The Goldwater Institute's announcement that it will back up its talk with a lawsuit once again places the onus on its opponents in the battle over the Phoenix Coyotes.
The NHL, Matthew Hulsizer and the City of Glendale all wanted to know what Goldwater planned to do and now the strategy has been laid bare. What happens next, however, is up to the financial and, perhaps, legal communities.
Glendale still needs to sell $116 million in municipal bonds to enable Hulsizer to close the deal. Should that occur, Goldwater will file its suit and leave it up to an Arizona judge to determine its merit.
Goldwater opposes Glendale's plan to front Hulsizer $100 million for the purchase of the NHL-owned Coyotes, claiming it contravenes Arizona's constitutional gift clause.
"Goldwater has determined the agreement violates two prohibitions of the Arizona constitution, which requires that no Arizona government shall ever give or loan its credit in aid of, or make any donation or grant, by subsidy or otherwise, to any individual, association, or corporation."
North Dakota litigator William Harrie says the Arizona taxpayer watchdog has a solid case.
"The battle will lie at the injunction stage and be won at that stage," said Harrie. "Based upon what I've seen, Goldwater has a very good chance of being granted an injunction."
Harrie explained that Goldwater will need to meet standard criteria to have a judge grant them an injunction and block the sale of the Coyotes to Hulsizer.
"An injunction should only be granted when the moving party's legal remedies are inadequate and the injunction is necessary to prevent great and irreparable harm. There are certain factors or elements required to get an injunction. Typically, the four factors are: threat of irreparable harm, balance of hardships between the parties, probability of success on the merits and public interest," said Harrie. "(Goldwater) doesn't have to win all four but a judge will weigh them out and make a decision."
Harrie outlined the four factors as they might pertain to Goldwater's case.
"Irreparable harm to the taxpayers in this case is what Goldwater will argue -- if the sale goes through -- will the taxpayers of Glendale, who Goldwater says they are acting for, be harmed? Balance of hardships speaks to the relief of harm an injunction will offer to one party weighed against the harm an injunction could cause to the other party," explained Harrie. "The third factor is the probability that the movant will succeed on the merits. If they can convince a judge they've got a solid case and the eventuality of a win at trial is strong, they can meet the burden. Finally, public interest. The judge will determine if granting an injunction is in the public's interest. In this case, Goldwater will want to show they are saving the taxpayers' money."
The NHL has been working to put together investors for the bond issue but Wellington West founder and CEO Charlie Spriring doesn't like the look of the investment.
"This makes the bond way less attractive. If they force this issue on to the market -- the smart money will short the bond. They won't buy it -- they'll sell it short. It's a very bad blow to the bond," said Spiring. "(NHL commissioner) Gary Bettman has lots of rich friends and he can pull some favours to get this deal done, but he'll look like crap in the end. The market will prevail and this bond will drop in value."
Even at a projected interest rate of nine per, Spiring says the bond will be a fool's play.
"There are all kinds of safe corporate bonds paying nine per cent. You can get low risk or stupid risk. This bond is stupid risk," said Spiring.
Glendale Mayor Elaine Scruggs discussed the sale at a public meeting on Tuesday night.
"The market valuation is done, and the bonds are out on the market," she said. "You all know the ups and downs, turns and twists we've been through, and the council feels we have a good agreement."
Scruggs said the future of the Coyotes rests with the bonds.
"The team will leave for Canada (if the bonds don't sell)," she said. "We can argue forever, but it is what it is. This is how things are done in the bond market."
Scruggs mentioned pursuing a minor league hockey team as a replacement anchor tenant for Jobing.com Arena should the Coyotes leave.
"We need guidance on this because we could be dealing with this in just a couple of weeks," she said. "I cannot be more serious. We'd need to find a way to cut expenses or raise revenue."