Arena Management Fee Key to Phoenix Coyotes Future in Arizona

Mark BrownContributor IJune 12, 2013

Without an arena-management deal in place,the Coyotes may have played their final game in Arena.
Without an arena-management deal in place,the Coyotes may have played their final game in Arena.Christian Petersen/Getty Images

The quagmire that is the Phoenix Coyotes could become deeper.

This four-year saga of franchise instability continues with no end in sight. At the same time, the Glendale, Arizona City Council appears in no mood to open its wallet and assist those who wish to cut a favorable arena management deal with the city. The ultimate purpose of such an agreement is to keep the Coyotes in the Phoenix market.

For suitors who seek a sweet deal to operate Arena, the prospects appear slim. That’s because of one clear factor.

The present composition of the Glendale City Council is far different than the one that orchestrated a $324 million, 20-year deal last November to a group headed by Greg Jamison, a former Sharks CEO.  That reason alone should raise a “red flag” for those interested in the purchase of the Coyotes.

It’s not that the city wants “to play hard ball.” Rather, said Glendale mayor Jerry Weiers, “this has to work for the citizens.”

On Tuesday night, the 2013-2014 budget was introduced to members of the Council. Save comments from one member of  the community, there was no discussion about the Coyotes’ future to play in Arena. A final budget meeting is scheduled for Friday, June 28, just two days before the city’s budget must, by law, be finalized.

At that time, the City Council will discuss an arena management fee as part of the overall budget consideration.

In nearly a one-half decade of franchise volatility, the Coyotes seem no closer to learning their destination.

After the Council meeting Tuesday night, Weiers  made it clear that the city is only interested in the arena management deal.

A potential sale involving the NHL, the current owner, to a prospective buyer is a matter strictly between these parties, the mayor pointed out. The city’s direction remains solely to hammer out the arena management deal.

The city owns Arena.

To that end, the city retained the services of Boston-based Beacon Sports Capital, LLC to identify interested parties in taking over management of the arena. Weiers said the arena calendar for the coming months is empty and the city, he pointed out, can not afford to pay the mortgage on a building which remains dark.

The latest suitor to express interest in the Coyotes is a group called Renaissance Sports and Entertainment, led by George Gosbee, a Calgary investment banker.  Gosbee, who admitted to getting a maple leaf tattoo when he was a teenager, is considered a passionate hockey fan with a desire to keep the Coyotes in Arizona.

Renaissance also includes Anthony LeBlanc, who approached the City of Glendale previously with a group known as IceEdge. Combined, the Gosbee team remains committed to acquiring the franchise and keep the team playing in Arena.

The NHL asking price for the team is reported at $170 million. That appears to be overvalued by Forbes, who set the value of the franchise at $140 million last year. That would rank 29 of 30 NHL teams, and only the St. Louis Blues were valued less by Forbes.

In the preliminary budget currently before the Glendale City Council, an allocation of $6.5 million is set aside for an arena management fee. A five-year projection of the same $6.5 million each year would provide the approximately $32.5 million the city said it would commit. Compare that that $324 million, 20 year deal the previous City Council allocated to Jamison, and there is room for wide debate.

“I want to make this happen and I want to see the Coyotes remain here,” Weiers said after Tuesday’s Council meeting. “At the same time, we need to understand this is not the same council.”

Going forward, sands in the hourglass are running down, and the June 30 deadline looms as a principal date.

The latest deal on the table was outlined in the May 30, 2013 edition of Forbes Magazine.

The transaction calls for Renaissance to put up $45 million in equity. Fortress Investment Group, with assets of $55.6 billion as of March 31, 2013, would provide $120 million, and the NHL would make $85 million available through a loan.

The Fortress dollars would be repaid by a fee the citizens of Glendale incur to operate the arena. Currently, that would be the $6.5 million allocated in the preliminary budget. At this point, the proposed $120 million from Fortress and a combined $32.5 million over the next five years from the Council appear wide apart.

The proposed package of $250 million far exceeds the Forbes value of $170 million placed on the franchise alone.

While considering the latest numbers, Weiers said he wanted to be honest. Throwing his arms in the air, he said, after Tuesday’s meeting,” really, I have nothing. At this point, we’re looking over some things, but I have nothing to report.”

Waiting in the wings is Coyotes' coach Dave Tippett, whose contract expires the first week in July.

With no deal in place, Tippett hinted he would like to coach elsewhere. If he leaves, the absence of his communication method with players, his important teaching skills, success on the ice and his reputation as “a players’ coach” could be a catalyst to further unravel this franchise.


Mark Brown is a Featured Columnist for Bleacher Report. Unless otherwise noted, all quotes were obtained first-hand.


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