The city of Glendale wants to keep its hockey team. At least, that’s what we’re led to believe by the nearly $100 million in bond sales the city was ready to pledge to prospective buyer Matthew Hulsizer to assist his efforts to purchase the Phoenix Coyotes from the NHL.
Negotiations appeared to be going rather well until the Goldwater Institute threw a wrench into the plans of the proposed sale, thus putting the long-term future of the Coyotes in Phoenix in jeopardy. The Goldwater Institute, a watchdog organization, stepped in the middle of negotiations between Hulsizer/the city of Glendale and the NHL when they determined that the city’s plans for financing a large portion of the bid were, in effect, an abuse of taxpayer dollars.
The Goldwater Institute released a statement on their website detailing their motivation for stepping between the parties involved in the sale of the Coyotes:
We recognize that Glendale has dug itself into a financial hole by building the taxpayer-funded Jobing.com arena for a team that has proven financially unsustainable. However, the City must find a way to improve its financial situation within the boundaries of the law. Likewise, we hope the city can find a way to attract great sports teams like the Coyotes without the unconstitutional use of taxpayer funds.
The Gift Clause of the Arizona Constitution prohibits gifts by subsidy, loan or otherwise to private individuals or corporations. Under the current structure of this deal, Glendale will send $100 million to Mr. Hulsizer to assist him in buying the team and will pay him another $97 million to manage the arena for the next five-and-a-half years. Giving public funds to the buyer of a sports franchise raises red flags under the Gift Clause
In response to the Goldwater Institute’s move to stifle Glendale’s ‘unlawful’ dispersal of taxpayers’ money, NHL commissioner Gary Bettman and deputy commissioner Bill Daly made the trek to Arizona on Tuesday in an effort to salvage the proposed deal. As first reported by the Winnipeg Free Press, Bettman and Daly are set to meet with officials from the city of Glendale and possibly with the Goldwater Institute in what is being hailed as a ‘last-ditch’ effort to save the Coyotes.
According to a report from the Phoenix Business Journal, the last minute plan to salvage the Hulsizer/Glendale deal would involve the following:
• Having the National Hockey League discount its estimated $170 million asking price for the team, plus this year’s $25 million to $30 million in losses it wants covered by Glendale or Hulsizer.
• Asking Hulsizer to contribute more than the current estimated $70 million he is putting into the transaction.
• Possibly leveraging $25 million Glendale previously allocated to help cover the Coyotes losses this season.
• Hoping the reduced bonds amount and financial changes lessen legal opposition to the deal from the Goldwater Institute watchdog group.
It’s quite a predicament for a hockey team that just can’t seem to get itself into a position of financial security. The NHL purchased the Coyotes out of bankruptcy for $140 million in 2009 and have suffered losses of $25 million and $45 million, respectively, in the two years it has held ownership.
If this ‘last-ditch’ deal falls through, then it’s possible that a group of Canadian investors (True North Sports and Entertainment) may revive a bid to purchase the team in hopes of moving it to Winnipeg. That too, is a story line that’s becoming more insipid by the day.