Hard times may scuttle Coyotes deal
Ice Edge CEO says economic woes challenge in keeping team in Ariz.
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Hey there, time traveller!
This article was published 08/06/2010 (4450 days ago), so information in it may no longer be current.
Ice Edge’s deal to keep the Phoenix Coyotes in Arizona could be in peril due to tough financial times, says the group’s spokesman.
Daryl Jones, CEO of Ice Edge Holdings, the lone group in discussions with the City of Glendale to buy and keep the Phoenix Coyotes at Jobing.com Arena, is not sure his team will be able to put together a financing package to purchase the team.
"It’s hard to gauge the probability of this deal closing," said Jones.
"Realistically, there has been a great deal of financial turmoil in the world over the last 45 days, sovereign-debt issues and stock market corrections, which are going to make it harder for us, or any group, to close this transaction. That being said, we do remain optimistic."
Glendale and Ice Edge have been working on a memo of understanding and council will vote on it in the Phoenix suburb tonight. The agreement is expected to pass and, while the 60 days of exclusivity included in the deal are a victory for Ice Edge, it’s the cash call that has everyone nervous.
Glendale has asked that Ice Edge provide proof of financing within 10 days of tonight’s vote. Should that not happen, this deal will fall apart before the real talks get going.
It should be noted, no matter what Glendale and Ice Edge cook up, it’s all subject to the NHL’s approval.
That agreement does not prevent the NHL from negotiating with other parties before Dec. 31. It’s understood a deal between the league and Winnipeg-based True North is in place requiring little more than signatures.
The NHL owns the Coyotes and they alone will sell the team. Glendale controls the rink and will negotiate a lease with any prospective buyer. But at some point, the purchaser must negotiate with the NHL and attempt to buy the team from the league.
"The proof of finance at this stage is just what they call a terms sheet and it’s highly contingent," said a source close to the deal, meaning any agreement with a financial institution at this early stage is not binding.
"Even if (Ice Edge) can provide proof of financing right now, there’s no guarantee it will still be in place when this deal gets near closing. (Ice Edge) will likely get an extension and work on this deal for the next 60 days and then who knows what will happen. The City of Glendale wants to work with (Ice Edge) because (Ice Edge) has the best terms where the city is concerned. So the city will take (Ice Edge) to the 11th hour."
While Glendale likely has some form of due diligence Ice Edge must undergo, it will pale in comparison to the financial exam the NHL will put the group through.
The NHL won’t begin sale negotiations until a purchaser has come to lease terms with Glendale.
A recent rumour had a third party kicking the tires but that group has apparently lost what limited interest it had in the Coyotes.
Should Ice Edge fail to close a lease deal with Glendale in the next 60 days, presumably the only option left for the city at that stage would be Chicago Bulls and Chicago White Sox owner Jerry Reinsdorf.
Reinsdorf, however, has shown no interest in buying the Coyotes unless it is at a discount rate with little or no risk to him.
The reputable sports entrepreneur wants total and debt-free control of Jobing.com Arena and the Coyotes with a subsidy from Glendale, a guarantee of up to $100 million in operating losses, a limit of five years to keep the team in Glendale and the right to sell the team in five years if it is not profitable.
Such a deal puts the City of Glendale financially on the hook for the Coyotes for years and is unlikely to pass the scrutiny of taxpayer watchdog group the Goldwater Institute.
Goldwater has been watching the potential sale of the Coyotes and has threatened lawsuits at a number of junctures when taxpayer money has been pledged to support the pro sports franchise.