Last week, before Game 1 of the NHL Final, commissioner Gary Bettman declared of the Arizona Coyotes that “the club is not going anywhere.” Tonight, during a special session that should begin right around the first intermission of Game 4, the Glendale City Council will vote on whether to kill its controversial lease deal with the Coyotes and leave the franchise homeless.
The Coyotes saga has been a long and rocky one, and two years ago, the council approved by a single vote a last-ditch deal to keep the team in town. It was a deal born of desperation—moving trucks were literally standing by, as the Coyotes would reportedly have been quickly sold and relocated to Seattle.
It was also not a favorable deal for Glendale. The city expects to lose nearly $17 million over the first two years once the official numbers come in. It’s those losses which have the city council looking to escape the onerous 15-year agreement, or—more likely—to renegotiate a new one.
It’s complicated (this TSN story from last month is a good, if involved, primer), but Glendale’s objection appears to hinge on taxpayer money not going to fund the arena’s management as stipulated. Instead, Glendale claims those public funds are being used to pay down the ownership group’s debt.
But nearly two years after council approved the controversial pact, city officials claim the money that cash-strapped Glendale is paying to the team’s owner IceArizona is instead going directly to Fortress Investment Group, the New York-based asset manager which financed holding company IceArizona’s purchase of the Coyotes.
City officials haven’t given details, and legally can’t because it’s thus far only been discussed in closed session. But the Arizona Republic notes the agenda for the city council meeting cites a state statute “that allows government entities to end a contract within three years of being signed if a person involved in negotiating the contract for the city is, in effect, an employee or agent of the other party to the contract.”
It’s not clear how that statute applies here, but it’s another sign that the complex contract, which sees the city pay $15 million annually to IceArizona to manage Gila River Arena, has as many moving parts as it does potential conflicts of interest. But no one can dispute that Glendale agreed to this contract. Now it’s got buyers’ remorse and is furiously scanning the small print to look for a way out.
The NHL and the Coyotes, unsurprisingly, dispute that Glendale has the legal standing to void the contract. In a statement issued by the team, its outside counsel is quoted as saying:
“This is a blatant attempt to renege on a valid contract that was negotiated fairly and in good faith and in compliance with all laws and procedures. In the event the City Council initiates any action to revoke, repeal or otherwise rescind the agreement, the Coyotes will immediately take all actions available to them under the law against the City of Glendale.”
That means a big old lawsuit if Glendale votes to escape the deal, so whatever happens tonight, the Coyotes’ future will be in limbo for some time to come. IceArizona could opt to renegotiate the contract (and presumably make it harder to break), but that would likely mean less money flowing from the city—and less money available for ownership to pay down its debt.
It’s hard to read anything about the Coyotes’ struggles without getting the impression that it might simply not be possible to make a profit on hockey in Arizona. The backers of a Las Vegas team are eagerly waiting for the NHL to come to that same conclusion.