From the principal parties at the end, there appeared more a relief than desperation.
After all, here's the Phoenix Coyotes franchise which the NHL did not want to operate for another day, but the city of Glendale, Ariz. wanted desperately to keep in the desert. The on-going debate concerning the future of the Phoenix NHL franchise was protracted for nearly two years, but appeared to have come to a conclusion in the Glendale city council chambers Tuesday night.
The consequences for the city is enormous, Glendale mayor Elaine Scruggs told a packed house during the December 14 council meeting. From an economic melt-down to a vacant arena, the city had no choice but to create favorable condition for a prospective buyer. If the council wanted to keep the Coyotes in the desert, then the city council had to broker a deal to keep hockey amid palm trees, coyotes and cacti.
At the end of a long and exhausting night, the city council took action to guarantee the Coyotes in Arizona for the next 30 years, and saved, had the Coyotes left, a shattered public image.
In the end of the nearly five hour meeting Tuesday night, the Glendale city council, by a vote of 5-to-2, agreed to restructure the lease at Jobing.com Arena, the home rink of the Coyotes. If
the lease was not restructured, a proposal from Chicago investment banker Matthew Hulsizer to gain ownership of the Coyotes would have likely collapsed. Plus, the NHL, which currently operates the franchise, indicated if a buyer was not found by December 31, the league would likely find a buyer and move the franchise.
The measure passed by the council merely restructures the lease and Hulsizer agreed to take over management of the arena. With managing all arena events, he also obtains controls all activities held at Jobing.com Arena. That means taking control of the Coyotes, the building's main tenant, and the main jewel in this transaction.
What makes this deal hard to turn down for Hulsizer is his actual financial obligation.
In addition to restructuring the lease, the council authorized the city of Glendale to borrow $100 million in revenue bonds. That $100 million will be turned over to Hulsizer in exchange for parking rights for 5,500 vehicles.
Currently, Jobing.com Arena is part of a larger complex Westgate, which is a mixed use area of restaurants, bars, shopping, the arena, and the University of Phoenix Stadium, home of the NFL Cardinals. Currently, there is no parking fee for Coyotes game, but that will now change because the city will charge to park at games as well as gain naming rights revenue to the parking lots and surrounding areas.
"The alternative (of leaving) is devastating for Glendale," said council member Yvonne Knaack, who voted to restructure the lease. "It's obvious Mr. Hulsizer is successful in what he does and that's will make him a winner here."
Hulsizer indicated he would use the $100 million as part of his purchase of the Coyotes. The NHL has put a price tag of $175 million, but that's not etched in stone.
"We would not commit to the $175 million," said NHL commissioner Gary Bettman after the city council meeting. "At this point, that's speculation, and we're not in the speculation business."
Previously, Hulsizer was said to have balked at a previous price of $140 million set by the NHL. In March, 2010, Forbes Magazine set the actual worth of the Phoenix NHL franchise at $134 million, lowest among the league's 30 franchises.
Given the fact that Hulsizer has already placed $25 million in an escrow account and given the $100 from the city, his commitment, at this point, would be $50 million for a major league franchise. Hulsizer's personal wealth has been reported at $300 million, so it appears he is touching only a fraction for this transaction.
Plus, the City of Glendale will also commit to an additional $97 million to Hulsizer for the operation and management of the arena for the next five and one half years. At the end of this period, Hulsizer can purchase the arena outright but for not more than $130 million.
On paper, the deal appears sweet, but now, Hulsizer needs to face reality.
While the Coyotes put a playoff team on the ice last season, and now competing for the top spot among Western Conference teams, the franchise is a total disaster at the gate.
In 14 home games this season, the Coyotes failed to draw more than 10,000 in six games, and played before a season-low of 6,708 against the Kings October 21. Phoenix has generated one sell-out, and that was against the Red Wings October 16, their home opener.
With the Coyotes traditionally losing a reported $30 million yearly, Hulsizer said he's prepared for the long haul. It's no secret this team continues to lose money at an alarming rate.
"I don't know how long it take to turn this around, but it will happen," he said after the council meeting Tuesday night. "Look, it won't happen overnight but maybe in 10, 15 years, I don't know. Hopefully, the economy will turn around, and the Coyotes will continue to win."
Immediately, Hulsizer awaits final ownership confirmation from the NHL, and he said that will likely take a few weeks.
Emerging from the council meeting to speak with the media. Hulsizer had a large smile and sparkling Coyotes pin in his sport jacket lapel. For now, the smile looks real enough, but that will quickly disappear as he sits among sea of red seats in the arena. That's not to mention limited and sporadic media coverage, along with pitiful television ratings.
The question for now remains, what is Hulsizer's definition of "how long."
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