Coyotes’ ownership saga enters stretch run
GLENDALE Ariz. — Skepticism is the best defense against Coyotes ownership news. When a franchise is in limbo for as long as it takes entire student bodies to complete their Bachelor of Arts degrees, it’s hard to believe any report that indicates this sorry saga is drawing to a close.
Against that backdrop of raised and dashed hopes, we tell you that there are multiple indicators that Phoenix’s NHL franchise will soon know its fate – for better or for worse.
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We’re not giving you a concrete date because there is none yet, but multiple sources within the league, the organization and associated with the various, prospective ownership groups have indicated that the league is taking a hands-on approach with the current negotiations to expedite the process. That makes sense since it is clear the league will not run this franchise for another season.
Here’s what we know. The group led by George Gosbee and Anthony LeBlanc has already submitted its purchase bid to the NHL, and Darin Pastor’s group submitted the paperwork for its proposal to the league on Friday. Greg Jamison’s group is still working on a proposal, but it is expected that they will submit it by the middle of next week, likely under pressure of an imposed NHL deadline.
That makes at least three ownership groups with their chips on the table – and there could be more if sources close to the situation are correct that longtime suitor Matthew Hulsizer is still in the running, as well as Arizona attorney John Kaites and Bulls and White Sox Chair Jerry Reinsdorf. Hulsizer has not had any contact with the Coyotes recently, and both of those camps have been largely silent, but because they have been a part of this process for so long, they might not need to be in discussion with anyone other than the NHL.
Some reports have suggested that this entire process could be over by the time the NHL playoffs begin on April 30. That is unlikely unless NHL Commissioner Gary Bettman forces everyone’s hand into such a narrow window. Any ownership group must still hammer out a lease agreement with the City of Glendale – a process for which there has been little if any progress to date.
What is likely to happen soon is that the NHL will choose an exclusive buyer, then approach Glendale to negotiate the lease agreement. The Glendale City Council hired Beacon Sports Capital in late March to solicit bids from management companies to run the arena, as well as to handle negotiations with any prospective owners. But if the city believes it will be have the option of negotiating with multiple buyers, those thoughts could be be misguided, according to sources who say that Glendale has largely been kept in the dark on the sales process until the league chooses its buyer.
When that happens, and indicators are that will come quickly given the pace of bids being submitted, sources say the league will approach the city and essentially say: “Here’s our group and here’s what we need in a lease agreement to make it work. Can you do it under these parameters?”
If the city can’t, sources say Bettman will be open to the idea of relocating the franchise at that point; but if the city agrees, those same sources say Bettman will expect a short negotiating period – not one that extends into the summer.
What that lease agreement will look like is anyone’s guess. Glendale Vice Mayor Yvonne Knaack said previously that the annual fee to the city could “be anywhere from $6 (million) to $10 million on operating, and then maybe another $9 million on debt.” Council member Gary Sherwood has publicly stated the figure could be $10 million to $12 million.
But the amount and the length of the lease are not the only concerns for potential buyers. There are nuances within the agreement — revenue streams such as capital expenses, ticket taxes and parking that must still be negotiated. The city could use the framework of the deal it had previously with Jamison, or it could start from scratch with the chosen group.
Of course, the biggest question on everyone’s mind is will the Coyotes stay in Arizona? Hockey fans in Quebec are hoping not and tend to dismiss any report that doesn’t say what they want to hear. Phoenix fans are hoping the team stays, and also tend to dismiss reports that suggest it is not. Both sentiments are understandable, but they’re also immaterial. Nobody knows at this point.
It should be clear to everyone that nobody wants hockey to stay in Phoenix more than Bettman. He has had opportunities to uproot the team before but fought tooth and nail to keep it put. There are practical reasons for that, notably the fact that the Phoenix area is one of the nation’s top dozen television markets. That matters when it comes time to negotiate a national broadcast deal – a vital source of revenue for a league long too reliant on ticket sales.
But there are other reasons that keeping the team in Phoenix seems more workable than in the past. The new collective bargaining agreement has removed some of the limits to revenue sharing that existed in the past, meaning the Coyotes are in line for a greater share of the league pie.
The NHL’s industry growth fund (reportedly $60 million), which is not fully in place but is expected to be soon, would help teams that have struggled at the gate or are in emerging markets. Unlike past years, clubs that do not meet desired revenue or other benchmarks would be not be penalized with the loss of some shared revenue. Nor would markets that in the past were deemed too big to qualify for some aid.
Some of the same benefits could apply if the team were relocated to another city, but there are costs associated with relocation that any ownership group would have to absorb, at least in part. As sources within two of the ownership groups noted, that is a significant deterrent to relocation.
Increased revenue would not only help offset some of the Coyotes’ losses in past years –- sources within the organization say those are between $10 million and $15 million, not the larger numbers that have been reported –- it might also help the Coyotes in areas such as advertising. Imagine what an additional $1 million per season could do for the Coyotes’ marketing efforts.
But will all of this be enough to keep the Coyotes in Arizona? There are too many factors at play to say with any certainty. But at long, last, it appears we are approaching the witching hour for this long rudderless franchise.
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