Despite the lack of a finalized sale of the Phoenix Coyotes, the NHL will not begin exploring relocation options following its Dec. 31 deadline.
The league entered an agreement last spring with the City of Glendale that saw the Phoenix suburb put up $25 million to cover losses while the league operated the team during the 2010-11 season.
Included in the deal was a deadline of Dec. 31 for a sale to a party willing to keep the team in Glendale.
The absence of such a deal would allow the league to begin pursuing sales to groups including those for relocation.
But on Wednesday, NHL deputy commissioner Bill Daly said the league would not exercise that option.
"Not at this point. We will still be committed to finalizing the Coyotes transaction," Daly said in an email to the Free Press.
It will be interesting to see how long the league is willing to wait. Glendale has made large financial promises and must now follow through in a timely fashion.
The NHL still has the prospect of selling the Coyotes to True North Sports and Entertainment should Glendale prove unable to meet its burden.
Glendale agreed earlier this month to a new lease agreement with Chicago businessman Matthew Hulsizer that would see the city pay Hulsizer $197 million over six years to keep the Coyotes in Glendale. Included in that arrangement is an upfront payment of $100 million to help Hulsizer finance the purchase of the team for $170 million from the NHL.
The league bought the Coyotes out of bankruptcy for $140 million in the summer of 2009 and has lost in the neighbourhood of $30 million while operating the team.
At the heart of Glendale's plan is the issue of a $125-million municipal bond to raise the cash they must give Hulsizer in order for him to buy the Coyotes.
Without the $100 million, Hulsizer either can't or won't buy the franchise.
It seems like a slam dunk and likely will come to fruition.
But Glendale deputy city manager Art Lynch raised the subject of a tipsy U.S. bond market during his presentation to city council on Dec. 14, suggesting the city wait out the market and enter at a more opportune moment.
That moment, however, doesn't appear to be coming any time soon.
The U.S. municipal bond market is on the precipice of a meltdown, according to CBS news magazine 60 Minutes.
Wall Street analyst Meredith Whitney told 60 Minutes she expects to see major upheaval in the muni bond market.
"There's not a doubt in my mind that you will see a spate of municipal bond defaults," said Whitney. "You could see 50 sizable defaults. Fifty to 100 sizeable defaults. More. This will amount to hundreds of billions of dollars' worth of defaults."
Lynch told Glendale council they would have to offer a high interest rate in order to make its bond attractive and that number could be climbing every day if the market remains unstable.
Bloomberg is predicting the next quarter to be the worst for municipal bonds since 1994. Not the best time to be entering such a market, but time is a luxury Glendale doesn't have.
They need to come up with their $100 million in the next month at the outside.
Glendale has been squeezed every which way on this deal.
First by the NHL, then by Matthew Hulsizer and now it's likely by a turbulent U.S. market.
One has to wonder how much juice they have left to give.