Glendale city council approved on Tuesday a proposed arena lease agreement submitted by a group headed by Chicago sports mogul Jerry Reinsdorf that is seeking to buy the Phoenix Coyotes.
The council also acted on a second proposal, rejecting a plan submitted by Ice Edge Holdings, a group of Canadian and U.S. investors.
Reinsdorf's group, known as Glendale Hockey, must now reach an agreement with the NHL, which purchased the team in bankruptcy court last year.
Reinsdorf's deal would provide millions of dollars annually to the group through the creation of a "community facilities district." It would change the team name to either the Glendale Coyotes or Arizona Coyotes, with the NHL's approval, and would keep the team in the suburban Phoenix city.
But how long the group would keep the club in Glendale is a matter of debate.
Reinsdorf, the owner of baseball's Chicago White Sox and the NBA's Chicago Bulls, and his partners wouldn't move the team from Glendale for the remaining 24 years of the lease, city officials said.
Intention to remain in Glendale
However, if certain conditions related to the facilities district aren't met, then in the fifth year Reinsdorf's group could give 180 days notice that it intends to sell the team. Glendale would have that 180 days to find a buyer who would keep the team in Arizona, with Reinsdorf guaranteed a minimum purchase price of $103 million US, the amount the group will invest in the team.
Lawyer John Kaites, a lead player in the Reinsdorf group, said the group's intent is to stay in Glendale.
"What that gives us at the end of that five-year period is an assessment period of where the team is," he said. "That gives us options for the city to retain the team and move forward."
Also under Reinsdorf's plan, the facilities district would pay the NHL up to $65 million over three years. In addition, a reserve account would be set up to cover operating losses of up to $25 million a year with a maximum $100 million over seven years.
The Winnipeg Jets moved to Arizona and became the Phoenix Coyotes in 1996 and the team has never turned a profit in the desert.
Ice Edge chief executive officer Anthony LeBlanc told the council before the vote they should not consider any proposal that isn't 100 per cent committed to keeping the team in Glendale for the remaining 24 years of the lease.
Funding resources questioned
He said his group would invest tens of millions of dollars of their own money into the team and that they have already raised between $200 million and $250 million to cover the purchase price of the team, losses and other costs, contingent on council approval.
Vice-Mayor Manny Martinez questioned whether Ice Edge actually had the capital available.
Ice Edge, which was relying on bank financing for much of its offer, would have Glendale operate the arena and its parking, and Ice Edge would get up to $7.5 million per year to pay bank loans.
Reinsdorf's group was approved 6-0 while Ice Edge was voted down 5-1.
Kaites said he hopes to reach an agreement with the NHL within 60 to 90 days.