Group warns lawsuit over Coyotes sale

Updated: March 15, 2011, 11:03 PM ET
Associated Press

PHOENIX -- A Phoenix watchdog group announced Tuesday it will sue the city of Glendale if the proposed deal to sell the NHL's Phoenix Coyotes to Chicago businessman Matthew Hulsizer is completed.

The conservative Goldwater Institute said after examining more than 1,000 pages of documents provided by the city under a court order, it believes Glendale's hockey deal would illegally subsidize a private business and put taxpayers at risk.

The city aims to sell bonds to pay Hulsizer $100 million. In return, Glendale would get the right to charge for parking during Jobing.com Arena events to pay the bond debt. The city also would pay Hulsizer $97 million over the next five years to manage the arena.

Hulsizer would buy the team from the NHL, which purchased the Coyotes in U.S. Bankruptcy Court in the fall of 2009.

The agreement would keep the Coyotes in Glendale through 2041. Glendale Mayor Elaine Scruggs has said it would stave off a $500 million economic loss to the city should the team leave.

The institute charges the deal violates the state Constitution, which it said bans Arizona governments from giving or loaning its credit to subsidize any individual, association or corporation.

The group has pressed Glendale to restructure the deal so Hulsizer -- or another buyer -- bears more risk. In return, the institute has faced its share of political pressure since its threat of a lawsuit made it difficult for Glendale to sell bonds to seal the deal.

A statement issued by Goldwater officials said the proposed Coyotes deal "poses enormous risks to Glendale taxpayers, who will have to repay the bonds if the team fails again or if parking revenues are insufficient to repay the bonds."

A Glendale spokeswoman declined comment on the threatened suit, but NHL Deputy Commissioner Bill Daly said "from our perspective, Goldwater's announcement doesn't change a thing."

"We are still pursuing a sale of the bonds," Daly added. "Hopefully, the announcement will not negatively affect that."

Hulsizer is the co-founder and chief executive officer of PEAK6 Investments.

The Coyotes have lost tens of millions of dollars virtually every season since moving from Winnipeg in 1995.


Copyright 2011 by The Associated Press

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