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Hockey doesn't do well in the desert
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Steve Chiotakis: The Phoenix Coyotes are bankrupt, and today the professional hockey team is on the auction block. The National Hockey League wants to keep the Coyotes in Arizona, but Blackberry billionaire Jim Balsillie's bid could send the team back to Canada. Whatever the outcome, one thing is for sure: building a successful hockey team in the Sunbelt hasn't been easy. From station KJZZ, Peter O'Dowd reports.
Peter O'Dowd: Greg Esposito is the type of sports fan who wears a jersey to work, and the thought of his beloved Coyotes moving to Canada makes him sick.
Greg Esposito: They're like old friends. They're reliable, you know. If they leave, you lose a part of yourself.
The problem is such loyal hockey fans are sort of like rain in the desert. The Coyotes haven't gone to the playoffs in seven years. The team hasn't made a profit since it came to town from Winnipeg in 1996.
Ray Artigue helped bring the team to Phoenix. He says early criticism that hockey wouldn't thrive here may have turned out to be justified.
Ray Artigue: Hockey in this market winds up being the odd man out in many ways.
That's because the Coyotes compete with three other professional sports teams here. What's more, sports economists say hockey in general doesn't have the fan base to draw the lucrative TV contracts that support other sports leagues.
Raymond Sauer: It's thin gruel for the teams outside of that circle.
That's Clemson University's Raymond Sauer. He says other Sunbelt hockey teams suffer the same fan indifference. The Florida Panthers are seeking buyers. The Thrashers in Atlanta are looking for new investors.
Sauer: Each one of them has built a business plan that they will be successful on the ice, but it's not possible for them to win the Stanley Cup at the same time.
Whatever happens at today's auction, it looks like the Coyotes will get at least one more chance to make money in Arizona. The team's first preseason game is set for Tuesday.
In Phoenix, I'm Peter O'Dowd for Marketplace.
What Happens if the NHL Wins & Jerry Moyes is a Creditor in Judge Baum’s ruling?
Apart from the scenarios of "no sale" which Judge Baum has said is possible or a victory by PSE that Baum knows will trigger more lawsuits, is a 3rd result which the NHL & those supporting their bid have incorrectly brushed off.
Judge Baum has clearly shown that his opinion trends to making sure ALL creditors are satisfied. Presently only the PSE bid addresses this & the others ignore it at their peril. If it is Baum’s opinion that Moyes & to a lesser extent Gretzky must be satisfied then Dell, Glendale & all of the other creditors will be paid much less.
The NHL as a secure creditor will be paid 1st, but they will inherit the crippling lease that Jerry Moyes would be freed of. The rest of the creditors would then be treated equally & would have to split the remaining pot of money. A pot of money that is not merely evaporating but boiling away at an ever-increasing rate. Add $60 million this year in losses & you have a very small pot of money indeed.
I'll bet Michael Dell didn't consider that scenario when he backed the conditional offer of the NHL. The NHL BOG certainly didn't expect to be stuck with a 26-year 'ironclad' lease. The 100+ suppliers & contractors for the team surely expected to be 'paid in full'. These all have a good chance of being extremely disappointed now should the NHL succeed in blocking the PSE bid.
If the NHL succeeds they will have little chance of selling the team to anyone with such a crippling lease. The city of Glendale is powerless to change the terms of the lease since the Goldwater Group will fight anything it considers to be a gift. We know this to be a truth in this equation because despite the time allotted, both the Reinsdorf & Ice Edge groups could not come to a deal in restructuring the lease.
The City of Glendale negotiators know that by playing their version of ‘rope a dope’ a good chance exists for the winner to be tied to the present lease., especially if the NHL is that winner. Any winning bid that intends to play 1 day in Glendale would be tied to that lease unless the Judge deems an intended relocation sale (PSE) is preferable & time must be allowed for that transfer to take place.
In other words, he can temporarily assign the lease in order to complete the sale. Under no other conditions of bankruptcy law can the lease be modified. Glendale knows that if the NHL tries to fold the franchise they will face opposition from the NHLPA that since its last contract has the right to block a team folding. They also know that if the team folds it would be an admission of complete failure in the ‘sunbelt experiment’.
This is why Glendale has stalled any renegotiation of the lease. It is the best way to play their limited cards under most circumstances. The only other consideration they have is that PSE might win the auction, which has become a very large possibility. In that circumstance they could receive as little as $7 million, a risk they are apparently willing to take even in the face of a $40 - $50 million offer to buy out the lease.
This offer now having been rejected by Glendale should be pulled from the bid by PSE & added to the main bid. It is of no value anymore & quite possibly a detriment to the bid being successful. While it was an offer designed to show good faith on the part of PSE, the lack of good faith by Glendale in not endorsing it, makes it an anchor that should be cut loose. Glendale has already made their decision & should no longer be allowed this safety net.
No matter what happens in this auction the NHL will be ‘paid in full’ & no doubt shall feign sadness at the creditors losses but the crocodile tears they shed today will be long gone tomorrow. If the NHL wins, Gary Bettman, smug in the knowledge that he played his cards well, will be able to say it wasn’t HIS decision to settle the debts in this manner. This despite the fact that it was his persuasion that caused these creditors to ignore their own best interests & support his bid.
