GLENDALE, Ariz. – A lease agreement between a prospective owner of the Phoenix Coyotes and the City of Glendale is still in doubt with a vote less than a week away.
The NHL, which has operated the Coyotes the past four seasons, has agreed to sell the franchise to Renaissance Sports&Entertainment, but the deal is contingent upon completing a lease agreement with the city for Jobing.com Arena.
The league has pushed Glendale to make a decision by next week and three councilmembers stepped forward to force a vote Tuesday despite concerns that the city did not have enough time to do due diligence on the deal.
“Now is the time for the City of Glendale to decide what they’re going to do,” said former Arizona Attorney General Grant Woods, who’s representing RSE. “They’ve driven a hard bargain and I give them credit for that, but they can’t screw around anymore. The NHL has given them a hard deadline and if they want to keep the Coyotes here and have the arena managed in a professional and successful way, they need to get on with it. If not, then the decision will be made for them.”
RSE, a group headed by George Gosbee, Anthony LeBlanc and Daryl Jones, reached an agreement to buy the team from the NHL last month.
After weeks of negotiating, RSE and Glendale agreed on enough points to create a draft of the deal, which was posted on the city’s website on Thursday.
Along with the draft, Glendale also posted a release outlining some of its concerns about the deal, including a $15 million management fee to run the arena, a five-year out clause that could allow RSE to move the team without penalty and concerns that the city would bear all the risk if revenue projected by RSE falls short.
“Contrary to what might appear in the papers, I don’t see this as a ‘done deal.’ Far from it,” acting city manager Dick Bowers said in a letter sent to the city council on Tuesday. “Discussions continued over the week and we have come only slightly closer to comfortable than before.”
The city says it has budgeted $6 million to pay for part of the $15 million management fee to be paid to RSE, with the difference made up in shared revenue streams that include arena naming rights, rent, parking, ticket surcharges and other sources. RSE has projected those revenues at $6.7 million, a figure based on the worst year the Coyotes have had in attendance.
Glendale officials have raised concerns that the city bears all the risk if the projected revenue falls short, though RSE would guarantee $1.2 million if the projections fall short, based on a $1.50 surcharge on each ticket.
The city also is concerned about a clause in the deal that would allow RSE terminate the contract if its cumulative losses reach $50 million or after five years, while Glendale cannot opt out if revenue projections fall short.
“I think you’ve got people who are really dedicated to hockey in general and the Phoenix Coyotes in particular,” Woods said. “Their entire game plan here is to make this work here in Arizona. There’s no discussion, no contingency plan, nothing in their plans other than making this a success in Arizona.”
The drawn-out saga to find an owner for the Coyotes will likely come to a head next week, one way or another.
If the city council approves the lease agreement, RSE will have a clear path to complete its purchase of the team and keep it in Arizona. Should the council vote against the lease deal, the NHL has indicated it pursue other options, including a possible move of the franchise to Seattle.
“We’re anticipating, or hoping, the Glendale City Council passes the deal with the Renaissance Group,” NHL Commissioner Gary Bettman said after the league’s Board of Governors meeting on Thursday. “If the council doesn’t approve it … I don’t think the Coyotes will be playing there anymore.”
This ownership tilt-a-whirl started in 2009, when former owner Jerry Moyes took the team into bankruptcy in a failed attempt to sell it to Blackberry founder Jim Balsille, who would move the franchise to Hamilton, Ontario. The NHL bought the team later that year and has operated it ever since.
Numerous potential owners have come to the forefront, only to fall away.
Chicago businessman Matthew Hulsizer appeared to be in line to buy the team, only to be thwarted by conservative watchdog group Goldwater Institute, which warned potential bond buyers to stay away from the Glendale offering because of a looming lawsuit.
Former San Jose Sharks CEO Greg Jamison had a preliminary agreement with the NHL to buy the team last year, but his bid fell through when he was unable to secure the finances and investors he needed in time to meet a deadline with Glendale on a lease-agreement deal.
Now it’s RSE’s turn to see if it can complete the deal.
“I think it would be a huge mistake for Glendale to think that we would have anything but an enormous financial disaster on our hands trying to keep that arena open after losing an anchor tenant and 41 nights,” Woods said. “The reality is, in my opinion, the arena would end up being shut down. I hope that doesn’t happen, but they have to look at the hard realities in the way the real world works, and I think that’s the reality is here.”