The city of Glendale, Ariz., has decided not to take any legal action against the Goldwater Institute for now, according to a source, but Matthew Hulsizer says other NHL teams are beckoning and he cannot wait much longer to complete his purchase of the Phoenix Coyotes.
A potential legal war between the suburban Phoenix community and the Goldwater Institute, a public watchdog group, is delaying the sale of municipal bonds that would back Hulsizer's purchase of the team from the NHL. The Chicago businessman is to get $100-million (all currency U.S.) from the bonds to put toward the $170-million purchase of the Coyotes from the NHL.
The bonds were supposed to go on sale two weeks ago but Goldwater lawyers issued warnings that the deal between Glendale and Hulsizer violates the state of Arizona's gift laws that prohibit excessive public subsidies to private enterprises. While the NHL has not set a deadline for the sale to Hulsizer before it considers selling the team to a group that plans to move it to Winnipeg, the Chicago businessman said Monday time is running out.
"We have been approached by other teams, yes," Hulsizer said, adding that he is not pursuing that interest "right now because we love Arizona."
However, even though the NHL has not put a squeeze on the sale by imposing a deadline, Hulsizer said he needs to have the municipal bonds on the market soon.
Some NHL governors said in an informal survey that the NHL could wait as long as its entry draft on June 24 and 25 before deciding to leave Phoenix in order to facilitate a move for next season. But Hulsizer is not prepared to wait that long.
"I don't think I have the patience to last months," he said. "Weeks, yes, months no."
There was much speculation in NHL circles in the past few days about how much longer the NHL is prepared to wait. Some insiders feel the league has already decided to sell to the Winnipeg group and others think it could happen in the next week.
NHL deputy commissioner Bill Daly acknowledged there is a date where a decision will be needed in order to draw up a schedule for next season with Winnipeg in it and to handle other logistics. But, he added, "It's not one we have established, or quite frankly, that we are particularly focused on right now."
There were hopes more talks between Glendale and Goldwater would produce a solution but Goldwater president and chief executive officer Darcy Olsen blasted the city's handling of the Coyotes sale. She said the institute has not filed its own lawsuit because Glendale officials have not complied with court orders to release information about the Coyotes deal.
"Let me be clear: The Goldwater Institute will not stop this investigation," Olsen said in a statement released Monday night. "Glendale has been deliberately recalcitrant in providing public records."
Olsen said Goldwater will only take legal action once it has all the relevant records. But she added that the institute believes Glendale may already own the parking rights it plans to sell to Hulsizer.
"If so, the city essentially is 'selling' parking revenue rights to itself, which would be an obvious sham and a clear violation of the gift clause [in Arizona law]" Olsen said.
Glendale officials did not respond to a request for comment.
An ESPN.com report on the weekend said Glendale was planning to sue Goldwater for more than $500-million, which is what city officials are said to believe would be the cost to the city if the Coyotes move to Winnipeg. Olsen said, "We have not been served [by Glendale]but neither have we received word that the city plans to hold off."
Some close to the situation feel that if Glendale proceeds with legal action against Goldwater it will set off a legal battle that would doom any hope of keeping the Coyotes in Arizona. "If they file, bring in the moving vans," one source said.
However, Daly said a lawsuit filed by Glendale will have no effect on the future of the team, although he declined to say why.
Under the proposed deal, Hulsizer will get $100-million from the sale of the bonds. He will also cover this season's estimated $40-million in losses by the Coyotes and Jobing.com Arena.
In exchange, Glendale will get back the $25-million it put up with the NHL to cover this season's losses and the right to sell the parking around the arena. The worth of the parking is subject to much debate, with the Goldwater Institute accusing one of Glendale's consulting firms of inflating the parking revenue in order to help the bond sale.
Those on the other side of the deal argue the parking is worth between $60-million and $80-million (although estimates from Glendale's consultants are higher) over the 30 years of the agreement and there are other benefits like naming and usage rights that will bring the total to more than $100-million once Glendale adds the $25-million it recovered from the NHL.
There are signs the NHL is looking at Winnipeg. A report by CBC.ca said the league commissioned studies of the Winnipeg market that estimated a team in the MTS Centre, which seats 15,015 people, would bring in around $70-million in a season, which is about double what the Coyotes earn at Jobing.com Arena. However, the report said this would be the lowest revenue of the six current Canadian teams.
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