Rhinos could lose stadium

[condor]

ity considers takeover as bank sues for $10.8 million in past-due loans

Brian Sharp and Steve Orr
Staff writers

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(January 29, 2008) — Citing a newly filed lawsuit claiming that the Rochester Rhinos organization defaulted on nearly $11 million in bank loans, city officials said Monday that they are contemplating steps to take over PAETEC Park.

The city already has met with a potential investor who the professional soccer franchise hopes will bail it out. Or the Rhinos' bankers could step in and operate the team.

Whatever happens, city officials say, the goal is to ensure that the stadium is a financially viable home for pro sports. But time is running out and options diminishing as more becomes known about what Mayor Robert Duffy calls "a total financial mess."

The Rhinos are scheduled to open their 2008 season May 2.

"If they fail to perform ... then the stadium reverts to the city," said Thomas Richards, the city's corporation counsel. "The question becomes whether we actually need to wait, or whether the financial situation is so obvious. We are considering that right now."

The lawsuit filed by a Chenango County bank and the city's reaction to it are the latest blows to struggling local sports impresario Steve Donner. His Rochester Americans hockey and Knighthawks indoor lacrosse teams have financial and legal problems, and the city has sought a change in management before granting them a new lease at Blue Cross Arena at the Community War Memorial.

Now Donner and Frank B. DuRoss, the other principal owner of the Rhinos, are at risk of losing access to the stadium they fought for years to have built. PAETEC Park is home to the Rhinos men's and women's soccer teams and Rattlers outdoor lacrosse team.

Donner, reached Monday night, said he does not consider the bank's action "an aggressive act." He said the team's new investor, whom he would not name, has addressed the team's short-term and long-term needs. He said negotiations were under way to purchase the mortgage from the bank.

"I'm very confident the plan we have will work," he said.

PAETEC Park opened in June 2006. The state contributed $19 million toward stadium construction, estimated to cover 80 percent of the cost. The city kicked in $4 million for infrastructure and has been put in charge of administering a $4 million state grant to complete 18 luxury suites and a press box. Uncertain about the Rhinos' financial situation even before the suit, the city has not released that money.

'We did not' need stadium

Rhinos attendance has flagged since the team moved from Frontier Field to the 12,500-seat stadium off West Broad Street near Lyell Avenue. Duffy said Monday that in hindsight, PAETEC Park should not have been built.

"Here is where government loses credibility," Duffy said. "In essence, we have spent all this money on this one public project, which has never achieved the promises that were made. I'm not pointing a finger at any one person. I think it shows a deep void ... in terms of decision making, in terms of financial projections, and in terms of protecting taxpayers.

"Did we need a second stadium? It is my opinion that we did not."

The lawsuit, filed Jan. 15, asserts that a Rhinos affiliate defaulted on five bank loans and owes $10.8 million.

NBT Bank of Norwich, Chenango County, filed the suit. The bank loaned $6 million to Rochester Rhinos Stadium LLC to help build PAETEC Park and made four other loans in 2007.

DuRoss lives in nearby Utica, where NBT has branch offices.

Payments on all five loans ceased in June or July 2007, says the suit, filed in state Supreme Court in Chenango County.

The loans were personally guaranteed by chief executive Donner, team president DuRoss and former general manager Chris Economides, according to the legal papers, and the three men are named as co-defendants. The affiliate that operates the soccer team, Empire Professional Soccer LLC, also is listed as a guarantor and co-defendant.

DuRoss and Economides declined comment when reached Monday. DuRoss referred all inquiries to Donner.

"This isn't the only debt over there," Richards said of PAETEC Park, though it is the largest of which the city is aware. "There are some other substantial debts. There are millions of dollars in additional debt."

The mayor said various parties have pressured City Hall to release the final $4 million in state funds, and creditors have approached him personally to do so. But that money is earmarked for stadium upgrades, not to pay bills.

The city would prefer that someone just take over the Rhinos, Richards said, because that option makes it more likely that creditors would be paid.

Florence Doller, NBT vice president and director of marketing, said Monday afternoon that the bank had no comment on the loans or the lawsuit. The lawyer who filed the case, Mitchell J. Katz of Syracuse, could not be reached for comment Monday evening.

NBT loaned the company $4 million in December 2004, shortly after construction of PAETEC Park began. The bank upped its building loan to a total of $6 million in August 2005. Terms were renegotiated several times so that the company didn't have to begin repaying until March 2007, according to the legal papers. Full repayment was due two years after that.

The NBT building loan represents the bulk of the money that team owners pledged to put into the stadium deal. Construction was paid for primarily with the $19 million in state grants.

The Norwich bank made three more loans totaling $4.6 million to the Rhinos stadium company in January 2007. Mortgage documents filed with the Monroe County clerk say the purpose of those loans, which had a term of two years, was "causing the (stadium) project to be constructed, equipped, developed, leased and operated."

The bank then made a final loan to the company, for $250,000, in May 2007. That money was due just one month later but was not repaid, according to the lawsuit. Payments on all the other loans were made through spring 2007 but halted after June, the suit alleges.

NBT subsequently demanded that the company and the guarantors make good on all the money owed to the bank. As of early January, that debt totaled $10.84 million, including interest, the legal papers say.

"We were told by Donner and DuRoss that they were going to get it straightened out," Richards said. "... We have serious doubts that they are going to be able to do so. I don't know if it's in anybody's interest to wait for them anymore."

Richards said the city, which owns the land on which the stadium is built, leased that land to the Rhinos stadium company for $1 a year. The lease stipulates that the company must field a viable soccer team each year or the stadium reverts to the city.

http://www.democratandchronicle.com/app ... /1002/NEWS

[xdukex]

[tucc]

BURN!

[xdukex]

As long as it is not 100% sure that Montréal makes it in the MLS, I don't think this is a good news at all...

Until we leave the USL, we need to keep this Mtl-Rochester rivalry alive and well.

On the other hand, don't worry I'm far from whining for them Whinos! haha

[penz]

Yup, those surely are bad news...

[Napule]

As long as it is not 100% sure that Montréal makes it in the MLS, I don't think this is a good news at all...

Until we leave the USL, we need to keep this Mtl-Rochester rivalry alive and well.

On the other hand, don't worry I'm far from whining for them Whinos! haha

quoi?? ont sen fous de la rivalité. La situation des rhinos démontre que la USL nest plus profitable pour limpact. le saut en MLS doit etre fait au plus vite , sinon le club montrealais va etre pris a jouer contre des équipes de la PDL en USL et en conséquences perdre de lasisstance. Who the hell wants to see the impact play against a team made up of university graduates? bro..the rivalry is long gone. just last year we beat those guys 3 times out of 4 encounters. This year i have a feeling well win all 4. while therye dealing with debts, the impact is sharpening up in italy. Its bogus!! and to think that they were looking good for mls in the past. Pis en plus, yon payer leur stade autour des 20 millions!!?? what!? un stade laid comme ca?! Steve Donner is an idiot!

[penz]

bro..the rivalry is long gone.

Next time, make the trip to Rochester and wear the Impact colors. Then you can tell us whether the rivalry is long gone or not.

[Daniel]

We keep hearing about this " unnamed mystery investor".

[penz]

We keep hearing about this " unnamed mystery investor".

[3kuyt]

Montreal-Rochester is by far the best rivalry among eastern soccer teams, including teams from the MLS. The rivalries are at the core of what I love about this sport, therefore I want the Rhinos to stick around.

[tucc]

Ils joueront dans le parc, c'est pas très grave.

[Napule]

bro..the rivalry is long gone.

Next time, make the trip to Rochester and wear the Impact colors. Then you can tell us whether the rivalry is long gone or not.

i understand yur point.However...on the field its over!! we dominate all the way until rochester ends up like richmond...in USL2. Dont expect the rhinos to have a competitive team this year oublie ca.

[Sabre]

Ils joueront dans le parc, c'est pas très grave.

[Napule]

daniel williams...un banquier. Intéressé a investir dans le foot américain.

[Bxl Boy]

http://www.13wham.com/news/local/story. ... 2449baa22f


The New Jersey businessman who wants to buy the struggling Rochester Rhinos issued a lengthy statement Saturday about the status of the potential sale.

"The economic realities of the situation are that this may no longer be possible," Dan Williams said.

NBT Bank of Utica loaned the team $10.8 million to help with construction of PAETEC Park, and is suing the team for payment.

Williams met with NBT Bank a week and a half ago, and submitted two proposals.

The city owns the land upon which PAETEC Park is built, and is considering taking ownership of the stadium before the team folds or declares bankruptcy.

The city has also requested a state audit of how $19 million in state tax dollars were used for PAETEC Park's construction.

In his statement, Williams said he is still very much interested in the team, but "there is a disconnect between the amount the bank is seeking to recoup and what Mr. Williams and, to date all other parties, have deemed the franchise to be worth."

"I would dearly love to take an ownership stake in Rochester's team... However, I would want the money injected in to this club to go in to finishing a stadium, in to attracting great players, to building a youth infrastructure and, above all, to improving the region immediately around the stadium," he said.

"What I am NOT interested in doing is having all the resources I, and others, would be willing to dedicate to this project merely disappear in to a black hole of overpaying just to secure a franchise, then paying off legacy debts and then covering operating expenses exaggerated by factors not of my creating."

Williams encourages the investment group formed by "Soccer" Sam Fantauzzo to continue exploring a purchase of the team. However, Williams does not believe the group has the financial means to make the club successful.

Williams said if the team folds and the stadium is owned by the city, there's "no question a deal can be struck."

The Rhinos' season begins May 2, and given, the financial troubles of the team, there is doubt the current ownership can field a team.
Statement released by Williams
Daniel Williams remains extremely interested in ownership of the Rochester Raging Rhinos. However it has been nearly two weeks since there has been any contact from the bank and Mr. Williams's most recent correspondences have not been directly replied to, rather what progress has been made has been brokered entirely by the city of Rochester.

The position of all parties has been stated and there is still hope that some deal can be done, but the value of a USL franchise to Mr. Williams has some limit, and at this stage the reality is that there is a disconnect between the amount the bank is seeking to recoup and what Mr. Williams and, to date all other parties, have deemed the franchise to be worth.

It should be noted that a USL franchise costs around $400,000 and while not disclosing the bank's position, Williams said it was safe to say that the bank were seeking "a significant multiple of that figure".

Mr. Williams said on Saturday "this is not an issue of amounts of money, it is an issue of where that money goes. I would dearly love to take an ownership stake in Rochester's team and invest to make this the greatest soccer team in the greatest soccer city in the USA. However, I would want the money injected in to this club to go in to finishing a stadium, in to attracting great players, to building a youth infrastructure and, above all, to improving the region immediately around the stadium so that everyone can feel good about the presence of Paetec Park and feel good about attending games in a well built, attractive, safe and accessible venue with world class amenities.

"What I am NOT interested in doing is having all the resources I - and others - would be willing to dedicate to this project merely disappear in to a black hole of overpaying just to secure a franchise, then paying off legacy debts and then covering operating expenses exaggerated by factors not of my creating, while having the first season as owner being spent more in courtrooms and lawyers offices than spent moving forwards a vision for the team, stadium and locality."

Williams is keen to express that this is not a negotiating tactic, nor any end to his interest in the club.

"I will say right now the money is there to make an investment on an unprecedented level in a USL club. It is there to make Paetec Park a success. It is there to attract talent to the team both on and off the field. Rochester is not a 'minor league' team and it deserves to have great ambitions. But such vision needs solid financial management. This is after all the business of sports, and too many clubs in the USL and other minor leagues suffer because there is not a viable business plan - I am not talking here of the Rhinos, but of teams across many sports in many cities.

"We have a model which is more than just viable it is vibrant and sustainable, but that model involves starting with several million dollars in reserves to allow for development, for investment, for infrastructure, not for tidying up after others, bailing lenders out of bad loans and paying needless rents and interests. That model will be applied to a USL franchise, we just hope that it can still be in Rochester."

Mr. Williams understands a local consortium has raised a figure of around $5,000,000 and has been very public about their desire to take over the team and had this to say on that matter "of course local ownership is a good thing, and I wish this group all the very best. They sound as though they have a history with the club and while I think they would need significantly more funds than the numbers quoted in order to do what I think is ultimately needed, I think it is fantastic to have fans own any club.

"It is probably time for this Soccer Sam and his group to step forwards and see if they can strike a deal with the bank and for the sake of the game I love at this level, I hope they can, but if not then this team and stadium revert back respectively to the league and, ultimately I understand in the stadium's case, the city. At that point, we are talking about an entirely different scenario and I would be very willing to discuss buying the Rhinos off the league and playing in Paetec Park as either a tenant, manager or owner of the facility. The League, city and I will certainly stay in touch, that is not to say the Bank and I will not have further discussions, but I am saying in that scenario where the city and the League are the owners of the assets, there is no question a deal can be struck".

Williams remains open to a deal being negotiated with either bank or current ownership before it reaches the stage of the league and City intervening, but feels that the economic realities of the situation are that this may no longer be possible for his interest.

Williams also said that his interactions with the city and specifically Corporate Counsel Tom Richards had left a very good impression of Rochester as a place to do business, finishing "I have developed a real affinity for Rochester, and whether or not anything ever happens with the Rhinos, we will do business in this great city, I am sure of that."

[Napule]

to be continued...?

[Bxl Boy]

The story ? Probably
The Rhinos ? Not sure...

[penz]

It's looking really bad.

[xdukex]

How pathetic!
Oh dear USL..

[Moutinho28]

[napule]non mai dtoute facon ya pu de rivalry entre mtl et rochester...[/napule]

[l'ami francki]

je ne me rejouis vraiment pas des déboires de rochester, je crois que c'est mauvais pour le foot en général, pour les partisans de là bas et également pour l'impact.

[Napule]

tres vrai ton argument. La rivalité? encore moins si rochester doit se soucier de payer des montants exorbitants. Une équipe de calibre USL2 a rochester cette année...pas plus. A moins que leurs déboires cessent par miracle. De ce que jai compris de larticle, il est meme possible que Rochester n'ait pas déquipe cette année. Cette histoire me rapelle lannée 2000...bad year in montreal.

[carolangers]

HEY Nick!!!! Bring DIALLO to Mtl!!!

[Napule]

i think yur on to something here...

[xdukex]

What would Diallo do if we're left with no team to play against...