Are the Arizona Coyotes and Glendale close to a new lease agreement?

There has been little news to report of late on the ongoing legal battle between the Arizona Coyotes and the City of Glendale. That is, until one local reporter clued in on a possible scoop:

I am picking up positive news on a possible renegotiated lease between COG and Coyotes but want to emphasize long way to go! #coyotes

— Jude LaCava (@judefox10) July 14, 2015

Obviously, a resolution to the court battle would be a massive sigh of relief for Coyotes fans tired of paying more attention to courtrooms and city council chambers than roster decisions and free agency. But is LaCava's reporting too good to be true?

A Renegotiated Lease?

It's no secret that the City of Glendale wants to modify the current lease agreement for Gila River Arena with IceArizona. Multiple city council members have said as much on the record. While Glendale might be pursuing this goal by questionable means - using an obscure state law to cancel a contract over somewhat flimsy conflict of interest claims - a settlement could potentially allow both parties to save some face.

When looking at the lease agreement, there are enough potential give-and-take options to make a settlement possible. Glendale is without a doubt looking for a reduction in the $15 million annual fee it pays to IceArizona to manage the arena. Even with revenue streams to offset the cost, the City still pays roughly $6-8 million for arena management when all is said and done.

A Possible Compromise?

The City explored the possibility of paying $6 million for private contractors to manage the arena without the Coyotes during the negotiating process with IceArizona back in 2013. A reduction of $2-3 million off of the current fee the City pays to IceArizona would get Glendale to roughly the same expenditure as one of those hypothetical offers the City explored two years ago.

Would IceArizona be amicable to such an arrangement? Possibly. The team may have a winning case, but the consequences of losing in court are far more severe than the benefits of winning. And it's no secret that the team has wanted to reduce the ticket surcharge Glendale applies to all tickets sold at Gila River Arena.

So a compromise that exchanged a reduction in the overall fee for managing Gila River Arena in exchange for a reduction or elimination of the ticket surcharges could satisfy everyone. The City could claim a victory in reducing costs for their taxpayers, while IceArizona could remove a fee that makes tickets to Coyotes games more expensive overall.

Another Vote?

If this rumored deal requires a new draft of the agreement, a formal vote will need to be held by the City Council. In theory, that could make the new arrangement vulnerable to a referendum attempt.

However if the city were to have a deadline they want to avoid, say for example the "evidentiary hearing" scheduled for 7/31, they could schedule an emergency council vote. They would have to post the completed amended agreement 24 hours prior to the vote. Furthermore, if this amended agreement passed with a super-majority vote of at least 5 to 2, it would remove the citizens ability to attempt a referendum.

How hard would it be to obtain a supermajority? Well, the vote to cancel the contract was 5-2, with the two opponents dissenting due to their support of the original contract. It would not be out of the realm of possibility for the council to approve unanimously a change to the contract that resolves the legal challenge while preserving the team's position in the arena.

The NHL's Say

Obviously, the NHL does not want to see its teams being threatened out of their arenas midway through a contract. Gary Bettman and the central office might not care much for any changes to the lease agreement after the fact.

But can the league do anything about it? Not really. Any punitive measures that the league could take against IceArizona - namely raising the interest rate on loans the group took out from the league - would also undermine the goal of making the Coyotes financially viable. And it's unclear if there's a provision in the bylaws that would permit the league to object to any changes to the agreement.

So even if the league disapproves of changes to the lease agreement, there is likely nothing they can do to stop it. What is more likely is that the league spins any changes as a sign that the Coyotes are approaching financial stability.

Final Thoughts

Resolving a civil case out of court is hardly a unique occurrence. And Jude LaCava infamously reported that Greg Jamison was on the verge of closing a deal with the NHL in late 2012, which did not come to pass. So take the report that the two sides are "closing in" on an arrangement with a grain of salt.

But there is a way out for both sides to claim victory, secure changes they want, and move on from a relatively ugly chapter in the team's relationship with the City.