The clock could start ticking on the Thrashers this week – and it could move quickly.
On Tuesday, the city of Glendale will vote on whether to pay another $25 million to the NHL. That money would be used by the league-owned team, rescued from bankruptcy in 2009, for operating expenses and would keep the financially struggling team in Arizona for one more season. According to several media outlets, the proposal is expected to pass.
Last week the city of Glendale paid the NHL $25 million for operating losses for last season.
The NHL is looking for an owner that will keep the team in Glendale. Efforts to sell to Chicago businessman Matthew Hulsizer have been ongoing for months in a complicated deal that has a local watchdog group threatening legal action.
The Phoenix franchise has been eyed by prospective buyer True North Sports and Entertainment, which would purchase the team and move it back to Winnipeg where it relocated from in 1996. However with the Coyotes staying in Arizona for at least another year, True North will likely turn its efforts, quickly, to the Thrashers, who have been for sale in earnest for several years. The Atlanta Spirit, owner of the Thrashers, Hawks and the operating rights to Philips Arena, have been looking for a buyer and/or investors and have said relocation is a possibility. Co-owner Michael Gearon Jr. told the Atlanta Journal-Constitution in February and again last week that there is a “sense of urgency” to find a solution to the financial losses suffered by the team. The Thrashers could fetch upwards of $170 million from True North with the NHL getting around $60 million as a relocation fee.
The Thrashers are not expected to be sold for that much to a buyer that would keep the team in Atlanta. Team president Don Waddell has been actively working with groups interested in purchasing the Thrashers. He told the AJC this week that there are currently two groups, both out of town, interested in purchasing the Thrashers and keeping them here. However, talks have not progressed beyond a preliminary stage. The clock on getting such a deal done could start with the Coyotes situation settled, at least temporarily.
The situation brings up three main issues concerned with the Thrashers.
1. Are the Spirit committed to selling to an owner that will keep the team in Atlanta even if it means turning down a potential offer and extending the search process? If offered such a sale price from True North, the owners could stand to make more money, minus capital calls, than their original cash investment in all three entities.
Co-owner Bruce Levenson and Gearon have said that keeping the Thrashers in Atlanta is their first choice. However, they have also made it clear they no longer desire to bear the financial responsibility of a franchise that is losing money, up to $130 million over the course of their ownership according to court documents. That figure does include the fact that a portion of arena revenues go directly to bond payments.
By selling and relocating the Thrashers, the Spirit does stand to lose additional revenue. It would lose a pro-rated amount on the $10 million annual naming rights to Philips Arena without an NHL occupant. It would also lose revenue associated with having 41 dates in the arena.
2. Will the NHL work with Atlanta, as it has with Phoenix, to avoid franchise relocation?
NHL Commissioner Gary Bettman has stated, on several occasions, that the NHL currently has no plans to relocate any franchise. The league has certainly worked to keep Phoenix in Arizona. While the league may not be willing to take on any financial responsibility for Atlanta, it could turn its full attention to helping resolve the ownership situation once the Phoenix situation, job No. 1 right now, is settled. Or not. The league could give its blessing to the Spirit to open talks with True North.
It would be puzzling if Bettman and the league dedicated months to trying to resolve said situation in Phoenix and not have a strong interest in keeping a team in Atlanta, the No. 8 television market.
3. There may not be enough time to get a sale and relocation completed in time for next season. Time figures to be an issue to sell and move the Thrashers to Winnipeg – or another city. The sale of a professional sports team is not an easy, nor a quick, process. The length of time it has taken to resolve the Phoenix situation would leave a short turnaround. However, the framework possibly in place on a Phoenix-Winnipeg deal could be used to move things along with the Thrashers. A similar situation occurred when the Spirit purchased the teams and rights to the arena after negotiations with Dallas businessman David McDavid were not completed.
The sale of Phoenix would help recoup the losses, footed by the NHL owners, from rescuing the franchise from bankruptcy and running it for two seasons. However, the league may not be in a hurry to relocate to a Winnipeg. They could wait another year to see what happens in Phoenix.
If the Thrashers were to leave for Winnipeg, there would almost certainly need to be a conference re-alignment to accommodate the move.