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Fallout From Arizona Coyotes v. City of Glendale

By Richard Duflo

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The recent vote to void the lease agreement between the City of Glendale and the Arizona Coyotes at Gila River Arena is a disastrous. The ramifications of this decision, should the city officially continue with it, will have terrible repercussions for more than just the two parties involved.

First off, the Glendale city officials have embarrassed themselves, their city and the state of Arizona. The Coyotes are part of the National Hockey League, they are a major sports team in one of the four major leagues in North America. This is a national story, the history of the team has been well documented and because hockey is a global game, this story is being reported across the world. Glendale is representing Arizona on a global scale with this story and have completely embarrassed the state.

It’s embarrassing enough to suddenly decide that you’re done holding your end up of a binding legal contract good for 15 years only 2 years into it, but it’s a whole different level of embarrassment when the evidence given for the contract termination has legal experts scratching their heads in absolute confusion. Everyday new information is released about the case and everyday the scale seemingly tips in favor of the Coyotes.

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Despite the lack of common sense and as of right now, terrible legal advice on the part of Glendale, saving their reputation is not the only problem faced here.

Before the vote was even taken, this had caused damages. During Coyotes President and CEO Anthony LeBlanc’s speech to the city council at the meeting on Wednesday, LeBlanc revealed that the Coyotes organization was forced to drop from bidding in an attempt to host the 2018 World Junior Championships. This could have been huge for hockey growth in Arizona, the Coyotes organization itself, surrounding businesses at West Gate and of course, the City of Glendale.

Speaking of the businesses that surround and make up Westgate, what about them? They are only there because of the Coyotes and Gila River Arena. Without them, they would struggle to survive. That’s 41 home games, not including preseason and playoffs that would bring crowds to the area upwards of 13,000 and more.

Westgate business owners brought this to the attention of the Glendale city council, who claim to be doing this for the people, but didn’t listen. The business owners and employees will be casualties of an unnecessary war if Glendale has their way.

The day after the vote, Westgate Development Manager Jeff Teetsel released the following statement,

"“We are disappointed with the direction chosen by the Glendale City Council last night. The City should recognize the positive contribution the Coyotes have made in the context of economic development, including the development of the Tanger Outlets Westgate in 2012, the addition of the Tanger Phase 2 in 2014, the Dave and Buster’s now under construction as part of the Westgate Entertainment District and the application pending for the construction of a new hotel at Westgate. The combination of all this activity has produced well over 1,000 new permanent jobs, in excess of $200 million a year in annual sales for which the city now receives millions of dollars a year in annual recurring sales tax revenue, and millions of dollars in building permit fees to the City of Glendale. It is a shame that a majority of Glendale councilmembers fail to appreciate and consider the economic activity around the arena and direct financial benefit to the City.”"

Sure, the Arizona Cardinals are out there as well, but they only have a handful of home games, not enough to sustain the area as it is now. Which by the way, is continuing to grow.

So, let’s say the Coyotes leave and a majority of Westgate closes. This would absolutely affect the Arizona Cardinals. Who the city council has also been at odds with recently, but why would the NFL or NCAA want to continue to hold events there? If there is nothing else around the University of Phoenix Stadium, why would marquee events be held there?

When the Super Bowl was here in 2015, all of the big events were held in Phoenix and Scottsdale, and that’s with Westgate still open to relieve some of the tourist pressure. Good luck trying to attract events to a completely dead area.

How about the actual hockey team? July 1 is the beginning of NHL free agency. Coming off of the abysmal season last year, the team entered a rebuild phase and this upcoming free agency is incredibly important as the team lays the groundwork for the future of the on ice product.

With this cloud of uncertainty hanging over the organization once again, what free agent is going to want to sign in Arizona? It’s going to take a pretty good sell job by Coyotes General Manager Don Maloney and his team to convince a player to come to the desert despite what is going on.

Another aspect of this is fan support. When it appeared that the team was on its way out of Arizona, attendance dropped. It plummeted and they were just now starting to build it back up slowly.

LeBlanc said that season ticket sales and renewals were both up, but after Glendale decided to try and cancel the lease, LeBlanc says that might come to a stop. He has been receiving calls about people wanting to cancel or hold off on their payments.

LeBlanc has stated that the organization has been receiving similar calls from sponsors as well. Partnerships that the team worked hard to establish during the beginning years of IceArizona’s ownership of the team.

This is money lost for a team that has none to lose.

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Yes, the city was paying the Coyotes $15 million (less than 1.5% of Glendale’s budget) to operate the arena, but the revenue that the coyotes bring in to the city actually cuts that number. This most recent season saw the Coyotes bring in $6.6 million in revenue to the city. The team also estimates that another $2.5 million was brought in from a sales tax increase at Westgate, which again, shrinks the difference.

LeBlanc tells Arizona Sports, that Glendale’s cost is already lower than if there was no team in the building,

"“Their net operating expense to operate the arena is less than $6 million,” LeBlanc said. “When they were looking at options when we did our deal two years ago, the number they had in their mind if there was no hockey team, the number they had to budget was $6.5 million. We’re below that, we’re already below that.”"

If Glendale has their way, what would this all equate to? Revenue for the city lost.

It’s too late now, no matter what happens in court, the city of Glendale has crossed the point of no return. If they thought what they were paying was too much before (less than 1.5% of their budget) they are in for a world of hurt.

If the Coyotes win in court, and it certainly seems as if they are in the better position, they are going to have to continue to pay the Coyotes for their lease on top of a damages claim that the team plans to file of $200 million.

In addition to the court battles against the Coyotes, former city attorney, Julie Frisoni, has been targeted by Glendale as the second person violating the conflict of interest law. Frisoni, who has never been a Coyotes employee, has an attorney ready to sue Glendale if her reputation is damaged.

So, that’s just one more court battle the city may have to deal with.

The city council has called for a closed doors executive session on Tuesday. It’s not known what will be discussed, but it could be the final meeting before they decide if they are going forward with the cancellation, or calling it off.

Even if they decide to call the cancellation off, the Coyotes will likely still sue the city for damages. So, this it for Glendale, the point of no return.

Take a look at what councilman Gary Sherwood had to say to Arizona Sports about the upcoming legal battle between the team and city. Sherwood was one of the two to vote in favor of the Coyotes, here’s what he had to say,

"“I truly believe they [Coyotes] will prevail. Unless there is a smoking gun there, I don’t know how (the city would win), I don’t see that at all.”“There was mention last night that we had been working on this for four months. There had been no discussions with council members until the executive session on June 8.”"

Seems like Glendale really did their homework here. No matter what the outcome is, this will not reflect well on the City of Glendale and will have detrimental effects on the city. The council thinks they are in a bad place, well, it’s about to get much worse for them because of their shortsighted actions.

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