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Why Glendale will regret keeping Coyotes

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Why Glendale will regret keeping Coyotes
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The Coyotes are one win away from their first appearance in the West final. (Getty Images)

It’s the perfect backdrop, isn’t it? Gary Bettman in Phoenix, almost three years to the day after former owner Jerry Moyes threw his ownership keys on the table, to announce the Coyotes have been sold just before the team puts a bow on the first second round series win in franchise history.

All will be well in Phoenix, then it’s time to move on to the Florida Panthers and New Jersey Devils, the next two teams requiring the league’s attention.

If only it were that easy. In fact, the prospective sale of the Coyotes might be nothing more than a shell game, with the objective of the game to extract as much money out of the good people of Glendale as possible. For example, if former San Jose Sharks CEO Greg Jamison is to purchase the Coyotes, the new lease could cost Glendale a total of $92 million over the next five years. And that could be with no guarantee the team stays beyond that time period.

According to one source close to such matters, there are a couple of major caveats to this deal.

“It might kick the can down the street by a few years,” the source said, “but that’s about it.”

That’s because there is speculation Jamison will not be required to sign an “unconditional guarantee” attached to his ownership. After Moyes essentially bailed on the Coyotes three years ago, the NHL made it mandatory for new owners to promise they’ll keep paying the bills ad nauseam. Hence the unconditional guarantee. Jeff Vinik had to sign one when he bought the Tampa Bay Lightning and Terry Pegula did the same when he purchased the Buffalo Sabres. The unconditional guarantee basically ensures the owner will be obliged to continue to throw unlimited amounts of money into the sinkhole without leaving the NHL to become a ward of the state.

(Deputy commissioner Bill Daly did not reply to an email asking about the terms of Jamison’s prospective sale.)

There is reportedly no such provision in the deal for the Coyotes with the NHL. The deal will be announced at about $170 million, but our source said it’s unlikely the actual money changing hands will amount to even $100 million. Remember, this is for a team Jim Balsillie was willing to pay $225 million to purchase not long ago.

The deal, of course, will be contingent upon Jamison negotiating a new arena lease with the City of Glendale, which should have anyone who pays property taxes in that city very, very nervous. According to Glendale council member Phil Lieberman, the new lease would cost the city $92 million in management fees over the next five years – $17 million next year, $20 million in each of 2014, 2015 and 2016 and $15 million in 2017. And while Lieberman hasn’t seen the entire proposal, he’s doubtful even that will be enough to keep the Coyotes in Phoenix long-term.

“Who knows?” Lieberman said. “Jamison says yes, but how do we know that’s not a bunch of bull? The NHL is the third owner of this team in the past five years and they’ve wanted $25 million a year to break even. How is Jamison going to make a profit? It’s impossible.”

Lieberman said the city, in return, receives only about $4.5 million per year in revenue, meaning that in order to keep the team in Glendale for another five years, it will cost a city of about 225,000 almost $70 million.

It doesn’t add up for people such as Lieberman. He said Global Spectrum manages the University of Phoenix Stadium, also located in Glendale, for about $9.2 million a year. Lieberman thinks the city can, without the Coyotes, hire someone to manage the facility for less money and attract more non-hockey events to the building to make it profitable.

“That’s where I’m coming from,” Lieberman said. “I’ve owned three businesses in Glendale. How much of a subsidy do you think the city has given me? None.”

Here’s a thought. Isn’t it time that perhaps the NHL did the right thing here and stopped holding this city hostage? Glendale is in for $50 million so far and if Jamison gets his lease, will have to pay another $92 million over the next five years. And so far, there is no guarantee from anyone the Coyotes will stay in Glendale long-term.

But Bettman is capitalizing on a feel-good situation in Glendale, where the team is winning and creating a short-term buzz. Hey, it might even win the Stanley Cup this spring. But does anyone really think that’s going to make one iota of difference in the long run? Will a long playoff run suddenly make the Coyotes profitable?

It’s highly doubtful. What is more likely is it will create a small, temporary spike in interest. None of the Carolina Hurricanes, Tampa Bay Lightning or Anaheim Ducks has seen its long-term numbers go up significantly because of their Stanley Cup titles.

Sources say just over 10 percent of the Coyotes revenues come from corporate business and that simply doesn’t cut it. No corporation is going to invest long-term in a team that can’t guarantee it will be there in a few years. Yes, there is a small, hardcore group of fans that might grow slightly in number, but filling a building with low-priced tickets 50 times a year is not a recipe for long-term success.

Greg Jamison will learn that and the good people of Glendale will continue to pay for a team that will always be in limbo.

Ken Campbell is the senior writer for The Hockey News and a regular contributor to THN.com with his column. To read more from Ken and THN's other stable of experts, subscribe to The Hockey News magazine.

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