Glendale City Council met on Wednesday night to decide whether or not to terminate the existing lease agreement with the Coyotes and they basically nixed the deal. That’s not good.
Coyotes CEO, president and co-owner Anthony Leblanc was quick with a statement: “We are disappointed with the city’s decision to violate its obligations under the agreement that was entered into and duly approved only two years ago. We will exhaust any and all legal remedies against the city of Glendale for this blatant violation of its contractual obligations to us.”
The NHL, too, chimed in: “We have been advised by the Coyotes that the City of Glendale’s contentions are without merit and we fully expect the Coyotes to continue to play at the Gila River Arena and for the City to continue to honor its obligations to the Coyotes. After everything that has transpired, it is extremely disappointing that the City of Glendale would do anything that might damage the Club.”
The City Council voted 5-2 in favour of terminating the contract, which effectively ends a 15-year agreement worth $225 million. Theoretically, this leaves the Coyotes without an arena.
“There’s no basis for your claim. If you really believe that a judge will kill a two-year-old deal for an NHL franchise in an arena it was built for based on an email from a former employee, then you’re making a terrible, terrible mistake,” the Coyotes’ legal representative Nick Wood said.
Glendale leases the Gila River Arena to the Coyotes and shells out for IceArena, the ownership group, to the tune of $15 million a year to manage the arena. Revenue sharing shortfalls cost the city some $8.1 million last fiscal year and the city’s figures cite losses of $8.7 million this fiscal year.
Things really broke down in November of 2013 when then-councilman Phil Lieberman filed an ethics complaint with Arizona’s State Bar. The complaint concerned former Glendale lawyer Craig Tindall, who was allegedly being paid severance by Glendale when he went to work for the Coyotes franchise. Three months ahead of the approval of the deal with the hockey team, Tindall hung up his skates with the city.
In other words, there are allegations of some overlap with regards to Tindall and his duties with the Coyotes. The city considers this a key linchpin in their pursuit of terminating the deal, citing it as a conflict of interest that thereby opens a path to terminating the deal. Obviously the Coyotes and the NHL oppose this contention, which is really where the bulk of this case seems to lie.
If there’s a glimmer of hope, it’s that the city did say that it’s open to a “resolution.” Says Glendale, “The Council has agreed to stand for transparency and the highest standards of ethics for any future agreement with the Coyotes.”