Coyotes Agreement

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The Glendale city council decided to go ahead and cancel its arena contracts with the Arizona Coyotes.
But what are the legal ramifications of the city’s move, and what responsibilities do the coyotes have in re-working a contract that’s detrimental to the city? Scottsdale attorney Randy Nussbaum provides context at 5:30.

TED SIMONS: Coming up next on "Arizona Horizon," we'll look at the legal aspects of Glendale's contract dispute with the Arizona Coyotes. Then it's time for our monthly update of science news with world renowned physicist Lawrence Krauss. Those stories next on "Arizona Horizon."

"Arizona Horizon" is made possible by contributions from the Friends of Eight, members of your Arizona PBS station. Thank you.

TED SIMONS: Good evening, and welcome to "Arizona Horizon," I'm Ted Simons. The Glendale City Council yesterday decided to go ahead and cancel its arena contracts with the Arizona Coyotes, but what are the legal ramifications of the city's move and what responsibilities do the Coyotes have in reworking a contract that's detrimental to the city? Here to help us sort this out is Scottsdale attorney Randy Nussbaum. Good to see you, thanks for joining us.

RANDY NUSSBAUM: Good afternoon, thank you for having me here today.

TED SIMONS: Were you surprised by Glendale's actions in the first place, voiding this contract?

RANDY NUSSBAUM: Based on the legal community, most lawyers and professionals were not surprised. However, what surprised I think a lot of professionals was the reaction to the city's decision to cancel the contract.

TED SIMONS: In what way?

RANDY NUSSBAUM: Most people following the story really thought that some type of negotiated settlement could be reached. Even when the city first announced it was going cancel the contract, a lot of folks really thought the Coyotes would make one last effort, but immediately after the Coyotes filed the lawsuit in Maricopa County Superior Court and rushed to court asking for immediate relief. I think a lot of folks were caught off guard how quickly and how well prepared they were for that action.

TED SIMONS: I want to get a little bit into the legal weeds here. The contract for the Coyotes, with the Coyotes -- City of Glendale's contract, they voided it because they claim the Coyotes violated a state law. What is that law?

RANDY NUSSBAUM: The law is ARS-38-511, enacted seven or eight years ago specifically to avoid scenarios in which a governmental lawyer contracts or get involved in a transaction with a nongovernmental entity and then goes to work for that exact nongovernmental entity.

TED SIMONS: They are looking at the former city attorney Craig Tindal. Quickly here, separation with Glendale in April of 2013. Three months later the Coyotes deal is signed. Another two months after that he is hired by the Coyotes. That's a good five months after the separation deal, even though he continued working with the City of Glendale kind of in a limited capacity. They are saying, what, conflict of interest?

RANDY NUSSBAUM: Conflict of interest and Ted, not only is there a concern about avoiding the potential conflict of interest, I think that statute was drafted also to avoid what I call the appearance of impropriety. Even if the lawyer involved does nothing wrong, it creates this appearance that maybe something is simply not proper.

TED SIMONS: Indeed. And that's my next question. How much involvement, we should mention the ex communications manager is employed by the City of Glendale. She left and wound up starting her own P.R. firm, one of the first jobs they got was with the Arizona Coyotes. With both of these folks, how much influence or involvement do they have to have in creating the contracts to have this law apply?

RANDY NUSSBAUM: The contract states significant involvement. But significant is a very difficult concept. What is significant? If the city attorney had had lunch and talked about the contract, would that be sufficient? The problem you have is when you have a statute, frankly I think the drafters were hoping would never be enforced. It's impossible to define what sig involvement is and that's the rub in this problem.

TED SIMONS: These two protections for heavily influenced and quietly assisted final negotiations. That is enough if that is what the tryer of fact determines, that's enough to invoke the specific statute, no question.

TED SIMONS: Is it right for a city to circumvent a contract that is not in its best interests?

RANDY NUSSBAUM: The problem that I along with other professionals have, this was a contract negotiated between two highly sophisticated professionals. And the question becomes if the city was so concerned how come it took two years for this issue to even arise?

TED SIMONS: I was going to ask about the timing, as well. They brought it out in the middle of the Stanley Cup finals, and again, you have three years to go ahead and void this contract, correct?

RANDY NUSSBAUM: That's correct.

TED SIMONS: Do you see anything in the timing of all this?

RANDY NUSSBAUM: I think Glendale was trying to renegotiate the contract over the last few months. First, disclosing that the city is losing money on the contract. There may be a factual despute, but even the Coyotes, using their most positive spin, they lose $6 million on a contract which most folks believe wasn't supposed to be a money-loser for the city.

TED SIMONS: Why wasn't this worked out without a fight?

RANDY NUSSBAUM: The team itself has not been that financially successful. Everyone knows the team has not drawn as well, has not done well in terms of qualifying for the playoffs. They went through bankruptcy just six years ago. It's a team that's struggling financially. It negotiates a highly favorable deal to help survive, and then you have the city coming back and saying, we don't want to play by the rules now, we want to change the rules. I think that's driving the Coyotes, the fact that they are saving money and they need to help build and promote the change. Do you know when the employees and the city of Glendale will sit down and renegotiate this deal?

TED SIMONS: Well, they have got a little bit of time. The judge did restrain the city from canceling the contract.

Were you surprised by that?

RANDY NUSSBAUM: No, not at all. In the legal system you rush into court and, if the judge is considering the potential consequences and believes that freezing everything is in everyone's best interests, the judge will do it. It was set for an additional hearing on June 29th. The cities and the Coyotes will have the time to try to reach an alternative resolution.

TED SIMONS: If they do, do you think it's possible, likely?

RANDY NUSSBAUM: There may be another problem on you to have a judge end of June to pressure the parties. First the scenario, if the litigation continues, it'll be detrimental not just to one side but detrimental to both sides.

TED SIMONS: And as far as the city is concerned, the image of a city, a municipality signing a contract and two years later voiding the contract because it's not in the city's best.

RANDY NUSSBAUM: Ted, the City of Glendale has tried to build a major sports Mecca, think about the national press and the fact that a sports fan just tasered the mayor a few days ago. Does that sound like a sophisticated place that you want to be? Very, very troublesome to everyone involved.

TED SIMONS: And is this the kind of thing the rest of the country, especially the rest of professional sports, owners, leagues, attorneys, are they all watching this so --

RANDY NUSSBAUM: Ted, if you owned a major sports franchise and you were negotiating with the City of Glendale, wouldn't this concern you as to whether you can count on the integrity of the city to fulfill its own contractual obligations?

TED SIMONS: It would. Which makes me wonder why the Coyotes would renegotiate with the same city.

RANDY NUSSBAUM: Because the Coyotes do have a state-of-the-art facility. Here's something that you need to recognize. In Glendale itself there are other all allotments for the city to play. The Coyotes have spent years, and the economic nix is a substantial amount for the employees.

TED SIMONS: What kind of moral ground do the Coyotes have when they know the contract they have signed with the city is detrimental to the city? They know the city is losing money. Do they have any responsibilities?

RANDY NUSSBAUM: My response on that, if Glendale had negotiated a contract highly favorable to it, I can guarantee you the City of Glendale would not be at the bargaining table right now. That is the reality of the situation. They wanted the Coyotes and nows they have to live with the consequences.

TED SIMONS: Does this mean they are in --

RANDY NUSSBAUM: They are going to still be in Glendale. It's going to be negotiated out because there's too much at stake for the Coyotes to move at this point.

TED SIMONS: Randy, thank you very much.

RANDY NUSSBAUM: Thanks again.

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Randy Nussbaum:Scottsdale Attorney

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