Phoenix Coyotes

May 6, 2009

Transcript:

Ted Simons:
Good evening, welcome to Horizon. I'm Ted Simons. Jerry Moyes owner of the Phoenix Coyotes has put the team in bankruptcy court. The move could mean he won't have to pay a $700 million fine for breaking a 30-year lease with a city of Glendale regarding Jobbing.com arena. The city and national hockey league have objections to the deal. He brokered to sell the team to a firm that would move it to Canada, but that deal could be outbid. Here to help sort this out is Mike Sunnucks of the Business Journal. Good to see you again, thanks for joining us.

Mike Sunnucks:
Good to see you.

Ted Simons:
What's happen, they filed for bankruptcy, got a guy who wants to move it to Canada but the NHL staying not so fast.

Mike Sunnucks:
Gary Bettman the commissioner was coming out here yesterday, the same -- right before Moyes filed bankruptcy, to talk about selling the team to Jerry Rhinesdorf, who lives here, owner of White Sox, has spring training here and Glendale and the NHL were trying to broker that deal and Moyes jumped the gun with the Canadian deal so they stripped him of ownership and responsibility of the team Tuesday night and the NHL says they're going to represent the team in bankruptcy court tomorrow in Phoenix. What they'll try to do is get the Moyes bankruptcy thrown out or changed so he can't move the team.

Ted Simons:
You got a guy putting $400 million into a team and the NHL basically says you're not in charge anymore?

Mike Sunnucks:
The key here is the NHL loaned money to Moyes, the Coyotes, in February to help with financial troubles, paying the lease, other bills. Part of that loan is procedures and protocols for the league to take over the Coyotes if they were to go belly up. And so I think they're going to make the argument that those loans and those protocols give them the right to come in and take over the team. The league can also play the procedural card that that ownership changes, moves, have to be approved by the league and all the other owners, so you're going to see a big fight tomorrow in court and Glendale's going to step forward and say look, we built this arena for this team, you know, we have some standing, Moyes is going to make the argument that, look, you're the bankruptcy court, got to take care of the creditors and people we owe money to and make the deal that's best for them.

Ted Simons:
Ok. It seems unlikely, but it could happen, that someone could outbid this Canadian gentleman that made the --

Mike Sunnucks:
Blackberry.

Ted Simons:
Blackberries, yeah. We haven't seen anyone rushing to the aid so far. If someone does, does Glendale have to now add more in the way of incentives to keep that?

Mike Sunnucks:
Yes, they'll probably have to rework the lease. The bankruptcy filing, that could get Moyes out of the lease, the bankruptcy court can undo the lease and terms, including the penalty. Somebody else will come in and forge a new lease with the team. They've been -- Glendale conformed today talks with Rhinesdorf, other ownership groups the league and Glendale and Moyes have been talking to try to keep the team here besides the guy from Ontario, Canada.

Ted Simons:
If it flows through bankruptcy courts again the bottom line there is do what's best for creditors, correct?

Mike Sunnucks:
Yeah, the court can decide that. If the court decides the Moyes deal to move to Canada, to sell them that could be it. What the league's going to do is say we own the team now, we control the team, we're the representative? They'll probably ask to dismiss the Moyes filing.

Ted Simons:
What impact on Glendale are we talking here?

Mike Sunnucks:
Glendale has to keep this team. They put all the money into that arena, Westgate area, they see it as a big economic engine out there and it would be, you know, that arena gets concerts and events but having the hockey team there was 40 home games a year, and never make the playoffs but hopefully sometime. That's a lot of revenue. And Glendale's going to fight hard along with the NHL to keep them here.

Ted Simons:
Why haven't the Coyotes, why has not this team succeeded?

Mike Sunnucks:
You know, part of it's the economy. Part of it's we're a Sun Belt city, and they haven't made the playoffs. Part of it is their location. Its different driving out to Cardinals games on the weekends. I think there's a challenge for them in getting people to come from mesa, Scottsdale, downtown Phoenix, to drive out on the weeknights to go to a game and drive back home. So the challenge there. But they haven't made the playoffs in several years. If you make the playoffs and have some success, we've supported other teams that have been successful, Suns, D-Backs, Cardinals. So you make the playoffs, maybe that turns around.

Ted Simons:
Makes you wonder. I think the location is key here, especially when the team isn't winning, makes you wonder if the team had figured out something in Scottsdale at the old Los Arcos site, like they were talking for so long, do you think this still would be coming to pass?

Mike Sunnucks:
The Scottsdale site would have helped maybe with some more expensive seats, club seats, little floor affluent in Scottsdale, but the same issue, people will drive downtown to see the suns or Diamondbacks. It's a challenge to get somebody who works downtown to drive to Scottsdale and then drive back to the west side if they live over there. So any suburban location for a venue that has weeknight events is going to be a challenge.

Ted Simons:
Sounds like quickly here it's a June 30th deadline imposed I guess by the league. They need to get their schedule out and this business. We should know relatively soon what's going on.

Mike Sunnucks:
The league's been very public, aggressive, they're going to oppose this, tight this, and try to keep the team in Glendale. The blackberry guy has tried to buy teams before, Penguins and other franchises and move them to Canada. There's a lot of support in Canada for this but the NHL is going to fight tooth and nail.

Ted Simons:
Be interesting to see how hard Glendale fights.

Mike Sunnucks:
Thanks a lot.