Two summers ago, moving trucks were standing by to relocate the Arizona Coyotes to Seattle before Glendale City Council passed an eleventh hour deal 4-3 to approve a 15-year, $225 million arena management contract with the team. The vote even drew the attention of the Arizona Attorney General’s Office, which launched an investigation into the sketchy political maneuvering that led to its passage.
In addition to the city losing millions of dollars each season, due in large part to the team itself losing close to $30 million per season, the city also felt that taxpayer money was not going to fund the arena’s management as initially agreed. Instead, Glendale claimed that public funds were being filtered to Fortress Investment Group — the New York asset manager that financed IceArizona’s purchase of the Coyotes.
So just how did Glendale pull off voiding a nearly quarter of a billion dollar deal?
The City Council did so by using state statute 38-511. This statute allows any government entity to cancel any contract within the first three years of execution, without penalty, if:
“any person significantly involved in initiating, negotiating, securing, drafting or creating the contract on behalf of the state, its political subdivisions or any of the departments or agencies of either is, at any time while the contract or any extension of the contract is in effect, an employee or agent of any other party to the contract in any capacity or a consultant to any other party of the contract with respect to the subject matter of the contract.”
This is where the departure of former city attorney Craig Tindall comes into play.
According to TSN, Tindall resigned as a Glendale city attorney on April 1, 2013, but accepted six months of severance pay in exchange for consulting with the city, meaning he was on the city payroll through Oct. 1, 2013. The city and Coyotes reached their arena management deal on July 2, 2013. Shortly thereafter, the Coyotes hired Tindall as General Counsel on Aug. 20, 2013.
Most importantly, Tindall, who had worked on a failed contract between Glendale and Greg Jamison to buy the Coyotes earlier in 2013, also advised City Council members on the IceArizona deal days before the tight vote while referencing the Jamison bid.
In an e-mail obtained by The Arizona Republic, Tindall wrote: “I have reviewed the agreement with IceArizona (the Coyotes ownership entity) per your requests and with the understanding of the city manager. Generally, it follows closely the agreement prepared for the Jamison deal.”
That suggests that Glendale could argue Tindall was involved in creating the document that became the Coyotes deal, which is a conflict under state law and grounds for voiding the deal.
As Glendale Mayor Jerry Weiers said, “This is to protect the taxpayers, I believe (the Coyotes) violated the law.”
However, the Coyotes are not going to accept Glendale’s vote without a fight. After the vote, Coyotes Co-Owner, President and CEO Anthony LeBlanc said the team “will exhaust any and all legal remedies against the city of Glendale for this blatant violation of its contractual obligations to us.”
Tone-deaf NHL Commissioner Gary Bettman, who I’m sure will give lawyers headaches in his upcoming concussion lawsuit deposition, went a step further and said “I’m not concerned about the Coyotes. If I lived in Glendale, I’d be concerned about my government.”
This is an absurd implication from Bettman that every Glendale taxpayer supports the arena deal. Judging by the amount of money the city loses each year and the team’s awful attendance figures, it certainly seems that the city residents do not unanimously support the Coyotes.
Bettman’s adversarial stance against the city also seems to suggest that the league will soon relocate the team. With the Coyotes ownership and the league commissioner scorching all bridges with Glendale, it is only a matter of time before Quebec City, Seattle, or maybe even Las Vegas welcomes the Coyotes to a new home.
Frankly, it is odd that the NHL wants to keep a team in Arizona so badly when it can go next door to Nevada to a city that has already sold more than 11,000 season tickets and has a brand new arena on the Las Vegas Strip. Granted, the current Coyotes owners would expect substantial compensation from Vegas’ ownership group.
For the time being, the NHL, Glendale, and the Coyotes face an uncertain future that will have to wait for the judicial system to resolve. Sadly, while this debacle is sorted out in court, it is the fans and taxpayers that will suffer — something that is becoming all too common in modern professional sports.
Steve Silver is the founder of TheLegalBlitz.com. He is a former sports reporter for the Las Vegas Sun and is now a lawyer in Philadelphia. You can reach him at firstname.lastname@example.org or on Twitter @thelegalblitz.
Image via Getty Images.