Coyotes deal in peril after Glendale's latest proposal

Paul Giblin | USA TODAY Sports

GLENDALE, Ariz. -- Negotiations to keep the Phoenix Coyotes in Arizona fell to a new level of chaos Friday evening, with both Glendale officials and the team's prospective owners saying they cannot overcome their latest impasse.

Unless the sides somehow overcome their differences during the next few days, the Coyotes' fate seems sealed.

Call in the moving vans. Destination: unknown.

The impasse arose Friday during what was supposed to be a public workshop to discuss a proposed agreement between the council and the prospective team owner, IceArizona, an investment group headed by partners doing business as Renaissance Sports & Entertainment. The agreement is for IceArizona to use and manage Jobing.com Arena.

But council members revealed during the hearing that earlier that day they had devised a counterproposal. Specifically, they wanted a five-year out clause that mirrored provisions IceArizona executive had given themselves.

Glendale officials formally posted the counteroffer late Friday, locking in that version of the proposal for a binding City Council vote Tuesday, though minor amendments could be made.

A representative of the team investors, who was monitoring the meeting via the Internet, texted reporters covering the meeting stating that they were unaware that the city had even drafted a counterproposal.

The key money points of the deal remained. Glendale would pay IceArizona $15 million a year for 15 years, while IceArizona would reimburse the city millions of dollars projected to come largely from the team's performance at the turnstiles.

However, the Glendale out clause was new. The new proposal says that, like IceArizona, the city can opt out after five years or after reaching $50 million in losses.

In addition, Glendale officials sought language in the contract that prevented one side from suing the other for issues at the city-owned arena.

"We're not going to agree to it. It is a non-starter," IceArizona spokesman David Leibowitz said after the meeting.

"What we want the city to do is remove the out clause. That's a deal breaker. We want the city to return to the deal framework that was negotiated previously," he said.

City Councilman Gary Sherwood, who led the effort to force the vote saying a day earlier the brinkmanship was over, said Friday that he could support the counteroffer but not the previous draft.

Sherwood acknowledged that the city's five-year out clause may be problematic with IceArizona's lenders who would want assurances of a guaranteed 15-year income stream from the city before providing as much as half of the team's $170 million purchase price.

"That's a biggie and that was pointed out to us," Sherwood said.

Similarly, veteran Councilman Manny Martinez, who has supported every previous hockey deal, said he could only support the latest counter offer.

With a vote that was expected to be iffy under any circumstances, Sherwood's and Martinez's votes are critical for the deal to pass. Four votes are needed on the seven-member council to approve the arena management measure.

"I don't know that anyone could have voted for what we saw yesterday in terms of the actual contract language. I don't think that anyone could vote for it," Sherwood said.

On Thursday during the National Hockey League's Board of Governors meeting in New York, Deputy Commissioner Bill Daly said time is running short for the Coyotes in Glendale.

"There are relocation options here. Those are the alternatives we're going to consider," he said.

The NHL acquired the team out of bankruptcy in 2009 and has been trying to sell it to private investors willing to keep the team in Glendale ever since.

Daly, who has served as the NHL's spokesman regarding the Coyotes, could not be reached Friday night.

Leibowitz said city negotiators requested an out clause three weeks ago and IceArizona executives flatly rejected it. Then, negotiations progressed without another mention of it until Friday.

Leibowitz said IceArizona's executives don't understand why it popped up again.

Martinez said the city needed an escape clause if the revenues promised by IceArizona don't pan out.

Mayor Jerry Weiers said the counter offer addresses important shortcomings. "The city has a good history of making bad decisions," he said.

Glendale resident and Coyotes season-ticket holder Darrin Lacey said it's important to keep the team because the games create spin-off business at Westgate Entertainment District.

"If the Coyotes do leave Westgate, that whole area will be affected, and I think Glendale will lose sales-tax revenue and potential businesses coming into the area," said Lacey, a telephone-system technician, who attended the public meeting.

Glendale resident and council observer Ken Jones said the proposal is lopsided in favor of IceArizona.

"They get a T-bone, five-course dinner. We get maybe a baloney sandwich," he said after the meeting.

Paul Giblin writes for the Arizona Republic, a Gannett property.