Tuesday, May 22, 2012

The Great Team Robbery

By: Mike "BCMike" Fraser

Edited by: Mike "The Deuce" Bailey

The following story is a tale suited perfectly for a Blog. I can’t prove any of it, and for the most part its educated speculation. It comes from years of following one story and reading between the lines of the various comments, news stories, and press releases. This is the story of the Phoenix Coyotes, specifically over the course of the last year, and more specifically dealing with the mechanics and motivations of what has come to be known as the Jamison bid, or as I like to call it, The Great Team Robbery .

So let’s backtrack almost a year to last summer. Matthew Hulsizer and the city of Glendale Arizona had watched their deal for team ownership and Arena stewardship disintegrate under the continued threat of civil action by the right wing think tank the Goldwater Institute (GWI).  The deal entailed a heavy subsidy for Hulsizer in the form of payment for parking rights at the city owned Jobing.com arena and an inflated arena management fee. The city would issue a bond to pay for the whole scheme and the Coyotes would stay in Glendale allowing the city to reap tax dollars from the activity generated by the team. Of course the GWI threats scared away bond investors and the rest is history. Hulsizer walked away and the team again was an orphaned ward of the NHL living from the good graces of the owners and the city of Glendale who had agreed to cover some losses.

Now I know what you’re thinking reader: not another rehash of the whole Phoenix situation, please I’d rather have multiple root canals. I know but just bear with me, I’m getting to something, really. So after that entire debacle there are a couple of questions that I and several others were asking; Who would ever want to invest hundreds of millions of dollars in such an obvious farce, and why? Enter Greg Jamison, and the Jamison group.

Greg Jamison is a minority stake holder in the San Jose Sharks hockey organization and a former CEO of the team. From all accounts he is a savvy sports executive who has a reputation for his creative approach to deal making and sports management. In the fall of 2011 Jamison’s name began to surface as a possible suitor to take on the problem of the Phoenix Coyotes. At that time however several reports said that Jamison was lacking the necessary financial backing and was indeed having trouble attracting investors to the potential ownership group. Even though it was widely reported that the Jamison group was shaky, they became the front runner in the Coyotes ownership tale. And so it went for months until in the spring of 2012 when the Jamison Group suddenly began to become more prominent in the ownership discussion. It appeared that the group may have found the financial backing necessary to start serious negotiations with city of Glendale and the NHL. NHL commissioner Gary Bettman even presented Jamison to reporters during an ownership update and reported that the framework of a deal was in place.

So why the sudden infusion of capital? And how did they ever think that the Phoenix Coyotes could become a viable business? This is where we dive into the world of speculation pieced together from scraps of information that have leaked out over the last few months. Enter Jim Treliving, the famous entrepreneur and owner of the successful Canadian restaurant franchise Boston Pizza. Treliving joined the group on the condition of anonymity and would provide a large amount of needed capital along with connections needed to implement a unique plan put forward by Jamison.

The plan was to push the City of Glendale and the NHL to the brink of disaster (regarding the Coyotes) and then insist on demands that would include a four year out clause along with a generous subsidy to run Jobing.com arena. In Jamisons ongoing negotiations he had already probed the idea of a four year out clause and found that although there was hostility towards the idea, it had not been rejected out of hand. The out clause was the key to a plan that would justify the outlay of hundreds of millions. The real goal of the plan would be to move the franchise to the hockey hotbed of Markham, Ontario after four years had expired.
Treliving and Jamison both had connections to a group that was planning and had, in the interim, gained approval to build a modern arena venue in the Toronto suburb of Markham. A team in Markham would put an NHL franchise in the long time and wildly underserved hockey market of southern Ontario. The franchise would immediately jump from a $170 million dollar club to a club worth well over $500 million simply due to its geography.

The deal demanded of the COG would also subsidize the yearly losses through a 17 million dollar arena management fee. This was a deal that put the NHL and the city of Glendale over a pretty steep barrel and the mayor for her part was ready to have nothing to do with it. In April she openly railed against everyone involved, including the NHL, and proposed the council look at life after hockey. The city manager Ed Beasley and a majority of city council however where determined to buy time with whatever means possible and are, at the time of this writing, preparing a budget with 17 million dollars earmarked for arena management.

So why take on a team that loses $35 million plus a season even if it is only for four years? Well for starters the loss never need be that big. The new ownership would simply gut the team, running at the cap floor and cutting all other expenditures. The new ownership group could theoretically slash losses from $35 million a year to under $10 million a year with the help of a Glendale subsidy. The ownership could also trade away costly assets in exchange for valuable draft picks that would prepare the team for their eventual arrival in Ontario. The looming lockout plays into this plan even more, allowing the new owners to save on salaries as well as giving it time to slowly dismantle the front office. Total cost to implement the scheme would be about 200 to 220 million dollars, which as we all know would be a bargain price to pay for a second Toronto franchise.

But it’s not going to happen.

The key to the great team robbery was to keep Trelivings name outside of the discussion. In late May several stories surfaced that Jim Treliving was interested in purchasing the Phoenix Coyotes. His name at that time was not linked with Jamison, and he urgently denied stories, but the damage had already been done. The exposure of his name in relation to the Phoenix situation signaled the true intention of the group to all involved; it would also create a significant amount of blowback to Trelivings Canadian business operations if he were identified as a roadblock in the way of seeing a team return to Quebec City, not to mention also incurring the wrath of Quebecor. Last week radio station The FAN590 reported that Treliving had been a part of the Jamison group and had subsequently pulled his support.

And so ends the attempt at one of the greatest heists in sports history. Whether the NHL or the City of Glendale would have caved to the four year out clause is still debatable, although there were indications that they would have. It’s also debatable whether the Board of Governors would have allowed the move to Markham after the four years in Phoenix, although it’s not inconceivable that it may have been a pre-arranged payoff for taking on the Yotes. It would have been a massive crime against the residents of Glendale and probably in the end would have bankrupted their small city. Of course the GWI would have sued, but it’s unlikely that they would have been able to obtain injuctive relief which would have stopped the sale, and instead would be forced to go through years of litigation and ultimately would have been seeking damages from an empty Phoenix shell corp.

It was a brilliant and evil plan that may have worked (although it still faced hurdles) and now for all intents and purposes it has been derailed. Will Jamison come back with another investor? Who knows? Will the team stay in Phoenix long term if he does? No way. The simple fact of the matter is that NHL hockey doesn’t work in Phoenix, and it never will. The only long term future for the Phoenix Coyotes franchise is unfortunately, outside of Phoenix.

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