With the beginning of the NHL season only one month away (if there is no lock-out), 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 despite stating that he found the necessary financial backing and investors to make it official.
Earlier this week, it has been reported by Scott Burnside of ESPN that potential owner Greg Jamison has secured 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. Jamison had previously entered into a deal with the City of Glendale for a 20-year lease that would see the City of Glendale pay him $324MM in management fees over the life of the proposed lease.
Among the potential investors are some members of Ice Edge Group, a collection of North American businessmen who were front-runners to buy the team themselves back in 2009, purchase that never happened to due to a lack of equity. In May 2010, after one year of negotiations, Ice Edge walked away from purchasing the Coyotes, because they were unable to strike an exclusivity deal preventing other bidders from buying the team.
Last week, Jamison came out publicly to announce he had finally found the necessary financing to sign the arena management contract with the City of Glendale and purchase the Coyotes from the NHL. However, following a closed-door meeting on the issue, the city council told administrators not to close the deal with Jamison and his group until they officially buy the team from the NHL and some changes can be made to some of the terms and details of the agreement.
“Since June, the city and the NHL have been saying the next step is for Mr. Jamison to purchase the team, at which time the city was ready to sign the agreement,”Glendale spoeswoman Julie Frisoni said. “At this time, in light of other issues, the council has asked us to go back and look at options that are feasible in terms of the management agreement.”
Glendale recently granted for the fourth time a 30-day extension to the NHL so it could continue operating Jobing.com Arena while the deal with Jamison is being worked on.
With the collective bargaining agreement coming to an end on September 15th, 2012, the NHL certainly wanted 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 Coyotes will almost certainly play at least one more season in Glendale, if the expected lock-out doesn’t wipe out the entire season, because now it’s too late to move the team to another market.
September 15th is also a key date regarding team captain Shane Doan, who has yet to sign with the Coyotes or another NHL team as an unrestricted free agent, because according to Doan’s agent Terry Bross:
“Shane is going to sign a contract before the CBA expires on the 15th. Ownership has to be done before the 15th, otherwise we’re signing somewhere because we don’t know what the new CBA is going to look like, and I don’t know if it’s going to limit any scope of a contract, so we want to make sure we sign before then.”
Doan, who turns 36 in early October, scored 22 goals and added 28 assists with a -8 plus/minus rating in 79 games with the Coyotes in 2011-12.
Doan’s return would certainly help boost tickets sales as the team was dead last in attendance last 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 Stanley Cup Champions, the Los Angeles Kings.
Now, let’s pretend for one minute that Jamison has secured all the required financing and is ready to move forward with the purchase of the Coyotes. There are still a few hurdles along the way that could prevent the deal from happening.
1. The City of Glendale and Greg Jamison need to officially finalize and sign the arena management lease.
What was a certainty a few months back doesn’t seem set in stone any more since Glendale wants to change some terms of the original deal, which could prove detrimental to the value of the original deal that was developed last Spring between the parties.
2. Greg Jamison and his group of unknown investors need to have all the money necessary to purchase the team.
While Jamison has said that he finally secured the necessary equity required to buy the team, he hasn’t made any official announcement to the public, whether it is by press conference or press release. Moreover, he has yet to name his financial backers after more than one year of negotiations with the city.
3. The sales tax vote now officially on the November ballot has to go in Glendale’s favor, which is far from certain.
Yesterday, the Arizona Supreme Court announced that it will not be hearing the City of Glendale’s appeal regarding Save Glendale Now!’s tax petition. As a result, the petition will go on the ballot allowing citizens to vote on the sales-tax initiative in the November election. Glendale council voted in June to raise its share of sales tax to 2.9 per cent on August 1 in an effort to deal with a $35-million deficit as well as a $20-million payment to Jamison for managing the arena. The increase is expected to raise $22-million/year, mostly to pay for the AMF signed with Jamison, but it is opposed by many business owners who created the Save Glendale Now! group.
4. The deal, including the purchase of the team & the signature of the AMF, has to close before 2012/12/31, before the new council takes over.
With the uncertainty surrounding the financial situation of the city, several candidates at the November election asked the current city council to reject the deal with a prospective owner. And with pro-Coyotes councilwoman Joyce Clark defeated in the primary election in the Yucca district by firefighter Sam Chavira, the Glendale city government is poised for turnover which doesn’t bode well for the approval of the deal with Jamison. A candidate had to pick up more than 50 percent of the vote to win outright on the August 28th election. As a result, Chavira, who is opposed to the deal, and Clark will battle head-to-head in the southwest Glendale district.
5. The closed deal has to survive the gift clause challenge from the Goldwater Institute, which is far from certain.
GWI, patiently waiting in the shadow, would mostly challenge on the Arizona gift clause, on the grounds that the AMF (arena management fee) far exceeds market value, and is truly a subsidy. It could also challenge that the T.L. Hocking’s report seriously over-estimated the damage to Glendale if the Coyotes leave, in that other possible tenants/events were not seriously considered. The Goldwater Institute watchdog group helped unravel a deal with shady investor Matthew Hulsizer when the city tried to sell bonds aimed at financially facilitating Hulsizers’s purchase of the team in 2011. It will make sure the city signs a deal that doesn’t contravene the state constitution’s gift clause.
Hat tip to Aqib Sakhia for some of the information included in the article.
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