Here We Go Again
The Coyotes are just the latest team to have an ownership mess
Word around the Coyotes' offices is that sometime this week—or perhaps next week or the week after that—new owners will finally take control in Phoenix. "Of course," says one Coyotes executive, "we've heard that about 10 times since May."
It's been a long five months in Phoenix since Wayne Gretzky's June 1 announcement that he was joining Arizona real estate developer Steve Ellman to purchase the Coyotes from Richard Burke. Before Gretzky got involved (he'll own 10% of the team and direct hockey operations), Ellman was about to balk at the $87 million selling price, which would have cleared the way for billionaire Paul Allen to buy the club and move it to Portland.
Having saved the franchise for Phoenix, Gretzky would like to run it He and Ellman, who have paid $175 million toward the purchase, still owe Burke another $9.5 million that was originally due by June 30. (They would also assume $60 million in team debt) Burke is so irked at the delay—apparently caused by Ellman's and Gretzky's search for additional investors—that he has banned Gretzky from the Coyotes' dressing room.
The drawn-out transaction has left Phoenix with as many lame ducks as the Clinton Administration. Shortly after Gretzky hired Cliff Fletcher as his player personnel adviser in September, Coyotes general manager Bobby Smith began forecasting his own dismissal. Assistant CM. Taylor Burke, Richard's son, is also certain to leave.
On the ice, where Phoenix got off to a rousing 8-1-2 start through Sunday, goalie Sean Burke (no relation to Richard and Taylor) is almost sure to lose his starting job. Gretzky has said he plans to re-sign restricted free agent net-minder Nikolai Khabibulin and restore him to the lineup. Also, free-agent wing Claude Lemieux has agreed to join the team when the deal is concluded. "The situation has gotten attention, partly because of Wayne's involvement," says the NHL's chief legal officer, William Daly, "but what's happening isn't that unusual."
Not by NHL standards, anyway. The matter has become the latest in a string of unseemly ownership transfers that are partly the result of expansion. The NHL has added nine teams while four others have relocated since 1991. In addition to diluting the league's level of talent, the changes have made it difficult for investors to predict their return. Consider the recent histories of two franchises:
?The Lightning. Even before Tampa Bay entered the league in 1992-93, its Japanese ownership group missed a $22.5 million expansion payment to the league. The owners then sold the team to insurance tycoon Art Williams in '98. When he realized his investment would not generate the yield he'd hoped for, Williams sold the Lightning the next year. His final move was to scotch a trade that would have brought Tampa Bay top goalie Roman Turek.
?The Islanders, hi April 1997, Dallas huckster John Spano purchased the team from John Pickett. Three months later Spano was exposed as an insolvent fraud, and the sale was voided. Howard Milstein and Steven Gluckstern bought the team from Pickett in '98 and unloaded it last April, when they couldn't get an arena built with taxpayer money as they hoped.
Ellman plans to build a $575 million complex for the Coyotes but has yet to settle on a location, which may determine how much, if any, public financing the Coyotes get. The uncertainty and the ambitiousness of his plan may be what's fueling the scramble for more investors.