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NHL Deputy Commissioner Bill Daly addresses the Glendale City council meeting in Glendale, Ariz., Tuesday, May, 11, 2010. The City council is voting on a financing mechanism to cover operating loses of the Phoenix Coyotes until an owner can be found. (Rob Schumacher/AP)
NHL Deputy Commissioner Bill Daly addresses the Glendale City council meeting in Glendale, Ariz., Tuesday, May, 11, 2010. The City council is voting on a financing mechanism to cover operating loses of the Phoenix Coyotes until an owner can be found. (Rob Schumacher/AP)

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Winnipeg's hopes for NHL team stay alive Add to ...

Winnipeg's hopes to get back in the NHL jumped again, as the league issued an ultimatum to the city of Glendale - find a buyer for the Phoenix Coyotes by Dec. 31 or we will sell them to someone we have waiting to buy and move the team.

The threat is included in the agreement between the NHL and the suburban Phoenix city in which the city agreed to pay up to $25-million (all currency U.S.) of the Coyotes' operating losses for the 2010-11 season. That agreement was completed on Friday and a copy was obtained by The Globe and Mail.

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There was no mention of the prospective buyer in the agreement but the only buyers the NHL has admitted speaking to in connection with the Coyotes, aside from Jerry Reinsdorf and the Ice Edge group who both want to keep the Coyotes in Arizona, are Canadian billionaire David Thomson and Mark Chipman, the CEO of True North Sports and Entertainment, who own and operate the MTS Centre in Winnipeg.

Neither Thomson nor Chipman has been willing to comment on buying the Coyotes and moving them back to their original NHL home. Scott Brown, a spokesman for True North, declined to comment on Saturday.

NHL deputy commissioner Bill Daly, who negotiated the Glendale agreement with city manager Ed Beasley, did not respond to a request for comment.

However, a source familiar with the Glendale negotiations said the offer referred to in the agreement is from Thomson and Chipman.

PDF: Arena Management and Operations

The agreement,, says the NHL has "a bona-fide offer from a viable purchaser who would relocate the hockey team to another market for the 2010-11 season and contemplates that the owners [the NHL]would break even on their investment in the team through the end of the 2009-10 NHL season as well as the NHL potentially receiving a relocation fee."

Last October, the NHL bought the Coyotes in a U.S. Bankruptcy Court auction for $140-million. The league also admitted to spending $20-million to cover the team's losses for 2009-10 plus $10-million in the legal fight against BlackBerry billionaire Jim Balsillie's attempt to buy the Coyotes and move them to Hamilton.

Even though Glendale officials managed to keep the team for at least one more season by agreeing to cover up to $25-million of next season's losses, the clock is now ticking on a move to Winnipeg, which lost the team to Phoenix in 1996.

The agreement says the city has only until Dec. 31 to find a buyer willing to keep the team at Jobing.com Arena in Glendale. After that, the NHL says it can sell the team as it chooses. The only way Glendale can keep the team after Dec. 31 is if it finds a local buyer and the NHL has "not yet entered into an agreement to sell the team in a non-Glendale sale and the city identifies a prospective bona fide purchaser."

Glendale's obligations to pay the Coyotes' losses begin July 1 and run until the team plays its last game of the 2010-11 season. The NHL also forced the city to sign an escrow agreement in which it will place $25-million in an escrow account with the Bank of America Merrill Lynch in Chicago or post a letter of credit so the league can begin drawing on it when the agreement begins.

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According to the agreement, the NHL can also sell the team to a local buyer before Dec. 31 but it also has the "absolute right to approve or disapprove any prospective purchases of the team."

However, the overall impression of the agreement is that the responsibility of finding a local buyer now rests with the city. At this point, it is not known if there are any substantial negotiations between Glendale officials and either Reinsdorf or Ice Edge. Before Glendale city council voted to give Beasley the power to commit to an agreement with the NHL, talks with both parties broke off.

Glendale hopes to cover its $25-million commitment by creating a special taxing district around Jobing.com Arena and through parking revenue. However, the agreement says if these efforts do not produce the necessary funds the city is responsible to make up the difference.

This could cause problems with the Goldwater Institute, a conservative watchdog group that has already said it plans to take the city to court over the deal once it is placed in writing. Arizona laws prohibit excessive public subsidies to private business and Goldwater lawyers have already said they believe it is illegal for a city council to give an employee the power to sign a binding agreement without a vote of approval.

The agreement recognizes the threat of the Goldwater Institute. One clause states that if any part of the deal is deemed illegal, it can be severed with the rest of the deal staying intact. Or the league and the city can negotiate a modification to the deal.

Follow on Twitter: @dshoalts

 

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