There may be a tentative agreement between the NHL and Greg Jamison to buy the Phoenix Coyotes but many unanswered questions remain along with some formidable hurdles.
The biggest questions are about money: Does Jamison, the former president of the San Jose Sharks, have the financing among his partners not only to pay the purchase price but cover the millions of dollars in losses the suburban city of Glendale cannot? How will Glendale come up with as much as $20-million (all currency U.S.) to pay Jamison in each of the next four or five years as an arena-management fee and an average of $16-million a year over the 30-year lease?
NHL commissioner Gary Bettman and Jamison didn't have any answers to those or most other questions when they met the media just before the Coyotes' playoff game against the Nashville Predators on Monday. Nor did Jamison want to reveal his partners – not today, he said – and say if any of them has the financial muscle needed here.
The biggest obstacle to the long-awaited sale is the Goldwater Institute, the conservative-watchdog group that scuttled a previous bid by Matthew Hulsizer on the grounds the payments by the city violate Arizona laws that limit public subsidies to private enterprises. Goldwater president Darcy Olsen said Monday she hopes the "new deal complies with the law and protects taxpayers by requiring the private parties involved to bear any related costs," so you know they aren't going away.
Bettman didn't offer much reassurance on that count, either, saying "you'll just have to see how successful we are." He also said this deal was "different" than Hulsizer's but declined to offer details. As for when this will be wrapped up, all Bettman and Jamison could say was they hope it takes "weeks, not months."
If the Coyotes are to stay in Glendale, the Jamison sale, which is allegedly for $170-million, needs to get done now. Even though a slim majority of four of the seven Glendale city councillors indicated they will vote for payments of up to $20-million to Jamison, there will not be any temporary measures to tide the club over until a deal is in place.
Four council seats, including the one held by outgoing mayor Elaine Scruggs, are up for election starting in August. Scruggs is now an opponent of the proposed payments to Jamison but she is not running for re-election. Neither is another opponent, councillor Phil Lieberman. But the current political climate means there is little chance most candidates will support huge payments to a sports club owner, so the arena lease has to be in place before the election.
There is no way this sale can happen without that big infusion of cash from Glendale. Multiple sources say Jamison's group simply does not have the money to cover the red ink of a club that loses $20-million in a good year.
With the Coyotes going so deep in the playoffs after running a distant last in average attendance (12,240) during the regular season, this is a good year. But even the announced playoff sellouts do not bring in money comparable to most other clubs because the tepid fan support means the Coyotes cannot jack up their postseason prices.
The (relatively) easy part for someone such as Jamison in these deals is to raise the money for the purchase. The hard part is writing cheques of $20-million or more every year to cover the losses, which is why the arm is put on Glendale.
Jamison's gamble is that by grabbing $20-million of the arena "management fee" in the first several years and taking less later, he can cover the Coyotes' annual losses by combining that with revenue-sharing from the NHL. There is also a good chance Bettman will extend the club's exemption from hitting the required sales and revenue targets in order to get a full revenue share, which would be worth millions every year. Those teams who do have to hit those targets to get a full share will have to hold their tongues.
But Glendale, a city of 250,000, is facing a budget shortfall this year of $35-million and a staggering total debt of $1-billion or more. Council is considering raising property and other taxes, laying off as many as 51 city employees and cutting programs. Glendale is already $5-million short of its $25-million obligation to the NHL this year, which is now due.
Even if the Goldwater Institute backs off, the grim reaper will never be far away from this deal.