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Monica Lindstrom

Updated Jul 24, 2015 - 3:43 pm

Legally Speaking: Who caved, who won in Arizona Coyotes vs. Glendale

The most recent chapter — in what I have been affectionately calling the #battleroyale on Twitter — may be coming to an end.

Glendale and the Arizona Coyotes reached a settlement that was approved by the city council on Friday. Although the council started the meeting with a closed-door executive session, it did go on to vote unanimously for the settlement. It also rescinded its June 10 vote to cancel the agreement, agreed to the First Amendment to the agreement and agreed to a settlement in the bankruptcy case.

Coyotes co-owner Anthony LeBlanc addressed the council immediately before its vote. Reading from a statement, he explained why the team decided to settle and that there was a need for certainty, especially in obtaining players.

So who got the better end of THIS deal? Only time will give us the definitive answer, but my initial opinion is that the Coyotes won.

For background, the city of Glendale and the ownership of the Coyotes (I will refer to the ownership as the Coyotes in this post) entered into a professional management services and arena lease agreement back on July 8, 2013. The agreement dictated the management of the arena — think of the Coyotes as the landlord and Glendale as the owner.

Back on June 10, 2015, the Glendale City Council voted to cancel the agreement. This vote resulted in the Coyotes filing a lawsuit in Maricopa County Superior Court to enforce the agreement. With the hearing date looming on July 31, the parties agreed to amend the agreement and not only settle the lawsuit, but also a lingering issue in the outstanding Coyote bankruptcy case.

Here are the basics and interesting provisions of the settlement and the first amendment to the agreement:

• This settlement settles all outstanding issues between Glendale and the Coyotes related to the agreement, including the bankruptcy matter, the Superior Court matter and anything else known or unknown related to the lawsuit.

• Glendale will pay the Coyotes $6.5 million per year under the amended agreement instead of the original $15 million per year.

• The Coyotes will pay Glendale $500,000 per year in rent.

• The Coyotes will receive all hockey and hockey-related revenue including income from parking, ticket surcharges, advertising, naming rights, concessions, food and beverage services, suite licenses and premium seats (with some small exceptions);

• The agreement will terminate on June 30, 2017 and there is no renewal provision. Although, the parties can always agree to extend it or create a new agreement.

• Glendale can replace the Coyotes as manager of the arena on or after June 30, 2016. If this happens, the Coyotes will only receive revenues from hockey-related events.

• Glendale will never again seek to cancel or void the agreement based on the involvement of Craig Tindall or Julie Frisoni as long as they do not work for the Coyotes. Yes, that means Tindall loses his position as counsel for the Coyotes.

Let’s now turn to who caved and who got the better deal. As I mentioned above, I think the Coyotes received the better end of the deal.

Under the amended agreement, the Coyotes have a guaranteed place to stay and play for the next two years. It has been difficult for the Coyotes to sign players and secure sponsorships since its future has been up in the air. This lack of certainty can be very debilitating for a business.

The agreement allows the Coyotes some short-term stability and security. It also gives them freedom to explore other options and places to move to without any condemnation from Glendale or anyone else. Some would argue this is the best part, since it could result in the Coyotes moving to Phoenix and playing in a new venue.

Although the Coyotes will only receive $6.5 million/year from Glendale, it will be receiving revenue from almost everything that occurs at the arena including non-hockey events (that are related to hockey or the ownership). According to the revenue numbers Anthony LeBlanc gave at the June 10 City Council meeting, this is a substantial amount. Lastly, it will receive a chunk of money that has been held up in an escrow account from the bankruptcy case.

Now let’s look at what Glendale received.

Its monetary commitment to the Coyotes was reduced — substantially. It has saved face with its taxpayers by saving money with the payment and avoiding a long, drawn-out court battle. It also allows the Coyotes to stay in Glendale for at least two more years, which will help the surrounding businesses. Lastly, Glendale will also receive $350,000 from the escrow account in the bankruptcy case.

Are there any drawbacks to this settlement? Sure. Glendale may end up losing its anchor tenant in its arena, and it loses out on revenues (even though Glendale says it has not made any money on the original agreement).

Most importantly, the settlement can not do anything to erase the opinions of Glendale held in the court of public opinion. Businesses may still be wary of entering contracts with Glendale since it could try to back out of any agreements. Overall, it does nothing to wash away the bad taste in the mouths of the public, it just saves some money in the short term.

As for the Coyotes, the only drawbacks at this time is that it loses its attorney and $8.5 million per year from Glendale that it might be able to make up for.

I have been asked if the Coyotes firing Tindall means that Glendale had a stronger case. I doubt it. Glendale released some of its “evidence” of substantial involvement and it wasn’t that moving. It was a concession by the Coyotes, just a little something to help the settlement along.

Overall, this settlement is beneficial in many ways for everyone involved. Mostly it’s beneficial for Coyotes fans, since they are assured at least two more seasons in the Valley.


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