Thursday, April 5, 2012

Elaine of Glendale: The Misanthrope

I was going to put a picture of Mayor Scraggs here, but I don't
want to look at her anymore after reading a bunch of
stories on this whole mess, so enjoy this instead.

Oh boy, it seems the Mayor of the City of Glendale, and she who borrowed millions upon million of dollars to build the sports complexes in Glendale, Elaine Scruggs had some harsh words for the totally-not-innocent-in-all-of-this-themselves Gary Bettman, Bill Daly, and NHL on the current state of the business-side of both parties' dealings with each other.

Basically, the mayor is not too happy that the NHL and the CoG hammered out a deal a while back that required the the city to pay the NHL $25 million to cover losses of the Coyotes this season.  The problem is, Glendale agreed to do this, and now the mayor is as mad as heck, and she ain't gonna take it anymore!  Read on, as we dissect what the mayor has to say.

“We have $20 million plugged in for next year. I will not support a budget that has $20 million plugged in for arena management… and I’m not just going to end it right there. I’m gonna tell you. I have been asking for information (regarding arena management fee) since June. I have repeatedly done this in every way, shape or form possible and have gotten nothing.”

"Yes, Elaine.  You pay us... 

“Last time at our meeting of February 28th 2012, everyone agreed we would get it on March 20th. I watched, listened to the meeting on March 20th, not one word about it. So I’m going to come up with my own number. This is what I’m gonna do. If the team leaves, we still have to run that arena. So you cannot wipe out $20 million. You have to put in some amount of money to manage the activities that are going to be left there. Pay a management company to manage and keep the place running so forth and so on. 

This is all very true.  You do have to put in some amount of money, and the most responsible thing to do at this point would be to rid yourself of the burden of operating Arena by allowing a private company to do so instead.  That still does not excuse you from not paying the NHL the amount of money you agreed upon... oh, what's that?  You don't care, you say?  Okay, then...

Now, I have some figures. These are annual expenses to operate the arena as reported by the arena management group financial statements.”
“I think,instead of $20M, I keep going back and forth between $10M and $12M. I’m looking at what it is going to cost to run the arena for all the other events, and hopefully, we will have more events. We are going to give up a lot of revenues that we get because of the hockey team being there and we are going to have to pay somebody to manage the arena. I’m going to say $11M because I cannot decide between $10M and $12M. So for me, when I look at a budget, if I see $20M there for arena management? That is not a budget that I am going to approve.”

Does it really work that way?  Can you just rearrange the budget now that a major financial deadline looms?  The NHL might like you to pay them their money BEFORE you start talking about the team moving and hiring a company to run the arena.

“The reason why we approved that second payment of $25M to the NHL. Why 5 of us voted for this, was because we were told that we were just this close to a deal being done. Mr. Daly stood right in front of us and he told us that. “We have never been closer… There was a deal that was going to be done so we should never have to pay that $25M and the NHL wouldn’t go move the team off some place. So, here we are now, a year later, two months from having to pay this. No Mr. Hulsizer… No Mr. Anybody Else. No Deals, No Nothing. So we have a problem.”

First, Daly could have told you that chicken sh*t was chocolate, but you don't have to believe him.  You have that right as a people, and as a governing body.  But, it's understandable that the City of Glendale had no reason not to believe the NHL on this matter, but it is also true a few of the potential owners of the Coyotes have almost jumped every hurdle to become THE owner.  Also, if you look at the situation as a whole, who would have thought this situation would have played out this long?  This just does not happen in North American professional sports, where the sport's governing body takes over a franchise and can't find an owner for this period of time.  It's hard to blame the NHL for saying they were close to an owner, and it's hard to blame the CoG for believing the NHL.

Second, if we look into the past and see what happen with you and Mr. Hulsizer, we will find that it was YOU who had trouble locking him up because the Goldwater Institute called YOU out on possibly breaking Arizona state bond laws.  Again, YOU couldn't approve him, so the NHL owners could not approve him.  Saying "we have a problem" is correct, but definitely not in the context you use it.

“My solution and my suggestion is that Mr. Beasley (City Manager representing Glendale in negotiations with the NHL) start talking to the NHL about what a great partner we have been with them. We have stuck to this. We have helped them get the TV rights for the west coast. 

West coast???  I guess she is talking about the NHL double-headers on NBC Sports Network that are more prevalent under the current television rights.  Which is great and all (seriously, though, the league has 30 teams, so it only makes sense to show more than just eight of them), but Glendale is doing that for their benefit, as well.  It's like if Sporting KC or the Royals didn't agree to a local television partnership.  You can't grow a fanbase without providing those possible fans with exposure to your product.  Thus, Mrs. Scruggs, don't think that the NHL owes you a favor for helping them expose their product to more possible fans, especially to those in your region, those people you need the most for your local product to survive. 

Given the stress that our budget is under, that there be a payment plan developed so that we don’t pay $25 million on May 2, 2012 or any other date. We structure a payment plan that fits within our budget.”
“What I have been told is ‘No that we won’t have any leverage with the NHL if we talk about that’. Then I was told, ‘Well, I proposed it to the NHL and they have taken it under advisement.”
“We have never been allowed to be part of any of these negotiations, and so I’m going to ask you; Are you willing to sign your name to a letter, to Mr. Gary Bettman, Commissioner of the NHL and say “This is what is happening to the City of Glendale?”

I think Gary Bettman knows as much as he needs/wants/cares to know about what is happening in Glendale.  Bettman cares that his product is working with people in the region of Glendale (more or less, it is).  Bettman cares that he is not losing money in Glendale (he is, definitely).  Thus, Bettman will want the money owed repaid in full.  I'm sure he might feel some pity taking money from a city whose budget is shot, but then again, he's the commissioner of a major North American business.  He will get his money one way or another, Glendale be damned.

“The NHL have been in control of this process the entire time. Everything had to start with them. We couldn’t do anything until they said that we could talk to somebody. The NHL have been in control of this and they have led us to this terrible point that we are at today.”

The NHL owns the franchise that operates within your arena at least 41 times per year that YOU allow them to play in.  All possible owners up to this point have been pretty much crap (Jim Ballsillie, Ice Edge) or disinterested (Matt Hulsizer, mostly due to the fact that you were trying to circumvent the state constitution and didn't provide the courts with necessary paperwork to say otherwise).  The NHL is under no obligations to you.  They didn't lead you anywhere.  If anything, they led you right where you are, which in a sense makes you right.  But, the difference is that they knew what they were doing all along, they just had their best interest in mind.  Thus, as the more powerful entity, they will play the villain once again.

“If we don’t pay that $20 million that is in escrow, which I have been told by our city attorney, we can’t get out without the NHL’s permission. It was put in an escrow account that we cannot terminate. If we get that out of the escrow account and we pay them $5M instead of $20M, our problems and everything that our employees are fearful of will pretty much go away.”
“In terms of the extra $5 million to meet the $25 million that we never could come up with, I better not see it in any budget. If it is in a budget? I’m not voting for it, because they don’t have it locked up in escrow yet. That is my answer to the $20M. You can’t wipe it out entirely, but you can sure take a huge chunk out of it. I’m saying take $9 million out and we talk to the NHL.”
“It is their problem they made. They misled us and they can’t do this to our city.”

Mayor Scruggs speaks as if business transactions are just as simple as borrowing money from a buddy for rent or whatever.  "They misled us and they can't do this to our city."  Yes, yes they can, because you gave them the right to operate in your arena AND you agreed to cover usage and overage fees.  These aren't costs that are new or hidden, you just don't want to pay because you don't have the money  and you don't have full access to the money you believe is rightfully yours.  Sure, Bettman and Daly and whoever you have spoken to with the NHL can be hateful dicks and maybe even shystered you into accepting a deal they knew would only benefit them in the end, but you can't call BS when the NHL comes looking for their money.  It makes a bad situation worse, and that what this was from the start when the franchise was losing millions of dollars per year, and soon thereafter when no real ownership group stepped in to help both sides.

Sheeeesh.  On the outside, this all looks like a terrible relationship gone worse.  Like, in 2009 the NHL moved in with this chick (Glendale) it was dating for about twelve years, and at first they had a hard time agreeing on matching furniture, but now Glendale just screams at the NHL, but he's all like "whateves, dude."  
We see now how this has turned out poorly for Glendale, and it does not appear things will get much better from here.  On the other end of the spectrum, the NHL leaves itself open to scrutiny and bad PR by owning the team, and they are now in the situation where they can't even sell it to someone they trust.  Even to someone who will move it!  They are losing money, the city is losing money, no one is happy... 

Coyotes fans, I hate to say it, but the situation is not good when your mayor starts to talk sh*t on the NHL.  This could be the beginning of the end of the Coyotes saga, one that could get very messy, and reflect poorly on the NHL as a whole.  It may not all be the NHL's fault, of course, but they definitely had to know this might be a possible conclusion when they bought the franchise in 2009.

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