Selling the Phoenix Coyotes

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The NHL has announced a preliminary agreement to sell the Phoenix Coyotes to a group of buyers led by former San Jose Sharks CEO Greg Jamison. Phoenix Business Journal reporter Mike Sunnucks explains what must happen to formalize the agreement.

Ted Simons: Good evening, and welcome to "Arizona Horizon." I'm Ted Simons. It's a great time to be a hockey fan in Arizona. The Phoenix coyotes won their NHL western conference semi-final series against the Nashville predators last night, and a deal to keep the coyotes in Glendale could soon be Finalized. Here to talk about the latest preliminary agreement to keep the coyotes in town is Mike Sunnucks of the Phoenix business journal. Mike has been covering this story forever it seems like. Let's talk about this latest wrinkle here. NHL commissioner says a deal has been reached.

Mike Sunnucks: they are in the due diligence stage. Compare it to a house being under contract. They are comfortable with Greg Jameson's group, his bid. They are crossing the Ts, dotting the Is, still has to go through the board of governors, NHL owners, still has to go through the city of Glendale, an arena management fee and some financial around the with Jameson, but it was a public show of support. Like an endorsement. They were on the same stage at a press conference before the coyotes-predators game. Probably a good sign.

Ted Simons: we have seen this kind of thing, preliminary deal, agreement, measure of understanding, in the past. Numerous times. Where is this one along in that process?

Mike Sunnucks: A lot of folks are asking those questions. Where is Jameson getting his money from. He hasn't said that. That's been not dissclosed -- disclosed. He's the former CEO of the Sharks. He's a former sports executive. He's probably not a poor fella but not a guy with a suitcase of cash and pays for a team at the signing. So he's go the got to get his money from someplace else. Glendale still has to do a deal with him for the arena. That's been a hiccup before. They are not going to do bonds. They are trying to avoid all that. Looks like they are getting their ducks in a row for a deal but we have a ways to go.

Ted Simons: This time Jameson. Jameson further along in the process?

Mike Sunnucks: I would say it's an eight or nine. Hotels highser was a six or seven. They are trying to avoid a Goldwater Institute threat or lawsuit. I think the Jameson is an NHL guy, with the Sharks, served on the board of governors, knows Bettman very well. I think the NHL has helped his bid along, maybe put him in the right room with the right people to talk about money. I think on that stage he's more of an insider.

Ted Simons: What is his bid?

Mike Sunnucks: We don't know yet. 170 is the number the NHL has been talking about. They bought the team out of chapter 11 bankruptcy couple years ago for $140. We'll see what the number is on paper. There's been franchises that have gone for less. They do have an interesting in trying to maintain price stability because there's other teams for sale. If the coyotes come in way down on the list that's going to hurt the league's values much like the Dodgers helped everyone's values in baseball by their $2 billion price. I think what you will see is them come up with some decent looking price, weather that's the realty of things we probably will never know.

Ted Simons: how long would the team stay in Glendale?

Mike Sunnucks: They are talking about ten years. That's not set in stone. What Glendale gives to them in terms of arena fees and other payments hinges on how long he's committed to staying there. That's the best deal they have been offered. Brian wanted to cut bait fast if things weren't working for him.

Ted Simons: The arena management fee has been a sticking point in a variety of ways. First we have to figure out what arena management really involves. Arena management. What are we talking about here?

Mike Sunnucks: It would operate the arena, order popcorn, do the contracts with all the concession airs, all the providers. Run it day in and day out, book concerts, bring in extra revenue. So that's kind of a strange fee and term for it. They are paying the NHL 25 million to do that, so there's a lot of questions, well, is that to run the arena or is that to help the NHL deal with the coyotes' losses. Little bit of scrutiny when the deal comes out.

Ted Simons: how much would Glendale look to be paying? Obviously it's not finalized.

Mike Sunnucks: $17 million has been thrown about recently. Other coyotes owners came in with 20 million. Why not 25 like the NHL. Elaine Scruggs say maybe 11. 17 is what Jameson has said he would be willing to go for. I think you'll see it come in someplace around there.

Ted Simons: I heard at least the early discussion was over 20-year lease the average would average outback into maybe 14 or $15 million.

Mike Sunnucks: they would adjust it based on the lease term. There might be some performance measures in there. The team makes more money they can reduce it. People question does it really cost that much to run an arena? I think it's a way to build in some financial stability for the new owner. The team loses 20, 25 million a year. They may do better this year because of the playoffs. If you build that in that gives them time to try to turn it around, get closer to breaking even.

Ted Simons: The Glendale city council has to approve the arena deal which hasn't been put up yet. Good that's approved the NHL board of governors has to agree to the sale what. Timeline are we talking about?

Mike Sunnucks: People said last week at the would get done right away. Yesterday Jameson and Bettman said we're looking at weeks, not months. That led to skepticism, especially from folks up in Canada. They think it's another kick the can move. I would think that they would try to get something done by the time the playoffs are over. If something isn't done we're looking at a dire situation.

Ted Simons: I would think Glendale would want something done before they get their budget finalize.

Mike Sunnucks: June is when Glendale does that I think. Trying to figure that out. They have allocated some space in the budget now for next year's payment, so they have guestimated that. It seems Bettman's words were parsed. It wasn't as aggressive as maybe some folks hoped. That led people to wonder how far along this is.

Ted Simons: One of the quotes, we see light at the end of the tunnel. Is that the S.S. Goldwater Institute coming the other direction?

Mike Sunnucks: They are on the sidelines. They are watching this carefully. One thing that's caught on this time is the city of Glendale and the NHL and Jameson have not produced any public disappointments because the Goldwater Institute gets their hands on the documents. They have sued the city of Glendale, they have an order for them to turn those things over. Once it shows itself Goldwater can look at this and cause problems, maybe scare off investors or some of the money involved with this. The NHL and Glendale folks have been very careful about making sure Goldwater doesn't see these things. Goldwater is in the dark now. They have a very short time to react.

Ted Simons: Their concern is illegal subsidies to a private corporation.

Mike Sunnucks: that's why this arena management fee, there's a certain number I think the Glendale and NHL people are trying to find that says this is a legitimate fee and Goldwater can't challenge it.

Ted Simons: If this falls apart for any reason, is that pretty much it? Doesn't Horne blow and the coyotes leave town?

Mike Sunnucks: I'm going to say yes. I think people are kicking the tires, looking at buying a sports team happens a lot. There's a rich guy that says, that's a good idea. I think Jameson is their guy. I think their money is on him. He's the known quantity. That's the one thing they liked about Jerry Reinsdorf. He's owned other sports teams. Jameson is in the same camp. He's run a team in a nontraditional market. I think all the chips are on him. He seems legitimate. The question does he have the financing and can Glendale come up with an arena financing fee to match that.

Ted Simons: Thanks for joining us.

Mike Sunnucks:Reporter, Phoenix Business Journal;

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