Phoenix Coyotes: How They Can Stay in Glendale Arena Arena

It was funny to watch Gary Bettman’s interview Sunday massaged by many into a conclusion the Coyotes were moving to Seattle immediately. Of course, most of what Bettman said would logically lead to the polar opposite of that conclusion, most of his statements were definitive and positive about the Coyotes remaining in Glendale. If you’re interested in an analysis of that interview, you could read “Bettman: Coyotes Are Staying In Glendale“.

Today the Seattle buzz died back to normal, yet the Tweets in French declaring the #Nordiques will return to Quebec within “30 jours” are popular. Ebb and flow.

Now there are multiple contenders to purchase the Coyotes, groups with the financial wherewithal and commitment to purchase the Coyotes and run the team successfully. The Coyotes Glendale options are far from exhausted.

Coyotes Will Be Sold Soon

We can all agree there is a fence dividing the crowd watching the Coyotes fiasco. One side of the fence has people such as myself who believe the team should stay in Glendale long enough to prove NHL hockey is a viable product here. On the other side of the fence are the people that believe the Coyotes should be relocated as soon as possible. That side of the fence now has three camps; the first camp doesn’t care where the team goes, the second camp wants the team in Seattle and the third camp wants the team in Canada. We can further split the Canada camp into Quebec City supporters and (because the French Canadians don’t play well with others in many cases) the people who would like to see the team somewhere in Ontario.

Both sides of the fence and all camps agree that it looks like the Coyotes will be sold soon. Perhaps the new CBA has made the purchase of a team that’s likely to continue to lose some money for a few years more attractive, although most of the contenders have been working the Coyotes deal for YEARS without any financial advantages of the new CBA.

The NHL Is Driving

Something Bettman did say in his Sunday interview was not news to most with even a rudimentary grasp on the Coyotes deal:

Well, I’ve been in regular touch with the mayor and we agreed that when we get a framework lined up then we would come see the city.

As far as I know it was the first time the “new” process was admitted to by someone from the NHL. Before this, the agreement for the NHL sale of the team would have been in place but not “closed” prior to negotiating with Glendale, with no “closing” until an agreement was reached regarding arena.

Gary Bettman (Tom Turk/THW)
Gary Bettman (Tom Turk/THW)

It looks like now the horse will come before the cart, possible only if there has been a decision to eliminate Glendale from the process if no timely agreement with them is possible.

For all we know, Gary already has a deal in place with Jerry Weiers.

It’s interesting to note the City of Glendale signed a big contract on March 4 with Beacon Sports Capital to perform the negotiating duties for them with any prospective buyers. The city, by the way, didn’t acknowledge the existence of a deal with Beacon publicly until March 19th, coincidentally after I submitted a public records request for documentation of Beacon related correspondence. So, despite paying for a $100k process designed to eliminate any city employee from negotiating with the NHL or potential owners, Glendale mayor Jerry Weiers has continued working a deal on his own with the NHL. Is he also talking to some or all potential owners as well? Probably, maybe we’ll find out when the city satisfies another public records request we submitted a week ago.

So, what is Beacon doing to earn their $400 an hour? Got me.

Eleven days after the January 31 deadline, former Jamison partner Anthony LeBlanc spoke with the Arizona Republic about some of the things his new group (including Matt Hulsizer at the time) would be talking about with Glendale and what the role of the NHL would be:

This time around, while I don’t actually know this will be the case, I think the league is going to take a much more involved role in discussions with the city. So I’m kind of seeing what the league’s coming to this time, before we really get ourselves too engaged.

So, the changed procedure vis-à-vis the order in which the transactions would be negotiated had already been decided upon by the NHL and discussed with potential team buyers.

Excellent NHL Move

Gary alluded to the difficulties of the backward “simultaneous closing” process in the aforementioned interview when asked why the Coyotes saga has gone on so long:

Some were with our control, some were beyond our control. Whether or not it was third party intervention, whether or not it was the work stoppage, whether or not it was the deal that went bad for a variety of reasons…

Rest assured there were obstacles, real or perceived. There were things that caused investors to bail. The trite “come and go” wouldn’t work, because there were no outside influences (referendums, Goldwater, initiatives, many more) that had a positive effect on negotiated deals. I’ll eventually offer some well educated guesses on what happened during the period between the signing of the CBA and the January 31 Glendale deadline that caused the Jamison agreement to fail.

One thing this four year experience has taught us is that the process needed to be changed for any chance at success this time. It’s not complicated, the NHL had to take the reins to push this thing forward or the currently dysfunctional combination in Glendale would drive the Coyotes out of the market that’s important to the NHL.

Coyotes staying in Glendale

New Day? New Deal

So, what are possible parameters of a new agreement?

It seems the NHL is sticking to their inflated $170M price for the Coyotes. It appears they may be willing to loosen their financial requirements for operating expenses. They also appear to be still willing to finance a goodly portion of the price of the team. I’m pretty sure under $80M  (or less) “down” would do the trick. I’m guessing this part of the process will be finished shortly. I am fairly certain all preliminary bids have to be submitted by this week.

I am not sure whether the NHL will decide on one “buyer” or select multiple groups to pass on to Glendale. My thinking is they will make the decision on ONE group prior to beginning the “Glendale phase” at which time they will present a united front as owner and league.

Glendale is a mess these days, being in the midst of a budget crisis. The city is faced with police and fire departments insisting on a bigger piece of the pie. While the PD and FD consume two thirds of the city budget, there’s always room for more and their unions wield a LOT of political juice (particularly the fire union). The new council members are still in rookie mode, unsure of each other. It’s likely that the city won’t be willing to pony up much cash to any entity to manage their arena. So, what are the remaining possibilities?

Glendale Options

It’s extremely unlikely that a third party arena manager would be acceptable to the NHL unless they were hand picked by them.

Despite assurances to the contrary from people in city government, I’m not sure the NHL doesn’t have the ability to renew their extremely advantageous arena management terms with Glendale for another seven years or so. I wrote “Who’s In Control Here” about that agreement. If that agreement is indeed active, the NHL has a huge negotiating hammer. They could transfer title of the hockey club and retain control of the existent lease, perhaps. So it’s possible the NHL could manage the arena, be paid for it by Glendale, and rent the facility to the Coyotes.

It’s likely that any deal would now split out capital improvements to from the balance of the management deal (if there is one), pushing ALL responsibility for capital expenditures back to the city.

Shane Doan (Flickr/ Project-Cat)
Shane Doan (Flickr/ Project-Cat)

It’s possible the arena will be sold to either the new owner of the Coyotes or a third party, maybe even AEG since they’ve reestablished their ownership stability. Asking price would probably be in the $150M range. AEG certainly has the chops and contracts to fill the building with more concerts, a better way than the Glendale proposed Jehovah’s Witnesses convention for bringing some funds to the area.

Glendale is inspecting now, looking at the roof and physical plant. The membrane roof, designed to “breathe” for some reason that has to do with the ice, is leaking. So the roof is being inspected, it may have happened already. You know, like an inspection you’d want on a house you were buying.

While Glendale recently restructured their debt, mostly to reduce the serious impending impact of Camelback Ranch, I’m sure they’d still be happy to unload the arena. It seems imperative that the arena would need a reliable anchor tenant, the Coyotes, to make the building financially feasible for a private party.

There are likely to be ticket surcharges thrown to Glendale as deal sweeteners no matter what the end structure of an agreement would be. Parking fees are a wild card. There will certainly be some sort of revenue stream provided for Glendale regardless of the status of the arena.

The fact of the matter remains the people who know the deals in play aren’t talking to many people, so it’s mostly conjecture on my part. Educated conjecture, however. There are plenty of realistic options available to keep the Coyotes in Glendale and, with the new-found competition, plenty of smart people to think in and outside “the box” to make it happen. It might be fun to goof on the people involved, to dismiss them as business people that don’t have some serious skills is foolish. I’ve taken shots at some of them myself, mostly for their purported plans to move the team, but I would never think that they aren’t capable of intelligent, imaginative solutions to thorny problems.

Even problems that have been around for four years. Don’t count the Coyotes out.