If there was any doubt about the shamelessness of the NHL when it comes to the Phoenix Coyotes, it was erased last Thursday when commissioner Gary Bettman had an ultimatum delivered to the city officials of Glendale, Ariz.
Show us proof you have $25-million (all currency U.S.) available to cover the Coyotes' operating losses next season, the suburban Phoenix community was told, or we will sell the team immediately to someone who will move it. Glendale city council member Phil Lieberman said Tuesday they were not told who was buying the Coyotes or where they were going, but he found out the destination was Winnipeg.
The ultimatum was made one week after Bettman dismissed reports he had a backup plan to sell the Coyotes to True North Sports and Entertainment of Winnipeg. "Rampant speculation that has no foundation," Bettman said in one interview.
But there was Bettman's henchman, deputy commissioner Bill Daly, dropping a Winnipeg grenade into the lap of Glendale city manager Ed Beasley. Cough up $25-million or we're out of here.
Officials from the city of 250,000 were given until 5 p.m. Friday to produce the $25-million guarantee, according to one source. They caved at 4:45, with 15 minutes to spare.
People from Glendale and Winnipeg should be outraged. Bettman and Daly have long told both cities, with straight faces, that they would love to have both of them in the NHL. But not, apparently, before one is told to shut up and cough up, and the other is used coldly as a bargaining chip.
"Well, he has the cards in his pocket," Lieberman said when asked why the city surrendered the cash. "He's got three aces - the franchise."
Glendale politicians are terrified of losing the franchise, so they willingly compounded one huge mistake with another. The first mistake was borrowing $180-million to build Jobing.com Arena for former Coyotes owner Steve Ellman. Now they feel they have no choice but to throw good money after bad to avoid losing the anchor tenant even if that tenant loses more than $20-million in a good year.
Actually, the city missed a chance to throw Jim Balsillie's money at the NHL. Last fall, when the BlackBerry billionaire was fighting to buy the Coyotes, he offered Glendale $42-million to drop its opposition to him. Even if he lost, Balsillie promised, Glendale could keep $25-million, no strings attached.
Lieberman was the only Glendale councillor to say grab the money. So now the city had to cough up $25-million from what it calls an "enterprise fund account," which is a reserve account originally ticketed for expenses that will come due in a few years.
Oh, don't worry, say some city councillors and staffers and, of course, Bettman. That money will not be needed because it's only insurance in case the team isn't sold and it surely will be. Oh yes, the sale has been nothing but smooth so far, hasn't it?
All the city really did was accept one ultimatum so the NHL could drop another one on it. The agreement spelling out how the city will cover up to $25-million in losses next season also says the city has until Dec. 31 to find a local buyer or the NHL will sell it to someone (hello True North) it has waiting to move the team. Lieberman said the city was told there was a cash offer of $170-million on the table.
The problem is, Lieberman points out, this hogties the city in its negotiations with the only two prospective local buyers. One, Jerry Reinsdorf, is not that interested. The other, the Ice Edge group, is not that credible.
"This means the city is almost blackmailed into accepting the terms of the owners," Lieberman said, referring to negotiations between the two prospective owners over an arena lease.
The city has a memorandum of understanding with both Reinsdorf and Ice Edge but that is only an outline of an agreement. Indications are that Reinsdorf's negotiators are playing hardball over the details, and who wouldn't, once it was shown the city is willing to surrender $25-million a year?
"Suppose the NHL doesn't accept any [lease]we approve and hand off to them for acceptance?" Lieberman said. "There's a big hole there."
There is also the Goldwater Institute, the conservative watchdog that is looking to take Glendale to court for spending too much of the taxpayers' money. One of their lawyers said Tuesday they are still studying the agreement between the NHL and Glendale.
And also holding their noses, one supposes.