DALLAS – In the wake of the third failed attempt to find a buyer for the National Hockey League’s Phoenix Coyotes, the city of Glendale, Ariz., is seeking a manager for the city-owned arena that serves as the team’s home.
Terms of the most recent unconsummated deal to sell the team to investors led by Greg Jamison, former chief executive of the NHL San Jose Sharks, included paying the Jamison group an annual average arena management fee of $15 million. That fee was designed to cover losses expected from keeping the team playing in the city’s Jobing.com arena.
The NHL has owned the Coyotes since former owner Jerry Moyes put the team in bankruptcy in 2009. Moyes had planned to sell the team to an owner who wanted to move it to Canada.
Glendale, which built the $180 million arena specifically for the team with sales-tax-backed revenue bonds in 2003, objected to plans to move the team, and the NHL stepped in to buy it out of bankruptcy.
Since then, three groups of investors have sought to buy the team from the NHL under terms that would keep the Coyotes playing in Glendale, but all have failed.
Glendale approved the latest effort to sell the team in November, but Jamison, who never indicated where the money would come from, failed to close the sale by the Jan. 31 deadline.
While Glendale and the NHL could still work out a deal to sell the team to Jamison or another buyer, the city is seeking an arena manager separately while negotiating with the NHL to keep the Coyotes playing through the current season.
“Mr. Jamison’s deal is done,” Glendale Mayor Jerry Weiers told the city council in a February meeting. “What we’re talking about now is opening it up to other people.”
Glendale spokeswoman Julie Frisoni said that the NHL is continuing to negotiate with potential team buyers and that the city would become involved once a viable bidder was identified. The city expects to seek requests for proposals for managing the arena within a month or so.
The city council, Frisoni said, "is just looking for options. They've been down this road for a couple of years now, and they want to leave all options available."
With bonds issued by the Glendale Municipal Property Corp. maturing through 2033, the city has $275.4 million of debt for the arena and related developments outstanding. Interest through 2033 is expected to cost $190 million.
Glendale’s general obligation bond ratings are A-minus from Standard & Poor’s with a negative outlook and A2 with a negative outlook from Moody’s Investors Service.
Even if the team were to leave, bondholders would be secure because of the pledge of excise tax. From 2010 to 2011, pledged revenues were 4.82 times higher than debt service payments.
However, the cost of covering the Coyotes financial losses has forced the city to divert revenues from other departments and raise the city’s sales tax rate. Pledged revenues for the arena bonds fell 7.14% from 2008-09, and were down 8.68% the next year. From 2010 to 2011, revenues improved slightly but were down 5.43%.