Saturday, March 5, 2011
Sources: Glendale to file lawsuit Monday
By Scott Burnside
The City of Glendale, faced with what they estimate will be more than a half-billion dollars in lost revenue, taxes and jobs if the Phoenix Coyotes relocate, is expected to file suit Monday against the Goldwater Institute and specific members of the public watchdog's board, multiples sources told ESPN.com Saturday.
The lawsuit is expected to allege the Goldwater Institute was guilty of a legal form of interference when the institute reached out to potential buyers of municipal bonds, the sale of which are crucial to the City of Glendale's new lease agreement with Chicago businessman Matthew Hulsizer, and warned them off purchasing the bonds.
The lease agreement calls for the city to pay $100 million to Hulsizer toward the purchase price of the team. The municipal bonds are needed to generate that revenue.
In return, among other things, the city will receive the rights to parking revenues at Jobing.com Arena and naming rights for the parking area.
The Goldwater Institute has insisted that the parking will not generate enough revenue to cover the $100 million and that the lease agreement runs afoul of state laws regarding "gifts" to businesses or individuals.
If the municipal bonds are not sold, multiple sources have told ESPN.com that the lease agreement cannot be finalized and the sale of the team to Hulsizer by the National Hockey League will fall apart.
The NHL has hired former Jerry Reinsdorf associate John Kaites to try and work with the Goldwater Institute to see if there is some way to work out the disagreement over the legality of the lease agreement in time to see the bonds sold and save this deal.
It's believed the NHL's patience with the situation in Glendale has reached the breaking point and that if the municipal bonds are not sold within a matter of days, or unless there is a new strategy revealed for getting the lease agreement done, that the league will move to relocate the team to Winnipeg.
The league has had the option of relocating the team since the end of December but the emergence of Hulsizer looked like the team's future in Arizona was going to be assured. But Goldwater's threat to sue the municipality over the proposed deal has stalled the sale of the municipal bonds and thrown the team's future into uncertainty.
A source familiar with the planned lawsuit said the city will name not just the institute itself but individual directors and will ask for "hundreds of millions" of dollars in damages.
It's believed the city will also ask for a judgment that the lease agreement doesn't contravene state law.
Among those expected to be named specifically in the suit will be Randy P. Kendrick, who is the wife of Arizona Diamondbacks owner Ken Kendrick and a member of the Goldwater board. She seemed shocked when contacted by ESPN.com Saturday afternoon but declined comment.
Goldwater officials including the institute's president and CEO, Darcy Olsen, who is also expected to be named individually in the suit, did not respond to requests for comment from ESPN.com Saturday.
Scott Burnside covers the NHL for ESPN.com.