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Phoenix Coyotes fan Rob Jennings, of Gilbert, Ariz., holds up a sign in support of the Coyotes staying in Arizona, prior to Game 4. (Ross D. Franklin/Associated Press)
Phoenix Coyotes fan Rob Jennings, of Gilbert, Ariz., holds up a sign in support of the Coyotes staying in Arizona, prior to Game 4. (Ross D. Franklin/Associated Press)

Councillor: Glendale flirting with financial disaster over Coyotes Add to ...

If Glendale city council follows through on its plans to cough up yet another $25-million (all currency U.S.) to help finance the Phoenix Coyotes next season, it will be flirting with financial disaster, according to a dissident councillor.

Phil Lieberman, who opposes the subsidy for the NHL, which owns the Coyotes, says the city of 250,000 simply cannot afford it. Glendale has already paid the NHL $50-million over the last two years to cover some of the financially crippled team’s losses.

Lieberman is also skeptical about NHL commissioner Gary Bettman’s statements on Thursday that there is a third party interested in buying the Coyotes and keeping them in Glendale. The only parties known to be interested at this point are two groups led by former San Jose Sharks president Greg Jamison and local Republican political fixer John Kaites. Glendale council is supposed to get an in-camera update on the negotiations Tuesday night but no progress is expected.

If the NHL cannot sell the team to someone willing to keep it in Arizona, the Coyotes will probably be moved this summer, with Quebec City as one of the candidates. However, Glendale council wants to head off a move by paying the NHL another $25-million. But there is a twist to the latest payment.

This time, the $25-million the NHL gets will be called a management fee for running Jobing.com Arena. However, Lieberman said it still amounts to subsidizing the Coyotes’ losses because it is an excessive payment compared to what other managers would charge to operate the arena.

Lieberman noted the city is already carrying a total debt of $1.13-billion “and I’m not going to vote for millions and millions we would hand away on top of that.” But the councillor noted Glendale Mayor Elaine Scruggs wants to give the $25-million to the NHL and has three votes she can count on among the seven-member council so the payment will likely be made if Bettman decides to keep the team in Glendale for the 2012-13 season if he cannot sell it.

Glendale is already in some financial difficulty because of the $50-million it’s paid out to the NHL. Moody’s Investors Service recently downgraded Glendale’s bond rating on $680-million of it total debt and blamed it on the NHL payments. This will make it more expensive for the city if it follows through on plans to refinance its debt.

Also, the city has to contend with a large drop in its general fund from $38.8-million in 2010 to $11.7-million in 2011. This fund pays for a large number of city services and Lieberman said by law, given the size of the city’s debt, the fund cannot legally remain that low.

Bettman brought up the alleged third party during his weekly radio show, which was broadcast from Ottawa, the site of Sunday’s NHL all-star game. He would not identify the group. Lieberman and NHL sources were skeptical about the prospects of another buyer surfacing this late in the game.

Lieberman said it’s his personal assumption “the NHL has not accepted the two [prospective buyers]I know of, Jamison or Kaites, because otherwise they would have been after us to lease the arena to one of them. They have not made any attempt to do that, so the only obvious conclusion is [Jamison and Kaites]do not qualify.”

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