Glendale’s series of lease deals to lure and keep the Arizona Coyotes in town have always been among the worst in sports history: The city built a new arena at its own expense and charged the Coyotes only $1 minimal rent [EDIT: see comments for more on the Coyotes’ past and present rent situation], gave the team $50 million in operating subsidies to keep its owners from leaving town after it filed for bankruptcy, then agreed to pay another $15 million a year for the next 15 years to ensure that the team stays put, leaving the city with a budget drowning in red ink even after laying off a quarter of municipal workers. That was all bad enough, but what may kick this over the top to Worst Sports Venue Deal Ever: Glendale gave the Coyotes owners an out clause that will let the team move even if it’s not losing money.

The short version, condensed from David Shoalts’ excellent investigation in Friday’s Globe and Mail: Under the escape clause, the Coyotes’ owners can break their lease and move the team if they’ve lost at least $50 million over the first five years of the deal, running through 2018. That would seem to be hard to do when you’re getting $15 million a year in subsidies from your landlords and paying very little rent, but the Coyotes figured a way around that:

The $15-million from Glendale is recorded as revenue on the books of the company [George] Gosbee and [Anthony] LeBlanc formed to manage the arena, not on the books of IceArizona, the company that owns the Coyotes. While that money eventually flows to IceArizona because it owns the arena manager, for perfectly legal accounting purposes the parent company can claim a larger loss on its hockey operations, which ratchets up the number for the escape clause. Just as important, it also means the $15-million is not recorded as hockey-related revenue, which has to be shared 50-50 with the players under the collective agreement.

So not only is Glendale paying the Coyotes to play in its arena, it’s agreeing to let the team owners claim unmanageable losses by not counting those payments on their books. That is some kind of crazy.

Now, it’s always possible that Gosbee and LeBlanc (and possible new majority investor Andrew Barroway) won’t exercise the escape clause, because where else are they going to find a city that’s willing to give them a free arena plus $15 million a year in cash while doing so in such a way that they’re still eligible for NHL revenue-sharing payments. But then, they don’t have to actually exercise the escape clause to make use of it — they can use the mere threat of it to try to extract even more concessions from Glendale in a revised lease. You may think Glendale is tapped out by now, but when you’re this far down the road in a long con, there’s nothing left to do but see how far you can push your mark.

The saga of the Phoenix (now Arizona) Coyotes was one of the longest in recent sports history, and ended in 2013 with the city of Glendale agreeing to pay the team $15 million a year to stay put in town for just five more years. But at least it’s finally over, and now Coyotes fans, such that there are fans, can enjoy the Coyotes season in peace, such that there’s much to enjoy — wait, what now?

The city of Glendale is not sure what impact — if any — a sale of the majority stake in the Arizona Coyotes will have on a $225 million arena accord reached with hockey team’s owners last summer…

City officials are not sure yet if a change in Coyotes majority ownership would necessitate a new or amended arena subsidy.

Why on earth would Glendale have to kick in more money just because of the checks being made out to a different name? Phoenix Business Journal doesn’t say, but presumably it’s connected to the out clause in the Coyotes’ lease, which allows the team’s owner (whoever it is at the time) to break the lease and move the team in 2018 if they’ve lost more than $50 million over the previous five years.

The Coyotes say they lost $24 million last year, which would certainly put them on the path to lease breakage. But it’s not entirely clear that that entire loss is really loss. As David Shoalts of the Globe and Mail explains it:

The problem for the latest owners is the same as it was for all the previous owners – despite any claims to a successful first year, the Coyotes’ cash flow is not enough to service the franchise’s enormous debt. The team’s hockey-related revenue (HRR) for the 2013-14 season was said to be just $40-million, last among the NHL’s 30 clubs.

Gosbee and LeBlanc borrowed $120-million from Fortress Investment Group and $85-million from the NHL to finance the team and have some working capital left over. While the NHL loan is at favourable terms, one source pegs the interest rate for the Fortress loan at 10 per cent.

The New York Post, which first reported the $24 million loss figure, doesn’t indicate if this counts debt service. But if it does, it’s completely ridiculous: Just because the team’s owners took out a terrible loan (which is soaking up the entire $15 million in subsidies from Glendale to pay off) because they didn’t have enough cash to buy the team shouldn’t count against the franchise’s performance. And it certainly shouldn’t allow the Coyotes owners to cry poverty in order to demand more subsidies. (They would have to repay some of the subsidies to do so, but it’s not really about whether they’d use the out clause, but whether they’d threaten to.)

Anyway, let this be a reminder to city officials everywhere: Don’t sign lease clauses based on team profits and loss, because the teams can cook the books however they want. Maybe someone could just print up some nice plaques with Paul Beeston’s quote on it and send them around to city halls everywhere? The world will appreciate it.

It’s baaaaaaaaaaack!

Glendale Mayor Jerry Weiers on Monday asked the state attorney general to investigate a previously undisclosed meeting of City Council members and an Arizona Coyotes attorney last June, days before the council approved a $225 million agreement with the team…

Violations of the Open Meeting Law can rescind actions taken by elected officials, which could potentially void Glendale’s deal with the team, which was then called the Phoenix Coyotes.

It’s been just slightly over a year since the Arizona Coyotes signed a new 15-year lease where the city of Glendale will pay them $15 million a year to play hockey in the arena that Glendale built for them. (They were the Phoenix Coyotes then, but as part of the lease the team owners agreed to change its name. But not to “Glendale Coyotes,” that’d be crazy.) It was one of the most generous sports deals in history, and only passed after councilmember Sammy Chavira made a last-second switch, so if it turns out that the whole thing was illegal, that’d be kind of a big deal.

Now, Mayor Weiers opposed the lease deal, so it’s not entirely unsurprising that he’s looking into trying to undo it. But according to emails obtained by the Arizona Republic, the evidence is kind of damning: Councilmember Gary Sherwood emailed councilmember Manny Martinez that he and councilmember Yvonne Knaack “spent over an hour with [incoming Coyotes attorney] Nick Wood last night,” and that “Sammy [Chavira] is already on board as he was with us last night.” Adding self-incrimincation to injury, Sherwood added, “Manny, please delete this email after you’ve read it.”

(Asked about this by the Republic, Sherwood defended holding secret discussions outside of public view by saying that he and Knaack only spoke with Wood over the phone, then spoke with Martinez and Chavira later. Which would still likely be a violation of the state Open Meeting Law, but hey, it worked for Cobb County.)

We’re still a long way from the Coyotes deal coming close to being overturned — among other things, even if last year’s vote turns out to be illegal, the council could just vote to reaffirm the new lease, this time without any hanky-panky. But if nothing else, this means we have more Glendale craziness to look forward to, which is always fun.

The Glendale city attorney who was in charge of negotiating with the Phoenix Coyotes until April is now the attorney for the Phoenix Coyotes. That is all. Except that Rick Eckstein is really prescient.

The moment we never thought would arrive has: The Phoenix Coyotes have been sold, to George Gosbee, Anthony LeBlanc, and assorted other wealthy Canadians for $170 million. Or as we like to call it here, $55 million less than the new owners will get from Glendale, Arizona over the next 15 years for playing there.

Over the next 15 years, that is, assuming the Coyotes stay put. Gosbee and LeBlanc negotiated an out clause where the team can move after five years if it’s lost $50 million over that time, which should be a pretty easy bar to reach if they want, given sports bookkeeping and the fact that it’s the Coyotes. Gosbee reassured Arizonans by noting that he wants to retire to the Phoenix area, and his home in Calgary was destroyed by floods, and calling the out clause “frustrating” to his plans to rebuild a fan base in the Phoenix area. Hey, here’s a crazy idea: If you find the out clause frustrating, how about you don’t put it in the deal in the first place?

Anyway, in the meantime, Glendale still has to pay that $15 million a year worth of “operating subsidies” (a fraction of which will come back to the city via ticket surcharges and parking fees). There hasn’t been any progress that I can tell on the proposal to sell City Hall to pay for past subsidies, but Glendale is considering closing a fire station. But things aren’t all bad: There’s a new city manager, and she likes sharks!

If you’ve been hoping the Goldwater Institute was going to file one of its patented lawsuits against the latest Phoenix Coyotes lease deal, looks like that’s not going to happen:

“Based on the information available to us at this time, we do not believe that the Glendale arena management deal would be held unconstitutional,” Goldwater said in a statement on their website. “Changes made to the agreement during the course of negotiations partially bridged the gap between the market cost of arena management and the amount of the payment to the team owner, thus bringing the deal into conformity with cases interpreting the Gift Clause of the Arizona Constitution.

“The initial deal proposed several years ago would have included not only a substantial annual arena management fee, but a $100 million up-front payment to subsidize the purchase of the team. We are proud to have played a constructive role in protecting the taxpayers and taking an illegal deal off the table.”

In other words, but getting their money one year at a time instead of all at once, the new Coyotes buyers have apparently gotten around any potential legal entanglements. Not that past Goldwater suits were all that effective, but it’s one less hurdle that the new owners have to worry about.

The buyers of the Phoenix Coyotes signed their new lease on Monday guaranteeing them $15 million a year in public operating subsidies in exchange for mumble mumble something something, and the city of Glendale is already reaping the rewards:

At the beginning of the year, Glendale, Arizona restructured the debt it took on for Jobing.com Arena, issuing $39.5 million of senior-lien notes backed by the city’s excise tax. Proceeds of the bonds will refund debt used to build the $220 million arena (Glendale still owes $152 million) that opened in 2003, and are structured to provide budget relief by reducing near-term debt service requirements. Those bonds have been hammered, with their yield jumping to $4.35% from 3.33% since January.

Much of that jump came before Monday, no doubt, but Forbes’ Michael Ozanian says bond buyers are looking askance at the Glendale arena bonds with good reason: Not only can the Coyotes leave after five years if they’re losing money, but even the shares of arena revenue that new owners George Gosbee and Anthony Le Blanc have promised to share with Glendale aren’t guaranteed. But hey, at least the struggling mom-and-pop businesses at the local mall like Johnny Rockets and the Cold Stone Creamery can rest assured of some of the Coyotes’ 500,000 fans a year wandering past before or after games. For the next five years, anyway. Unless there’s another lockout.

I’m still on the road (had a great time at tonight’s Oakland A’s game — no sewage malfunctions at all!), but wanted to stop by to report on tonight’s vote by the Glendale city council, which approved the plan to give $15 million a year in subsidies for the next 15 years to the Phoenix Coyotes in exchange for the team staying put for five years and paying way less than that in rent, ticket surcharges, and other stuff.

With the council split 3-3 and Mayor Jerry Weiers skeptical about the plan, somebody was going to have to flip to get the subsidy package passed, and somebody did:

Councilman Manny Martinez said he supported the deal after the potential team buyer offered more financial guarantees to the city, including a partnership with a successful events-management firm and repayment under certain circumstances if team revenue projections don’t pan out.

“These two things put an entirely different picture before us tonight,” Martinez said.

[UPDATE: The above from USA Today notwithstanding, it was actually councilmember Sammy Chavira who flipped from the no to the yes column, complete with a poorly timed metaphor about firemen rushing into a burning building.]

I wasn’t able to watch the hearing itself (was at the A’s game, remember?), but that “repayment under certain circumstances,” as near as I can understand it, is a promise that if the new Coyotes owners exercise an out clause in their lease and leave after five years of losses, the team would pay the city for any losses it incurred beyond $6 million. That’s something, I suppose — though given that this was promised in exchange for Glendale dropping its demand for its own five-year out clause (the team get break the lease in 2018 if it wants, but the city is stuck in it through 2028), and given that I’m not clear on how “losses” will be calculated for the purpose of this clause, it’s a pretty meager concession.

The Glendale council also considered bids by several other arena operators, some of which offered to run the Jobing.com Arena for just $6 million a year in subsidies, but according to USA Today, those were rejected because they “couldn’t guarantee NHL hockey.” So in essence, the four members of the Glendale council who voted for this deal decided that it’s worth paying $9 million a year for the next 15 years just to have 40 home hockey games a season. That’s about $18 per game per fan who actually shows up to Coyotes games, or nearly half what the fans themselves are paying — and they, unlike Glendale taxpayers overall, are at least actually getting hockey tickets for their money.

The deal — which also includes the team changing its name to the Arizona Coyotes, which helps Glendale because, um, tourists might hear the name and decide to come to the state and accidentally stumble upon Glendale? — will only be finalized if the sale of the team goes through by August 5th, which is reportedly not a stumbling block, but then, this is the Coyotes we’re talking about, so probably best to believe it when we see it. Assuming that happens, though, Coyotes fans can look forward to at least five more seasons of their team being in town, even if they have to buy all new gear now that says “Arizona” on it. And Glendale residents can look forward to at least five more years, if not 15, of sending checks to the local hockey team — plus, one assumes, all sorts of exciting debates about what public buildings to sell off next.