THE clock on the sale of the Phoenix Coyotes continues to tick with the whiff of a lawsuit jamming up the needed bond purchase to facilitate a close.
Prospective Coyotes buyer Matthew Hulsizer awaits the $100 million he needs to buy the franchise from the NHL but the City of Glendale is having trouble raising the money.
The bonds were issued more than two weeks ago but pre-sale attempts have failed to gain much traction and Glendale to date has been unable to come up with the money Hulsizer needs fronted in order to close the deal with the NHL.
Numerous reports have had the Coyotes deal on the verge of finalizing but NHL commissioner Gary Bettman was less than certain during an interview on Thursday with the Fan 590 radio show in Toronto.
"(Phoenix will close) provided they sell the bonds, which they are working on doing," said Bettman. "Obviously, if the bonds don't sell that's a whole different kettle of fish. If the bonds do get sold there will be a closing soon."
Glendale has cooked up a deal with Hulszier that would see them fork over $100 million of the $170 million purchase price in exchange for the ability to sell parking at games.
Investors are skittish about the deal because of the potential of a lawsuit. The potential of putting cash into the bonds and then having it frozen due to a lawsuit is not attractive in an already iffy municipal bond market.
Glendale used two consultant firms to evaluate the potential revenue from 5,500 parking spots at Jobing.com Arena.
A national consultant reported parking receipts from Coyotes games would fall far short of the revenue needed to meet interest payments on the $116-million bond issue Glendale has floated. Another firm, TL Hocking and Associates, which is currently a defendant in a federal lawsuit over providing inflated revenue projections on a separate bond issue, reported sufficient revenue could be generated for Glendale to meet its obligations.
According to a study about to be released by the Goldwater Institute, Glendale councillors were told only of the Hocking study.
"The council saw nothing," said Glendale councilwoman Joyce Clark, who voted against the Coyotes deal. "We were verbally told about a parking study that staff said was preliminary and not complete. I suspect they were referring to the Hocking study because they said based upon the preliminary draft the parking revenues would meet the obligations. I'm upset. You can't make sound decisions unless you have all of the information."
Goldwater is considering an injunction to prevent the sale of the Coyotes based on the belief the deal contravenes Arizona's gift clause, which prevents government from propping up private business with taxpayer money.
"Given that the taxpayers are completely on the hook for this deal, it is essential that the city has complete financial information," said Clint Bolick, the Goldwater Institute's litigation director.