Glendale, Ice Edge, True North And Winnipeg: Trying To Make Sense Of The Coyotes' Ownership Mess

Today is a big day for the future of the Phoenix Coyotes and their fans.

At 7 PM local time, the Glendale City Council will meet and decide whether or not they are willing to cover operating losses the NHL could incur next season should they fail to sell the team to a new owner.  If the council fails to do so, well... SBN's Five For Howling has more on that touchy subject.

Today is do or die day...Glendale City Council meeting is tonight at 7 PM...they will be voting on approving agreements to satisfy the NHL about covering losses if they can't find a new owner by next year.  If they don't approve these agreements, it's quite possible that the Coyotes won't be here.  All the potential that we, as fans, finally saw from the hard work of this team, of GMDM, of Dave Tippett and the rest of the coaches...all of that will go away because a bunch of elected officials can't get their heads out of their asses.  There's only one way to show them how foolish they will be.  Show up tonight, in your Coyotes gear, and raise bloody hell.  Make it clear to each and every member of that council that if they don't make this work, they can find a new job as soon as they are up for reelection.

(Here's the PDF of the agenda for tonight's Glendale City Council meeting. The related portion is listed as number 14 under 'Consent Resolultions.')

But there are a lot of questions here. As reported on Monday, Ice Edge Holdings, the group favored by Coyotes fans to purchase the club, backed out of negotiations with the City on terms that they want exclusive negotiations. Essentially, they want a rival ownership bid from Chicago Bulls owner Jerry Reinsdorf to be tossed aside for good.

If IEH winds up ending lease negotiations with the City, which owns Arena, the NHL could still keep the team in town for next season. That's where tonight's Council meeting comes in to play. If the Council votes to satisfy the NHL regarding the losses for next season, the Coyotes will likely stay in town for at least another year.

But if the City doesn't agree, that's when all hell will break loose. The obvious next question, then, is should we expect the Glendale Council to agree to these terms?

Well, like everything else, it's very complicated. Those operating losses for next season could reach $20 to 25 million, according to various reports, and it's hard to imagine the City could simply foot the bill in that case. According to The Arizona Republic, Glendale would create a special taxing district called a community-facilites district, which would tax landowners in the area of the arena to pay for the operating losses the team would incur.

But, as also reported by the Republic, that might not be possible.

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.

Froelich was skeptical of the public purpose. 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.

Here's how Five For Howling understands the situation:

IEH is also not asking Glendale to cover its losses. This is the big difference between IEH and Reinsdorf’s bid. Reinsdorf would’ve basically taken money right from the city. IEH wants the city to create a CFD (a funding district) that would raise extra revenue for the team through small taxes to local business, fees for parking at Westgate, etc. A set amount of money is guaranteed to IEH (it’s something like $7 million/year) with the excess going to Glendale. However, if the CFD does not raise this money, then yes, Glendale could be on the hook for some of it. However, if the team becomes profitable (and having sellout crowds night-in and night-out will go a long way towards that), then it shouldn’t be an issue.

Those questions -- if the CFD doesn't raise the money, for example -- seem to be the sticking point here. If the Council is to vote yes at their Tuesday night meeting, they'll be agreeing to pay operating losses on an NHL team without having this taxing district set up and without knowing how large those losses will be.

These are the concerns of councilman Phil Lieberman, who told David Shoalts of the Toronto Globe & Mail the following:

"This is absolutely crazy," council member Phil Lieberman said Sunday. "I will do everything I can to point that out on Tuesday."

"We're broke," Lieberman said. "We're $14.7-million in the hole, we're laying people off, we had to up water bills by 12 bucks a month. How can we raise so much money for a bunch of athletes?"

If you ask Coyotes fans about Lieberman, though, you'll get a different response. According to them, Lieberman knows quite well how the City is able to use the CFD's to pay for any potential Coyotes' operating losses.

Back to FfH:

There's one giant gaping hole in that logic though. You see Phil Lieberman was the only member of the City Council that voted to use these districts twice. That's right. He voted for Jerry Reinsdorf's proposal that had one in it AND for Ice Edge's original proposal as well. What's so complicated about that now buddy? What you're basically saying is that you don't get how this works, but you went ahead and voted for it last time anyhow? Do you somehow have less information than you did the last time you voted for it? I really just don't understand how that's even possible. 

Bob from Western Hockey Exchange does a great job of pointing out the nuts and bolts of what's going on here so I suggest you take a read. But basically only one thing has changed. The Community Funding District would have to be created no matter what and if the City can't get on the ball with Ice Edge then the CFD just pays the NHL while it plays here in Glendale for another season. I don't understand the difference. But then I never understood why one group using the mechanism was alright (Reinsdorf) and then it wasn't alright for another group to use the exact same thing. (Ice Edge)

Regardless, though, there's a lot of doubt on their part, but on the flip side of the coin, if they vote them down and the Coyotes wind up leaving town, they're stuck paying for a brand new arena that has no permanent tenants. Glendale put up $180 million dollars to build the arena.

If the Council says no to the NHL, it will be very bad news for Coyotes fans. The NHL will not cover Coyotes expenses for next season and if the City won't cover them and a new owner won't cover them, the League will sell the team to a group that will relocate the team. Now that Glendale and Ice Edge have broken off talks, it comes down to the Glendale Council tonight.

And in case the vote is no, the NHL reportedly has a contingency plan. From CBC:

The NHL schedule makers have created an itinerary for the 2010-2011 season that includes a team based out of Winnipeg.

The schedule is a contingency plan as the future of the Phoenix Coyotes remains undecided, according to numerous media sources, including CBC Sports national reporter Teddy Katz.

True North Sports and Entertainment is the group that would move the team to Winnipeg. They own MTS Centre in downtown Winnipeg, a 15,000-capacity building that is currently home to the Manitoba Moose of the AHL, which True North also owns. It would take a relatively quick deal between the NHL and True North to put together a sale of the team in time for a Winnipeg team -- let's call them the Jets -- to take the ice for the 2010-2011 season.

But the NHL is clearly planning for the possibility, True North is planning for the possibility, and unfortunately for Coyotes fans, they might have to start planning for the possibility of losing their team if the Glendale Council doesn't come through for them tonight.

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