Rock and a hard place

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(WINNIPEG FREE PRESS)

GLENDALE -- For the second time in 15 years, the fate of the NHL franchise that began in Winnipeg and then moved to Phoenix will depend on a vote by a civic body facing a proverbial gun to its head.

Tonight in the Phoenix suburb of Glendale, Arizona, seven city council members face a difficult choice between spending untold millions to hold onto their money-losing NHL franchise for another year or allowing it to move away.

The National Hockey League has demanded the City of Glendale, pop. 253,000, cover the Phoenix Coyotes' losses in 2010-2011, a figure that may easily exceed $20 million, in the event the league is unable to sell the club to Ice Edge Holdings or anyone else willing to keep the team in Arizona.

"Talks have broken off," Ice Edge chief operating office Daryl Jones told the Free Press late Monday night.

"We were adamant about needing exclusivity in these negotiations and they haven't provided it. I'm not totally surprised. We've been dealing with this for a while. We thought we had agreed to certain things and expected them in writing. That didn't materialize."

To anyone in Winnipeg who endured the "Save The Jets" saga in 1995-96, Glendale's choice sounds painfully familiar. But unlike Winnipeg, which merely faced the loss of its team, Glendale politicians are afraid to lose an expensive investment.

Seven years ago, Glendale's politicians gambled on a $180-million deal to finance Jobing.com Arena, a building where the Coyotes serve as anchor tenant.

Though Mayor Elaine Scruggs declined to comment through a spokesman Monday, the prospect the venue could sit empty may force council to approve a plan to hand Glendale city manager Ed Beasley the authority to do whatever is "reasonably necessary" to satisfy the NHL's demands.

"I think they have us over a barrel," Glendale Coun. Phil Lieberman said in an interview. "We're in a terrible position."

The six-paragraph motion that comes before Glendale council includes no financial figures or detailed analysis. As a result, Lieberman said there's no way he can vote for it, even though he believes a mall adjacent to the arena will suffer if the Coyotes don't remain in town to play 41 home games a year.

"I cannot even think about the team leaving. I'm worried the trickle-down effects would be disastrous," he said. "But I have no qualms about being the lone vote against this resolution.

"One of the primary goals of this council was not to put any more money into the Coyotes. If we are going to do this for the NHL, why didn't we do this for (former owner) Jerry Moyes?" Moyes declared bankruptcy, which initiated the current uncertainty about the team's future.

Glendale, which faces a $14.7-million budget deficit in 2010-11, already spends at least $60 million of its $930-million budget to service debt, Lieberman said.

The positive vote will not guarantee the Coyotes remain in Phoenix, as the NHL must still complete a deal to sell the club, presumably to Ice Edge. But a vote in favour of the NHL demands will likely provoke further legal action from the Goldwater Institute, a taxpayers' watchdog organization that has already taken Glendale to court to learn more about various negotiations to keep the Coyotes in Arizona.

As it's illegal for municipal governments to subsidize private businesses, spending $20 million to keep the Coyotes in town for a year is unacceptable, said Goldwater attorney Carrie Ann Sitren.

"It's unconstitutional to throw any more money at this. It's time for the city to cut its losses," she said, noting council will have to live with the prospect Jobing.com Arena might become a white elephant. "That's certainly the fear, but all the more lesson that cities shouldn't get into business of sports arenas and relying on one tenant."

Glendale councillors who originally hoped the arena would be busy 150 nights a year were misguided, said University of Michigan sport management professor Mark Rosentraub, an expert on the relationship between governments and pro sports franchises.

The Phoenix metropolitan area is not large enough to host four major-league sports franchises on top of the presence of popular university sports, Rosentraub said. "When Glendale made the decision to (build the arena), it was at the apex of the market and their exuberance overestimated the demand for sports," he said.

But he believes Glendale councillors will accept the NHL's demands. "They're in a situation where they're going to lose money or lose a lot of money," he said.

In Winnipeg, there are no subsidies on the table for a returning NHL franchise. A spokesman for Premier Greg Selinger shrugged off reports the province would help bring the Coyotes back to Manitoba, and Winnipeg Mayor Sam Katz dismissed the notion the city will provide any help.

"Anybody interested in bringing a team here should not be thinking about any kind of incentives in any way, shape or form," Katz said late last week.

-- with files from Gary Lawless

bartley.kives@freepress.mb.ca

Republished from the Winnipeg Free Press print edition May 11, 2010 A4