- Associated Press - Wednesday, May 11, 2011

GLENDALE, ARIZ. (AP) - The Glendale City Council has voted to pay the NHL $25 million in arena operating costs to keep the Phoenix Coyotes in Arizona for another season while the prolonged attempt to sell the troubled franchise goes on.

The 5-2 vote on Tuesday night came a week after the league exercised its option to cash in $25 million pledged by the city a year ago.

Before the vote, NHL deputy commissioner Bill Daly told the council that the league remains committed to keeping the team in Arizona. He said he hadn’t anticipated being back for another $25 million, that the league thought it had a buyer in Chicago businessman Matthew Hulsizer, but he indicated the league could seek another buyer.

Hulsizer’s purchase has been stalled, perhaps permanently blocked, by a threatened lawsuit by the conservative Goldwater Institute watchdog group over terms of the lease worked out between the city and the potential owner.

“We’re much closer to the finish line,” Daly said. “I think we are getting there whether it is with Mr. Hulsizer or another potential buyer.”

Mayor Elaine Scruggs emphasized that “this is a payment for a service. This is not a subsidy.”

“We are keeping our community arena open for business,” she said. “We are keeping that arena generating revenue.”

Nick Dranias, director for constitutional government at the Goldwater Institute, told the council that the $25 million could violate the state constitution because it may include money to fund operation of the hockey team and not just the city’s Jobing.com Arena.

Scruggs called Dranias’ comment “a new idea that’s pretty shocking.”

Dranias was one of 25 people who spoke on the issue before the vote.

Hulsizer’s efforts have hit a logjam that, Daly conceded, might be impossible to break. Hulsizer has indicated he has made his last, best offer and the Goldwater Institute vows to sue if the city follows through on the deal. The institute says it is concerned that the terms of the lease violate the state’s constitutional ban on subsidizing private enterprise.

City council member Joycey Clark, who voted for the measure, said she believed the Goldwater Institute had “successfully poisoned” the Hulsizer deal, which she opposed.

“I don’t think that deal will ever make it,” she said. “That’s my opinion.”

Dranias called it “a disgrace” that Glendale was even considering such a deal.

Council member Norma Alvarez voted against the proposal.

“We cannot use taxpayer’s money to subsidize the team,” she said, “and neglect our community.”

The threat of a lawsuit has been a major obstacle in the city’s efforts to sell $100 million in bonds to finance its part of the Hulsizer agreement. If those bonds can’t be sold, there would be no deal with Hulsizer.

The city might attempt to try to find a buyer that would be willing to invest more money outright in the sale to make it more palatable to critics such as the Goldwater Institute. No such buyer has surfaced in two years.

Meanwhile, the Coyotes could be left without solid ownership for a third season, something that coach Dave Tippett had labeled unacceptable if the franchise is to be viable.

Despite the limitations it has operated under, Phoenix made the playoffs each of the last two seasons, losing in the first round to Detroit both times.

The Coyotes‘ situation has been in limbo for two years, almost to the day, since then-owner Jerry Moyes took the team into bankruptcy, unbeknownst to the NHL, and tried to engineer the sale to Canadian billionaire Jim Balsillie contingent on moving the franchise to Hamilton, Ontario, despite the league’s vehement opposition.

A U.S. bankruptcy judge nixed that plan, and the NHL wound up buying the team out of bankruptcy with the stated intention of finding a buyer who would keep the team in Arizona. That was in September 2009.

If no local owner is found, the franchise could wind up back in Winnipeg, its home before moving to Arizona in 1996.

Earlier Tuesday, Ice Edge Holdings withdrew its minority interest in the proposed purchase of the Coyotes.



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