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Phoenix Coyotes coach Wayne Gretzky's $8-million (U.S.) a year salary is often quoted as part of the team's mismanagement. (Ross D. Franklin)
Phoenix Coyotes coach Wayne Gretzky's $8-million (U.S.) a year salary is often quoted as part of the team's mismanagement. (Ross D. Franklin)

City, Moyes differ on team's viability Add to ...

Alexis Camponi lives in Chilliwack, B.C., but when she wants to watch the Vancouver Canucks play hockey, she doesn't drive to GM Place. She heads to Phoenix.

Camponi and her husband Brian are Phoenix Coyotes season-ticket holders and they attend about 29 games each year. They paid $1,700 (U.S.) for two tickets, or roughly $30 per seat per game. That's about one-third of what comparable seats would cost at GM Place.

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"It's really good hockey and they know how to give you good entertainment down there," said Ms. Camponi. "It's awesome."

Camponi won't be cheering for Jim Balsillie when his lawyers head into an Arizona bankruptcy court today to argue why Balsillie should be able to buy the club for $212.5-million and move it to Hamilton. She and many others hope the club stays put.

"I think their fan base is growing," she said. "If you look at other teams, it took them a while to get settled in their places."

The NHL says it has four potential buyers, including the co-owners of the Toronto Argonauts, that have filed an application seeking league approval to "purchase the Coyotes and - in every case - have indicated an interest in operating the franchise in Phoenix."

But so far there are no details.

Lawyers for Balsillie and the Coyotes current owner Jerry Moyes have argued repeatedly that the team is not viable in Phoenix. They point to poor attendance and a history of financial shortfalls, including a loss of nearly $30-million on operations last season.

But others say the Coyotes can work and that Moyes has been the problem.

The City of Glendale, the Phoenix suburb were the Coyotes play, alleges in court filings that the club has been mismanaged for years, and it backs the NHL's opposition to Balsillie's bid. The city says Balsillie is trying to snatch the club away for a discount and that it would take far less money that his offer to pay off the club's creditors.

Glendale has a lot riding on today's hearing. It kicked in $183-million in 2001 to help build the Jobing.com arena, where the Coyotes play. The arena opened in 2003 and was supposed to be the anchor for a $1-billion retail, office and entertainment complex called Westgate City Center.

The city alleges the developers, Moyes and Steve Ellman, told local officials the complex would generate nearly $800-million in civic taxes and revenue during its first 30 years.

Based on those assurances, the city said it helped pay for the arena construction and charged the Coyotes minimal rent. The city says it let the Coyotes keep revenue from concessions, sponsorships, suite licenses and several other sources.

The city alleges Moyes, who split with Ellman in 2006 and took control of the Coyotes, is now trying to use the courts to break his promise and recover losses caused by his mismanagement. To back up its case, the city filed a report in court by Gerald Sheehan of Beacon Capital Partners near Boston.

Sheehan concluded the Coyotes are overstaffed, overpaid and do a lousy job of marketing. He estimated roughly $15-million in costs could be immediately cut. Those costs included compensation for Wayne Gretzky, who is head coach and a co-owner. Sheehan said the team should chop Gretzky's annual salary to $1.6-million from $8-million and eliminate a roughly 1-per-cent cut in revenue he receives.

He also said the club spends $8.5-million annually on marketing, which is the second highest of any team in the NHL. Despite that spending, the Coyotes generate the lowest level of local revenue in the NHL. Better marketing would not only save money, he said, but could more than double the number of non-hockey events at the arena annually.

The city also contends that the Coyotes' debts are not as high as Moyes alleges. In court filings, Moyes has said the Coyotes owe more than $220-million to creditors, including $104-million worth of loans he made to the club. The city alleges Moyes received an ownership interest in return for his loans and therefore he cannot be considered a creditor. If his debt is removed, the Coyotes could be sold to a local buyer for as little as $138-million to cover creditors.

The solution, the city says, is for Glendale to work with the NHL to find a buyer for the Coyotes and work out terms for a new arena lease. That process was already under way before Moyes put the club into Chapter 11 protection, the city said.

In court filings, Moyes has rejected the city's conclusions and outlined in detail how the loans he made make him a creditor. Former Coyotes CEO Jeff Shumway has also suggested in filings that the city constantly pushed the club to pick up more costs and reneged on various aspects of the lease. And he alleged the city didn't even pay for an extra luxury suite it uses at the arena.



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