DALLAS - The Glendale, Ariz., City Council voted Wednesday night to end a 15-year, $250 million lease agreement with the Arizona Coyotes that had been designed to keep the National Hockey League team playing in the city's bond-financed arena.
City officials said they are open to renegotiating a lease with the team but that the lease approved in 2013 is invalid because an attorney involved in negotiating its terms was in a conflict of interest. Under the lease, the city pays the team to operate the arena in what is effectively a subsidy for the Coyotes.
An Arizona law allows an agency to cancel a contract if an employee directly involved with the agreement becomes an employee or agent to the other party. At issue was the Coyotes' hiring of former city attorney Craig Tindall as general counsel in 2013.
The city of Glendale issued a statement before the meeting that it would be open to renegotiating the arena deal, a proposal the Coyotes flatly refused.
"This was an extremely difficult and painful decision for me and for our City Council," Glendale Mayor Jerry Weiers said in a prepared statement. "We have worked for months to resolve the inequities in this contract. Only recently did we learn that the integrity of the process had been compromised.
"We can't and won't support a contract that favored the sports team over the interests of Glendale citizens," the mayor added. "Tonight's public comment was replete with warnings, litigation threats and the team assured the community that 'it's not going to happen' when asked about the possibility to renegotiate. In a way, I am thankful that our citizens have seen the obstacles we have faced to make this agreement work."
Coyotes co-owner Anthony LeBlanc responded angrily.
"We are disappointed with the city's decision to violate its obligations under the agreement that was entered into and duly approved only two years ago," he said in a statement. "We will exhaust any and all legal remedies against the city of Glendale for this blatant violation of its contractual obligations to us."
Keeping the Coyotes playing in the city-owned arena, now known as the Gila River Arena, has been costly for Glendale. But the earlier city council that agreed to the lease said that losing the arena's main tenant would be costlier. Several members of the council are new since 2013.
The arena was financed with $180 million of city debt in 2001 specifically for the Coyotes, a team that previously played in Phoenix. The arena opened in 2003 and six years later, the team's owner declared bankruptcy and announced plans to sell the team to a buyer planning to move the Coyotes to Canada.
The National Hockey League bought the team out of bankruptcy and pledged to keep it in Glendale. The city provided subsidies of up to $25 million per year to the NHL. When a buyer was finally found for the team in 2013, the city agreed to continue subsidies through arena lease of $15 million per year.
Glendale's losses for hockey and other events at Gila River Arena through April exceeded $6.3 million, up nearly 14% from a year earlier. The city lost $8.1 million on its outlays for the team for the 2013-14 fiscal year and expects that to grow. The Coyotes have consistently been among the bottom three teams for attendance in the NHL.
