WINNIPEG -- The City of Glendale, Ariz., has authorized its city manager to cut a deal worth up to US$25 million with the NHL to cover losses and keep the Phoenix Coyotes playing in the city’s Jobing.com Arena next season, but a sandstorm is immediately on the horizon.
The Goldwater Institute, a conservative taxpayer watchdog group, is ready to get into court in the next few days to mix it up with the city.
Goldwater attorney Carrie Ann Sitren told the Free Press in an email late Wednesday night that could happen as early as Friday.
"We plan to file something soon in the context of our pending public records lawsuit against Glendale," Sitren said.
The group took the city to court in 2009 and gained traction over hidden documents and the city’s lack of openness in the Coyotes affair. It further objects to public money being included in the proposed deal to save the Coyotes.
Sitren said earlier Wednesday that no lawsuit can be filed against Glendale’s plan to spend the $25 million until the money is spent, but now it appears the group has found a way to act more swiftly.
As well, a Globe and Mail report said that the Goldwater Institute believes the authorization of city manager Ed Beasley to make a deal with the NHL violates Arizona law.
The state’s gift law forbids communities from giving excessive subsidies to private business without an obvious benefit to taxpayers.
In separate memorandums of understanding (MOU) both groups vying for the Coyotes purchase, Chicago sports mogul Jerry Reinsdorf and Ice Edge Holdings LLC, have multiple contributions of city cash, be they from parking fees or from the "community facilities district" (CFD) to be established around the arena.
Reinsdorf’s MOU was approved last month; Ice Edge’s was not.
"It certainly sounds like there’s a potential subsidy issue, but taxpayers can’t sue at this point," Sitren said. "Cities are not supposed to take these kinds of risks."
Consent for Beasley was one thing, but more challenges and landmines lay ahead despite the city council’s 7-0 vote on Tuesday.
For starters, Beasley has a short time frame to try to satisfy the NHL’s requirement that not a dollar more of league money goes into backstopping the team’s operational losses.
The city agreed to spend up to $25 million to keep the franchise for the upcoming season if the NHL is stuck with it for 2010-11.
Having bought the team out of bankruptcy last fall, the NHL owned the Coyotes through the 2009-10 season. It demanded the hefty guarantee from the city in case a sale is not completed and the league is left to operate the team again next season - the least-preferred option of NHL commissioner Gary Bettman.
In the meantime, the clock is ticking towards the June 30 date on which the NHL may sell and/or move the money-losing team.
This week, the city must come up with the $25 million to back the agreement with the league.
Past that hurdle, the city is at an awkward juncture with two bidding parties, both of which have been in and out of negotiations in recent weeks.
Glendale has an MOU with Chicago sports mogul Jerry Reinsdorf, but not yet with Ice Edge Holdings LLC, the more eager and more public of the two bidders that appears on the surface to be less flush with cash for the deal.
Ice Edge’s proposed MOU was voted down by council last month and many blamed back-room politicking by the NHL. Ice Edge was asked to return to the process late last week, but called a halt to the reopened discussion on Monday when it couldn’t be assured that Glendale would talk exclusively to Ice Edge.
Exclusivity is a bit of a ruse at this stage of the game, with the city under growing pressure to find a buyer, any buyer, that will keep the team in Arizona, and NHL deputy commissioner Bill Daly confirmed on Tuesday night that both the Reinsdorf and Ice Edge groups remain in the running.
The league needs any and all options if a permanent solution is to be found.
"We’ve invested a lot of money, time and resources into this franchise and we believe it could be successful here," NHL deputy commissioner Bill Daly said. "But the owner - the next owner - has to come forward and buy this club, and that, I understand, is going to take time. Hopefully it gets done this summer."