On Monday, May 7 the NHL announced that it had reached a tentative agreement to sell the Phoenix Coyotes to a group led by former San Jose Sharks CEO Greg Jamison. The NHL and Jamison will continue to finalize the deal while Jamison negotiates with the city of Glendale on a lease agreement for Jobing.com Arena. The deal depends on reaching a favourable lease agreement, of course, but the NHL and Gary Bettman said all the right things at the press conference and it all sounded very positive.
The thing is, we've seen this before and I can't help but be skeptical. In 2010 the NHL had a tentative agreement in place to sell the team to Ice Edge Group, but the Ice Edge bid couldn't satisfy Glendale's financing conditions or come to an agreeable lease without the team playing some games outside of Phoenix. Then in 2011 the NHL had a deal to sell the team to an investment group led by Matthew Hulsizer, although this deal was again contingent on reaching an agreement on the arena lease and operating contract. Hulsizer's deal relied on $100 million in municipal bonds that through the arena operating contract and parking revenue would have essentially been a subsidy towards the purchase price of the team. As we all know, the Goldwater Institute threatened to sue, the bond market collapsed, and Hulsizer's deal collapsed.
So my question is, what's different this time? Is the Jamison group receiving financial concessions that other investors didn't receive? Do they know something nobody else knows? Is it just blind faith? Are they just so passionate about owning a hockey team that they're willing to lose millions upon millions of dollars to do it?
Dozens of smart, shrewd investors have looked at purchasing the Coyotes and no group has believed that the team would be economically viable without receiving significant concessions from the city of Glendale. Jim Ballsillie had so little confidence that he wanted to move the team immediately. Jerry Reinsdorf required the city to cover a large portion of his losses and had an out clause after 5 years. Matthew Hulsizer had the municipal bonds. Ice Edge wanted to play some games in Saskatoon. These are smart investors who didn't think a deal made sense financially. Presumably, dozens of other potential investors also didn't have enough confidence in the financial numbers to even submit a bid.
Am I hopeful this works out? I am. But I'm also incredibly skeptical. Very little has been released about the structure of the deal, and I'd be shocked if it didn't include some heavy "not a subsidy" subsidies. After 15 years and not a single profitable season, I just can't picture a scenario in which the Coyotes are a viable business without some serious financial concessions or subsidies.