PHOENIX - Two groups seeking to buy the Phoenix Coyotes have signed memorandums of understanding on a revised lease with the city of Glendale, a significant step toward purchase of the financially troubled NHL franchise.
The documents were signed by Chicago sports mogul Jerry Reinsdorf and by Anthony LeBlanc, head of Ice Edge Holdings, a group of Canadian businessmen. Reinsdorf signed his memorandum on April 1. LeBlanc didn't sign until Friday.
Both deals would provide millions of dollars annually to the buyer through creation of a "Community Financial District." Both proposals would change the team name either the Glendale Coyotes or Arizona Coyotes, with the NHL's approval, and would keep the team in Glendale.
From there, the plans are far different.
The city council will vote on the proposals next Tuesday. If the council approves both, it would be left to the NHL to determine who would buy the team.
The league bought the Coyotes out of bankruptcy last year when no buyer could be found that would keep the team in Glendale.
LeBlanc called the memorandum an "important first step" but said there is much work to be done to finalize the agreement.
Glendale officials did not grant interviews, but released a statement saying the signing "continues the process of ensuring the Coyotes stay in Glendale for the remainder of their lease."
"Keeping this playoff-bound team in Arizona is beneficial to both the regional and statewide economy and is excellent news for (Phoenix area) sports fans," the city said.
NHL deputy commissioner Bill Daly said the league would have no comment until the city completes its process.
Prominent Phoenix attorney John Kaites, part of the Reinsdorf group, did not respond to an email seeking comment.
In the fifth year, Reinsdorf's group, known as Glendale Hockey, could give 180-days notice that it intends to sell the team. Glendale would have that 180 days to find a buyer who would keep the team in Arizona, with Reinsdorf guaranteed a minimum purchase price of US$103 million.
Ice Edge seeks no such "out clause" but would establish a ticket surcharge that could vary between Coyotes games and other events at Jobing.com Arena, a popular venue for major concerts such as the recent Paul McCartney appearance. The financial district would terminate after 10 years, with whatever money is left in it going to the city.
Within five years, Ice Edge would enter into talks with Glendale to buy the arena.
Under Reinsdorf's plan, the financial district would pay the NHL up to $65 million over three years. In addition, a reserve account would be set up to cover operating losses of up to $25 million a year with a maximum $100 million over seven years.
Ice Edge, relying on bank financing for much of its offer, would have Glendale operate the arena and its parking. Ice Edge would get up to $7.5 million per year to pay bank loans. It would get another $5 million from the district's landowners per year for up to 10 years to cover annual operating losses.
The boundaries of the district remain a major question. Arizona Cardinals president Michael Bidwill, whose NFL team plays at nearby University of Phoenix Stadium, blasted the idea when it first surfaced months ago.
Both prospective buyers say there is no way a team can be financially viable in Glendale without major changes to the lease to play at Jobing.com Arena, which the city built for the Coyotes in 2003 at a cost of $180 million. There are 23 years remaining on the lease.
The NHL has said that if no local buyer is found by the end of June, it will look to move the franchise out of Arizona.
Any lease approved by the city council would face a possible lawsuit from the conservative Goldwater Institute over a provision of the state constitution that prohibits giving away public money, but Grant Woods, a former Arizona attorney who represents Ice Edge, said he's comfortable that the Ice Edge agreement would meet any of the institute's concerns.
Woods said he anticipated the city council approving both agreements "and the NHL can decide who to sell the team to."
Woods described his clients as "die-hard hockey fans," who would finance the purchase through bank loans, along with their own money. Reinsdorf, by all accounts, is no big fan of the game and is interested in the hockey team strictly as an investment. He owns baseball's Chicago White Sox and the NBA's Chicago Bulls. The NHL says it was on the brink of selling the team to the Reinsdorf group last May when Coyotes owner Jerry Moyes abruptly took the team into bankruptcy, to the league's great surprise.
The Coyotes have lost tens of millions of dollars each of the past several seasons and never have turned a profit since the franchise moved from Winnipeg in 1996. Court documents showed the Coyotes had an operating loss of $54.8 million in 2008.
Moyes planned to sell the team in bankruptcy to Canadian billionaire Jim Balsillie contingent on moving it to Hamilton.
The NHL vehemently fought the plan and, when no local buyer came through, purchased the team in U.S. Bankruptcy Court for about $140 million. Judge Redfield Baum refused to go along with Balsillie's bid to force the franchise's move despite the opposition of the league.
Moyes, who says he lost some $300 million on his investment with the team, contends hockey can never succeed in the desert.
On the ice, the Coyotes have been one of the biggest surprises in sports this season, setting franchise records for wins and points while earning their first playoff berth since 2002. The team clinched home ice in the first round by beating Nashville Wednesday night in front of the Coyotes' fourth consecutive sellout crowd.