Gretzky Nearing Purchase of Coyotes

S C O T T S D A L E, Ariz., Feb. 6, 2001 -- Wayne Gretzky and Phoenix developerSteve Ellman plan to close on their purchase of the Phoenix Coyoteson Feb. 14, a consultant said Monday night.

That would be a day before the third deadline set by the NHL andteam owner Richard Burke. The original deadline to complete thepurchase was June 30, and the first extension expired on Dec. 31.

The New York Post reported Monday that Gretzky was discouragedwhen another financial snag prevented the deal from closing lastweek before the NHL All-Star Game. Councilman George Zraket saidsomeone suggested to him before the meeting that Gretzky would pullout of the partnership.

Consultant Assures Purchase Will Close on Time

But Tom Stanberry, the manager of U.S. Bancorp Piper Jaffray'spublic finance group, said he received assurances from Ellman Cos.officials before the Scottsdale City Council meeting.

"What I was told today is they plan to close on the 14th,"Stanberry said. "There are a few things left on a transaction ofthis size, but they don't size up to deal-killers."

Gretzky, in Canada for the All-Star game and to pick Canada'snational team, said yet again Friday that purchase of the PhoenixCoyotes would be completed by the Feb. 15 deadline.

He said he had hoped it would be completed in time for theAll-Star weekend, "but it is going to happen.

"All I can say is that it's close, and it's going to getdone," he added.

Money From Sales Tax a Key Issue

Earlier, Stanberry briefed the council on the Los Arcos Mallredevelopment, which is to include a new Coyotes arena. He askedfor guidance on six issues — including what to do with extra salestaxes, and whether to use tax-increment bonds, which would beredeemed through public funds, to help pay for the $125 millionarena.

Last year's state Legislature added 0.6 percent to the 5 percentstate sales tax that the Los Arcos Stadium District can recaptureat the site for 10 years. Stanberry said the money would be awindfall for the developer unless the still-pending redevelopmentagreement requires that it be paid back to the city.

"The six-10ths probably would change hands," Stanberry said."It probably would flow to the district and come right back to thecity, and they could continue to use it for the purpose theLegislature intended [schools]."

During Ellman's nearly 13 months of negotiations to buy theteam, the proposed mall space has been scaled down — from 2.3million to 1.2 million square feet, and Stanberry said that neededto increase to 1.5 million for profitability.

The size reduction threw financing mechanisms out of balance, hesaid, leading to the proposal to use sales-tax bonds (TIBs) for the arena.

"We've changed the mix," Stanberry said. "We still getapproximately the same amount of sales-tax bonds, but byreducing the square footage they're collecting less rent, and rentis what pays for the conventional financing."

Parking Questions Loom

The other issues concern whether the city wants to condemnretail property east of the arena site or residential propertysouth of it, and shared parking and parking fees for NHL games andother events.

"Those six I think you'd describe as key issues," Stanberrysaid.

The parking questions concern whether the city will adopt arecommended $5 fee for general event parking, $7 for closer parkingand $12 for valet service. Stanberry also asked the council todecide whether day-night customers should share spaces, which wouldreduce the need for the original 10,000 parking spots by up to 20percent.

"It's evident that we need substantially less parking than thecity ordinance would require for the square footage," Stanberrysaid.

The council voted on Dec. 18 to extend the district, which wasvoted into life in November 1999, until March 5 — but only withstrings attached.

One of the six conditions — that the Coyotes sale close by Dec.31 — was overshot, but city manager Janet Dolan said Ellman had metthree of the others by posting a nearly $400,000 bond to guaranteedemolition is completed, convincing the city of his solvency andpaying $49,000 for Piper Jaffray's services to the city.