NHL Asks City to Cover Coyotes’ Financial Losses
PHOENIX - The city of Glendale is being asked by the National Hockey League to guarantee an unspecified amount of money to cover the Phoenix Coyotes' operating losses next season if a final deal with new owners is not reached by then.
The City Council is scheduled to vote on the agreement Tuesday.
The vote signals increased pressure the league has put on Glendale, where the Coyotes play, as the deadline nears to decide whether the team will stay or go.
The NHL purchased the Coyotes out of U.S. Bankruptcy Court last fall and committed to spend this season searching for an owner to keep the team in the Phoenix area.
The NHL was expected to cover about $20 million in team losses this season.
City Attorney Craig Tindall said the amount that Glendale would guarantee is unknown.
The city might not have to fund any losses if a new owner is secured, he said.
"Depending on how things go, it may be nothing," he said. "It all depends on how negotiations go over the next few days."
Glendale officials have said that they would not cover the team's losses with the city's general budget, which provides services to residents.
Rather, Glendale expects to pay the operating losses through taxes and fees in the city's sports and entertainment district.
That includes setting up a taxing district, called a community-facilities district, to charge landowners near the arena and Westgate City Center.
The council would vote on the guarantee before the team's ownership is clear and before any such district is in place.
Two Valley bond experts questioned whether such a taxing district could legally funnel revenues to a sports team.
"In my opinion, an operating loss would not be an eligible use," said Carter Froelich, a Phoenix principal with Development Planning and Financing Group, which works in this area.
Such taxing districts typically pay for infrastructure such as sewers or streets.
Glendale spokeswoman Julie Frisoni said the city has done its homework.
"We would not have suggested anything we felt was not doable," she said.
Glendale also must finalize a deal with an ownership group that would lease the city-owned Jobing.com Arena, the Coyotes' home.
The city has been in talks with two possible groups, one led by Chicago sports mogul Jerry Reinsdorf, and the other group, Ice Edge Holdings, made up of American and Canadian investors.
The talks have been a roller-coaster, with the council rejecting Ice Edge's proposal in April, only to ask Ice Edge back this week.
Ice Edge and city officials now say a preliminary lease deal could be released in a few days.
Grant Woods, who represents Ice Edge, said he expected the council would vote on it in the coming week or two.
There are mixed reports on whether Reinsdorf is still in the picture.
Woods said Glendale officials should sign an agreement on Monday to enter into exclusive talks with Ice Edge.
Reinsdorf's group is not commenting.