Tuesday, June 1, 2010

Sometimes, "The Check is in the Mail", Doesn't Quite Cut It.

It went something like this. The City if Glendale took a deep breath and voted to meet the National Hockey League’s demand for $25MM in guarantees to cover any losses the Coyotes incur in 2010-11. The City, expecting to make a deal with either the Jerry Reinsdorf group or Ice Edge Holdings, nodded and smiled, saying it was likely the money would never be needed.

And so they lived happily ever after, right?

Not quite. The NHL had a slightly different view of the proceedings. Partly because of the large number of NHL teams opening in Europe (including the Coyotes) this year and partly because other teams (desperately) need a schedule in hand to sell tickets; the NHL wants to publish the 2010-11 schedule in late June, three weeks earlier than usual. And if the Coyotes were to be slotted in Arizona and not some other far away city, the league wanted to see the money. Now.

As others have reported, the league was ready to pull the plug on the Coyotes. Ready as in a 5PM deadline or we’re going to Winnipeg…or Kansas City…or somewhere, anywhere else. NHL Deputy Commissioner Bill Daly was in town to collect and he wasn’t leaving without a check. The alternative? There wasn’t one. Daly was here to foreclose. The patience of the NHL has clearly been stretched by the Coyotes predicament.

And for once, the Canadian media wasn’t engaging in sensationalism. It was dead nuts serious. I heard the story as it was happening but was waiting to learn more from the Brahm Resnick’s of the world. After all, they have better sources than I do, don’t they?

But once again, Glendale produced. As in $25MM borrowed from a very large ($400MM+) capital expenditures fund held by the city. And you thought all local governments were broke.

So what got us to this latest crisis?

One can reasonably assume that there is some friction between the Jerry Reinsdorf group and Glendale. After all, they have a Memorandum of Understanding, with The City. That usually is the precursor to a formal lease. But for whatever reason, we’re not getting from station to station very easily here. Our guess is that the City is doing everything possible to build a lease that insulates themselves against legal action from the Goldwater Institute. And we’re also guessing that Team Reinsdorf is driving a very hard bargain. After all, this ain’t a blue sky sale. So both sides continue to negotiate, posture and talk. Hopefully.

And by calling Ice Edge Holdings and asking if they would still like to talk about the Coyotes, Glendale City manager Ed Beasley clearly wasn’t above putting some pressure on the Reinsdorf group. The good folks at Ice Edge said sure (well maybe) we’ll get back in this thing. With of course a guarantee of exclusivity. When you’ve been ditched once, a fairly firm pre nuptial is usually recommended.

But alas, there’s no exclusivity for Ice Edge and the assumption is that Team Reinsdorf is still in play. John Kaites was joined at the hip to Daly at the recent Glendale Council meeting and we’ve heard he’s been involved not only in negotiations but also staying close to the Coyotes decision making process. So that would indicate it’s a when, not if for the Reinsdorf Group to take control of the franchise.

Meanwhile, Ice Edge quietly remains on the sidelines. We say quietly because the very glib (at least on Twitter) Daryl Jones has been quiet lately. That may be a good thing. If the Ice Edge talks with Glendale are “taking a nap” (not my words, those of that well known unnamed source) then I expect they will either fade from the scene or get a wakeup call soon. Perhaps they already have. Apparently though, and to the chagrin of many local hockey fans, they are the fallback plan.

What we do know is that the Coyotes will play in Glendale next year. They may or may not be the Arizona Coyotes (they certainly would be by 2011) but there will be hockey here next year. Season ticket invoices have been mailed, the NHL schedule is going to be released in three weeks (and did someone say that the Coyotes are going to open at home Saturday October 16th against a certain despised Western Conference team?) and we can turn our attention to hockey again.

Aside from the risky nature of the investment, it’s been asked of me and others how any deal for the Coyotes can work right now. Here are four important things to consider.

Bank financing is starting to thaw. The money spigot isn’t exactly running wide open yet but business conditions are improving. Banks are lending. And that’s a good thing. Heck, even Basha’s has lined up $210MM to try and turn that battleship around. Sports teams used to be able to get money easily. A return to the go-go days is unlikely but a liquid money supply is important to making this deal work.

Secondly, for any group trying to buy a team, this is a clean slate and a fresh start. No old bills, no lose financial ends and no legal fights with past and former owners. It’s a clean deal. Unlike say, the Atlanta Thrashers, where the team owners have spent most of the franchises existence in court suing each other. In business, clean deals are good. Don’t underestimate the importance of a fresh start.

Next, there’s the Coyotes organization. On the playing side, it’s in pretty good shape. A roster loaded with value, a farm system with significant assets and a great management and coaching team in place. And on the business side, it’s basically a shell that new owners can staff as they see fit.

And finally, there’s the small matter of what happened at the end of the season. 8 straight sellouts including all four playoff games. New sponsors coming on for the playoffs. A point in time where the Coyotes actually dominated sports talk radio. OK, nobody dominates KTAR other than the house teams but there even were days (hours?) when they actually sounded more like their worthy competitors. Heck, even Dave Byrnes talked about hockey a few times. Anyone who was watching closely knows this isn’t a doomed team that plays 50 miles out of town. Quite the contrary, I’d say.

All good things and all essential for the success of new ownership.

Of course, all of these things mean little if the new owners cannot build an organization that wins on and off the ice. There’s not a large margin of error for the new owners, whoever they turn out to be. And for the City of Glendale, there’s really no margin of error left. They have to, no make that need to, get new owners in here right now to rebuild the front office, make sure Don Maloney has a competitive budget to retain key players and get a staff on the streets selling tickets and advertising.

Interesting sidebar – I had friends from Toronto visit during the playoffs. They couldn’t believe the arena location was an issue and loved the entire experience. “Feels like a hockey town to me”, said my friend.

Yeah, it did feel like a hockey town, even if it was just a month. But what a glorious thought it is that this could be a hockey town for a long, long time. And what a feeling it would be.

No comments:

Post a Comment