It's the NHL offseason, so like clockwork, the Arizona Coyotes are now in jeopardy again.
A new article published by TSN up in Canada outlines how some members of the Glendale City Council - particularly Ian Hugh - believe IceArizona is in breach of contract with the City over the management of Gila River Arena. Nullifying the agreement, as Councilmember Hugh seems to desire, would almost certainly result in relocation of the Arizona Coyotes.
But Hugh's rationale - and the idea that the lease agreement would be declared invalid by a court - is on extremely shaky legal ground even before the first lawsuit gets filed. Here's why.
What it Means to Breach a Contract
A "breach of contract" in very simple terms, is the failure of one party to fulfill their obligations as outlined in a contract - the arena management agreement in this instance - to another party. What are the obligations IceArizona has to the City of Glendale?
According to the actual Gila River Arena Lease Agreement , IceArizona has four primary responsibilities under the arena management contract. You can find them all in the Statement of Intent in Section 1.1, but the major four are:
- The Arizona Coyotes must play all home games at the arena.
- IceArizona must provide the City of Glendale with additional revenue streams (outlined in detail here).
- IceArizona must secure non-hockey related events to the arena, either through their own efforts or through the hiring of an arena manager (in this case, Global Spectrum).
- IceArizona must maintain Gila River Arena and ensure it remains in compliance with municipal, state, and federal laws dictating safety, cleanliness, and accessibility.
A Question of Accounting
IceArizona's Financial Flexibility
What's the Harm?
Intent Matters Too
The decision to go to court is a relatively simple one. All it would take for the City of Glendale to sue IceArizona for breach of contract is a majority vote of the City Council. Councilmember Hugh may get his way, especially with Glendale's finances front and center as election season rolls around.
But election season could work against the lawsuit effort too. Arizona's Public Records Laws are strongly worded in favor of access to information, which means that the audits of IceArizona's finances - both by the ownership group and by the City - could very easily become public knowledge if a news organization or private entity was willing to do the legal legwork to get them.
If it turns out that Glendale is dramatically overstating IceArizona's loss reports, or that there is a reasonable explanation for IceArizona's accounting methods, then Glendale simultaneously damages their case in court while giving taxpayers reason to wonder why the City is spending more of their money on costly litigation.
It's not out of the realm of possibility that Glendale does decide to sue IceArizona. More than one City Council member has expressed displeasure with Coyotes Chairman Andrew Barroway. It's clear that the relationship between Glendale and the Coyotes is sour.
But once a breach of contract suit arrives in Maricopa County Superior Court, the City will likely face an uphill battle to prove their case. Nullifying an agreement worth hundreds of millions of dollars over a single clause that does not affect IceArizona's ability to perform their primary obligations is a lot for a court to swallow.