Gary Bettman got his way. Now — for once and for all — we get to find out if the fiercest little commissioner in sports is right about hockey in the desert.
In the wee hours of Wednesday morning Glendale City Council rolled over and said “uncle.”
The small Arizona municipality of just 250,000 west of Phoenix approved a lease agreement with Renaissance Sports & Entertainment that was the final piece of the puzzle in the NHL’s sale of the Phoenix Coyotes — now rebranded the Arizona Coyotes — to a group of Canadian businessmen who almost certainly will be the last in a long line of wealthy men kicking around the idea that hockey can work there.
Odds are it won’t and they’ll be the ones to take it down the highway in 2018 when their controversial “out” clause can be activated, leaving Glendale with an older arena, a bigger debt and more proof that the Coyotes were doomed there from the start.
The deal makes a credit card agreement with a furniture store seem palatable in comparison, but the gist is this: The city has agreed to guarantee RSE $225 million over the next 15 years — $15 million a year — to run its sink hole, er, Jobing.com Arena.
That is about $8.5 million more than the city wanted to spend, so the deal calls for the difference to be made up by revenues from a range of sources, including a cut of naming rights fees; surcharges on event tickets and parking revenues. The catch is that if it doesn’t work, the team can leave after five years and $50 million in losses.
So if you think the city council is thrilled at the prospect of the Coyotes staying on the terms agreed to — given some estimate that the effort to keep them since Jerry Moyes walked away in bankruptcy proceedings in 2009 has cost the cash-strapped city nearly $200 million — think again.
“I don’t have any other options, and I don’t think anyone in this room does,” said Glendale Mayor Jerry Weiers. “This is like stepping out in front of a truck and trusting that someone will pull you back.”
Weiers was one of three opposing votes on the seven-member council; but four voted in favour of the lease agreement and it passed. A last-minute deal between RSE and leading arena management firm Global Spectrum — touted as bringing new synergies to the property — as well as some financial assurances should the team leave, tipped the vote.
Since RSE — which will own the team through a more broadly held subsidiary called IceArizona Hockey — had already negotiated a highly-leveraged $170 million purchase agreement for the team with the NHL (the league itself is lending the buyers $85 million, for example), the new deal is expected to be rubber-stamped by the league next month.
It’s very likely not the end of the league’s saga in Phoenix, in fact the “out” clause seems to guarantee more drama, although for the rest of the hockey world it at least provides a long intermission.
From a distance, that seems like a certainty that the team will eventually be gone anyway given that it’s believed the Coyotes have run a deficit of as much as $40 million in the last few years.
The one unknown since the Coyotes saga began has been how badly the franchise has been damaged by the chronic uncertainty. Bettman has always maintained that in the right circumstance — and despite financial losses that stretched back to the Coyotes arrival in 1996 — that Phoenix could be a viable hockey market.
“There is a brand-new building in Phoenix,” Bettman said on his radio show four years ago when the Coyotes were put into bankruptcy by former owner Jerry Moyes. “There are people that are supportive of the franchise and want to keep it there. The team hasn’t been particularly well run. It’s fixable.
“When you have fans invest in a franchise emotionally and financially, you just don’t give up on them when times get tough. If the standard was, ‘When times get tough,’ we would have been out of Chicago, for Pete’s sakes. We would have been out of Ottawa, Buffalo and Pittsburgh, and they were all situations that were fixable.”
The next few years will be the test if Bettman is right or not.
At stake is the financial health of Glendale, which never stopped doubling down on a losing bet on sports and entertainment as an engine for economic growth.
The Coyotes arena was just one venture.
The city is also saddled with debt to pay for a massive spring training complex built for the Chicago White Sox and Los Angeles Dodgers called Camelback Ranch that was supposed to benefit from pre-crash real estate speculation and has fallen on hard times since the 2008 recession.
Meeting those debts has forced the city to draw its general fund from $76 million to almost zero; dip into money earmarked for essential infrastructure and to force the city to make tough choices regarding city services, including closing libraries and laying off municipal staff.
Bettman and the NHL have extracted $50 million from the city as a fee for running the arena the past two years. This year he upped the ante by dropping any pretense about working with Glendale for the common good.
The council met last night with a gun to its head: either come to an agreement with the NHL’s preferred buyer or the team would be moving as of this morning; with Seattle the likely destination.
And that $20 million Glendale still owes the league for this past season?
If the deal fell through Glendale would have been required to pay it in full. Instead they can pay it back over time.
You get the elected officials you deserve, it goes without saying, and Glendale ultimately has itself to blame as taxes are increased and services cut.
The most disturbing scene among many during the meeting was when councillor Sam Chavira invited Anthony LeBlanc — frontman for RSE — back to the floor for some questions.
A firefighter by trade, one might have expected Chavira, considered the swing vote on council, to grill LeBlanc.
Instead he buttered up a businessman who describes himself as a “professional salesman.”
Chavira even went as far as to reference the 19 firefighters who died in Arizona this week fighting brush fires elsewhere in the state, saying, “If you fail, we fail, correct? … (but) I see the same spirit (in you) when we run into a home and building to save a life. I know looking at you Mr. LeBlanc that you have the same intensity to fix this city.”
It was a preposterous thing to say.
That it was said explains a lot about this deal and the City of Glendale and how it got into this mess.
That the Coyotes have another lease on life says a lot about Gary Bettman and his determination to be proven right.
In a very short five years the proof will be definitive. Either the Coyotes will have somehow, miraculously, weaned themselves off life support, or they will be gone to greener pastures, leaving Glendale a smoking wreck that no hero will be able to rescue.