A Look at The How The Phoenix Coyotes Ended Up In Their Current Situation
Editor’s Note: I reached out to Brendan Porter of Five For Howling to write a piece about ho the Phoenix Coyotes ended up in their current situation. Unlike the situation with the Sacramento Kings, I really have no clue about what has happened since the franchise left Winnipeg. Thankfully Brendan was willing to sit down and write a quick recap about what has happened down in Phoenix.
By Brendan Porter,
The ownership situation of the Phoenix Coyotes is unusual primarily for its longevity. While the Coyotes did not formally enter NHL ownership until 2009, the problems emerged much earlier with previous owner Jerry Moyes. Moyes purchased the team from real estate mogul Steve Ellman with the intention of essentially “flipping” the franchise and quickly re-selling it for a profit. Unfortunately for him, the economy in Arizona crashed due to its reliance on the housing market. Suddenly stuck with a franchise that was bleeding millions of dollars, Moyes attempted to enter bankruptcy and sell the team to Research in Motion CEO Jim Balsillie, who had previously failed in an attempt to purchase the Nashville Predators and relocate them to Hamilton, Ontario. The NHL challenged the move in Federal Bankruptcy Court, arguing that Moyes had ceded his decision-making stake in the franchise and that the League had ultimate authority in determining who owned its franchises and where they were located. The Court sided with the NHL, and awarded the team to the league.
Over the next four years, the NHL has been unable to find a partner capable of completing the transaction. The initial group, led by Chicago White Sox owner Jerry Reinsdorf, insisted on a five year “out clause” which would permit him to relocate the franchise after five years (more on this later).The City of Glendale, which owns the arena that the team plays in, objected to this transaction, and refused to lease the arena out to Reinsdorf. The city is ultimately what makes this whole process substantially more complicated, as any deal between the NHL and an investment group also requires a deal between the investment group and Glendale, which is subject to a whole different series of laws governing public entities and the contracts they can award.
Several more players emerged in attempts to purchase the franchise; Matt Hulsizer made a very public bid for the team back in 2011, but that effort collapsed due to both questions regarding his financial stability and a bond sale with the City of Glendale of dubious legality (the Arizona Constitution forbids municipalities from directly subsidizing private entities, and the structure of the Hulsizer deal was potentially in violation of that clause). In 2012, Greg Jamison, former CEO of the San Jose Sharks, threw his hat into the ring, and even managed to secure an arena lease agreement with Glendale (which, while hefty, would have likely avoided the subsidy violation by being structured as an arena management contract). However, Jamison’s financing would also fall apart, under questionable circumstances (while nothing definitive is being stated, it appears as if the NHL decided it wanted to go in a different direction and ultimately axed the deal).
Enter Anthony LeBlanc and Renaissance Sports & Entertainment. LeBlanc and his associates have been around this process in some capacity since 2009, when they were known as Ice Edge Holdings. Their primary problem has been a lack of serious money necessary to operate the franchise after purchasing it. Recently however, Canadian CEO George Gosbee became part of RSE, which gave the NHL enough confidence to allow them to move forward with the City of Glendale. They are currently in the process of finalizing an arena management contract with the city, which should be made public very soon in advance of a City Council vote. Should the vote succeed, it is likely that RSE will complete the purchase of the team in the next month or so and finally bring an end to the mess in Glendale.