In the article from the SportsBusiness Daily, March 26, 2009:
Poll Indicates Glendale Residents’ Support For Coyotes Falling
A poll released yesterday by Americans for Prosperity indicated that support for the Coyotes “may be faltering among the team’s closest neighbors, the residents of Glendale,” according to Rebekah Sanders of the ARIZONA REPUBLIC. The poll indicated that “less than a quarter of Glendale voters surveyed said they would support spending taxpayer money to keep the financially struggling team from leaving the city’s Jobing.com Arena.” But the survey “appears to be partisan-driven and touches on a bailout scenario that city leaders say is off the table.” Virginia-based Republican survey research firm Public Opinion Strategies “conducted phone interviews with 300 Glendale voters on March 23.” When asked whether Glendale “should give the Coyotes” $3-15M each year to keep the team or allow the team to move, 72% polled said to “let the NHL team leave.” Americans for Prosperity Arizona Dir Tom Jenney said the answer is to “let the Coyotes fend for themselves.” Jenney: “If they can make a successful venture, more power to them. But don’t do it with taxpayer subsidies.” Coyotes President & COO Doug Moss said, “I feel it would be inappropriate to comment on a study or survey that’s based on erroneous … reporting” (ARIZONA REPUBLIC, 3/26).
So, the question remains, should concessions be negotiated with the proposed owner, Jerry Reinsdorf, if the majority of taxpayers are not interested in giving away any of their money?
According to the LexisNexis News:
Reinsdorf has a good relationship with Glendale officials, who lured his White Sox from Tucson to Glendale as a spring tenant by building a plush training facility/ballpark, Camelback Ranch, that the White Sox share with the Los Angeles Dodgers.
The documents also suggest Reinsdorf’s group will seek more control of non-hockey events at the arena, which should produce additional revenue ”It’s a bad lease — the team doesn’t make as much as it should off parking, concessions and other potential revenue streams like the restaurants outside the building,” the source said. “Glendale has to be amenable to reworking it. Otherwise they lose their major tenant and their building becomes a white elephant.”
Just how good a relationship with Glendale officials does Jerry Reinsdorf have?
Well, with son Michael Reinsdorf continuing to gain from his company’s contract with Glendale for services including consulting on issues related to Jobing.com arena, it may be better than we think. But, would it be an appropriate arrangement for father Jerry to further benefit from the City when Michael already is? Would it lend itself to speculation that the Reinsdorf factor would give an unfair advantage by name and current business relationships?
And, if Michael is responsible for any aspect of consulting on the arena lease, how could he continue to do so, without accusations of favoritism? This would likely not be viewed as a “non arms length” arrangement. For the 72% of taxpayers already not convinced their money is well spent in Jobing.com on the Coyotes, I’m sure this would raise some eyebrows.
Further, it would stand that if Michael was involved with aspects of the current lease arrangement with Jerry Moyes, how could he now support a better deal to dear ‘ol dad? If concessions can be granted, why weren’t they made for Jerry Moyes?
How could Michael agree that the prior lease was fair, and then turn around and then say, “yes, it needs to be adjusted”. Not going to fly.
This leads us to the underlying meat behind the endless possibilities in this case.
If the City of Glendale is under the microscope by the Goldwater Group over potential tax concessions, it would stand to reason that under normal conditions, the only help a city official could give an owner is the suggestion that ticket prices be raised. Anything else, even according to city officials reported in AZCentral, is supported as not being in the cards:
Glendale officials say concessions were never on the table, and instead the team should have cut expenses and raised ticket prices to survive.
However, an attorney for Chicago sports mogul Jerry Reinsdorf said in bankruptcy court this week that Reinsdorf, who is interested in buying the Coyotes, has been in negotiations with Glendale over the arena lease. City attorney Craig Tindall called the Reinsdorf talks informal “discussions.”
But with influence in hand, the name Reinsdorf may bring with it enough credibility and strength to have much influence in Glendale. After all, isn’t Jerry the man who owns two succesful teams already, and isn’t Michael savy in complex development, financing, and management?
And, let’s not forget what might be very obvious in light of today’s economic reality. With property values taking a hit, and the tax base shrinking, Glendale must be looking at it’s current financial picture and the threat of losing a fairly lucrative lease arrangement, and getting worried as the days go by.
So, with the team of Reinsdorf and Reinsdorf, and all that success and experience, is it little wonder a little municipality like Glendale would welcome such a powerful promise of success? Sure, they should.
The Camelback project must be in relative infancy, and I would imagine there is plenty of room to create revenue opportunities outside of hockey, that could benefit both the new owner’s need to make up revenue, and the same for the ailing City of Glendale. A perfect union, and a suitable suitor!
Oh, remember, we are talking about the Phoenix Coyotes not land development, remember? Right. Let’s get back on track here.
Hockey, ah yes. The struggling Phoenix Coyotes. The Coyotes that Jerry Moyes has been said to have been the poor owner with poor vision. Those Coyotes. Forbes ranked the Coyotes a must leave Phoenix type team, as shown here.
In the rating, Forbes accurately gives us:
The skinny
The plans to expand the NHL to the southwest and ignite economic growth in Glendale, Arizona by meshing a new multi-purpose arena with 6.5 million square feet of new real estate development has been a catastrophe. Under the leadership of Steven Ellman, Jerry Moyes and Wayne Gretzky, the Coyotes have been a dysfunctional and under-capitalized hockey franchise that Gretzky, the team boss, has been unable to get a grip on. Westgate City, in part tied to the success of people showing up for hockey games, has been a bust. As a result of their consistent losses on and off the ice the Coyotes have struggled to draw fans to Jobing.com Arena since the building opened in December 2003. If it were not for the huge fee the team would have to pay as stipulated by their lease if they were to move, it would make sense for the Coyotes to bolt Phoenix.
It makes you wonder who is truly in charge of giving direction to the details of that huge fee lease that is financially impossible. The same lease that Jerry Reinsdorf knows coming in is unworkable. That is, unless you speak with Gary Bettman, who believed the team was never in jeopardy, should never have gone into bankruptcy, and the notion is well, ‘silly’! So who do we believe? Jerry Reinsdorf that owns two teams and knows, or Gary Bettman who believes non-traditional hockey markets can fly as long as you produce a winner? I’d take the common sense of Reinsdorf.
But, who was there to help the previous tenant, Jerry Moyes? He was paying the going rate. After all, he did not have the experience in sports management and development enjoyed by Jerry and son, Michael Reinsdorf. Again, might be excusable except for the fact that Michael must have had some infuence when Jerry Moyes was in charge, and may well be when his dad arrives. One could suggest that Moyes was taken to the cleaners on the unfair lease. And, Moyes himself, in anger might believe he was being setup for financial failure and takeover, an ugly possibility, and one we don’t even want to entertain. But with the goings on in Tampa Bay the last few days, it seems to be a game of ‘put up or shut up’. Ugly, ugly, ugly!
For Jerry Moyes, it must have felt like being an employee that was being ‘set up’ to be fired. The irony is he was the boss. Supposedly. That would be in a normal business, but the NHL today is looking anything but normal.
According to John P. Kaites, a Phoenix attorney putting together the group of investors:
Hours before Jerry Moyes put the Phoenix Coyotes into bankruptcy court Tuesday and agreed to sell the team to a Canadian millionaire, Glendale was working on a deal to have Chicago sports executive Jerry Reinsdorf, along with other investors, take over the hockey franchise.
Ed Beasley, Glendale city manager, said Wednesday. “We are working with the (NHL) league and will aggressively work to keep this team in Glendale and the state of Arizona.”
Ed Beasley, Glendale City Manager
“The city of Glendale is working with interested parties and one of those parties we had a conversation with was Mr. Reinsdorf,”
According to Kaites, the ‘thinking’ was in the works for a much longer time:
Phoenix attorney John Kaites said that he began putting together a team of investors and approached the city and team six months ago about taking over and keeping the Coyotes in Glendale.
Kaites, who represents the White Sox among other sports teams, declined to say who or how many investors were involved.
“It’s a robust group, and that is what it’s going to take to save the team,” he said.
I would be inclined to ask why a robust group would be necessary if the team was viable as a standalone, revenue generating machine? Obviously the inference is there is more to salvaging this team than standard hockey operations. Would it be relocation strategies, as in the name Tony Tavares? Or would it be in capital infusion in projects outside the hockey operation?
Nevertheless, it would seem the railroading of Jerry Moyes, and the inside scoop no doubt enjoyed by the father and son team of Reinsdorf and Reinsdorf gave plenty of time to formulate a plan. But, that’s another story. When Ron McLean asked Gary Bettman if he had used the term, “saved him from embarassment” (Moyes) , Bettman first denied, then confirmed it once McLean pulled out the actual transcript. It leaves one with a terrible feeling that if you don’t live up to the expectations, and come through to plan, you are cast off and replaced, owner or not.
You don’t have to go much further than the Great One, Wayne Gretzky to know that it’s a cruel, no holes barred battle of the almighty dollar in this league. Even the best to have played the game is expendable. And you can see Gretzky’s distaste in this interview.
But, calming down, and getting back to the cash flow issues, it is important to note that revenue streams outside of hockey are not part of the hockey revenues reported. So, an owner that knows his team will always be close to bottom ten in revenue, would be foolish to get up too high in the ranking, and jeopardize the very favourable revenue sharing arrangement of the NHL. The sunbelt teams are able to charge less for tickets to attract fans, while the revenues are made up from the higher ticket prices charged in better hockey markets. But, it does mean that hockey towns like Glendale, must allow the owners to dip into the taxpayers pockets somehow to succeed. The problem again, is the lack of support, and the potential conflict of interest to go with it in this case.
Gary Bettman has said that every team’s situation is a little different. Now, it would seem to be obvious why. When you have a son with a relationship with a municipality and lots of connections of your own, you may be able to sustain some hockey losses if you can make it up somewhere else. And, without having to jeopardize your revenue sharing deal. Sweet! It might be suggested that Goldwater check out the White Sox lease as well.
But, if hockey cannot sustain itself by the demand for hockey alone, there is almost something unclean about this notion. It just doesn’t seem like a wholesome sell. When Gary Bettman says that the Coyotes were never in jeopardy, are we to truly believe this? Well, if Gary was infering that a man like Jerry Reinsdorf was in the wings, with plan in hand, we might. But, it would not be for the black and white math that spelled disaster for the inexperienced Jerry Moyes. Perhaps it would have been nice to fill him in on how things work now, instead of waiting ’till the well ran dry. Live and learn in the ‘new’ NHL, where you have to make certain improvisations to remain under the sun.
With the current power play that seems to be taking place between Bettman and certain owners, it makes you wonder who is working for who? Is the Board of Governors really in charge, or are they only as good as long as they toe the ‘Bettman’ line? Reminds me of the characteristics of a dictator. If you squawk too much, you are disposed of or replaced.
Bettman claims on the one hand that is the individual owner’s responsibility to ensure their team remains viable, but with the other hand, treats them like children when they apparently don’t get it right. And, one might ask why Moyes had to sign a ‘proxy’ to relinquish all rights. Another conflict in conversation, as Bettman may not have as much control as he would want. The bankruptcy court could teach him a thing or two about bullying.
The franchise ownership issue is an important one, and it plays right into the issue in the court today of owner’s rights. It will be interesting to see if the court can challenge the league.
And, perhaps Mr. Bettman should call Forbes and correct them too on the ‘true’ factors that go into assessing a team’s viability. We could call it ‘Bettmanomics’!
