Coyotes saga continues: Glendale could lose twice with attempt to terminate lease

Cue the circus music: Gongdale, er, Glendale, Arizona, is back in business.

But now the question is, is this the last waltz for the Arizona Coyotes in the desert city after this latest local government fiasco?

Less than two years after signing a 15-year lease worth $225 million to keep the Coyotes in the city, the Glendale City Council voted by a 5-2 count Wednesday night to terminate the lease, once again throwing the future of the franchise into disarray.

Honestly, you can’t make this up.

There’s a kind of Stephen King, "Carrie" reaching up from her gravely grave element to this latest twist in the Coyotes' Glendale saga.

City leaders -- and we use that term loosely -- believe they have found a loophole in the language of the agreement signed in July 2013 that supports the termination of the agreement.

It’s not that they want the Yotes to leave town, though; they just want them to stay under terms that are more favorable to the city.

"It is dealing in the worst possible manner in bad faith," Coyotes co-owner, president and CEO Anthony LeBlanc told ESPN.com Thursday. "It’s going to hurt everybody."

Everybody as in the team, the league, the city and, perhaps most important of all, the beleaguered taxpayers who thought this issue had been put to bed almost two years ago.

The apparent conflict of interest issue relates to former Glendale counsel Craig Tindall, who worked on the arena lease language for the city with previous suitors for the team when the Coyotes were being run by the NHL. He left his post in April 2013 and was later hired by LeBlanc to work for the team’s ownership company, IceArizona.

The Arizona Republic reported that part of Tindall’s separation package was for his salary to be paid for six months after leaving his job, during which time he would act as a consultant. He was hired by IceArizona in late August after the lease deal was signed with team ownership, the paper reported. City officials say there is a clause that prevents people who work on an agreement with the city to then work for the other parties.

Five days before IceArizona signed the lease agreement with the city, several council members sent Tindall an email asking for clarification on several points in the agreement.

That is believed to be the city’s basis for terminating the lease, LeBlanc said.

There was no effort made by the city to contact IceArizona for a "cure" or resolution for any alleged breach of contract, according to LeBlanc.

"Our litigators basically, they couldn’t stop laughing when they looked at this," LeBlanc said.

Mayor Jerry Weiers, who spearheaded the move to quash the lease agreement, was not doing media interviews on Thursday and city officials said there would be no further comment until the Coyotes had filed legal paperwork.

LeBlanc said the team would file a temporary restraining order against the lease dissolution and ask the state supreme court for injunctive relief that would allow the team to continue business as usual, including receiving payments from the City of Glendale as per the lease agreement until a court rules on the validity of the city’s argument regarding breach of contract.

The team is also expected to file a suit claiming $200 million in damages.

"And the damages are growing," LeBlanc said.

The team was putting together a proposal for USA Hockey to host the 2018 World Junior Championships, but that bid will not be presented given the city’s course of action.

"They killed it yesterday," LeBlanc said. "I’d be laughed out of the room in Colorado Springs (headquarters for USA Hockey)."

Here’s the part that makes so little sense.

As the Coyotes go, so too does the City of Glendale and the taxpayers who are weary from public services cuts and local government deficits.

To whit, the city earned more than $900,000 from parking revenues, $500,000 from rent, $420,000 as part of the naming rights deal, $2.8 million in ticket surcharge fees and $1.5 million in sales tax from the Coyotes and $522,000 in reimbursed public safety fees.

So, while the city pays IceArizona $15 million annually to manage Gila River Arena, they receive $9 million back from the team.

How much will it cost the city if the Coyotes end up somewhere else?

More than that.

Was the deal struck two years ago a good one for Glendale and its taxpayers?

At the time, the options were slim: sign the deal or watch the team leave.

You can argue which was the better option until the cows come home, but that point is moot now. Or it should be.

The bottom line is that city officials signed the deal. They should be working with the team on every level possible to increase revenues and find new ways to attract people to the area, whether it’s for hockey or non-hockey events.

Would USA Hockey have considered the location for a World Junior tournament? Who knows, but imagine the additional revenue brought to the city had it worked out.

Instead, trying to use a loophole to extort a better deal two years later is more than a little tawdry and reinforces the widely-held notion that this is a small-town operation hopelessly in over its municipal head.

How on earth does anyone think this is a sound strategy unless this is a strategy designed to force the team out of the municipality?

"This development certainly creates further uncertainty for a franchise already facing issues," said Canadian sports legal analyst Eric Macramalla, a partner at Gowlings law firm and contributor to Forbes.

"Glendale’s legal claims are ambitious and may have difficulty succeeding. So it seems clear they are using this out as a way of pressuring the team to renegotiate its arena deal on more favorable terms. If that happens, the team is positioned to stay long term. If, however, the sides can’t broker a settlement, the team’s long-term viability in Arizona may become compromised."

We have seen what legal infighting does to a franchise like the former Atlanta Thrashers, where ownership spent so much time and money in legal fights that they forgot about building a grassroots hockey program and nurturing a fledgling franchise. The Thrashers moved to Winnipeg without a whimper in the summer of 2011.

And we know that right now the Coyotes have no plans to knuckle under to the city’s demands.

"We’re not going to operate that way because we know they don’t have a case," LeBlanc said.

The Coyotes are not a perfect franchise by any stretch, and the marketplace remains an unknown quantity given the years of chaos and uncertainty that led to the 2013 sale of the team to IceArizona.

The Arizona Republic reported recently that the City of Glendale figured to lose $8.1 million last fiscal year and $8.7 million this year as it relates to the city’s investment in the Coyotes.

Commissioner Gary Bettman was asked by Canadian broadcaster Sportsnet if he was worried about the team. He said he’d be more concerned if he was a taxpayer in Glendale.

He’s right. Never mind season ticket holders or the specifics of the economics as they relate to the NHL franchise in Glendale; what company of any sort would enter into a relationship with this municipality?

On the hockey front, what season-ticket holder is going to ante up for the coming season (even though the Coyotes have seen a 5 percent bump in season-ticket renewals from last season in spite of a poor showing on the ice) or beyond?

The team has entered into new sponsorship agreements with companies like BMW and Wicked Tango, but what corporation is going to sink money and time into a relationship that once again is fraught with uncertainty?

How about the other businesses in the area surrounding the arena? How big will the loss in tax dollars be when business dries up for those merchants?

At the end of the day, the NHL will find a place for the forlorn Coyotes to play.

Multiple sources have already told ESPN.com the team will not be moving -- at least not out of Arizona -- anytime soon, even though the Glendale news immediately touched off a storm of "Will the Coyotes be heading to Quebec City?" commentary in social media.

That’s not happening. At least not right away.

There are already rumblings about a possible move back to downtown Phoenix, where the Coyotes first played when they relocated from Winnipeg after the 1996 season.

The US Airways Center is not a great locale for hockey, but we're pretty sure the NBA’s Phoenix Suns -- even on a short-term basis -- would be better partners than the City of Glendale has turned out to be. There are also rumblings that the Suns would like to build a new arena.

Never mind a silver lining, this whole thing could turn out to have a gold lining for the Coyotes.

They could end up playing in a far more attractive locale with better proximity to their fan base and might even end up winning a court battle with their former partners in Glendale.

How sweet would that be?

So, yes, cue the circus music, the theme song for the place called Gongdale, the current, but not necessarily future, home of the Arizona Coyotes.