Greg Jamison says he hopes to close the purchase of the Phoenix Coyotes in January, and while the usual doubters point out this is simply the latest in a long line of such predictions, they are giving him full marks for creativity in his hunt for investors.
This is due to Jamison's novel but failed attempt to find investors through the Immigrant Investor Program of the U.S. Citizenship and Immigration Services. Two sources familiar with his investment plans said Jamison, the former president of the NHL's San Jose Sharks, tried to raise at least some of the $170-million (all currency U.S.) purchase price by using what is also known as the EB-5 program.
EB-5 is the official name of the visa, a conditional green card, granted by the U.S. government to wealthy immigrants in exchange for an investment of at least $1-million ($500,000 in rural or high-unemployment areas) in an American business.
Jamison said Thursday he took a look at the program, which essentially trades green cards for cash, but said it will not be part of his financing package in the purchase of the team from the NHL. He declined again to reveal any of his investors or details of his financing plan, but said he hopes to close the sale in January.
"I've been at this 18 months, I've looked at everything," Jamison said. "I'm aware of the [EB-5] program and what it can do. We did discuss it, but we're not using it as part of our program, no."
One source said Jamison spent a lot of time and travel trying to attract foreign investors through the program, particularly in the Middle East. Another source said Jamison is not using the program because he failed to find any takers for the same reason he is having trouble getting conventional investors – the Coyotes are a poor investment.
A third source said while Jamison never discussed using the program with his only known investors, the Ice Edge group of Canadian and U.S. businessmen, at least one member of the group checked out the EB-5 program on his own to see if it would help land a green card.
A Los Angeles lawyer who specializes in setting up immigrant EB-5 investors in business deals said the program is popular enough that people can be selective about their $1-million investment rather than write it off as the cost of a U.S. visa. The program is popular with Chinese immigrants and was expanded after the 2008 recession when companies like Marriott International and other hotel developers found it difficult to get conventional financing for hotel projects and turned to the program.
"People in China are sophisticated investors," said Catherine DeBono Holmes, a partner in the law firm Jeffer Mangels Butler & Mitchell. "They're not going to invest in any old project, plus there's a lot of projects available. This is a pretty darn good program.
"If you've got the money, you can invest in a project where you have a decent chance to get your money back in five years. If you invest in a hotel being built by a big company in Manhattan, you have a good chance [of a return]."
The chances of a profit on the Coyotes are remote. Former owner Jerry Moyes, who is being pursued in civil court by the NHL, said he lost more than $300-million on the team before he placed it in bankruptcy in 2009. Since buying the Coyotes through the U.S. Bankruptcy Court in August of 2009 for $140-million, the NHL has dropped more than $200-million on the team despite $50-million in subsidies from the suburban city of Glendale.
Glendale's financial situation is so bleak, it forced Jamison to renegotiate a 20-year lease for Jobing.com Arena that they agreed to last June. He recently agreed to a revised deal that reduced the payment to him for managing the arena to $11-million in the first year from $17-million. The total payments over the first five years of the lease dropped to $71-million from $94-million, which is why one source said investors are not attracted to the sale.
The problem for Jamison is the NHL is not interested in dropping its $170-million price, due to the money it has sunk into the franchise, despite the fact the St. Louis Blues sold for a reported $130-million last spring. The Blues were also shaky financially but take in substantially more revenue than the Coyotes, who ranked last or second last among the NHL's 30 teams in attendance since the NHL bought them. Also, the Blues sale included its American Hockey League farm team and the Peabody Opera House.
"The [Coyotes] price has been consistent all the way through," Jamison said. "We don't anticipate a change. There's also different [reported] prices St. Louis really went for. I've heard the same price you have. I've heard other prices as well."
NHL deputy commissioner Bill Daly, the league's point man on the sale, could not be reached for comment.
Jamison said there are a lot of documents to work through with both the league and his potential investors on the sale, including the revised lease. He said he has not signed the new lease but has agreed to it.
One of the three sources familiar with Jamison's plans is not as optimistic as Jamison the deal will close by the end of January. But the source believes Jamison does have substantial investors interested, although the pace of negotiations will have to increase if the sale is to be completed by then.