PHOENIX – The city of Glendale says a prospective buyer of the Phoenix Coyotes, “in a show of good faith,” has deposited US$25 million in an escrow account.
The figure is equal to the amount of city funds Glendale had deposited, at the NHL’s insistence, to cover potential losses for the coming season while a local buyer was sought.
Glendale, in a news release Friday, said the buyer has asked for confidentiality because negotiations are ongoing, but there have been multiple reports the city has been in talks with Chicago investor Matthew Hulsizer.
The city said that the would-be buyer’s move shows Glendale has met the NHL deadline for finding a qualified purchaser to keep the team in Arizona, a condition for releasing the $25 million the city deposited in escrow.
The NHL bought the team out of bankruptcy a year ago in hopes of finding a buyer to keep the Coyotes playing at Glendale’s Jobing.com Arena.
However, the city may not see its money any time soon, if at all.
A person with knowledge of the situation, who asked not to be identified because of the sensitive nature of the matter, said that “from my understanding, this was purely a goodwill move on behalf of the bidder” and said that the city is not likely to have access to the funds.
Hulsizer emerged recently as the latest major player in this saga, which began in May 2009 when then-owner Jerry Moyes took the Coyotes into bankruptcy intending to sell the franchise to Canadian billionaire Jim Balsillie contingent on moving it to Hamilton whether the league liked it or not. After a mountain of documents were filed and dozens of attorneys became involved, a U.S. Bankruptcy Court judge threw out Balsillie’s bid.
Eventually, the NHL was left as the only bidder, purchasing the team with the intention of finding a buyer to keep the team in Arizona. But if that becomes impossible, the league has said it would move the franchise elsewhere. Winnipeg, the franchise’s home before it moved to Arizona in 1996, has emerged as a leading possibility.
The league has said that the franchise could not continue to operate in Arizona without a new lease agreement with the city of Glendale, which built the arena specifically for the Coyotes.
Ice Edge Holdings held exclusive negotiating rights for a time after a group headed by Chicago sports baron Jerry Reinsdorf announced it was pulling out of contention. But the city was concerned that Ice Edge, a group of four Canadian and U.S. investors, lacked the money for the purchase, relying too much on bank loans for the acquisition.
Enter Hulsizer, who would be the majority owner with Ice Edge apparently holding a minority stake.
Hulsizer is co-founder and chief executive officer of PEAK6 Investments. According to his biography on the PEAK6 website, he is a 1991 Amherst graduate who was a director and risk manager for Swiss Bank from 1994 until he co-founded PEAK6 in 1997. Before that, he was a senior trader with O’Connor&Associates, a proprietary derivatives firm that was acquired by Swiss Bank.
PEAK6 was formed as a trading group and since has created the OptionsHouse online brokerage and WeSeed, a social networking site that “empowers and educates people who have never before engaged with the stock market.”
The Coyotes never have turned a profit since moving to Arizona. The team initially played in downtown Phoenix at what is now known as US Airways Center, home of the NBA’s Suns. While negotiations for building an arena in Scottsdale dragged on, then-Coyotes owner Steve Ellman reached a backdoor deal with Glendale, which spent $180 million to build Jobing.com Arena specifically for the Coyotes in 2003.
During the bankruptcy proceedings, Moyes told the Glendale city council that hockey would never make it in Arizona.
Despite its uncertain ownership status and a low payroll, the NHL-owned Coyotes had a surprisingly successful 2009-10 season, winning 50 games, third-most in the West. The team went from playing in an almost empty arena early to a string of eight sellouts at the end of the season before losing to Detroit in seven games in the first round of the playoffs. The Coyotes opened their training camp in Glendale on Friday.