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Sale of Phoenix Coyotes still not a done deal

Pat Hickey, Postmedia News, June 7 2012

The Glendale City Council meets Friday to give its approval on a deal that will give Greg Jamison, the prospective owner of the Phoenix Coyotes, $325 million US to operate and make improvements to the city-owned Jobing.com Arena over the next 20 years.

The deal is supposed to be the final step in transferring ownership of the team from the National Hockey League to Jamison, but fans in Quebec City, Las Vegas or Seattle shouldn't abandon their dreams of seeing the National Hockey League in their fair city next winter.

While the Glendale council is going through with what amounts to a terrible deal for the local taxpayers, there's now a question of whether Jamison, the former president of the San Jose Sharks, can raise the $170-million purchase price.

Potential investors are skittish because the Coyotes have been bleeding red ink since the franchise moved from Winnipeg in 1996. There was a warm and fuzzy feeling last month when the Coyotes reached the second round of the playoffs and attracted sellout crowds. While that showed there is room to grow the product – during the regular season the Coyotes averaged an NHL-low 12,240 fans in a 17,125-seat arena – Forbes magazine said investors didn't believe Jamison could boost attendance and attract enough non-NHL events to make the team profitable.

No matter what happens with the team, the city of Glendale will be a loser. For the past two years, the city has handed the NHL $25 million to help cover losses. By that standard, the $16 million a year they will pay Jamison to manage the building is a bargain.

The problem is that the city is in worse shape financially than Jamison. Propping up the Coyotes has put a strain on the proposed city budget that calls for tax hikes, layoffs and reduced services. A report commissioned by the city estimates that the deal will cost each resident an additional $45 a year over the term of the deal.

The city's analysis also shows that Glendale can expect to collect less than $8 million a year in ticket surcharges, rent and sales taxes. According to the Arizona Republic, the report shows that Glendale could lose $9 million a year even if the Coyotes went to the Stanley Cup final in each of the next 20 years and the arena booked 30 sold-out concerts.

The city held a public meeting Thursday night to discuss the deal, but that was strictly for show because a straw poll shows that the subsidy for Jamison will carry by a 4-3 majority. The most prominent dissenter is Mayor Elaine Scruggs, a one-time supporter of doing whatever it takes to keep the team in the desert. She has done an about-face in the past year, accusing the NHL or dragging its feet on finding a buyer.

Two earlier deals to sell the team fell through and that doesn't include Jim Balsillie's original offer to buy the team and move it to Hamilton. The NHL has stubbornly insisted on standing by Glendale despite all the evidence that the franchise is not viable. If Jamison doesn't come up with the cash, it's time to bring in the moving vans.