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From the editor's desk: the Coyotes out-clause and sins of omission

When it comes to the Arizona Coyotes' out-clause, what you don't say is as important as what you do.

By Brendan Porter
Matt Kartozian-USA TODAY Sports

Sometimes I wonder how many people who have written about the out-clause contained in the Gila River Arena management contract between the City of Glendale and IceArizona have actually read it.

That thought occurred to me again while I was reading this piece by Anthony Perez over at Today's Slapshot concerning comments made by TSN's Rick Westhead. Here is the original tweet in question:

This tweet contains two massive sins of omission on the part of Westhead. While granted, Twitter is not exactly the best medium for nuance and context, what Westhead leaves out is absolutely pivotal to how the out-clause functions.

The clause in question is Section 3.3, page 23 of the contract. For the sake of convenience, here is the actual language of the provision:

Notwithstanding the other terms and provisions of this Agreement, Team Owner and Arena Manager jointly shall have the right to terminate this Agreement (i) by delivery of written notice to the City at any time within 180 days following the end of the fifth (5th) Hockey Season after the Effective Date [emphasis added] and (ii) subject to a payment to the City of the City Shortfall; but only if (iii) neither a Team Owner Default or Arena Manager Defauly has occurred and is continuing beyond the applicable cure periods, and (iv) Team Owner has incurred a cumulative operating loss of Fifty Million Dollars ($50,000,000) or more, calculated in accordance with GAAP as the sum of Team Owner's operating income/loss for each of the Fiscal Year periods then ended.

Don't believe me? You don't have to. You can read the entire thing for yourself here - Gila River Arena Lease Agreement

Westhead correctly states the operating loss threshold is $50 million over five years. What he neglects to include is the team has only 180 days to exercise that clause, and the 180 days only applies after Year Five.

Why does that matter? Because by omitting the emphasized portion of the out-clause from the discussion, Westhead implies that the threshold can be triggered at any point as soon as $50 million in losses is reached (it can't) and the out-clause can be exercised at any point in the future (also not true).

So how is it that a TSN reporter could correctly interpret the second half of the clause while completely ignoring the first? Unless people read from back to front in Canada - which I don't believe is the case - then I have no choice to conclude that Westhead, and others who have not touched on this part of the agreement either, have not actually read the Lease Agreement themselves.

Of course, I could be wrong, and Westhead has in fact read the Agreement. I would be more than happy to admit I was mistaken in my assertion. However, if that's true, I wonder what the rationale is behind omitting the other portion of the out-clause from the discussion is though. That's a conversation well worth having.

Thoughts

  • One advantage of sending players to the IIHF World Championship - especially from the Coyotes - is that they receive international exposure and attention that they otherwise don't receive while playing in Arizona.
  • One such player is Oliver Ekman-Larsson. Coyotes fans have known for years that OEL is a stud on the blueline. Now the rest of the world is witnessing it too.
  • That Ekman-Larsson has only a $5.5 million annual cap hit through 2019 is simply incredible. He will hit free agency when he turns 28 though, which means he'll likely be an extremely valuable free agent target worth a lot of money.
  • It's quite possible then that Arizona has a very limited window to utilize OEL's services before his price becomes incredibly high (though his salary in the final season of his current contract is $7 million). Would the team consider overpaying to keep him on?
  • To me the answer probably depends on how close Arizona is to competing for a Cup at that point. If the team is close, it might be worth overpaying in the long-run for a few more seasons of Ekman-Larsson at an elite level.
  • Neither Connor Murphy or John Moore have points at the IIHF World Championship. Is that concerning?
  • On some level, yes. Obviously you want your players to still produce against top tier talent. And Murphy and Moore have been consistently receiving second pairing minutes throughout the tournament. It's not like they haven't been getting chances to produce.
  • Mark Arcobello has also had trouble scoring at this tournament. My guess is that he will be a positive contributor to some NHL team next year. But my guess is also that this past season was an aberration, not a sign of things to come.

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