Sources: Coyotes would stay in Phoenix

Updated: May 8, 2010, 8:33 PM ET
By Scott Burnside |

The City of Glendale and the Ice Edge Holdings group have agreed on all points on a new lease agreement that would keep the Phoenix Coyotes in Arizona, sources told Friday evening.

The two sides are expected to sign a letter of exclusivity by early Monday morning, which will formally end the bid of Chicago sports tycoon Jerry Reinsdorf, although sources told that the city has not considered the Reinsdorf bid viable for some time now.

Ice Edge will not, however, agree to have its new memorandum of understanding submitted to the City Council for a vote until Glendale agrees to a number of conditions outlined by the NHL, chief among them that the city will agree to pay any operating losses the Coyotes might incur next season if a deal to sell the team collapses.

Those requirements will be discussed by City Council at its public meeting Tuesday in Glendale.

Although it's possible the city could find itself on the hook for between $20 million and $30 million in operating losses if a deal with Ice Edge or any other potential buyer moving forward collapses, it's believed Glendale will agree to the league's conditions because the NHL will exercise its right to move the team without those assurances.

It's believed Winnipeg would be the prime target for relocation, sources have told, and that a deal to sell the team to interests in Winnipeg could be completed quickly if Glendale cannot satisfy the league's conditions.

While the NHL's conditions are on the agenda for Tuesday's council meeting, meetings between Ice Edge officials and city officials went so late Friday that discussion of the new memorandum of understanding wasn't able to make it onto the council agenda for Tuesday's meeting. It's possible the city could convene a special session next week to approve the new lease agreement.

Assuming the city appeases the NHL and approves the Ice Edge proposal, sources say it could then take four to eight weeks to complete the sale of the team to the Ice Edge group.

A month ago the City Council rejected Ice Edge's proposal for a new lease agreement and instead accepted a more controversial proposal from a group headed by Reinsdorf. But problems arose with that bid and city officials quietly began wooing the Ice Edge group back to the table.

"The NHL has expressed its intention to keep the team in Glendale," Tuesday's agenda item reads, "but has established deadlines and imposed requirements that require certain immediate financial commitments and assurances" by the city.

The item says the money would not come from the city coffers but from arena operations and the special taxing district that is to be established as part of the sale of the team and the new lease agreement.

Glendale faces the prospect of giving the NHL what it wants or finding itself with an empty arena the city built specifically for the Coyotes.

Ice Edge investors, who say they would buy the team with a combination of their money and bank financing, describe themselves as avid hockey fans and say they would not seek an out-clause in the lease agreement. Ice Edge even took out a full page ad in The Arizona Republic before the city council vote.

"Ice Edge continues to believe in the future of hockey in the valley," the group said in a statement released Saturday. "We have held several discussions with the city of Glendale over the past few days, and those discussions continue through the weekend."

The Coyotes are coming off a surprising season in which, despite all the ownership turmoil, the team set franchise records for wins and points. They were eliminated by the Detroit Red Wings in seven games in the first round of the playoffs. Some sort of certainty in ownership is needed as the free agency period approaches. Several Phoenix players have contracts that are expiring.

Scott Burnside covers the NHL for The Associated Press contributed to this report