Lease clears way for sale of Coyotes
GLENDALE, Ariz. -- The Glendale City Council has approved a new lease for the Phoenix Coyotes, clearing the way for sale of the team by the NHL to Chicago businessman Matt Hulsizer.
The council voted 5-2 late Tuesday night in favor of the lease, which will cost the city $197 million over a six-year period. Hulsizer is expected to pay about $170 million for the team.
NHL commissioner Gary Bettman attended the meeting and assured the council that the league's board of governors would approve Hulsizer as an owner.
However, the conservative Goldwater Institute warned the council that terms of the lease may violate Arizona's anti-subsidy law.
The NHL purchased the franchise out of U.S. Bankruptcy Court a year ago with the intent of selling it to someone who would keep the team in the state. That, however, was contingent on a new lease agreement with Glendale, which built Jobing.com Arena for the Coyotes.
"This is the resolution we sought," Bettman said after the meeting ended near midnight. "The action taken by the council is successful and conclusive."
The lease has the city giving Hulsizer $100 million for parking rights and another $97 million over a six-year period as a fee for operating the arena. The Goldwater Institute questioned the agreement as overgenerous and the fees far beyond fair market value.
City attorney Craig Tindall said the Goldwater argument has little merit. He said he would meet with Goldwater representatives on Thursday.
"My reservation here is the city would be left with huge bills and no income from this transaction if Mr. Hulsizer defaults on any of his payments to the city," said council member Joyce Clark, who voted against the lease. "If, for some reason, he relinquishes control of the Coyotes franchise, the cost to the city would be enormous."
The Coyotes issued a statement thanking the council and called the vote "another step towards securing our future in Glendale and we remain optimistic that a deal will be finalized soon."
The team has not made a profit since moving from Winnipeg in 1996 and is expected to lose at least $25 million this season. The 40-year-old Hulsizer, who played hockey at Amherst and co-owns with his wife an investment firm, has said he expects to lose money on the team for several more years.
"It will take some time to turn this around," he said. "It will not happen in the short term. We're looking 10, 15 years possibly, I don't know. We hope the economy will start to turn around, and the Coyotes can win."
The agreement, which gives Hulsizer an option to buy the arena after five years, covers the remaining 23 years of the 30-year lease signed with then-owner Jerry Moyes.
Moyes took the team into bankruptcy without notifying the league and intended to sell it to Canadian billionaire James Balsillie, who would move the franchise to Hamilton, Ontario. But a bankruptcy judge eventually threw out Balsillie's bid because the NHL opposed moving the team and refused to accept the Canadian as an owner.
The NHL was the last remaining bidder and bought the team. If the Hulsizer deal falls through, the league would look to move the franchise out of Arizona.
Copyright 2010 by The Associated Press