Saturday, 22 May 2010

Ultimatums And Decisions

Musically-speaking, the Barenaked Ladies sang a song entitled "If I Had $1000000" that spoke of all the crazy things that they would buy if they had one million dollars. Not many of us have that kind of money to buy things like art (a Picasso or a Garfunkel), a fur coat (not a real fur coat because that's cruel), or a monkey (haven't you always wanted a monkey?!?). If you're dealing with the NHL, though, $1 million will buy you approximately nine days of time. That's a pretty hefty price tag for anyone regardless of how much money you have.

The NHL has essentially issued the City of Glendale an ultimatum in this cat-and-mouse game of ownership of the Coyotes franchise: find a local buyer by December 31, or we'll sell the team to the highest bidder*.

If you noticed the asterisk, congratulations. With their latest move, the NHL has essentially told the City of Glendale that if you can't make hockey work in Arizona, we'll let someone else try in some other location as long as they have the money to buy and move the team.

Remember that $25 million that the City of Glendale guaranteed the NHL to cover losses this season? That bought the city approximately 222 days of time to find an owner from the date of publication. Each day costs the taxpayers in Glendale $112,612.61 in lost revenueIF, and only if, the City of Glendale cannot find a buyer for the Coyotes and the NHL loses the full $25 million in operation costs this upcoming season.

And you thought Jim Balsillie played dirty.

Of course, this re-opens the entire discussion on True North Sports and Entertainment's pursuit of the Coyotes. Let's go to the report.

"The agreement, obtained by the Globe and Mail, also states Glendale can only keep the Coyotes after Dec. 31 if it finds a local buyer and the NHL has 'not yet entered into an agreement to sell the team in a non-Glendale sale and the city identifies a prospective bona fide purchaser.'"
We'll call this portion of the agreement the "out clause". With this clause written into the agreement between the NHL and the City of Glendale, the NHL has taken the appropriate steps to exhaust all potential local buyers, thereby opening the field up to any and all offers, including those where the team would move to a new home. With no local buyers, the NHL can definitively say that moving the team is the only option.

However, they left the job of selling the team to the City of Glendale. Now, I'm not sure about you, but I know that there aren't a lot of private businessmen and businesswomen who will do business with a level of government. It just doesn't make good business sense to deal with the "house", to use a gambling term, because the "house" - in this case, the government - never loses. Nevertheless, the NHL has left it up to the City of Glendale to find an owner, putting the onus squarely back on the city's councillors to come up with a solution for a problem they are ultimately paying to solve.

In defence of the City of Glendale, this could simply be a case of academia in that "city manager Ed Beasley and NHL deputy commissioner Bill Daly told Glendale council that the sale of the Coyotes is expected to close by the end of June" on May 11. Whether Glendale agrees to the concessions demanded by either Jerry Reinsdorf or Ice Edge Holdings, none of the $25 million could be spent nor will the NHL's "out clause" come into effect.

The sticking points thus far in the negotiations with Ice Edge, the leading candidate as far a public opinion is concerned, is that Ice Edge wants the City of Glendale to sign an agreement offering them the exclusive negotiating rights with the city in addition to some changes being made to the arena lease deal under which the Coyotes currently operate. As it stands, the City of Glendale will not sign off on that exclusivity agreement, and, quite frankly, I don't blame them.

Limiting your sale to one buyer limits your bargaining power when it comes to capitalizing on the potential growth that the Coyotes may bring. By signing off on the exclusivity deal, the City of Glendale paints itself into a corner - something that would help the Ice Edge Holdings bid immensely.

The other player who had stepped forward is apparently either no longer interested or simply laying in wait. Jerry Reinsdorf, owner of the Chicago Bulls and Chicago White Sox, was the odds-on favorite a little over one month ago to seal the deal with the City of Glendale until Glendale came to their senses. Reinsdorf got greedy in asking for $45 million in subsidies, and this prompted the City of Glendale to bring Ice Edge back into the negotiations.

While I doubt that Reinsdorf will back off the subsidies he asked for if the City of Glendale decides to re-open talks with him, it appears his bid for the team is dead. Judging by public opinion, many in the greater Phoenix area consider this a win for the team. I have to agree with them.

So it comes to this: find a buyer before the calendar turns to 2011, or the NHL will open the floor to all bidders regardless of having a team in the Phoenix market or not. With Winnipeg already on the map in terms of being NHL-ready in terms of having an owner, it appears this soap opera in the desert just won't go away.

And it's costing the good people in Glendale $112,612.61 per day to live in this made-for-TV drama.

Until next time, keep your sticks on the ice!

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