DALLAS — In an effort to protect its $180 million investment in the Jobing.com Arena, Glendale, Ariz., is willing to cover up to $25 million in losses for the National Hockey League’s Phoenix Coyotes to keep them playing there.
The City Council’s decision this week appears to be a rare instance in which Glendale has committed to guaranteeing the success of a private business.
The subsidy for the Coyotes would come from a special tax and bonding district that would be created around the arena and include surrounding retail and business development known as Westgate City Center.
The $25 million would go to the NHL, which took ownership of the team out of bankruptcy. Two groups are seeking to buy the team from the league. One group, Ice Edge Holdings, appears to have the inside track after reports that a group headed by Chicago White Sox owner Jerry Reinsdorf is stepping back from the deal.
If no local buyer can be found, the NHL has said it will allow the team to be sold and moved to another city. Plans to move the team to Canada prompted the league to step in and buy the team in bankruptcy. Now it is believed that the Coyotes, formerly the Winnipeg Jets, would return to Winnipeg if a deal falls through.
Calling Glendale’s $25 million subsidy “nothing more than an insurance policy,” NHL deputy commissioner Bill Daly said: “We feel confident an ownership transaction can happen and it can happen in an expeditious fashion.”
Ice Edge is a group of Canadian and U.S. investors whose original bid to buy the team was rejected. At the time, Reinsdorf, whose White Sox hold baseball spring training in nearby Scottsdale, was the favored buyer.
Talks between Ice Edge and Glendale broke down Monday over the issue of exclusive bargaining rights in a proposed memorandum of understanding.
To build the arena in 2003, Glendale issued revenue bonds backed by sales taxes as well as general obligation bonds for roads, sidewalks and other infrastructure around the Westgate area. The city issued $155 million of Series 2003A and B sales tax bonds in July 2003 for the bulk of the financing under the name Glendale Municipal Property Corp.
The owner of the team at the time, Arizona developer Steve Elman, turned to Glendale after the Phoenix suburb of Scottsdale rejected his proposal for an arena and commercial development. Elman was later replaced by owner Jerry Moyes amid doubts about Elman’s ability to finance his existing projects.
Glendale, which later landed the nearby National Football League Arizona Cardinals stadium, financed by the Arizona Sports and Tourism Authority, began promoting itself as a major professional sports mecca, with plans to add a Cactus League baseball stadium.
Despite the chances of losing the Coyotes, rating analysts have taken no action on the Municipal Property Corp., which serves as the conduit issuer for the arena bonds. Standard & Poor’s has maintained the rating on the debt at AA while Moody’s Investors Service retains the Aa3 rating, both with stable outlooks.
