The Phoenix Coyotes Saga Dragging On

With the Stanley Cup final between the New Jersey Devils and the Los Angeles Kings coming to an end this week, everyone thought the Phoenix Coyotes saga would be over by now and that the NHL-owned team would have a new owner ready to turn things around in Glendale, a suburb of Phoenix. Greg Jamison, former CEO of the San Jose Sharks, who has been interested in buying the Coyotes for several months now, has yet to officially purchase the team from the NHL stating he has problems finding the right investors.

Earlier last week, the city of Glendale published some documents regarding the sale of the hockey team to Greg Jamison on their Website (http://www.glendaleaz.com/); however, according to the Goldwater Institute (GWI), a conservative watchdog group, the city may be working without all the facts. On Friday, the city of Glendale voted 4-2 (council member Norma Alvarez didn’t vote as she is currently hospitalized after a fall) in favor of an arena management fee (AMF) agreement that will most likely keep the Phoenix Coyotes in the desert for the next 20 years.

“They just voted on a contract they don’t have the financial justification to explain,” said Starlee Rhoades, Executive Vice President at the Goldwater Institute. According to Rhoades, Glendale approved a deal that is missing two critical parts, known as exhibits, in the written contract. One missing exhibit is a written budget for Jobing.com Arena, while the other missing exhibit is the performance standards the arena management company has to meet, including how many events the company will bring in, the plan for repairs and maintenance, as well as other requirements regarding the arena.

The GWI had sought a temporary restraining in order to block or postpone the vote, arguing that the city had not yet released documents important to understanding the financial deal proposed, while the City of Gendale said that the major documents had been provided to Glendale citizens and the GWI throughout the week and that the court had no authority to prevent a vote on the AMF. While Goldwater was not able to halt Glendale from voting on the AMF (Superior Court Judge Katherine Cooper agreed with Glendale ‘s argument that the court does not have the authority to prevent a vote), Judge Cooper told Glendale to postpone the vote to give enough time to the citizens and the council members to review in great detail all the necessary documents pertaining to the financial deal.

Greg Jamison has been trying to buy the Coyotes for several months (Matt Kartozian-US PRESSWIRE)

Despite the Judge Cooper’s warning: “What the city is preparing to do, not complying with the court’s order, may jeopardize the ability to carry forward with that agreement because it would be subject to attack legally”, the city decided to go ahead with the vote on Friday. NHL Commissioner Gary Bettman, as well as Bill Daly and Greg Jamison where in attendance to make sure the deal was approved.

After the hearing, GWI’s attorney, Carrie Ann Sitren, said they had received some documents as late as Thursday afternoon, less than 24 hours before the meeting.

Sitren also said the judge’s remarks made it clear that if the council voted Friday on the Coyotes deal, it would violate a 2009 court order requiring that Glendale provide all related documents to Goldwater in a timely manner regarding Phoenix Coyotes negotiations with proposed buyers.

Sitren added that if Glendale approved the deal on Friday June 8th, 2012, Goldwater would be back in court to ask that the deal be declared invalid claiming the city has brokered a backroom deal: “We absolutely will challenge this vote.”

Goldwater President Darcy Olsen also released a statement after the court proceedings:

“This morning, Judge Cooper denied the Goldwater Institute’s motion for temporary restraining on the grounds that felt the court lacked the authority to block the vote. Simultaneously, she issued a strong warning to the City of Glendale about the implications of moving forward today, affirming the Goldwater Institute’s contention that the city has committed ‘clear violations’ both of court orders and open meeting laws.

“She emphasized the court would be receptive to considering holding the city in contempt if the council moves forward with the vote, stating that sanctions would be in order. We hope the council will heed the judge’s warning, comply with the law, and give the public sufficient time to review the council’s proposed action.”

The missing documents and the violation of open meeting laws are not the only roadblocks regarding the sale of the Phoenix Coyotes as Goldwater expressed concerns that the agreement between Glendale and Jamison amounts to a subsidy, which would violate the Arizona state’s gift clause. GWI even sent a letter to the Mayor Elaine Scruggs and the council members, warning them not to rush a vote because the deal would add an important financial burden to a city that is already overwhelmed with debt.

Gary Bettman wants to settle the Coyotes ownership situation soon (Tom Turk / THW)

Moreover, it has been reported by different sources that potential owner Greg Jamison still hasn’t raised enough equity to purchase the Coyotes and meet the NHL’s rumored asking price of $170MM, even though the Coyotes are valued at only $134MM. Even with the $15 million/year taxpayer subsidy given by the City of Glendale to “manage” the arena over the course of the 20-year lease, investors are having cold feet, because despite the AMF, it will be hard to turn a profit with the Coyotes.

The team has been dead last in attendance this season with a disappointing 12,400 fans per game, about 5,000 less than the league average, that, despite having a very competitive team that made the playoffs and reached the Western Conference finals, which they lost 4 games to 1 against the Los Angeles Kings.

Investors are hesitant because they are skeptical that Jamison can boost ticket sales and revenue from non-NHL events enough to make the Coyotes profitable over the long term, which is why he will need much more money than the sale price of $170MM to survive the adventure of owning a team in the desert.

On Friday, during the city meeting, when Mayor Scruggs asked him who his financial investors were, Jamison simply answered that he couldn’t name them and that he needed a little more time to raise the required money. During the meeting, Gary Bettman added that the clock is ticking and that the NHL extended the delay to broker a deal with Jamison, which was originally 5 days after the Coyotes played their last game on May 22nd, by 30 more days, which would bring us to the NHL Entry Draft on June 22nd.

With the collective bargaining agreement coming to an end in September 2012, the NHL certainly wants to settle the ownership situation in Glendale in order to avoid distractions as a new CBA will have major impacts on revenue sharing as well as the salary cap. The NHL also has to make a decision quickly should the agreement with Jamison falters and should it needs to move the team to another viable city, such as Quebec City, in time for next season as the NHL schedule is usually released around the NHL draft.

It has been reported that the NHL has drawn more than one schedule in case it has to relocate the Coyotes before next season since the NHL stated several times it didn’t want to own the struggling franchise for another season.

Finally, this week will be crucial regarding the ownership situation of the Phoenix Coyotes and fans are hoping they finally find a suitable owner willing to spend tons of money in Glendale to market the team actively in the Valley and turn the franchise into a successful story, both at the gates and on the ice.

You can listen to the interview I did yesterday with the guys of On the ice. by Fan vs Fan Radio Network. I address the Coyotes situation at the 90-minute mark.

*UPDATE*: According to Columnist Yvon Pedneault of Tva Sports, Greg Jamison has only collected about $50MM for the purchase of the Phoenix Coyotes, far less than the required amount of $170MM. 

**UPDATE**: According to Maricopa County Superior Court records, Goldwater and Glendale will return to court over the vote of the Coyotes’ lease.

You can also follow me on Twitter for more information on the NHL.

Fred Poulin

Fred Poulin

Freelance translator/writer
A long-time Joe Sakic fan, Fred, 35, is a freelance sports writer and translator. Fred earned a Bachelor of Translation in 2002 at Laval University in Quebec City. He also writes on the Montreal Canadiens for HabsAddict.com and he is an associate editor and a baseball columnist on Dobberbaseball.com. He is also fluent in English, French and Spanish.
Fred Poulin
RT @jimmystagger: Woof. The @FlaPanthers are pulling in some @cdchivasusa numbers. http://t.co/mQQl8pm3cj (via @FredPoulin98) - 17 mins ago

27 Comments

  1. Excellent Article Fred.   This deal looks sketchy to me.  Question:  If Jamieson fails to raise capital or the arena management deal is illegal, we are back to square one.  Elaine Scruggs (mayor of Glendale) is likely to then tell th NHL to cry in their hat –  they will not be paying the continuing $25 subsidy, and the team can then move.   But to where?   Does Pallideau (QMI Sun Media) relly have $170 million? I doubt it.   If so, it is logisically impossible for him to ice a team in Quebec next season.   Yes, Winnipeg did it fast but they were already operating a professional hockey team.  The team infrastructure was in place.  It was a challenge for them to get it done starting May 31st, so how on earth does Quebec City ice a team for 2012-13, starting from scratch in late June or July?   They can’t do it.   Nobody can.

    Perhaps Bettman, as a bargaining chip, uses the Pheonix team to threaten contraction.   That is, he tells the NHLPA he will fold this team, putting 30+ professional hockey players out of work.   That would certainly loom large with the NHLPA over other negotiating matters that are not even remotely as close in importance to those which caused the lock-out and missed season in 2004-05.

    The nightmare in the desert continues.   Bettman never should have moved them to Pheonix in the first place.   Perhaps the NHL should just be a 28 or 29 team league for a while and take it back over 30 with teams in Toronto (they need a real team), and Quebec City when they are ready to move forward in 2013-14.

    • Pierre-Karl Peladeau and Quebecor Media have money don’t worry about it. They are ready to pay $230MM for the team (that includes a $60MM relocation fee). Also, the current arena (the Old Colisee) is under renovations to make it NHL-ready in time for the fall. As for the team infrastructure, it would be tight, but I’m sure it can be done!

      • Well that’s first thing I have disagreed with you on.   Winnipeg just barely got it done with infrastructure in place.   I got my Jets season tickets the week the season started, and pre-season tickets had to be printed separately and sent in advance.   And this was from an organization already operating a pro hockey team and that started May 31st.

        They have to do a ticket drive (better be successful)
        They have to sign their players
        They have to get jerseys and create a proper uniform
        They have to provide a first class operation or the players ill want out from day one.
        They will need to hire the fully bilingual office staff. They will not be successful re-locating the Coyotes office staff to Quebec City in a different country, in a french speaking, snowy community.

        How does Quebec get all this done with no infrastructure starting in July?

        Let me be clear – I am pulling for Quebec City, I think the team has way better prospects there, but I wouldn’t be surprised if the NHL has already ruled it out for 2012-13.

        They may have to pull just as ugly a move out of Phoenix as they did going in.   Sell it to Quebecor this summer and operate as a lame duck for a year in the desert.

  2. TVA also reported last summer that the deal was done for the team to move to Winnipeg as well as earlier this year, they reported that the entire Jamison deal had collapsed and the team was on their way to Quebec City. I wouldn’t exactly call their speculative claims as reliable. Jamison and Bettman both said that Jamison has the money lined up, and the city of Glendale pursued his deal instead of the Reinsdorf deal, and it has been well known since Hulsizer left the picture that the Reinsdorf/Kaites team had enough money to purchase the franchise by themselves. Why would the city pursue this deal instead of the other deal if it wasnt well established that they have the financing in place? The only reason why the needed equity wouldnt be in place was because the arena deal wasnt finalized, which all parties have said was the final roadblack to keeping the team in Phoenix. Now that that has been cleared, the needed equity can sign on. I really wish some of you Canadian hockey reporters can cut the wishful thinking and biased perspective out of the articles you write about this team.

    • Andy Stickland, a very reputable source, is reporting the same on Jamison’s equity:
      Rink Rats!There’s still work to be done by Greg Jamison who is looking to purchase the Phoenix Coyotes. The city recently approved a taxpayer-funded deal to keep the team playing in Glendale for the next 20 years. Sources say Jamison still needs to show he has the money and is likely facing a late June deadline. Word is he’ll probably need $85 Million in cash plus another $20 mill in working capital. The overall total will likely be close to $170 million with the rest being borrowed. My sources say he might have to borrow the rest of the money from the NHL as he could have trouble finding a bank to loan the cash.

      • Again, you gotta look at the 3 week comment by Bettman at the Glendale meeting. Straight from the horses mouth. How would they be able to set even a somewhat firm target date without the proper financing? Rather than speculate from blogs and people who dont have any sort of insight into the inner workings of the deal, why not listen to what Jamison has reiterated time and time again? He has constantly repeated that he has the money essentially lined up, and the only thing that was preventing him from accessing it was the arena lease, which has now been cleared up. That $50 million dollar is likely what Jamison himself is bringing to the table, rather than the equity of his group as a whole.

  3. Benjamingeeks says:

    As a Glendale resident this whole deal smells. I get my taxes raised with no guarantee of any profits for my city. I’m sorry Greg but, “trust me”, won’t work anymore. Show me the money!

    • The only guarantee in life is that you die.  Every investment has some element of risk to it, and the ones that get you profit have an increased risk.  

  4. Mike Sadowski says:

    Curious on this sentance:

    “Investors are hesitant because they are skeptical that Jamison can boost ticket sales and revenue from non-NHL events enough to make the Coyotes profitable over the long term, which is why he will need much more money than the sale price of $170MM to survive the adventure of owning a team in the desert”

    Where does that notion come from?  How do you know this?  I have heard that he has the investors, but it was contigent on Glendale approving the lease deal.  You cant have the investors all in until you have an arena to play in.   Now that they do, the investors will sign on board.

    You saying giving reasons for investors to be hesistant has to be soely made up, since you dont even know who these investors are.

    You had a nice unbiased article besides that paragraph.

    • I don’t know them personally, but I based that statement on the following:
      A Republic analysis revealed that even if the Coyotes went to the Stanley Cup Finals for the next 20 seasons and the arena booked 30 sold-out concerts each year for the next 20 years, Glendale could still expect to lose about $9 million annually.That figure does not include the city’s annual arena debt payments, which will average about $12.6 million a year over the next 20 years. http://www.azcentral.com/news/articles/2012/06/04/20120604glendale-shares-details-deal-potential-buyer.html Just straight facts.

      • Fun fact: that Arizona Republic article is based off of the notion that the Coyotes would still only average 12,400 people a game and sell tickets at around 36$ on average every year for the next 20 years, which is completely unrealistic and overly conservative. Even under the low preforming Gretzky era, the team still managed to attract 15,000 a game on average. Fact of the matter is that the fan base is willing to attach themselves to stability AND success, as evinced by the situations in Pittsburgh, Chicago, and Nashville just a few years ago. Season ticket renewals at are at an all time high and nearly 1,500 people put their names on a waiting list for season tickets for next year during the playoff run. As well, Jamison has never once said that he doesn’t have the investors, he just hasn’t named some of his partners at this time. During the meeting, Bettman said that they intend to have the deal done in 3 weeks, so giving a somewhat firm date of completion would indicate that they have the finances lined up. 

        •  Boy you must feel ,like a smuck after your wrote this .

        • ? what are you trying to get at here….

        • I don’t think you can compare Phoenix to Pittsburgh because while it did have a brief period of troubles, the franchise has shown longevity and hockey as a sport is not as foreign to the native population.   The team i entrenched in the hearts of the local fans.   Can Phoenix say that? Chicago, really?, a comparison to the storied Chicago Blackhawks as beyond a stretch, it’s a joke.

          The there is Nashville.   You are not too far off by comparing the two but the Predators franchise is renowned for substantial community outreach, in developing hockey programs, hockey enthusiasm, and knowledge in an area where hockey is a foreign game.   This is the model that MUST be followed in Phoenix but to date, no owner or potential owner has built that into their Arizona business plans.

          Until Jamieson can prove that he can sell tickets like nobody before him has done, the 12,400 figure will not go up, nor will the price per seat.  It is also WELL documented that 12,400 is an inflated number with THOUSANDS of give-aways every game just to make the place look full.

          This is a mad experiment gone wrong.  I have a better chance of growing palm trees in the arctic. 15 years is enough.   I feel bad for Glendale but they never should have built that beautiful Arena.

        • Uhhhh overinflated by thousands? Since Don Maloney has taken over as GM and Daley has been in charge of hockey operations, they have made it a mandate NOT to give away tickets like they used to. In fact, it was reported that there were less than 5,000 tickets ALL SEASON that were given away, whether as corporate reimbursement, contest prizes, or gifts by players and staff. Well documented that theyre just handing tickets away by the busload? Hardly.

          I don’t see how the situation in Pittsburgh was any different, and I dont see how the Coyotes arent’t following a model similar to Nashville’s. In Pittsburgh, the had attendance similar or worse than the Coyotes are experiencing right now, for a longer period of time, with higher yearly losses, and such loss was a theme for the team’s entire history, excluding periods of time when they had stars like Lemieux of Jagr. The only thing that saved them from moving to Kansas City or what have you was the 11th hour deal by Lemieux to help buy them and winning the Sidney Crosby sweepstakes. In regards to community outreach, theCoyotes organization is frequently involved in charitable events and community outreach events, which is notable because unlike Nashville, Phoenix is a completely saturated professional sports market. Before the Coyotes came to town, there was 1 sheet of us in the state. Now there are 28, with the Ice Den building a third tournament-caliber rink, and ranking in the top 10 ice rinks in the nation. Shane Doan won the NHL Foundation Player award for community outreach last year at the NHL awards, further substantiating that claim. While essentially all Coyotes fans agree bulding the arena in Glendale was a mistake, Greg Jamison may be the only person in the world who has the know-how to turn it around, and it would be foolish not to let him have a shot at it.

      • Mike Sadowski says:

        Yes I read that article as well.  And even if it is true..”they are skeptical that Jamison can boost ticket sales ” is putting words in someones mouth.  YOU are skeptical….you are pulling that statement about the investors out of your thoughts.  Dont make things up. 
        And you also have to remember that that analysis is strictly on operating that arena.  So if those numbers are right, they will lose 9M annually on the arena (which is a conservative analysis to begin with).  But it doesnt include any taxes generated from Westgate, shopping, and near by hotels.  That is the key to the deal.  Keeping the Westgate city center alive is the main goal of keeping the Coyotes for Glendale.

        • Well, the whole aspect of making profits is moot if Yvon Pedneault is right and Jamison only has $50MM of equity… I understand that keeping the Coyotes in Glendale makes a lot of sense for Westgate and the local economy, but at what price for the citizens?

        • I’m pretty sure that when the economy is doing good the people tend to prosper as well.  And what makes sense for Westgate makes sense for the entire city of Glendale, as there is little reason to go to Glendale other then Westgate.  

        • Mike Sadowski says:

          My opinion is Bettman and Jamison wouldnt have put this much time in if  they didnt feel Jamison couldnt raise the funds.  So I am not concerned about that.

          Yes they need to consider at what price to the citizens is it worth keeping the Coyotes…but remember to ask yourself, what will cost the citizens more? Paying to keep the Coyotes, or not keeping the Coyotes and then having to cover the costs that go with a ghost town.  Taxes would still need to be raised to cover their gap.  According to the Pollock study, the impact of keeping the Coyotes is better than what the city would see if they left.

          So I like to phrase it in our terms as “Glendale is in trouble.  If they keep the Coyotes, in the long run they will be in LESS trouble than if they left.”

          Nobody denies the Coyotes are costing Glendale, but its saving more than what an empty arena would cost Glendale.

    • I am less than curious about that sentence.   After 15 years of losses, why WOULDN’T you be hesitant that Jamieson, another in a long line of owners and potential owners, could boost ticket sales and revenue from non-NHL Events.   Ths investment is definitely high risk no matter how much money you have.

      • Mike Sadowski says:

        Of course you would be hesitant.  It is a high risk deal everyone knows that.  Im saying he is speaking on behalf of the investors.  Not once has that ever been said by Jamison, and especially not his investors, because their identity still remains unknown.  Could they be thinking that? yes.  But he states it as a fact…even though nobody knows who the investors are.

        Its just another way to try and make it look like this deal wont happen.  Taking made up shots at it.

        And when your writing an article…you shouldnt put words in someone elses mouth just because thats what you want to be true.

  5. So… “Jamison… has yet to officially purchase the team from the NHL stating he has problems finding the right investors.”  By the “right investors” I assume Jamison means a bunch of rich dimwits willing to lose millions of dollars years after year on his hockey team.
     
    Enough BS – WHO are Jamison’s investors? I cannot think of another purchase in recent memory where we didn’t know long before this stage just who the key moneymen were.

  6. Nice review Fred.  My only concern regarding the possibility of relocate the coyotes to, let say, Quebec city is linked to CBA coming to an end this fall.  We know that the NHL wants the players to get 50% of the revenues instead of the actual 54-57%.  And the NHLPA would want the revenues to be as high as possible.  In this matter, I’m afraid that hockey market such as Quebec city could be use as a negotiation’s tool.  Thing like: “In exchange of you accepting 50% of the revenues, we’ll make sure that those revenues will be maximized”, which would be the case by moving the coyotes from Glendale to Quebec City.

    • Yes Francois, that is a possibility, but I highly doubt they will think about the CBA if the sale to Jamison falters before the draft. They will have to make a quick decision to move the team.

    • Rainer Fehrenbacher Rainer Fehrenbacher says:

      Because everybody knows that as long as there isn’t a signed deal on the table, the Coyotes are absolutely destined to move to Canada.

      It’s time to get over it. The Coyotes are not moving to Quebec City. Start working on an expansion proposal.

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