The city council in Glendale, Ariz., plans to review two arena-lease proposals from prospective buyers of the Phoenix Coyotes.
One is from the group of Canadian and U.S. businessmen known as Ice Edge Holdings LLC, and the other is from Chicago White Sox owner Jerry Reinsdorf, who was convinced to re-enter the bidding for the NHL team after Ice Edge hit some financing difficulties.
While council is not expected to vote on either proposal tomorrow, a decision is expected soon because council is drawing up its 2010-11 budget.
Ice Edge and Reinsdorf are vying to buy the Coyotes from the NHL, which is asking $160-million (all currency U.S.) for the team. The league bought the Coyotes at a U.S. Bankruptcy Court auction last October for $140-million. The NHL has also spent at least $20-million covering the team's losses since then.
However, there is no guarantee either lease proposal will be approved by the city. Both Ice Edge and Reinsdorf, who demanded annual subsidies of $23-million from Glendale last year before dropping his bid for the team, are thought to be looking for indirect subsidies at the very least.
A source said Reinsdorf's latest lease proposal for Jobing.com Arena contains an escape clause - probably tied to revenue and ticket sales - that would allow the team to leave. Ice Edge has not asked for a similar clause.
Under the current lease, which the NHL negotiated when it bought the team out of bankruptcy, the league can move the team if it has not sold the Coyotes by June 30.
Daryl Jones, one of the principals in Ice Edge, declined to comment yesterday, as did NHL deputy commissioner Bill Daly.
Glendale politicians have to be careful about handing out subsidies in an arena lease. An Arizona Supreme Court ruling in January held that communities have to demonstrate specific public benefits for any tax breaks or subsidies given to developers and other businesses. The decision also put strict limits on using economic development and job creation as reasons for granting any subsidies.
In addition, a conservative watchdog group known as the Goldwater Institute is keeping a close eye on Glendale's plans for the Coyotes. The group warned it will take the city to court if it hands over any money to the Coyotes.
Even if Glendale wants to subsidize whoever owns the Coyotes, the city of 250,000 people simply may not have the money. The 2010-11 budget is expected to have a deficit of $16.3-million, up $2-million from earlier forecasts. The city has already announced plans to cut jobs as part of a plan to reduce the deficit.Report Typo/Error