SBD/March 7, 2011/Franchises

City Of Glendale Expected To File Suit Against Goldwater Institute Over Coyotes

NHL could move to relocate Coyotes to Winnipeg if bonds are not sold soon
The City of Glendale is "expected to file suit Monday against the Goldwater Institute and specific members of the public watchdog's board," according to sources cited by Scott Burnside of ESPN.com. The lawsuit is "expected to allege the Goldwater Institute was guilty of a legal form of interference when the institute reached out to potential buyers of municipal bonds, the sale of which are crucial to the City of Glendale's new lease agreement" with prospective Coyotes buyer Matthew Hulsizer, and "warned them off purchasing the bonds." The lease agreement "calls for the city to pay $100 million to Hulsizer toward the purchase price of the team," and the municipal bonds are "needed to generate that revenue." It is "believed the NHL's patience with the situation in Glendale has reached the breaking point and that if the municipal bonds are not sold within a matter of days, or unless there is a new strategy revealed for getting the lease agreement done, that the league will move to relocate" the Coyotes to Winnipeg. A source familiar with the planned lawsuit against the Goldwater Institute said that the city "will name not just the institute itself but individual directors and will ask for 'hundreds of millions' of dollars in damages." Goldwater BOD member Randy Kendrick, the wife of D'Backs Managing General Partner Ken Kendrick, is "among those expected to be named specifically in the suit" (ESPN.com, 3/5). In Phoenix, Rebekah Sanders cites a source as saying that Glendale is "expected to sue for significant damages," potentially "as much as $500 million, the amount of economic impact Glendale estimates it would lose if the NHL team left for Canada" (ARIZONA REPUBLIC, 3/7).

THE BONDS THAT TIE: NHL Deputy Commissioner Bill Daly Friday said that the league is "actively engaged in helping the City of Glendale sell or place the $116 million municipal bonds being floated to fund $100 million of Hulsizer's purchase price." Daly said in an e-mail, "I think it is fair to say that we are attempting to assist in the completion of the transaction in any way we can" (WINNIPEG FREE PRESS, 3/5). In Phoenix, Mike Sunnucks reported Glendale, Hulsizer and the NHL are "reworking the $100 million bond deal." Sources familiar with the Coyotes deal said that "perhaps the bond amount could be reduced so Hulsizer gets" $70M instead of $100M. That "could make the bonds more financially doable or up to legal scrutiny" (BIZJOURNALS.com, 3/5). Meanwhile, Hulsizer has indicated that the Coyotes and Jobing.com Arena "have lost $40 million this season," though team officials said that a "typical end-of-season bounce should lessen that." Team officials also "point to positive signs in ticket sales," but "as it stands, the losses have pushed up Hulsizer's purchase price to" $210M. The ARIZONA REPUBLIC's Sanders reported the NHL "tacked on team and arena losses to the $140 million purchase price, which is what the league paid to take the team out of bankruptcy in late 2009." The Coyotes "lost about $30 million last season." Hulsizer said that he is "willing to pay those losses if the team sale goes through." Hulsizer: "I'm inheriting a terrible problem, but I really like hockey. And I feel like we can make a few tweaks, and we can make a pretty good go of it" (ARIZONA REPUBLIC, 3/6).

END IN SIGHT? ESPN.com's Pierre LeBrun noted the "next 7-10 days may possibly decide the fate" of the Coyotes. Either the bonds "will finally be sold and the sale could finally close to keep the team in Phoenix, or the bonds won't be sold and the league will be forced to make a difficult decision on whether to relocate the team to Winnipeg for the 2011-12 season." There is "still no official deadline for this to be resolved, but the belief is the process is already living on borrowed time." It "doesn't seem this can drag on past the end of March/early April" (ESPN.com, 3/5). In Phoenix, Paola Boivin wrote, "This mess has grown so complicated that it's hard to know whom to blame anymore. The Goldwater Institute surely deserves some of it. Their threat of legal action is what has stalled the sale in the first place. ... The City of Glendale deserves to be scolded, too, for lacking the finesse and foresight to get this deal done" (ARIZONA REPUBLIC, 3/6). In Toronto, Damien Cox wrote, "This was and is a bad deal, and it's never going to be anything but a bad deal. Glendale needs to run, not walk, from Hulsizer and the NHL" (THESTAR.com, 3/4).
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