If Glendale city council intends to bow to the NHL's demand to guarantee upwards of $25-million (all currency U.S.) of its operating losses next season for the Phoenix Coyotes, there will be strenuous opposition from at least one council member.
"This is absolutely crazy," council member Phil Lieberman said Sunday. "I will do everything I can to point that out on Tuesday."
Lieberman also accused city staff of misleading the council members about the issues surrounding the Coyotes. He also wonders how a city of 250,000 people that is facing a $14.7-million deficit in its annual budget can afford to pay the cost of operating a professional sports team.
"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?"
While there have been reports Glendale officials have agreed to a new memorandum of understanding on an arena lease with Ice Edge Holdings LLC, a would-be buyer of the Coyotes, Lieberman said there has been no official notice to council the deal will be brought to them for discussion and a vote at their meeting on Tuesday night. He said if the deal is to be handled by council, it has to be notified 24 hours in advance, which is 7 p.m. Monday night.
In the meantime, there is a request on the meeting agenda for council to grant city manager Ed Beasley the authority to "secure the financial mechanisms that are reasonably necessary to satisfy the NHL's requirements in order for the Phoenix Coyotes to remain in Glendale during the 2010-11 season."
The agenda also states the NHL wants "certain immediate financial commitments and assurances" from the city.
The league is playing hardball because the city had to go back to the Ice Edge group it rejected last month after lease negotiations with Chicago White Sox owner Jerry Reinsdorf, who demanded huge subsidies from the city, recently fell apart.
If the NHL, which bought the Coyotes in a bankruptcy court auction last October, cannot sell the team, it will legally be in a position on June 30 to sell it to someone who wants to move the team. Canadian billionaire David Thomson is waiting to see if he will be able to buy the Coyotes and bring them back to Winnipeg, which lost them to Phoenix in 1996.
Since there are many questions about the ability of the Ice Edge group of investors to finance the purchase, the NHL is also demanding that Glendale offer financial guarantees to them as well.
Arizona laws prohibit communities from granting excessive subsidies to private businesses. When they are made, they have to make a clear benefit to the taxpayers.
The agenda for Tuesday's meeting says the money for the financial guarantees the NHL wants will come from the creation of a "community facilities district" (CFD) around Jobing.com Arena and from the arena's operating revenue. Landowners in the special district will have to pay levies and other taxes to provide the revenue the city needs.
But, Lieberman said, there has been no clear explanation from city staff about how the district will work. He also does not think the district will be able to raise enough money to cover the guarantee the NHL wants and pointed out that state laws prohibit the city from covering any shortfalls.
"We don't know what [the district]will contribute," he said. "We don't even know what will make up the district.
"We have never discussed it yet. If CFDs are that good, why haven't we done this in the past? Everything is speculation and the whole thing is sheer stupidity."