The NHL may end up selling the Phoenix Coyotes to the Renaissance Sports & Entertainment group led by Alberta investment banker George Gosbee, but it doesn’t sound like the league will be able to completely cut its exposure to the perpetually money-losing franchise.
A source close to the negotiations, who traded candor for anonymity, revealed the purchase price as $170 million. The capital structure would consist of RS&E putting in $45 million of equity, Fortress Investment Group lending $120 million (to be repaid by the fee Glendale taxpayers are going to pay the team to run the arena), and an $85 million loan from the NHL.
The $80 million the total capital investment ($250 million) exceeds the enterprise value of the purchase ($170 million) will be used as working capital.
Vendor financing isn’t wholly unusual in business transactions, but an NHL loan that will partly fund the Coyotes’ operations isn’t ideal from an optics standpoint. The NHL will eventually want that money back, people will say, and what better way to help the Coyotes’ bottom line than by helping Phoenix win hockey games?
Cue the wild conspiracy theories.
At any rate, the deal isn’t done yet. There’s still the matter of getting a favorable lease from the City of Glendale.