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The Glendale City Council is considering whether to cancel its services management contract and lease agreement with the Arizona Coyotes. Mike Sunnucks of the Phoenix Business Journal will bring us up to date.

TED SIMONS: Coming up next on "Arizona Horizon," Glendale considers cancelling its contracts with the Arizona coyotes. A state lawmaker calls for changes in the way the state handles high-risk cases of child abuse. And we'll learn about a program that honors early career scientists and engineers. Those stories next on "Arizona Horizon."

VIDEO: "Arizona Horizon" is made possible by contributions from the friends of eight, members of your Arizona PBS station. Thank you.

TED SIMSON: Good evening and welcome to "Arizona Horizon." I'm Ted Simons. The Glendale city council is about to consider whether or not to cancel its services management contract and lease agreement with the Arizona coyotes. Mike Sunnucks of the "Phoenix business journal" has been following the story. We should mention, we're live at 5:30, this program will rebroadcast at 10:00. By then who knows what has changed. But for now what is going on?

MIKE SUNNUCKS: Well, just this week, the city posted on its web site, going to have a special meeting tonight at 6:00 on whether to get rid of this, cancel this 15-year, $225 million contract, lease deal they inked with the coyotes ownership in 2013. It is a huge dramatic twist and turn in the saga of this hockey franchise. They could cancel it and we could go down a new road of options.

TED SIMONS: We will go down that road in a second here. Agenda for the meeting cited a state statute regarding bargaining with a city government or a municipality, bargaining with another entity and if that entity is somehow involved with the other bargaining party -- what's going on? It sounds like the city of Glendale saying there is some double dealing going on.

MIKE SUNNUCKS: This centers around Craig -- the Glendale city attorney for a number of years, served in a capacity during a lot of these -- he left Glendale in 2013 and landed at the coyotes as general counsel. And there is an opinion that Terry Goddard put out in 2008, statute that people are pointing to that allows a government entity to cancel a contract if something like this happens where you're attorney or you're a party for a state agency or city government, ink a contract with somebody and then you go work for them. No quid pro quo type stuff --

TED SIMONS: You can do that within three years.

MIKE SUNNUCKS: Three years. If he does it within three years -- I think the coyotes will argue that he didn't work on their deal. Already out of the picture. Getting some severance during that time. I think you will see the city, they will argue otherwise. This could be one of the main contentions to try to get out of this thing. If they do this, we're certainly probably going to see legal action from the team on that and other fronts.

TED SIMONS: I was going to say, from a distance, it appears that the city of Glendale is looking for a way to get out of a contract that is not working well for the city.

MIKE SUNNUCKS: The city has been losing money on this thing. They put out a report at the end of every month for the fiscal year showing what they took in and what they sent out to the coyotes. They pay the coyotes $15 million a year and promise to put a half a million into upgrades to the arena, which the city built back in 2003. In exchange, the coyotes share some revenue with them for naming rights and parking surcharges, and their sales tax revenue. The way the report came out, the city is in the red $6 million. So, they're looking at this like we're just throwing good money after bad. There is another tact that the city could take. They want to renegotiate some of the terms to try to get a better deal. The owner, CEO of the coyotes put out a statement today saying that's the reason they're doing this, trying to get the coyotes to come to the table renegotiate things, and if that is the tactic --

TED SIMONS: Unhappy negotiating partner if you go that route.

MIKE SUNNUCKS: City requested an audit, under the terms of the deal they can do. This has dragged on into this year. Still having issues with that.

TED SIMONS: There seem to be some issues, a couple of city auditors, one reported X, another one, supervisor said, oh, no, it's Y, and then X decided to go ahead and leave suggesting that Y was somehow in cahoots with the coyotes.

MIKE SUNNUCKS: Two auditors at the city over disputed things, one that left turned kind of a whistle blower and claimed the person with the city changed things. I think their spouse somehow worked for the coyotes at some point a number of years ago. And the coyotes, and the city has had a hard time getting the numbers to each other. We were working on this. So it is hard to see them coming to the negotiating table and working things out. Interesting to see what goes on tonight with people that turn out at the meeting. How the city councilors react to that. Coyotes fans there, a lot of media attention. This has always been a tough deal for Glendale ever since they have come out there.

TED SIMONS: You have to think the mayor, probably leading this, has the votes, because I don't think he would have agreed to the meeting if he didn't have the votes. As far as Glendale's finances are concerned, can they afford for a major tenant, the major tenant of that arena to dry up and go away, if not this year, because legal proceedings will probably drag this on a little bit, but --

MIKE SUNNUCKS: This has been the quandary for them all along. It came up at other ownership meetings they had, you're losing money on this arena, you have debt on it. Are you losing more money if it is empty? Idea is you're bringing in tax revenue, activity, maybe things will get better at west gate, outlet malls out there, the commercial real estate company has done a better job of getting restaurants and businesses out there. But it is still a challenge. Coyotes still lose money. The owners have an out clause in 2018 if they lose $50 million in that time, they can leave.

TED SIMONS: And they have already lost more than half of it, haven't they?

MIKE SUNNUCKS: That's the assumption. If they want to lose $50 million in that time --

TED SIMONS: They can find a way.

MIKE SUNNUCKS: Always other cities, Quebec city, Portland, Seattle, Kansas City, sitting out there chomping at the bit to get a team.

TED SIMONS: Does westgate dry up without the coyotes?

MIKE SUNNUCKS: I don't think so. You have the outlet mall out there. They have -- competing with the arena down here and other venues. I don't think it is in as bad a shape as it was before. More stuff out there. Hospital going in across the street. A little more activity. Become a little more of an employment center. But that is an anchor of the area is having that arena and those games there.

TED SIMONS: Does Glendale's opinion and west valley's in general opinion of a casino nearby change if the coyotes leave?

MIKE SUNNUCKS: I don't think so. I think Glendale has changed their tune on that with the change of mayor and council. Scruggs and Beasley opposed that strongly. The folks there now are okay with it. I think, you know, again there is a split decision on that. It brings in more people. Brings people to the west valley, or does it take away from westgate. I don't think --

TED SIMONS: We're live at 5:30, at 10:00 the program will rebroadcast and things will likely change a bit by then. If Glendale goes ahead and says we're not honoring this contract, what does that do to Glendale's image?

MIKE SUNNUCKS: Coyotes say they will probably take them to court. See a lawsuit. Adds to the problems that they had. Just had a city manager leave. A lot of turnover there. Bad relations with the cardinals during the Super Bowl. And the region, still getting events to the stadium despite Glendale, but it doesn't help their image.

TED SIMONS: We will see what happens later tonight. Good to have you here.

MIKE SUNNUCKS: Thanks a lot.

Mike Sunnucks:Phoenix Business Journal

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