Reinsdorf deal for Coyotes on verge of collapse

A little more than one year to the day after the Phoenix Coyotes wound up in bankruptcy court, creating a story that overshadowed the Stanley Cup playoffs, they are on the verge of embarrassing the NHL once again.

The sale of the financially crippled franchise to Jerry Reinsdorf has hit enough difficulty that the suburban city of Glendale, which holds the arena lease for the Coyotes, has gone back, cap in hand, to the bidders it flatly rejected last month.

Several reports say Glendale officials have asked the group of Canadian and American businessmen known as Ice Edge Holdings LLC to revisit negotiations for the team. Several weeks ago, Glendale city council voted 6-0 to accept a bid from Reinsdorf, the owner of the Chicago White Sox and Chicago Bulls, and at the same time rejected an offer from Ice Edge by a 5-1 margin.

However, Reinsdorf's bid calls for massive subsidies for the team, which was taken into bankruptcy court on May 5, 2009, by former owner Jerry Moyes, who said he lost more than $350-million (all currency U.S.) on the Coyotes.

Few people familiar with Arizona state law, which forbids excessive public subsidies for private businesses, gave Reinsdorf's bid any chance of succeeding. The bid was conditional on squeezing almost $47-million a year in bonds and other revenue out of a "community facilities district" around the Jobing.com Arena. The money was to cover operating losses and part of the purchase price of the team (the NHL is asking for $160-million).

The vote by city council was only a tentative acceptance and a formal deal had to be worked out between Glendale, Reinsdorf and the NHL. But talks went poorly enough that apparently Ice Edge was approached last week by Glendale officials. While sources say NHL deputy commissioner Bill Daly insists Reinsdorf is officially still in the running, the deal is hanging by a thread.

Daly did not respond to a request for comment.

However, the chances that the Coyotes will move appear to be at least as good as the chances they will be sold to Ice Edge. The NHL can legally sell the team to someone who can move them on June 30 if a local buyer cannot be found.

A report on ESPN.com said the NHL has a backup deal in place to sell the Coyotes to Canadian billionaire David Thomson if the sale to Reinsdorf or Ice Edge falls through. Thomson would then move the team back to Winnipeg, the city which lost what was then called the Winnipeg Jets to Phoenix in 1996.

While Ice Edge has pledged not to move the team, many questions surround their ability to finance and support a team. The group has said it can have the financing in place as soon as there is a deal with Glendale, but indications are the group has as little as $20-million as a downpayment and is looking to buy and run the team mostly on borrowed money.