Coyotes Rumors Of Relocation Begin To Resurface

by | May 19, 2015

Remember the times when the Arizona Coyotes were always in trouble with ownership, money issues, and a depleted fan base?

We are back at where we started.

A report from TSN.ca reports that the City of Glendale is looking into a breach of contract with finances that IceArizona, explain they had underreported their losses and failed to use their $15 million earned from city taxpayers from Glendale to fund their home Gila River Arena.

From TSN.ca:

When the city council in Glendale voted to give the owners of the Coyotes $225 million (all U.S. dollars) over 15 years, the money was supposed to be used by the team to manage the 12-year-old Gila River Arena, where the Coyotes play their home games.

The deal helped narrow the losses of a club that sports investment bankers say is a perpetual money loser, bleeding some $50 million or more per year.

But nearly two years after council approved the controversial pact, city officials claim the money that cash-strapped Glendale is paying to the team’s owner IceArizona is instead going directly to Fortress Investment Group, the New York-based asset manager which financed holding company IceArizona’s purchase of the Coyotes.

Glendale Vice Mayor Ian Hugh says using taxpayer dollars to pay down the team’s debt rather than for direct arena management expenses amounts to a breach of contract. Hugh says he hopes in coming weeks to rally support on Glendale’s seven-member city council to direct the city’s attorney to explore whether the Phoenix suburb can get out of its contract with the Coyotes, a potential legal battle that could finally herald the Coyotes’ exodus from the desert.

“The taxpayer got the short end of the stick,” Hugh said in an interview. “If they call this an investment, you’d think there would be a possible return. I’m hard pressed to see the benefits to the city of Glendale.”

Let’s look at all that has transpired since the team was on the verge of leaving the first time in 2013. In the city meeting that determined the team’s fate the first time, the Coyotes were allowed to remain after a 4-3 council member vote. Glendale Mayor Jerry Weiers was one that voted down on the offer, being afraid that its citizens would suffer even greater as they had already faced higher sales taxes. Money that would be used from their tax dollars to help fund the area, which was a vocal agreement to begin with, was not the direction that he wanted to go. Instead, the other members saw this as an opportunity to help revive Westgate, which was originally built for the Coyotes and Arizona Cardinals and liven up Maricopa County.

Fast forward two years later, and it seems as if Glendale may be regretting its decision of staying. While they have seen a lot of change in entertainment, in which IceArizona did live up to its promise, the team has still not been profitable. While underreporting their losses is already bad enough, Glendale is now looking to find a way to sever ties with the team as soon as possible.

While there was no written agreement that the $15 million was supposed to be used for the arena, this does not look well for the Coyotes to remain in Arizona much longer. The city has also accused new owner Anthony Barroway of even discussing a resolve face to face. According to the City of Glendale, the team has stated that Barroway has refused to come to Glendale since agreeing to become 51% responsible for the team, and the only way he would like to discuss matters would be a 90-minute session at his offices in New York.

The fans have also not helped at all with how dedicated they promised to be. They were third to last in attendance yet again, and their TV ratings are comparable to some minor league teams have. The Coyotes do not have a comfortable TV contract to begin with, and competing with the Phoenix Suns has already been hard enough to earn any kinds of ratings and attendance while both are in season.

Dumping off their top key players to help flux their cap was a smart move for 2015-2016, but as the days and weeks go by, talks with the owners and Glendale will move very quickly.

As far as relocating:

One NHL owner said the most likely outcome over the next few years will see the team move. Rumoured landing spots are Seattle, Portland, Quebec City, Southern Ontario and Las Vegas.

But Seattle does not have an arena, and there’s little appetite among the local population to pay for a new rink. “This can’t work with private money,” the NHL team owner said. “The team acquisition cost and arena finance bill would combine to be over $800 million. It doesn’t work in Seattle with those numbers.”

The NHL team owner said Portland faces similar hurdles because billionaire Paul Allen, who owns the NBA’s Trail Blazers and controls the arena there, “doesn’t care about hockey.”

As for Quebec City or Southern Ontario? “Nope. Both of those cities make the balanced conference problem worse,” said the NHL team owner, who declined to speak publicly for fear of being fined by the league. “I think it leaves us with Las Vegas as our best alternative. I could see them moving the Coyotes there when the new arena is done.”

It just seems inevitable now that the team is looking at other options, but now the timetable seems to be when rather than if. The cities mentioned above aren’t ready to handle another NHL team, and Seattle seems to be off the table considering they refuse to build a new arena (note the history of the Seattle Supersonics). Las Veags is not ready to hold a team right this minute, but their new MGM-AEG arena is planned to be open by 2016. While hockey has not been successful in Sin City, they have been craving a major professional team for years. The NHL has been considering taking a risk, and this is could be the team to do so. The Orleans Arena has hosed the Las Vegas Wranglers, an ECHL team that went under last season. The lease for the arena is cheap, and even if they cannot seat more than 10,000 to begin with, it would be the perfect arena as a temporary home. The MGM Grand Arena does seat a lot more, but it is coming with age. Regardless, with whatever decision transpires, the biggest fear seems like it is bound to happen to a team that has suffered for years.

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