March 3, 2011
Politicians to meet on Coyotes sale
By QMI Agency
The mayor of Glendale, Ariz., urged the Goldwater Institute to stop blocking the deal to sell the Phoenix Coyotes to Matthew Hulsizer Thursday at a press conference.
Mayor Elaine Scruggs said the independent government watchdog is "significantly hindering" the sale of the Coyotes by threatening to sue over its belief that Glendale's plan to raise money to aid Hulsizer's purchase are in violation of state law.
Reports have indicated if the sale to Hulsizer can't be completed soon, the Coyotes could be forced to relocate. Winnipeg's Mark Chipman and his partners had a deal in place to buy the team and move it to Winnipeg last spring and it's believed that deal could be easily resurrected.
Scruggs is the latest person involved in the deal to ask Goldwater to stand down. Hulsizer did the same thing on the weekend and the Arizona Republic has published two editorials urging Goldwater to step away for the good of the community.
Glendale has promised $197 million to Hulsizer to get him to buy the Coyotes from the NHL for $170 million. The city's intent is to raise $100 million from a bond sale, which so far has not gone well as a result of high interest rates and Goldwater's threat of a lawsuit.
Goldwater Institute president and CEO Darcy Olsen published an editorial of her own in the Republic Thursday, suggesting the organization has no intention of backing down.
In the article, Olsen points out that Glendale’s mounting debt is already triple the national median for cities of its size.
“Our preliminary analysis suggests new parking fees at the arena will not be enough to repay the additional debt, leaving taxpayers on the hook. Any investor should be nervous about bonds to back a corporate subsidy that may be illegal,” Olsen writes. “The Goldwater Institute has enforced Arizona's public-records law and brought sorely needed transparency to Glendale city government. We hope the city will do the right thing and avoid a lengthy and protracted lawsuit by coming into compliance with the law.”
Olsen also wrote a letter to Scruggs, parts of which were printed in the Phoenix Business Journal Thursday. She said the city's plan to buy parking rights for Jobing.com Arena from Hulsizer is at the heart of the problem.
“The crux of the deal is the city obtaining parking rights in exchange for giving a payment of $100 million to the purchaser. We believe the city already owns the parking rights. We have examined all of the documents the city contends prove the opposite, and those documents fortify our conclusion. If the city owns the parking rights, then there is no consideration and the deal is unquestionably invalid,” Olsen wrote.
“Even if the team owns the parking rights, they must be worth the $100 million the city is paying. We believe the revenues will be insufficient to repay the debt. If they are insufficient or if the team fails, the taxpayers, not the purchaser, is liable. That is where we believe the deal should be restructured to avoid an illegal gift. If the parking rights are as valuable as the city apparently believes, then the purchaser should borrow the money necessary to make the purchase, not the city."