DALLAS — With only one bid for the Phoenix Coyotes on the table, the Glendale, Ariz., City Council has 60 days to negotiate a lease with an investor group promising to keep the National Hockey League team in the city’s Jobing.com arena.
Bought out of bankruptcy by the NHL, the Coyotes would be sold to Ice Edge Holdings, a group of American and Canadian investors who have agreed to keep the team in Glendale. The City Council on Tuesday voted unanimously to accept an exclusive memorandum of understanding to negotiate an arena lease with Ice Edge. The lease is a condition for selling the team to Ice Edge. If a deal cannot be reached, the NHL has the right to sell the team to another buyer who could then move the franchise.
Glendale has also approved a $25 million subsidy to cover losses the team is likely to incur over the next hockey season as the transaction develops. In May, a U.S. Bankruptcy Court judge ruled that the team must stay in Glendale for at least one more year.
The subsidy will come from a community facilities district made up of commercial development surrounding the arena known as Westgate City Center. The CFD will operate the parking facilities and provide improvements as needed.
Glendale’s goal is to keep the seven-year-old arena viable. Built in 2003 and funded with $180 million of taxable and tax-exempt bonds, the arena was designed for one major tenant, the Coyotes. Without the team, the city would have to substitute other events to keep revenue flowing.
Loss of the team would not endanger the arena bonds, which are supported by sales tax revenue. The senior-lien bonds carry Glendale’s general obligation ratings of AA from Standard & Poor’s and Aa3 from Moody’s Investors Service. The junior-lien debt is a notch lower, but the outlooks on both remain stable. Still, the loss of the team would affect Glendale’s overall economy as well as businesses in the Westgate development.
“The transfer of ownership and possession to Ice Edge Holdings is a major and final step in establishing the long-term presence of hockey in Glendale, Ariz.,” the city said in a statement regarding the sale.
Even if the sale goes through, however, the economic viability of the Coyotes will still be in doubt, officials acknowledge. The team has never made a profit since it moved to Phoenix from Winnipeg, Ontario, in 1996. It moved to Glendale from Phoenix when the arena, later named for the company Jobing.com, was built in 2003.
At the time, Glendale was becoming a major professional sports hub with the opening of the National Football League’s Arizona Cardinals stadium and new Cactus League spring training camps for Major League Baseball’s Chicago White Sox and Los Angeles Dodgers.
The Coyotes had the lowest attendance of any team in the NHL this season, drawing an average of 11,989 fans per game, or 69% of the arena’s capacity. Attendance was down 19% from the 2009 season, as the leauge saw overall attendance for its 30 teams drop 2.2%.
The NHL’s purchase of the team out of bankruptcy was prompted by previous owner Jerry Moyes’ plan to sell to an investment group that planned to move the team to Hamilton, Ontario. The NHL intended to hold the team only long enough to sell it to another buyer who would try to keep it in Glendale.
