The fate of the Phoenix Coyotes sale should be resolved next week, as the NHL has set July 2 as a drop-dead date to make a deal and a potential owner pitching a $15-million annual subsidy to run the arena.
The deal, as pitched by IceArizona (the new operating name for the former Renaissance Sports & Entertainment), calls for the city to pay the group $15 million annually for 15 years, but would pay some of the back in the form on revenue sharing on parking, ticket and merchandise sales, and sponsorship deals. In other words: IceArizona wants to see financially stressed Glendale assume even more risk in an arena lease. And IceArizona, to boot, wants an out: if the team loses $50 million in the first five years of the jobing.com Arena lease, they can move the team — but they basically can move it for any reason anyway.
Now, you’re probably thinking: why not just cut a deal for a $9 million annual subsidy, which is a lot closer to the $6 million the city has budgeted? Because IceArizona is working to arrange its own financing to buy the Coyotes from the NHL for $170 million and needs the annual guarantee on the book as a solid cash input. We’re already seeing some financial red flags in the proceedings — we have a new corporate entity buying the team in order to bring in a broader base of investors — and without the city guarantee, the potential owners would presumably need to put up more of their own money to finance the purchase. There are other convoluted provisions proposed by IceArizona, including leasing the parking lots from the city and then running parking concessions on their own.
It’s not a great deal for Glendale; in fact, it’s rather one-sided and leaves the NHL as the only entity to actually benefit from a lease because it guarantees the $170 million purchase price for the franchise. And the NHL is certainly putting the pressure on Glendale: the proposal was only officially released yesterday, and the NHL wants to see a decision on the deal by July 2. Ostensibly, it’s to ensure a 2013-2014 schedule can be released, but there’s also some desire to push Glendale into a quick decision on a bad proposal. If the council doesn’t approve it so that this transaction can close, I don’t think the Coyotes will be playing there anymore,” NHL Commissioner Gary Bettman said during a press conference yesterday.
Of course, if Glendale rejects the plan — and right now no one is really sure what will happen — the NHL does have a backup plan: inquiries have been made about an NHL team playing in Seattle’s Key Arena.
Image via flickr.com.
