Sources: Matthew Hulsizer walks away

The most promising potential buyer of the beleaguered Phoenix Coyotes to come along since the team was thrown into bankruptcy two years ago has walked away from the process, a source told ESPN.com on Monday afternoon.

Chicago businessman Matthew Hulsizer, who had hoped to have a deal in place to purchase the team from the NHL last spring, had set aside more than $100 million, but ongoing issues about a new arena lease agreement with the city of Glendale have led to Hulsizer withdrawing from the deal.

Hulsizer's departure leaves the team's already tenuous future in Arizona even less certain, but NHL deputy commissioner Bill Daly said there are still suitors for the franchise.

"There are ongoing negotiations," Daly said in an email to The Associated Press. "While it is unfortunate that Matt has decided to go in a different direction, the city of Glendale has chosen to pursue an alternative structure with one or more potentially interested purchasers. We do not view this as a step backwards in the process. The situation has been moving in this direction for quite some time now."

It's believed Chicago Bulls and White Sox owner Jerry Reinsdorf, an on-again, off-again suitor the past two years, is back in the picture as a potential owner, as well as another group, the source said.

Another source told ESPN.com Monday the Hulsizer withdrawal doesn't necessarily jeopardize the Coyotes' prospects and that there remains optimism a new owner will be in place by the end of August.

"The City of Glendale and the National Hockey League continue to negotiate with other interested parties to secure new ownership for the Phoenix Coyotes," the team said in a release. "The objective continues to be to transition ownership of the Club to an interested purchaser in the coming months."

Still, Reinsdorf's intentions vis-a-vis buying the Coyotes has always been suspect, and multiple sources have told ESPN.com they don't believe Reinsdorf will be interested in buying the team without significant givebacks from the City of Glendale.

The city has already committed $50 million to the NHL to cover losses incurred by the team last season and the coming 2011-12 season -- $25 million per season.

However, the team's losses go well beyond that figure and it's unlikely the NHL will keep the team in Arizona beyond next season if a buyer cannot be found that can work out a lease agreement with Glendale's fractious city council and city officials.

Glendale had agreed to sell more than $100 million in municipal bonds, which would have gone toward the purchase price of the team.

But that deal was opposed by The Goldwater Institute, a public interest group, which threatened to sue if the bond sale went through, effectively stalling the bond sale.

Although Hulsizer's lease proposal had been approved by the city council months ago, he recently produced an alternative proposal that would have given the city more flexibility in managing the lease deal. That new proposal never received enough traction, and ultimately Hulsizer had had enough, the source said.

The NHL recently approved the sale of the Atlanta Thrashers to a group in Winnipeg, although realignment was held off for the coming season. The withdrawal of Hulsizer ultimately may force the NHL to factor in two relocated markets when it gets around to drawing up the schedule for the 2012-2013 season.

As for Hulsizer, it's believed he would entertain the notion of buying or becoming a lead partner in another NHL team.

Scott Burnside covers the NHL for ESPN.com. Information from The Associated Press was used in this report.