April 14, 2010
The Glendale City Council approved on Tuesday night a preliminary arena lease agreement put forth by Reinsdorf's ownership group, in the process ending the Ice Edge Holdings bid to purchase the team.
Ice Edge had been popular with Coyotes fans and continued to rally support with an open letter to Glendale taxpayers in recent days. But Reinsdorf and Co. have been in the mix since last summer, and the assumption has been they were the preferred buyers.
The Reinsdorf deal entails creating a special bond district around the arena and Westgate City Center that will take out bonds against property tax revenue. Those bond proceeds will be used to pay the NHL $65 million and set up a reserve fund to deal the team's financial losses.
Reinsdorf also would manage the city-owned arena under the lease deal. Glendale Deputy City Manager Jim Colson said Reinsdorf can sell the team to an owner in another market if the bond district does not perform up to the lease deal and the team is losing money. Glendale would have the chance to find a new Arizona owner before Reinsdorf could sell the team to another market.
There are also parking fees, like the Ice Edge deal has as well; but other facets in the lease agreement have drawn the ire of critics.
Carrie Ann Sitren, a Goldwater [Institute] lawyer, said the Reinsdorf lease places way too much burden on the Glendale taxpayers and not enough on Reinsdorf. Aside from the large amounts of money he is looking to raise from the special district to pay for the team and its operating cost, Sitren said the clause that allows Reinsdorf to sell the team and move it after five years is also a problem.
"He really seems to have insulated himself completely from any financial liability," Sitren said. "It is not a certain prospect for the team to stick around in the long-term. The Ice Edge deal looks more hard-working, as in let's be creative and see how this can work."
More from the Toronto Star. Also, reader Bradford F. reminds us that this must-read Aug. 2009 article from Sarah Fenske of the Phoenix New Times is as valid as ever now, as it details the nepotism and backroom dealings that may have led to Reinsdorf's favored status:
When the Goldwater Institute asked Glendale for information about what incentives the city was offering to keep the team under the Kaites/Reinsdorf plan, the institute was flatly denied access. It sued. Even though Superior Court Judge Edward Burke has ruled that some information should be released — and quickly — the bids and information about the incentives was deemed confidential.
But secrets have a way of being revealed, and it's clear to me from city records that no other prospective buyers enjoyed as much access to City Hall as John Kaites and his cohorts.
The Ice Edge Group continued to point to a 5-year "out clause" in the Reinsdorf bid as a problem area, but reporter Brahm Resnik in Glendale quotes Reinsdorf partner John Kaites as saying it's an "assessment period."
No word if that includes assessing the price of U-Haul rentals and airfare to Winnipeg. But Travis from Five For Howling tells us that the 5-year out clause would only be triggered by huge losses for the franchise ... which is now a playoff contending franchise, mind you.