There is much to admire about the chutzpah of the group of young businessmen who have gathered under the Ice Edge Holdings LLC banner.
Their plan - pipedream, the realists say - to buy the Phoenix Coyotes from the NHL is reminiscent of another audacious play hatched over a few drinks after a beer-league hockey game. Bruce Firestone and his pals did land the Ottawa Senators expansion franchise with no real money, but they crashed and burned.
At this point, it looks as if Anthony LeBlanc, Daryl Jones and the rest of the Ice Edge group will not even get off the runway. Too many problems are coming up, almost all of them because no one in the group appears to have the substantial personal fortune needed to convince a banker or bankers to lend Ice Edge enough money to pull it off.
Here are the obstacles facing these would-be NHL owners:
- The NHL, which paid $140-million (all currency U.S.) for the Coyotes in a U.S. bankruptcy court auction, wants $160-million for the team in order to recoup at least some of the money the league has spent propping it up this season.
- Bankers are balking at financing this venture after they learned financier Jeffrey Vinik paid only about $100-million in cash for the Tampa Bay Lightning. They are asking hard questions about why the Coyotes would be worth 60 per cent more.
- The Ice Edge principals will not discuss their finances in detail, but a banking source says they have only a relatively small amount to put into the proposed deal. As a result, bankers are not queuing up to lend money.
- A bill introduced in the Arizona legislature last month, which would have created a special tax zone around the Coyotes' home arena to subsidize the team, died quickly from a lack of support.
- A Phoenix real-estate development company that was supposed to help Ice Edge get financing pulled out of the venture.
Add it all up and Ice Edge is unlikely to close the sale by the hoped-for date of June 1. That should make the annual board of governors meeting during the June entry draft a lot of fun for NHL commissioner Gary Bettman.
A failed sale will also break Bettman's recent streak of pulling wealthy rabbits out of threadbare hats.
In recent months, he found Vinik, who solved the NHL's troubles in Tampa, and he turned a couple of Florida Panthers minority owners into majority partners to cover the enormous losses by that franchise.
Also, Bettman probably had a hand in getting the Nashville Predators minority partners to step up and agree to cover fellow owner David Freeman's share of a lease guarantee with the city when he ran into a spot of bother with the U.S. Internal Revenue Service. That arrangement still needs to be worked out but, right now, the Predators' landlord, the Metro Sports Authority, seems to have stopped complaining.
The trouble with the Coyotes is finding a billionaire not named Jim Balsillie willing to pay the bills.
The Ice Edge guys talk bravely about using smarter management to get the franchise to a break-even point but that, too, is about as likely as finding a sugar daddy willing to keep the team in the Phoenix area.
This team has not turned anything close to a profit since former owner Steve Ellman made his ill-advised deal with the Phoenix satellite community of Glendale to build an arena many kilometres away from the team's affluent fan base in Scottsdale. (The Ottawa boys built a rink in the boondocks, too, but Canadians will drive a long way to watch an NHL game.)
The Coyotes have turned things around on the ice this season, although that has not translated into box-office gold. Their average announced crowd is up to 11,420, but that is still last in the NHL and those fans are paying heavily discounted ticket prices.
There is an argument that breaking even is in sight because the team is expected to lose $20-million this season, down from more than $60-million last season. But that is because the debt carried by former majority owner Jerry Moyes is gone - and if Ice Edge gets the team, there will be more debt added on.
A banker who has handled many franchise evaluations and sales says the Coyotes, in their present location, are worth $50-million.
That leaves the NHL the choice of taking a big haircut eventually or moving the team - in which case, Bettman will have the fun job explaining just what that lengthy court fight with Balsillie was all about.