For Mathew Hulsizer, these times are becoming trying and frustrating.
This is probably part of his doing, but also a kind of intransigence to legislative and economic reality.
Nearly three months ago, Hulsizer thought he bought and was ready to take possession of the Phoenix Coyotes. A Glendale, Ariz. city council measure to borrow $125 million in bonds passed, and Hulsizer was on the verge of completing a deal in which he would take control of Jobing.com Arena, the Coyotes' home rink.
The action taken by the city of Glendale, in effect, gives Hulsizer $100 million of the $125 bond money acquired, and Hulsizer would then use that money to buy the Coyotes from the NHL.
The Coyotes success on the ice in the last two seasons is well documented, but their continued future in the desert remains ambiguous.
A consequence of the Glendale plan to borrow up to $125 million in bonds may compromise, delay or abrogate the Hulsizer transaction. Actually, two issues may influence Glendale’s ability to finalize this transaction.
In the meantime, the fate and future of this franchise continues to be put on hold.
If current reports are correct, Hulsizer may never obtain the control of the franchise, and then its almost guranteed the Coyotes would relocate.
The borrowing process now is on hold because The Goldwater Institute, a conservative think tank based in Phoenix, is considering a law suit against the city of Glendale. Goldwater believes the $100 million Glendale would give to Hulsizer to manage Jobing.com Arena, is a violation of the Arizona constitution.
The state constitution prohibits municipalities from giving money to individuals for economic development. Simply put, that’s considered “a gift.“ In a Jan., 2010 Arizona state Supreme decision, the state’s high court ruled money given by the city of Phoenix to a developer to build a mall was a gift, and violated the state constitution. Goldwater may now go after the city of Glendale under the same premise.
“Any investor with a head on his shoulders should be nervous about buying bonds to back a corporate subsidy that appears to be an illegal deal in violation of the Arizona constitution,” Darcy Olsen, the Goldwater’s CEO, told The Phoenix Business Journal in late February, 2011.
Olsen pointed out to The Journal that her organization requested about 250 pages of legal documents to review before deciding on litigation. Here, there is no time window for Goldwater to make a decision whether to sue the city of Glendale, Olson added.
Any substantial delay here would increase the interest rate on bonds borrowed, Hulsizer told FOX Sports Arizona, and an delay could cost Glendale an additional $100 million over a 30 year period for increased interest rate.
In discussing the overall Coyotes’ matter with The Phoenix Business Journal, Olsen indicated the city of Glendale confronts a second major issue.
Because the city recently incurred substantial debt in the construction of the University of Phoenix Stadium, Camelback Ranch, spring training site for the Chicago White Sox and Los Angeles Dodgers and Jobing.com Arena, lenders may be leery of extending additional credit to the city.
Already, both Moody’s and Standard and Poor, two prestigious bond rating agencies, downgraded the City of Glendale, and that means the city’s ability borrow money at lower rate may be compromised.
There could be an easy solution here, and a consequence previously mentioned many times.
Simply, Hulsizer could reach into his pockets and buy the Coyotes outright from the NHL. At this point, Hulsizer seems to want something for nothing, and is reluctant to part with a substantial part of his estimated $300 million.
Should Hulsizer make the purchase from his own pocket, the city of Glendale would not have to secure the $125 million in bonds, and this entire issue would be moot. Hulsizer’s purchase of the team sets up the Coyotes for a future in the desert, and the city of Glendale, in turn, can begin charging for parking.
To date, parking is free at Westgate, a destination which houses Jobing.com Arena, restaurants, bars and hotels. With this, the city of Glendale could realize revenues from aprking fees.
To finally gain closure in the protracted mess, Glendale would be wise to drop the attempt to borrow the bond money, and insist if Hulsizer really wants the Coyotes, he should make an effort to secure the team through private means.
If that fails, then hockey is the desert is history, and the city of Glendale needs to confront a future of paying off the Jobing.com Arena mortgage without a major tenet.