Naylor: Goldwater still opposed to Hulsizer deal for Coyotes

Dave Naylor

3/22/2011 2:32:22 AM

Glendale Mayor Elaine Scruggs and NHL commissioner Gary Bettman have begged them to stand down.

And Sunday night, would-be Phoenix Coyotes owner Matthew Hulsizer did the same on television during intermission of a game in Glendale, with Senator John McCain, one of the most powerful men in Arizona, adding his voice to the cry as well.

They all have implored the Goldwater Institute to back away, drop its threat of a lawsuit, and let the sale of the Phoenix Coyotes go through, allowing the team to remain in Glendale.

None of that apparently matters.

Monday night, the Goldwater Institute released a statement maintaining its opposition to the deal that calls on the City of Glendale to contribute $100 million worth or proceeds from a municipal bond sale to help Hulsizer buy the team from the NHL for $170 million.

On Friday, Hulsizer sent a letter to Goldwater promising to guarantee $75 million worth of the funds to the city as a measure of protecting citizens from financial risk. But that failed to move the taxpayer advocacy group of its long-held opposition to the deal. 

"The offer recognizes the significant risk to taxpayers under the current deal and to that extent is a positive development," Goldwater Institute president Darcy Olsen said in a statement. "Regrettably, however, the proposal fails to remedy the core legal violation at issue, leaving the expensive taxpayer gamble intact."

Goldwater claims that Hulsizer's $75 million guarantee, which he unveiled on television Sunday, meant that revenues to the city from all sources - such as arena events, rental payments, parking revenues - would total at least $75 million over 30 years, a promise he made in the letter he sent to the institute on Friday.
"Arizona Hockey is willing to modify the lease agreement with Glendale to guaranty [sic] to the city that they [sic] will receive direct revenues from the Coyotes, Arena and parking that have a value to day [sic] of at least $75 million," Hulsizer wrote to the Goldwater Insitute. "If the cumulative direct revenues received from the Coyotes, Arena and parking are that amount, than [sic] the shortfall will be the liability of Arizona Hockey Holdings."

Both the NHL and the city have stated recently that time is running short for a solution in Glendale.

But Monday night, NHL deputy commissioner Bill Daly said Goldwater's unwavering position will not dissuade the league from continuing its efforts to close the deal with Hulsizer.

"It doesn't change our equation," said Daly. "We have never anticipated that Goldwater would change its position. Our objective has been to try to find a solution with or without Goldwater's endorsement."

The question is whether Hulsizer, who seemed frustrated during his television interview Sunday night, has the appetite to push forward with the deal at this point.

Glendale's municipal bonds were originally to be sold by the end of February. However, the Goldwater Institute sent letters to potential buyers, warning them that a potential lawsuit may follow. Last week, Goldwater clarified its position by promising to sue if the deal closed.

NHL commissioner Gary Bettman, the City of Glendale and Hulsizer have all blamed the Goldwater Institute's threat of a lawsuit for the failure of the bonds to sell.

Goldwater's opposition is based on its belief that the parking revenues being used to fund repayment of the bonds already belongs to the city and therefore should be used to aid the hockey club. It is also opposed to a $97 million payment the city has pledged to Hulsizer for managing Arena over five-and-a-half years.

Goldwater's statement claims that even with Hulsizer's $75 million guarantee, taxpayers will be on the hook for $362 million over the next 30 years.

"The Goldwater Institute has recommended that Mr. Hulsizer use his resources to buy the team and hold taxpayers harmless," said the statement released by Goldwater on Monday. "In a less than perfect compromise, Mr. Hulsizer could also protect taxpayers by personally guaranteeing the full repayment amount of the bonds."

Goldwater also expressed concern about the Coyotes viability in Phoenix, suggesting that taxpayers will be on the hook if the team winds up in bankruptcy again. The Coyotes have been a financial disaster in Glendale, expected to lose roughly $40 million this season alone.

"Glendale taxpayers have been given no protection against a future team bankruptcy," said the Goldwater statement. "If the team goes bankrupt again, taxpayers will assume the full cost of bond repayment—this is on top of what taxpayers are already paying for the construction of Arena. Any restructured deal should legally protect taxpayers from liability for the bond repayment if the team fails again. "

The response from Goldwater is sure to be warmly greeted in Winnipeg where fans have been following the trials of the Coyotes on a daily basis, anticipating that the team will move North if the bond sale doesn't close.

While there has been no end to the twists and turns in a saga that began when the Coyotes were put into bankruptcy back in May of 2009, this latest turn has added another level of urgency to the situation.

"We hope Glendale will put a deal on the table that doesn't expose taxpayers to unnecessary risk," said Olsen.