January 26, 2011
(UPDATE: As mentioned below, the NHL calls the report inaccurate.)
Sportsnet Radio FAN 590's Bob McCown reported Wednesday afternoon that the $100M public bond issue which was a requirement to keep the Coyotes in Phoenix has "failed." The city of Glendale was seeking to sell $100 million in bonds, transfer the money to prospective owner Matthew Hulsizer and then recoup the money through parking fees.
McCown said on his radio program that the NHL denied the report, saying, "They have independent news that nothing has fallen through."
Globe & Mail columnist David Shoalts, who has been on the Coyotes beat throughout their financial and ownership dilemmas, was a guest on FAN 590 and said the following on the latest news and the potential for the Coyotes to be sold to interests in Winnipeg:
"It's a little premature to be jumping up and down and starting to sell tickets yet. Everybody knew the bond issue was going to be a problem because the municipal bond market right now are not the hottest thing. [It's] a pretty lukewarm bond market, I think. So they've got a few more things to try there. I always thought that this whole deal where they were going to hand out $100 million up front was pretty dodgy anyway.
"The key to all this is Gary Bettman and the NHL. They had this deadline of Dec. 31 to get a deal done or else they'd turn around and sell to the Winnipeg guys, and that came and went. And it came and went because they still believe that they can get some sort of deal done in Glendale. As long as they believe that, they won't enforce the deadline. The only time they do enforce the deadline is when they want to put Glendale in a vice, and that could be coming."
Meanwhile, for the Coyotes, there could be more trouble on the horizon for the bond issue.
From the Phoenix Business Journal on Wednesday, news that the most vocal local opponent to any Coyotes deal could be prompted to act:
The libertarian Goldwater has said the $197 million deal violates the Arizona Constitution's gift clause, which prohibits governments from giving money to businesses.
Goldwater has yet to file a suit, which leaves bond markets more open to the Glendale financing, the source said.
In case the Hulsizer deal melts down, the NHL has a backup plan with an ownership group in Canada. That could result in the Coyotes moving back to Winnipeg. The Winnipeg Jets moved to Phoenix in 1996 becoming the Coyotes.
"Winnipeg is gunning to get this moved out of Arizona and up there quickly. They have hired consultants who are behind the scenes trying to quietly promote a suit by the Goldwater Institute," the source said.
Goldwater attorney Carrie Ann Sitren said her group is being encouraged by local critics of the Glendale-Hulsizer-Coyotes deal but she was not aware of Canadian influence. "We get inquiries from the Canadian media, but we aren't really hearing from Canadian citizens. We do, however, receive e-mails and phone calls from Glendale residents every day asking us to investigate and file a lawsuit," Sitren said.
When the Glendale City Council and the NHL both gave Hulsizer their stamp of approval by mid-December, we were told the sale would happen in a few weeks.
As the All-Star break dawns, we're still waiting.
We're told now that the only thing holding up the sale is the city of Glendale, which must sell at least $100 million in bonds and transfer the money to Hulsizer, who will use the money plus a maximum $97 million of his own to purchase the team from the NHL.
An NHL source told FOXSportsArizona.com that the city could be waiting for the bond rate to improve before making the move.
From Hulsizer's perspective, there is no need to rush. He's getting a $100 million gift from the city. If the city wants a better bond rate, fine. The team feels the same. As long as the sale happens, who cares when? But what about the NHL?
It's a horrible time to try and sell a $100m municipal bond so the NHL is just going to sit around and keep this as quiet as they can while Glendale twiddles their thumbs and waits for the bond market to improve (who knows when that will be). If they can keep the Winnipegers and Quebecs from getting wound up again they should be fine (from a PR standpoint).
But -- here's the problem (these are rough numbers off the top of my head):
-- NHL bought the team for $150m -- only way Bettman could get away with that is if he promised the owners they wouldn't lose a dollar
-- Coyotes operate at about a $25m loss per year -- as of last summer that means to not lose any money on the deal Bettman had to find a buyer to pay $175m
-- No sane person is going to buy that franchise for $175m in this economy (perfect example, much more promising franchise in Tampa sold a few months ago for about $75m)
-- Bettman bends Glendale over the table and says 'make this deal valuable for Mr. Hulsizer' (head bobbles as he talks)
-- Glendale can't afford losing the team, says fine
-- Lots of details involved, but basically Glendale can't pull it off, massive debt, horrible bond market, etc.
-- Now we go to next summer, Coyotes lost another $25m...that "$175m" number just went to "$200m", on and on and on.
The saga continues. Meanwhile, the Coyotes are doing what they can to get fans in the seats. Don't you dare call it a Snuggie.