it, they will come”
Based on the average expectation of booking about 130 events a year, attendance of at least 3,000 at each sporting event, and the sale of a certain number of luxury suites and advertising packages at each arena, Global estimated that the venues would generate enough revenue to cover their operating expenses and their debt, in most cases. But this wasn’t the case – in fact, far from it.
A recent look at the events calendar for the last three facilities built by Global, two of which with successful hockey teams as tenants, dramatically illustrates the problem at hand – for the remainder of the year, the Allen Events Center has a total of 20 dates booked for varied events. The Independence Events Center has a total of 12 dates booked and the United Wireless Arena has just one date booked.
By November of 2010, only one of the 10 venues built by Global was still managed by the company – Tim’s Toyota Center in Prescott Valley, Arizona (which Global has an ownership stake in).
The company was removed from the other nine – two prior to opening (Budweiser Events Center in Loveland, Colo. and the United Wireless Events Center in Dodge City, KS), and four others within one year of opening (1st Bank Center in Broomfield, Colo., Town Toyota Center in Wentachee, Wash., the Independence Events Center in Independence, Mo., and the Allen Events Center in Allen, Texas). The remaining three removed Global between 27 and 38 months after opening (the Santa Ana Star Center in Rio Rancho, N.M., the State Farm Arena (former Dodge Arena) in Hidalgo, Texas and the Covelli Center in Youngstown, Ohio).
Late last year, Global bowed out of the arena management business altogether, issuing a public statement that while it has “excelled in developing and building first-class events centers…our company has faced challenges in managing these buildings and we have concluded that this is not our core strength.”
Instead, Global announced a strategic partnership with VenuWorks, a public assembly management firm, to provide facility management services for the events center Global had constructed in Dodge City, Kansas, along with future facilities the company develops.
Local newspapers have been covering the mess for years, mostly laying blame on the shoulders of Kozuback and Global, who seemingly refuse to accept any responsibilty and continue to blame the economic downturn for the lack of sales and event bookings.
However, there’s little coverage if any, regarding the cities that bought into the Global’s sales pitch having performed due diligence or in some cases, even listened to their constituents when it came to independent research to assess the risk involved with the issuance of bonds to pay for these facilities.
One prospectus for a proposed Global venue resembled most of the others. Demographics were filled in for the particular city with information one could obtain from a local chamber of commerce website. Newspaper articles and sometimes letters to Global from particular organizations, expressing the need for a local venue they could call home were sometimes added. But there was little substantive backup from Global to provide local officials a sound basis to make the decision to fund the development and construction of the facility, let alone to contract with Global’s subsidiaries to manage the venue and provide other services.
By 2007, Global had acknowledged inexperience in the arena construction and management business in another SEC filing. The report stated the company had only been building arenas, managing them and doing ticketing and event booking for a few years.
“Because of our recently acquired experience, it is difficult to determine whether we will be able to successfully manage these businesses,” the report said.
The following year, the citizens of Yuma, Ariz. overturned a $60 million arena deal with Global, previously approved by the city council despite articles, editorials and letters to the editor of a local newspaper which warned against such an agreement. A similar proposal to the city of Show Low, Ariz. was turned down by city officials who weren’t confident that the revenues generated would be sufficient to cover bonds.
Global has not been hired to build a new arena since January of 2009 which brings us back to the statement in the company’s most recent SEC filing – “The uncertainty regarding our ability to generate sufficient cash flows and liquidity to fund operations raises substantial doubt about our ability to continue as a going concern.”
To say that the future of the company is questionable is an understatement. At the very least, the Central Hockey League, Global’s primary subsidiary, which appears to be facing it’s own challenges with the rumored defection of some of its teams this off-season, will likely survive and continue for years to come.
Next: The future of the Central Hockey league examined
Contact the writer at robert.keith@prohockeynews.com
