Friday, March 4, 2011

Did I hear the fat lady warming up for the final act of the Phoenix Coyotes?

The fat lady you hear about likely refers to an overweight soprano, perhaps Brünnhilde singing the final arias from Die Walküre. It’s a signal pack up your belongings and head for the exit. I’m not an opera fan and I’m sure you’re not either. Watching events play out in Glendale, Arizona is as painful as sitting through an opera, unless you live in Winnipeg. Former Jet fans who are observing the situation in the Arizona desert remind me of a flock of vultures circling their prey waiting for it to expire.

Despite denials from everyone the Coyotes appear to be done. The only party to show any interest in the Coyotes has been Matthew Hulsizer. Except he’s not going to pay $170 million for a franchise when is likely worth about half that price. That price is what the NHL needs to allow the owners to get back all their money they provided the NHL to keep the Coyotes afloat.

Glendale which was suckered into funding an arena for the team is literally caught between a rock and a hard place. Without a tenant for their $180 million arena there will be not rent or tax revenue coming in to pay the mortgage. So Glendale worked out a deal with Hulsizer where they would provide him with something in the neighbourhood of $100 million in exchange for the parking revenue at the arena. I bet you’re thinking that sounds like a lot of money to pay for the rights to parking revenue in an arena in the middle of a desert. The city must sell $116 million in bonds to provide Hulsizer with money to complete the transaction.

It turns out the Goldwater Institute also thinks that’s too much money. They are a conservative public policy research organization established in 1988 that advances public policies with emphasis on lower taxes and limited government spending. Goldwater suspects that the deal may violate the “gift clause” in Arizona’s state constitution, which reads: “Neither the state, nor any county, city, town, municipality, or other subdivision of the state shall ever give or loan its credit in the aid of, or make any donation or grant, by subsidy or otherwise, to any individual, association or corporation.”

Goldwater believes that the City already owns the parking rights and if even if they don’t the rights are not worth $100 million. They see this as a subsidy to Hulsizer so that he will buy the team which is a contravention of the state constitution. Goldwater is threatening a lawsuit if the City go ahead with the bond issue which will scare off investors. Without that money the sale falls apart but the NHL cannot go back to square one anymore. As the team continues to lose money it becomes less likely that the NHL owners get back their money. If the Coyotes can’t be sold for $170 million then there is no way a buyer will be found to pay $200 million. So we are weeks or maybe a few months away from a relocation decision. Clearly these need to be resolved before work begins on next season’s schedule.

That explains the vultures wearing Winnipeg Jet jerseys.

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