Coyotes’ sweetheart lease is dead, long live whatever the hell comes next

In case you somehow missed not only this site’s brief update last night but Twitter going absolutely batshit, yes, the Glendale city council voted last night to terminate the Arizona Coyotes lease deal, effective immediately. The grounds: The Coyotes hired former city attorney Craig Tindall in August 2013, about seven weeks after the council approved the lease deal that Tindall had helped craft an early version of, and state conflict-of-interest law allowed the city to then call for an annulment of the whole lease.

What happened next, in addition to the Twitter batshittery:

The important thing for now is that — barring a court reversal — the old Coyotes lease that was signed in 2013 after years of battles is now dead. This means that Glendale can stop paying $15 million a year in “operating subsidies” to LeBlanc (though it’s still on the hook for $12 million a year in debt payments on the arena), and LeBlanc can stop paying Glendale about $5 million a year in rent, ticket surcharges, parking fees, and a cut of naming-rights money that he agreed to in the lease deal. (The rest of the money that LeBlanc claims Glendale is getting in return is sales taxes, which the Coyotes have to pay regardless unless they leave town, and which Coyotes fans need to pay regardless unless they go with them.) It’s the end to one of the most notorious deals in sports subsidy history, one extracted by the team owners — not LeBlanc, but the previous team owners, I honestly forget which one, there have been so many — by threatening to leave town if their demands weren’t met. To which the new city council that took office since then has now said: “We’re happy to renegotiate something that makes more sense for us, but otherwise, don’t let the door hit you on the way out.”

It’s a reasonable move for a city that doesn’t have much to lose — even if LeBlanc wins in court, the city is no worse off than when it started, and thanks to that godawful out clause it’s not like the lease was going to guarantee that the Coyotes stuck around anyway. It’s just the latest in a recent string of local elected officials actually standing up to sports team owners and demanding to be treated as equal negotiating adversaries, not doormats, and — oh, look, the article I wrote for Vice Sports on this mini-trend is just now going live! Nice timing, Vice Sports!


33 comments on “Coyotes’ sweetheart lease is dead, long live whatever the hell comes next

  1. I do not think LeBlanc could have come off looking any worse than he did last night – an arrogant and entitled bully. The evidence revealed thus far sure seems to suggest that Glendale has a strong legal case to cancel the contract. Next few weeks will be interesting…

  2. I liked the article you linked from Vice and the Phoenix paper article; “Phoenix Suns arena is one of the oldest” – at 22 years old, oh the horrors!

  3. I think the Moda Center (formerly the Rose Garden) in Portland would actually be ready for hockey at any time. The bigger question is if Paul Allen and the Trail Blazers are interested in sharing the arena … there’s been much speculation about that over the years and Allen has been noncommittal at best.

  4. But didn’t all the money that Glendale made from the 2015 Super Bowl more than offset this terrible lease deal with the Coyote’s and and 76% of cost that taxpayer’s put towards the football stadium? HAR-DE-HAR-HAR-HAR

  5. The Dogs ain’t leavin the Phoenix area because there’s a 99.9% chance that NBC gets to pay the League a lot less money if they lose the 12th largest TV market in the country.

    I must say that Neil should love this. The deal was blown up essentially because Glendale pols got made that money for “arena operating costs” was actually going to pay down the debt that the Dogs’ owners used to purchase the team. Gary Bettman created a loophole by having the League take on that debt, but that only served to further piss off the Glendale pols.

    We should also be careful to give James Dolan credit/blame for this. If he hadn’t been a cowboy (in the best sense of the word) and turned The Forum into a viable concert/special events arena, then Glendale pols almost certainly wouldn’t have gotten the idea of trying to replicate that move in the Phoenix area (which appears to be what Glendale pols are attempting).

  6. This is the greatest news since… A pretty long time. Go Glendale!

    The $12M annually is a regrettable sunk cost, but it’s also large enough to where they Coyotes could easily say, “Screw it, we’re still staying.” They went from being over-the-top generous to merely way too generous. There’s still value there for them. I’d wager they’ll be there next season, maybe even 2 seasons.

  7. MikeM: The Coyotes will be in Phoenix for at least as long as TV dominates pro sports’ revenues. I do think that the Coyotes are done in Glendale, however. I’d expect that they’ll partner on a new arena with the Suns.

  8. It’s always about Sacramento to me.

    The deal we’ve given to the Kings will probably result in about a $15M/year subsidy to the Kings. Aside from paying about $6.5M in rent, they’ll find that whole deal will be revenue-neutral. But that’ll be with payments over $23M. So yeah, we’ll give them a subsidy worth about $15M, probably more.

    Glendale might even be better off without the Coyotes. Sacramento would have been better off without the Kings.

    Why are cities so dumb about this?

  9. Yeah, but it’s 1) doing well with concerts and won’t want to offer a sweetheart lease to hockey and 2) in Kansas City.

  10. I’d like to see the Yotes move to Portland, if for no other reason then to watch the Seattle arena supporters collectively twist off.

  11. Being a hockey fan from KC, I hope they move here. It’s not like we have to build them an arena or anything, since we already have one. However, I seem to remember readin an article in the KC Star a couple years ago that the Coyotes already considered moving here, but they would require the city to subsidize them (I guess similar to what Glendale did) and the city wisely said no.

    Still, I have hope for a return of the Scouts without a horrible lease.

  12. Neil, those are both very good reasons for them (and other teams) not to move into the Sprint Center :) I only asked because the story says ‘the only city with an arena ready to go is Quebec’ and I couldn’t tell from the Googles whether or not the arena was hockey ready, just that there had been one-off hockey games played there. Thanks for confirming.

  13. I’m living in Quebec City for the summer. The new rink (Centre Videotron) is opening in early September, with the first scheduled event to be a Quebec Remparts game (Quebec Major Junior Hockey League) on September 12th, and a Habs-Penguins preseason game later in the month.

    The city and the province spent a ridiculous amount of money to build the rink and gave a sweetheart deal to Quebecor (a massive media company) to manage it. Obviously the logistics of moving the Coyotes to Quebec in time for the upcoming season make it extremely unlikely, but I can guarantee you that they would be welcomed with open arms. However, my understanding is that Quebecor is only interested in owning a team, however I don’t know that for certain.

  14. Well, there’s always the offset rink of KeyArena. Puck-heads around here say we’re so clamoring for hockey that they might even crowd the place for a team that recorded 13k avg attendance last year.

  15. If this Craig Tindall violated conflict-of-interest laws, shouldn’t Glendale be suing or prosecuting him?

  16. Kansas City is really small:

    http://www.nielsen.com/content/dam/corporate/us/en/docs/solutions/measurement/television/2013-2014-DMA-Ranks.pdf

    Not that they couldn’t support an NHL team, but it would be one of the smaller markets in the league, so probably not a big step up from Glendale unless they got another sweetheart lease, which AEG won’t be offering.

  17. KC is 3x bigger than Quebec City in terms of metro area. So it doesn’t really make sense to eliminate KC for being too small, without eliminating Quebec City for the same reason.

  18. The issue with Quebec City/Quebecor is that Pierre Karl Peladeau, the main shareholder, is currently the leader of the Parti Québecois and leader of the opposition. He has his shares in the company in a trust that, depending on whom you ask, is semi-blind or an absolute joke. Quebecor also has an exclusive to operate the rink (named after its Videotron subsidiary).

    Not only would he want to own the team if it were there, there’s some question about whether Quebecor could buy the team given how hamstrung the situation is with the trust and the possible array of conflicts and headlines, though of course the “PKP brings back the Nords” headlines would probably weigh it out. I’d lean toward “yes”, but it’s far from a settled issue.

    @ T: They’re not going to Kansas City. Wouldn’t be a new business model or add to the TV contract, and the other locations have a lot more guaranteed hockey fans.

  19. @T

    I think what Neil is referring to is that KC would be the smallest market with 3 major pro teams. The NHL would undoubtedly take a back seat to the Chiefs and Royals whereas they would sell out every game in QC.

  20. KC is just small, regardless. Market size doesn’t matter much in the NFL, and the Royals are one of the lowest-revenue teams in MLB. Again, not that an NHL team couldn’t survive in KC, but it’s not anything that’s going to excite a money-hungry owner just coming off getting paid $15m a year by his city.

  21. The Rockets have exclusive rights to put an NHL team there, and apparently their owners aren’t interested. It would sure work from a market size standpoint, though that was the idea behind Phoenix, too.

  22. Mr. Bettman was asked about the NBC contract (which, at $200m per year, is vastly inferior to the revenue provided by the Rogers media contract – some C$433m, or $350m USD per season… assuming that the Rogers deal wasn’t done in USD which it very well may have been…) language with regard to specific markets shortly after that deal was signed a couple of years ago.

    He indicated that the NBC deal did not name specific markets, nor require that the league remain in all of the top ten/fifteen media markets in the US.

    That said, I would be surprised if the NBC deal didn’t require them to be in “some” of the major markets (lest they want to move the Rangers, Devils and Islanders to KC, Peoria and Milwaukee respectively). The question, of course, is how many.

    So no, the Coyotes leaving Glendale or Phoenix area would not impact the amount due from NBC directly. Whether they have some other terms related to number of teams in the US v Canada etc is unknown. But I don’t believe the Coyotes are moving to Canada anyway, given the hundreds of millions the league has spent to keep them where they are (closing in on as much as Glendale taxpayers have spent… sobering…)

    Vegas maybe. Seattle if they had a building (which they don’t, despite what the article linked says). There are also several markets that could act as parking spots for the franchise for a year or two while longer term options are investigated.

    Given that any of the “deemed great” markets that don’t presently have a franchise would cost the owners expansion money if they stuck the Coyotes there, it could be that their temporary home (which could indeed be Glendale) will last several years.

    I remember Richard Burke (who originally bought the Jets from Barry Shenkarow and moved them to AWA in Phoenix) telling everyone (after he sold the club) that he would have lost less money if he kept operating them in Winnipeg instead.

    This franchise is the gift that keeps on taking…

  23. “The Dogs ain’t leavin the Phoenix area because there’s a 99.9% chance that NBC gets to pay the League a lot less money if they lose the 12th largest TV market in the country. ”
    Has this ever happened in the history of time? Did NBC pay less when the Thrashers moved to Winnipeg?

  24. The worry would be that in the next contract, the NHL would get less than it would otherwise if Phoenix weren’t included. Given that this contract has another six years to run, I really doubt anyone is sweating it.

  25. That’s true, Neil, but I wonder if it is a legitimate worry or not.

    During the Moyes/NHL bankruptcy filing fiasco, documents provided to the court showed that an average of around 9,000 tv households tuned in to Coyotes games through the regular season… even less people than were attending the games (at an average of $9/ticket sold at the time).

    I’m sure that number has come up over the past few years as the new ownership group does things like actual marketing… but still. In a market the size of Phx, even 15-20 times that number is not a significant percentage of the sporting landscape. And marketers (at NBC or elsewhere) notice that sort of thing.

  26. We’re in agreement, John. If it were the Rangers or Kings moving, the TV networks might possibly raise it as an issue five years from now. Phoenix vs wherever is close enough to a wash in TV terms as to be not worth a mention.

    Bettman does have an obsession with the Sun Belt that will likely make him want to keep the team there (even aside from there not being any obvious slam dunk alternatives), but I doubt it has much to do with the TV networks.

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