Glendale Mayor Elaine Scruggs is hopping mad at the NHL over the $25-million (all currency U.S.) that is due from the city May 2 to cover part of the Phoenix Coyotes losses this season and wants to play tough with the league.
In addition to blasting the NHL during a budget meeting Tuesday, the mayor asked her colleagues on city council to petition NHL commissioner Gary Bettman to return most of the $20-million that is currently in an escrow account for the May 2 payment. The city did not have enough money to put all of the $25-million it promised the NHL in the account and Scruggs indicated it still does not have the shortfall of $5-million.
The money is desperately needed to help cover a potential budget deficit of $30-million. In any event, Scruggs said, the money should be the NHL's problem because the league did not play straight with the city about its prospects of selling the Coyotes.
"They have been in control of this process for the entire time. They have led us to this terrible point we're at today," the mayor said, adding later that "it's their problem, they misled us and they can't do this to our city."
Originally, Scruggs wanted to simply withdraw the $20-million from the account but she was not aware until recently that the city did not have control of the escrow account. It needs the NHL's permission to take the money out. This also fuelled the mayor's anger and she now wants to ask Bettman to take $5-million from the account, give the $15-million balance back to the city and work out a repayment plan.
After much prodding from Scruggs, Glendale city manager Ed Beasley passed on Scruggs's request to Bettman. Beasley told Scruggs Bettman took the request "under advisement."
But if the NHL rejects the request, which Scruggs wants to be made formally in a letter signed by herself and the six council members, it could mean the Coyotes will finally move to another city. While Bettman has said the league, which owns the Coyotes, are negotiating with more than one prospective buyer, Scruggs said in Tuesday's meeting that no deal is in sight.
The mayor said her anger at the NHL springs from several years of negotiations over the Coyotes, which the league bought out of bankruptcy in October, 2009. Scruggs said she isn't sure the NHL will agree to her request to return Glendale's money but wondered if it might because she thinks the league is poised to move the team.
"Is there any reason they feel sorry for little Glendale?" Scruggs said. "Maybe not but maybe there is because they want to take the team someplace else.
"Maybe some places should know what they're getting involved in when they get involved with the NHL. This is what I know based on how long we've been fiddling around with [the NHL]"
NHL deputy commissioner Bill Daly said recently the league's priority is to keep the Coyotes in Glendale. However, he admitted the time is coming for a decision since a 2012-13 schedule needs to be released and whoever buys the Coyotes will need time to make the move.
One year ago, the NHL told city council it was close to selling the Coyotes to Chicago businessman Matthew Hulsizer. Mayor Scruggs said the only reason she and the majority of the council members voted one year ago to provide $25-million to the NHL for a second consecutive year to cover part of the team's losses was that NHL deputy commissioner Bill Daly told council the city's money would not be at risk because the new owner would eventually cover all the losses.
"Mr. Daly stood right in front of us and he told us that we've never been closer [to a sale]" Scruggs said, referring to a council meeting early in 2011. "We were told a deal was being done and we should never have to pay that 25 million dollars. You [just]have to put it in so NHL wouldn't move the team off some place.
"So here we are a year later, no Mr. Hulsizer, and it appears the NHL never intended to do business with Mr. Hulsizer in the first place. But we put this money up believing we'd never spend it.
"But here we are, I guess two months from having to pay this. No Mr. Hulsizer, no Mr. Anybody Else, no deals, no nothing. So we have a problem."
The problem is the 2013 budget deficit for the city of 250,000, which will include cutbacks in services and perhaps layoffs. City officials and council are in discussions about the new budget, which will be adopted in June. Scruggs recently announced she will not run this summer for a sixth term as mayor but she will have a vote on the 2013 budget.
Scruggs said if the $20-million is returned by the NHL, "our problems and everything our employees are fearful of will go away."
Daly could not be immediately reached for comment.
Since the Coyotes still have not been sold, there is a proposal for a $20-million payment to the NHL for next season which will be called a management fee for Jobing.com Arena where the Coyotes play. Scruggs said her research shows a more reasonable amount for a management fee is $11-million and she will not vote for any payment of $20-million. She also said she will not support paying the $5-million to top up the $20-million in escrow for this season's Coyotes losses.
Scruggs's lengthy discourse on the state of the city's relationship with the NHL also showed a division with Beasley, who represents Glendale in talks with the NHL. At one time, Beasley and Scruggs worked closely together on her plan to build sports facilities like the hockey arena, a football stadium and a spring-training baseball complex in order to attract major-league teams to the city. But borrowing money to build them contributed to the city's overall debt, which is close to $1-billion.