This is an archived version of a Field of Schemes article. Comments on this page are closed. To find the current version of the article with updated comments, click here.
June 20, 2012
Judge: Coyotes deal no "emergency," so referendum on subsidy deal is possible
The long-awaited legal throwdown over Glendale's subsidy deal for the Phoenix Coyotes is finally on, with a Maricopa County judge issuing a a ruling yesterday that could open the door to a November ballot initiative on the $200-million-plus plan.
How exactly this all happened is mind-numbingly technical, but it goes something like this: The Goldwater Institute, a conservative-libertarian think tank, sued the city of Glendale to invalidate the Coyotes deal, saying the city had illegally failed to conduct competitive bidding for an arena operator. (Under the Glendale plan, the Coyotes will operate the facility, and the city will give them gobs of money to do so.) Judge Dean Fink hasn't ruled on that bigger issue yet, but did note that as only four of seven councilmembers voted to approve the deal, it couldn't qualify as an "emergency" measure, which requires five votes.
This turns out to be vitally important, because only emergency legislation is exempt from being overturned by public referendum. So now that Judge Fink has ruled that the Coyotes deal wasn't an emergency, one of the Goldwater plaintiffs is rushing to get 1,862 signatures to put the deal on the November ballot.
Since it seems pretty likely that 1,862 Glendalians (okay, I have no idea what you call somebody from Glendale) can be found to ask this thing to be put on the ballot, the big questions now are whether a referendum overturning the deal can win (good chance, though it depends on how much the NHL is willing to spend on campaigning against it) and whether prospective owner Greg Jamison will even stick around long enough to find out. November isn't that all that long to wait, but given the checkered history of past prospective Coyotes owners, and the fact that Jamison reportedly still hasn't been able to raise the $170 million in cash needed to buy the team, even with a $224 million subsidy awaiting, it's entirely possible that we could go through another two or three Coyotes buyers before this thing even hits the ballot. Jerry Reinsdorf, where are you?
I am trying to figure how this will play out. It seems to me that the NHL will want to give at least until the July 9th deadline to see if they get the signatures + another 20 days for the city to validate/test the signatures so that puts us around Aug 1st to know if it will even go to referendum.
There is a question that I saw if the city would even push for the referendum should the they get the signatures. So then what?
Regardless if they get the signatures or not, it looks like the Coyotes are playing in Glendale next year or the NHL moves the team to Quebec City, theoretically in July or do you think they would wait until August? Seems way way to late for moving a team. If they play in Phoenix, I guess they need a one year deal with the Arena...
Giving credit where credit is due @LisaHalverstadt on twitter has covered the legal aspect of this really well. Follow her if you are interested in following this more closely.
Posted by JB on June 20, 2012 07:06 PM
I'm guessing it's too late now to move the team. Winnipeg was primed to welcome home the Jets - I don't know if Quebec or Seattle is.
Has the city of Glendale promised to keep the team covered for the '13 season? If not the only move I see possible if a referendum is pending and this new owner can't close this deal is one where the NHL suspends operations and resurrects the team to a new owner if the city of Glendale can continue their financially support.
Then Glendale gets their team back in September 2013 or one of the primed markets rumored to be keen on getting a team gets the Coyotes, essentially as an expansion club.
Posted by Andrew T on June 20, 2012 07:37 PM
I think the league may cover it in Glendale again but without the $ support from Glendale. They need to work out terms and the league as you state, doesn't have much leverage. I do think QC could accommodate next year somehow. Seattle no way because they need to get the arena deal approved (August) and then get an NBA team. Their deal is all about the NBA so the NHL won't lead.
Suspending the league seems drastic but I don't know. Seems like finding players some spots + recreation could be more costly than floating the team for a year. I could very well be wrong here.
Posted by JB on June 20, 2012 08:08 PM
It may have come off as otherwise, but I was suggesting the NHL suspend the Coyotes for one year while they sort out the mess and not cough up $30M in cash or more to cover another lost season.
I'm sure some teams (like the Calgary Flames) see a league supporting one franchise that if they weren't around would've otherwise been in the playoffs. So they won't miss propping up an opponent.
Other teams like the NJ Devils might be needing cash as well.
Plus, since the CBA needs to be hammered out if the league stops supporting the Coyotes it puts added pressure on an NHLPA. Do the players negotiate a deal that works for them and maximizes their return? Or do they want to keep places like Nashville, Florida and Dallas in the league? Make the sacrificial kill...
As for the team - if I were the league I'd hold a dispersal draft for the NHL players rights the team currently holds and foot the bill for a management team to manage the prospects in the system. At seasons end either you have a city able to absorb the remnants of the Coyotes or you hold one more dispersal draft and find new teams for the remaining prospects in the system.
That's what I'd do since you didn't ask : )
Posted by Andrew T on June 20, 2012 11:58 PM
Easier solution: Make them a road team, and give everyone else in the league a couple of extra home games. That'd take the sting out of the league paying their payroll.
I don't see them doing that, though. If the referendum fails, doesn't the NHL get its arena subsidy for 2012-13 immediately? If they still want to keep the team in Glendale (and apparently Bettman does, for whatever his reasons), then I think you have to roll the dice on staying put for next season, since there's no way you win a public vote on financing if the team has already been pulled.
Posted by Neil deMause on June 21, 2012 07:13 AM
"Easier solution: Make them a road team..."
A terribly nasty thing to do to a bunch of players when there are arenas available. (I'm a long way from a Yankees fan, but I pity the poor guys playing for their AAA team in Scranton-Wilkes Barre this year. Well, actually everywhere --but-- in Scranton-Wilkes Barre. They couldn't have thrown up some temporary bleachers around a local high school or college field?)
Posted by Keith on June 21, 2012 07:54 AM
The problem with picking an arena and sticking the Coyotes in it is that then you're giving that city a leg up on getting the franchise permanently, and the league may not want to tip its hand before setting up an inevitable bidding war. Also, arenas are well under way booking events for the fall already, so you could end up with a scheduling nightmare if you decided suddenly, "Hey, let's shift the entire Coyotes schedule to Key Arena."
I don't really see any of these things happening, though — missing out on a $15 million operating subsidy for one season is a small price to pay for holding on to a shot at a $200 million windfall. The only way I see the Coyotes leaving as soon as this fall is if Bettman decides to say the hell with it and sell the team to Quebecor, but that seems unlikely to go down in the next couple of months.
Posted by Neil deMause on June 21, 2012 08:17 AM
@ Neil
If this thing goes to a referendum I'd bet my meager life savings that it gets shot down in a blaze of glory.
If they get their required 1862 signatures that is the end of this saga.
Just my opinion.
Posted by Andrew T on June 21, 2012 09:26 AM
I think if they can get one more season in Phoenix, Seattle could be a legitimate city to use as leverage against QC. Seattle City Council votes on the Arena deal in August then Hansen would need to get an NBA team and only then can Seattle be considered a legit city for leverage (legit or not). I don't know what that leverage is worth but I imagine it is over 20M. The catch with Seattle is that there doesn't appear to be a rumored owner. It could be Hulsizer, Reinsdorf or maybe the Jamison group is a potential Seattle Franchise owner. A couple months ago, Hulsizer has publicly said that he hasn't had any conversations with the Hansen group.
Posted by JB on June 21, 2012 10:38 AM
Anyone who lumps Dallas in with the troubled Sun Belt franchises is a fool. Dallas's only problem is that the group that owned it went bankrupt from its other ventures (EPL ownership, etc.) *not* hockey. Dallas was profitable for over a decade and just barely lost money last year. It's also one of the most valuable franchises and had no problems supporting the team when ownership did/could. The franchise also owns half of one of the nicest arenas in the country.
Posted by Anon on June 21, 2012 01:19 PM