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The Arizona Coyotes out-clause is not going anywhere, get used to it

Despite the recent addition of Andrew Barroway to the IceArizona ownership group, the out-clause in the arena management contract is not going to disappear. Here's why.

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Christian Petersen

The inevitable addition of Andrew Barroway to the IceArizona ownership group has had a largely positive effect on the morale of Arizona Coyotes fans who are seeing the limitations of icing a team with the third lowest payroll in the NHL. While the potential to add more talent is certainly an appealing part of the deal, fans are equally excited about the prospect of deep pockets that could render the possibility of relocation a dead letter.

Especially when it comes to the 180 day opt-out window established in the arena management contract signed with the City of Glendale. Discussions about the team's long-term future in Arizona inevitably return to the existence of that out-clause, and more than one fan has suggested the best sign of commitment to the Valley would be if IceArizona amended the agreement to remove the out-clause altogether.

As nice as that would be, it's not happening. For a couple of reasons.

It's a Good Deal

The argument about IceArizona's finances will probably never be resolved. The team is not going to give the public access to its books, and even then it's not hard to have the math add up to support the narrative you want to tell (remember when NHL owners were crying poor before the lockout right as they handed guys like Zach Parise and Ryan Suter $98 million contracts?). That also explains why there are so many conflicting reports as to how much the franchise lost in the first year.

Despite the varying numbers, it's clear that the team lost a sizable amount of money in its first year under IceArizona. That's why the out-clause is there; the Coyotes were, to put it mildly, a distressed asset. No one in their right mind makes that kind of a purchase without some sort of safety valve to offset some of the risk. Especially when the City of Glendale is willing to hand them an opt-out clause. So while public commitments of loyalty to the desert are nice, the out-clause is advantageous to IceArizona, and so it's not going to be removed from the agreement.

Going back to Glendale

Any change to the out-clause would have to be done with the consent of both IceArizona and the Glendale City Council. While the former is unlikely to engage in a long and public dialogue over proposed changes to the agreement, the latter would likely be all to eager to do so, for a few reasons.

First, there is a faction of the council that dislikes the out-clause. It was sufficient for Mayor Jerry Weiers to vote against the agreement in its entirely, and it is entirely possible that the majority that voted for the agreement would like to see it go too. The possibility of the arena management agreement coming back up for discussion isn't likely to be ignored.

Second, those that don't like the agreement at all would get the opportunity to amend the agreement as they see fit. Obviously the ownership group doesn't have to agree to any changes that they do not like, but leaving the window open for others to gum up the works is not out of the question.

Finally, once an agreement was passed, the same rules that governed previous agreements apply. Which means in theory the contract could be subject to lawsuit or referendum. While a successful attempt would merely revert the agreement back to its original unamended form, that process is unlikely to endear the city to Andrew Barroway, which could become a big deal if the loss target in the original agreement is actually met before the fifth year.

Final thoughts

Ultimately everyone has an incentive to keep the agreement the way it is. IceArizona benefits from having a release valve and from having the gong-show that is Glendale politics in their rearview mirror. So while the existence of the out-clause will likely continue to give Coyotes fans heartburn, it is not going anywhere. So get used to it.