Here's a scenario for you: Two years ago, you bought a beautiful, very expensive wedding dress. You weren't engaged yet, but you were in a steady relationship, saw this dress, and thought it would be a great investment. Eventually, it would pay off, you told yourself. And damn, it was a nice dress.
Then your relationship ends. And you're sitting here with this expensive dress hanging in your closet -- in fact, you got it on a payment plan and you're still paying for it every month. You have no use for this dress any time soon, and you really need that extra money each month. It's the worst case of buyers remorse you've ever had ... except you lost the receipt, and there's a strict return policy. You'd kill for any loop hole to get rid of this thing.
That's basically how the City of Glendale sees the Arizona Coyotes hockey club.
A bad deal we all saw coming
In July 2013, Glendale's City Council voted in favor of a lease agreement that would keep the Coyotes in Glendale. The 15 year deal not only gave the Coyotes a home at the city-owned Jobing.com Arena (now Gila River Arena) but also had Glendale paying the Coyotes $15 million per year to operate the day-to-day operations of the building.
It was a bad deal, and we knew that before pen ever met paper. The Arizona Republic said in an June 2013 editorial that even if the Coyotes went to the Stanley Cup Final for 20 straight seasons and the arena booked 30 sold out concerts each year for 20 years, the city would still lose about $9 million per year. The best-case scenario was losing a ton of cash.
This knowledge was out there even as the Council voted 4-3 in favor of the deal, largely on the belief that they'd lose much more than $15 million per year if the team stuck around.
And, right on cue ... the results have not been pretty for Glendale. They lost a reported $8.1 million on the arena last fiscal year, and they're expected to lost $8.7 million on it this year. Most of the council members who voted in favor of the deal back in 2013 have since been voted out of office. Residents are pissed, especially since the city can't pay for other stuff that's a lot more important than a hockey team.
Surely the current council and the mayor can see the writing on the wall, and now they want out of the deal they made with the team. A deal they voted on and signed for on the dotted line. And just like you are with that terribly ill-advised wedding dress purchase, they're scrambling for any loop hole they can find to get out of it.
Weaseling out of the deal
That brings us to a special meeting being held by the council on Wednesday night -- a meeting where they'll vote on whether or not to terminate the agreement that exists with the Coyotes. Yes, they think they have found their loophole.
A public notice on Glendale's website outlining the details of the special meeting says that the City will explore options for termination of the agreement with IceArizona, the owners of the Coyotes, who are currently paid by the City to manage the city-owned Arena.
The basis of the City's argument hinges on a state statute that says governments can end contracts that are less than three years old if a person who helped negotiate on behalf of the government becomes an employee of the other party involved. The AP points out that former Glendale attorney Craig Tindall now works for the Coyotes, and that could be the lever the City is trying to pull here.
Tindall, the man who seems to be question here, was indeed a lawyer for the City of Glendale in 2013. He negotiated on behalf of the city for years, but he never actually was involved with the ultimate deal that was signed between the city and Coyotes owners IceArizona.
"Tindall resigned from Glendale nearly two months before the city’s negotiations with IceArizona principals began after May 28," the Arizona Republic reported in August 2013 when he started working for the team.
Aside from the Tindall stuff, there's another potential out for the city here, as first discussed in a May report by TSN. The city says that their $15 million per year payments to the Coyotes aren't actually going directly to arena management like they're supposed to, and that this equals a breach of contract. Via TSN:
But nearly two years after council approved the controversial pact, city officials claim the money that cash-strapped Glendale is paying to the team's owner IceArizona is instead going directly to Fortress Investment Group, the New York-based asset manager which financed holding company IceArizona's purchase of the Coyotes. ... Glendale Vice Mayor Ian Hugh says using taxpayer dollars to pay down the team's debt rather than for direct arena management expenses amounts to a breach of contract.
Team co-owner Andrew Barroway denied any rumor of breach of contract as recently as Tuesday evening, and he says that they're comfortable in their legal standing on that matter. In all honesty though -- whether we're talking about the Tindall situation or the finger-pointing regarding breach of contract -- it feels like Glendale is just digging around in the dark, searching for a loop hole to get out of the horrible deal they made two years ago.
Coyotes president Anthony LeBlanc really, really isn't happy about that, as you might imagine.
"This action by the City of Glendale is completely ludicrous," said LeBlanc. "The City of Glendale is displaying a complete lack of good faith, business acumen or an understanding of a business partnership."
The city released a statement, too.
"The City Council has scheduled a discussion and possible vote regarding Glendale’s contract with the Arizona Coyotes. Discussions and negotiations regarding the contract have been ongoing for months. Specifically, the City is open to a resolution but it must be one that provides certainty and fairness to both parties, especially the taxpayers. The Council has agreed to stand for transparency and the highest standards of ethics for any future agreement with the Coyotes."
The Council has to stand for the highest standards of ethics ... but meanwhile, over here, they're trying to sneak out of a deal that was fairly negotiated and agreed upon in good faith two years ago.
Look, Glendale taxpayers are getting a raw deal here. They have new government leadership in the city, and those folks would like to keep their jobs. One way to do that is to fix the city's budget problems -- which are in large part caused by this disastrous arena they built and the hockey team they're paying to play in it. Getting out of the deal plays well, generally speaking, with Glendale residents.
But just because new folks are in charge shouldn't mean the city gets out of its prior agreements. The time for Glendale to call the audible and stop this from happening was two years ago before a deal was ever on paper -- not two years later when they're feeling that buyers remorse.
What happens if Glendale votes to terminate the agreement?
Here we are, though. If Glendale votes to terminate this lease agreement, we will no doubt have a lengthy court battle on our hands. The Coyotes may very well win that court battle ... but what about in the interim?
Think out loud with me on how this might play out (and please keep in mind that I am certainly not a lawyer).
1) Glendale votes to terminate the deal. The Coyotes then cave and agree to renegotiate. (The team has already said they will not do that.)
2) Glendale votes to terminate the deal. They say that the Coyotes do not have a lease to play at Gila River Arena. The Coyotes sue them. Maybe a judge grants an order that says that until this is resolved, the team gets to play at the building, and the cloud hangs over the Coyotes (yet again) until this is all cleared up.
3) ... or maybe that doesn't happen. Glendale says there's no lease, and while we're waiting for the courts to clear everything up, the city takes the keys, and locks the team out of the building. They're homeless.
There's a hockey season that starts in October whether the Coyotes have a home or not. The league schedule comes out in July -- or maybe even late June -- and needs to be at least somewhat set in the very near future. You kind of need to know where are 30 teams are going to be playing.
That's where we'd have to start talking about relocation -- or at least temporary relocation until this all gets resolved.
You're probably thinking of the usual suspects: Las Vegas, Kansas City, Seattle, Hamilton, Quebec City.
Vegas doesn't have an arena that's ready yet, and their existing building is full year-round with concerts and boxing and any other number of events. It's too busy for an NHL team to play its home games there, which is a big reason why they're building a second arena in the city anyway. Kansas City has an arena, but no real fan base to speak of and no indication that they would support the NHL. Same for Houston or San Antonio, if we want to go further down that road.
Hamilton gets messy with the Toronto Maple Leafs' territorial rights. Seattle has a horrible old arena that's also not built for hockey, and no promise of a new barn on the horizon. The NHL's owners seem to be hanging on to the idea of the rich expansion fee they'd earn from Quebec City -- which they obviously wouldn't get if a team merely relocates from Arizona.
Then think about the logistics -- setting up an operation in a new city, physically moving the team, rebranding, the whole nine yards. A lot would need to happen in a short amount of time for this to work, and they wouldn't have the same head start that Winnipeg did when the Thrashers suddenly relocated in June 2011.
Making it work in Arizona without Glendale's help
There's one potential temporary option right under our noses, though.
Would US Airways Center (soon to be known as Talking Stick Resort Arena) in downtown Phoenix, home of the NBA's Suns, be a feasible temporary venue? The Coyotes played there from its inception in 1996 until 2003 when they moved out to Glendale. The ECHL's Phoenix Roadrunners played there from 2005 to 2009, so we know the building can still make ice despite its renovations in the early-2000s.
The Coyotes left downtown because the arena was so horrible for hockey -- with a small capacity and a ton of obstructed seats -- and their financial struggles were exacerbated by the issues the arena caused. But if it's a temporary solution, it might be an option if a deal is to be had with the City of Phoenix.
On that front, it might be possible. At least one Phoenix council member is already lobbying for the team to move back to Phoenix permanently -- proposing a new project that would house both the Coyotes and the Suns. That could be a huge boon for the Coyotes, especially when it comes to geography. Glendale built them a nice new arena, but it's 20 miles west of downtown Phoenix and even farther away from population centers in Scottsdale and Tempe -- you know, places where lots of Coyotes fans live.
Being back in downtown Phoenix could be huge for the long-term viability of the team and ultimately, the success of hockey in Arizona. Of course, the big kicker: they probably won't get a free $15 million every season from the City of Phoenix -- or any other potential new city -- like they do with Glendale, and that could be a huge factor to the team's bottom line both long-term and short-term.
This is all speculation anyway. We have no real idea what the Coyotes books look like, and we have no idea how this could shake out in the real world, where -- as we've learned over the last six years -- lawyers and complicated finances can convolute any situation.
But it's not hard to imagine a world where the Coyotes leave Glendale for greener pastures -- potentially, if Arizona hockey fans are lucky, without even leaving the state.
It seems unlikely that Glendale and the Coyotes will ever have a good working relationship, especially not if the last 24 hours are any indication of how the team plans to operate. So it's probably best at this point if the team moves on, one way or the other. We'll all be saved a lot of headaches and maybe we'll finally be able to enjoy hockey without the off-ice distractions.
And hey, Glendale will finally wash its hands of the hockey team it lured to town 12 years ago. That way they'll only have an empty $220 million arena sitting on the Loop 101 to remind them of their many mistakes.