Let’s start with one simple fact before tackling Thursday’s incendiary Forbes report on the sale of the Phoenix Coyotes, which indicated that the prospective ownership group headed by George Gosbee and Anthony LeBlanc will be receiving some of its financing from the NHL.
These are not the New York Yankees that Renaissance Sports and Entertainment is attempting to buy. These are not even the Nashville Predators. The Phoenix Coyotes are a struggling franchise that lost upwards of $30 million in their worst season and still lost between $10 million and $15 million a year ago, when they advanced to the Western Conference Final.
Locals know that there are mitigating factors in that poor showing, including a lack of stable ownership, poor management and coaching by the previous regime, poor drafts choices (Blake Wheeler, Peter Mueller, Kyle Turris) by the previous regime and a dearth of top-end skill (or the cash to buy it) since the club moved west to Glendale in 2003.
Many believe that if some of those problems are solved – as they have been in other emerging markets – the Coyotes could become a viable franchise in the nation’s sixth-largest city.
Persistent suitor Darin Pastor has repeatedly called the Coyotes an “undervalued asset” due to past issues. Some of those issues have been solved.
The management need has already been addressed with the re-signing of GM Don Maloney. The Coyotes have a capable COO in Mike Nealy, who has worked wonders on a shoestring budget with a skeleton staff. And if Maloney can bring back coach Dave Tippett, the franchise will have several key pieces locked up for the long term.
With a growing population and increasing corporate sponsorship opportunities, maybe the other issues can be solved, too.
But put yourself in a prospective buyer’s shoes, look at all the issues the Coyotes currently have (location, payroll, one of the league’s lower annual attendance figures, low suite sales) and then ask yourself why you were surprised to hear that the NHL is financing a large chunk of the deal. Did you expect owners to be leapfrogging each other for a right to cough up $80 million-$100 million up front, plus the cash required to cover losses and operating expenses?
If so, have you had any success with your business approach? While the Forbes figures may not be entirely accurate – multiple sources indicated that they are a reflection of how the deal looked a couple of months ago rather than how it looks at present – they are not far off.
But this should not come as a shock to anyone who has followed this story closely. It’s long been expected that the league would finance a good portion of this deal and give the new owners time to establish some momentum because, again, this franchise has a troubled past.
All NHL deputy commissioner Bill Daly would say Thursday about the Forbes report was this: "We don't have any comment ... not going to be discussing the precise terms of our deal publicly."
But the key players in this deal, including the City of Glendale and the NHL’s Board of Governors, all had a good sense of the structure of this deal before it became public, multiple sources have confirmed.
Those same sources said that, despite rumors to the contrary, this deal is similar to the ones Greg Jamison and Matthew Hulsizer were pursuing – with the main exceptions being that in the Hulsizer deal, the city was going to sell bonds to help finance the deal, while Jamison had a 20-year lease agreement on Jobing.com Arena.
It should also be noted that since the Goldwater Institute fiasco with the Hulsizer deal, every subsequent deal has been structured in a way to avoid a legal challenge by that watchdog group.
So if you’re thinking that this Forbes revelation will sabotage talks with Glendale or the NHL’s Board of Governors, just know that you were the last to enter the loop. The key players already knew, and they are still moving forward.
“The issue now is the same as it was yesterday,” Glendale council member Gary Sherwood said. “It’s bridging the gap on the arena management fee. I don’t know if we can get there, but we’re working on it.”
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