Good news for hockey fans in Winnipeg.
Matthew Hulsizer's bid to buy the Phoenix Coyotes from the NHL has stalled because the Chicago businessman wants a big discount on the $165-million (all currency U.S.) the league wants for the team, two sources say. This, the sources add, is despite the fact Hulsizer, 40, has an agreement in principle with the city of Glendale, Ariz., on a multiyear arena lease that could pay him $100-million toward the Coyotes' annual losses through parking charges, taxes and property levies from a community-facilities district created around Jobing.com arena.
Glendale Mayor Elaine Scruggs and city council have until Dec. 31 to find a buyer willing to keep the team in Glendale. If they fail, the NHL, which bought the Coyotes for $140-million in a U.S. Bankruptcy Court auction in October of 2009, can sell the team to someone who wants to move it. Scruggs and other Glendale politicians have said that NHL commissioner Gary Bettman has an offer in hand from True North Sports and Entertainment Ltd., in Winnipeg for at least $165-million.
A third source, an NHL governor, said Hulsizer was told at least a month ago that Bettman will never agree to sell the franchise for less than what the entire Coyotes' debacle has cost the league. The NHL could have as much as $175-million invested now, since it covered the Coyotes' losses through this summer. Glendale agreed to cover up to $25-million of this season's losses beginning Sept. 1 in order to keep the NHL from selling the team sooner than the end of the year.
The NHL governor said many of his peers are not keen on seeing the Coyotes return to Winnipeg, which they left in 1996. But if the alternative is that each team owner has to write a big cheque to cover the NHL's losses on the Coyotes, "we will go to Winnipeg," the governor said.
Glendale recently trumpeted the fact Hulsizer deposited $25-million in an escrow account to show he was serious about buying the Coyotes. But an NHL source said the funds came from an investment bank that plans to help Hulsizer raise enough money to buy the team.
NHL deputy commissioner Bill Daly did not respond to a request for comment Thursday. Glendale spokeswoman Julie Frisoni said city officials will not comment on "any ongoing negotiations." Hulsizer has not made any public comments since his interest in buying the Coyotes became known.
As the clock ticks down on the Coyotes, city officials are feeling the pressure to find a solution. When it comes to the Coyotes, Scruggs told the Arizona Republic newspaper, "Don't ask me what Plan B is. … We don't have a Plan B."
According to a story in the Republic, the city owes $500-million on sports facilities it built to attract professional teams to Glendale, including a $180-million investment in Jobing.com Arena. That is a staggering sum for a city of 250,000 people. Thanks to the recession, entertainment and retail developments that were supposed to spring up to provide the revenue to pay the debt have either failed to materialize or are bringing in a fraction of the projected income.
Sources say the tentative lease deal with Hulsizer (the plan was to finalize the details as he negotiated the sale of the Coyotes with the NHL) was similar to the one Chicago White Sox owner Jerry Reinsdorf made with Glendale before he decided not to proceed. That deal called for bonds and other revenue to come from the community-facilities district around the arena.
Those proceeds were to be used to create an "operating loss reserve account" that would collect $25-million a year with a cap of $100-million and seven years. Parking charges at the arena would also go into the operating-loss account.
However, the Reinsdorf deal said after the fifth year of the agreement, if the operating-loss account does not have enough money to pay for the Coyotes' losses, Glendale is on the hook. The city would have to make up the shortfall itself or allow Reinsdorf to sell the team to someone who could move it.
Given that the entire sports district around Jobing.com Arena raised just $13-million in sales tax in 2009, it does not seem likely a "community-facilities district" would produce enough revenue to cover the city's obligations to the Coyotes' owner.