DALLAS — A proposed sale of the National Hockey League’s Phoenix Coyotes to Chicago sports entrepreneur Jerry Reinsdorf is contingent on creation of a bond district backed by tax revenue.
Reinsdorf, owner of Major League Baseball’s Chicago White Sox and the National Basketball Association’s Chicago Bulls, was chosen by the Glendale, Ariz., City Council as the preferred owner of the Coyotes at a meeting Tuesday.
Under the proposed deal, Reinsdorf would buy the Coyotes from the NHL, which bought the team out of bankruptcy in October for $140 million. The league’s purchase was designed to keep the Coyotes in Glendale, which built the $180 million Jobing.com arena in 2003 using municipal bonds. Under a previous deal to sell the team, the Coyotes would have moved to Canada, leaving the arena, built specifically for the team, largely unused.
Reinsdorf would pay $103 million, far below the asking price of $140 million to $160 million and below a rival bid of $140 million from a group called Ice Edge.
The Ice Edge proposal would have required a larger potential cash backing from the city in the event that revenues fell short of projections.
The finance plan calls for the creation of a community facilities district that could issue bonds backed by property and sales tax and other revenues. The bonds would pay for a new lease on the arena, cover potential losses, and defray the cost of the team. Revenues are expected to be about $65 million per year. The Arizona Legislature is considering revising SB 1083 to allow reserve funds for community facilities districts.
The area around the arena includes retail and commercial development known as Westgate City Center. Westgate is owned by former Coyotes owner Steve Ellman, who moved the team to Glendale from Phoenix after convincing Glendale to build the arena.
Under the plan, Reinsdorf would manage the city-owned arena and could sell the team to an owner in another city if the bond district does not perform up to the lease deal while the team loses money. Glendale would be allowed to seek another owner before the team could move.
Glendale is planning to complete the sale by July 1. The Coyotes have lost $300 million since moving to Phoenix from Winnipeg, Manitoba, in 1996. If the current deal fails, the NHL could sell the team to owners who would move the team back to Winnipeg next season.
CFDs are already in place in the state and Glendale could try to craft a lease with Reinsdorf via existing law or via new statutes. SB 1083 was originally geared for a California-based real estate developer to develop land in Buckeye using a CFD to finance construction.
The Glendale CFD bond zone would not include the University of Phoenix Stadium that hosts the Arizona Cardinals.