News

Something Smells in Glendale: Did the City Steer the Phoenix Coyotes Franchise to an Insider?

Something is rotten in the city of Glendale.

That's my conclusion after poring over bankruptcy files for the Phoenix Coyotes, reading hundreds of pages of municipal records, and getting an earful from some insiders.

I can't say for sure what's happening — Glendale officials are using the specter of litigation to dodge key questions.

But I can tell you this: It smells pretty damn bad.

The record suggests, in fact, that Glendale City Manager Ed Beasley is trying his best to hand over the Coyotes to his friend, lobbyist John Kaites, and Kaites' Chicago buddy, Jerry Reinsdorf. The deal might well suck for the team's current owners (who stand to lose millions) and its creditors (who suggest they're getting a raw deal). And never mind that the Valley has never shown much interest in driving to Glendale for hockey games: Beasley has been working for months to make a deal that would give Kaites and Co. the franchise and force the team to stay in town.

Some of my sources insist that's okay. As a good city manager, Beasley has to do whatever he can to keep the Coyotes in Glendale. That's the only way to save Glendale's multimillion-dollar investment in Jobing.com Arena.

But it's one thing to fight to save a team. It's another thing entirely to fix the playing field for connected insiders.

And that, I think, is exactly what's happened here. Even more than Phoenix, where Frank Fairbanks rules the roost, Glendale is a town run by its city manager, Beasley. And city records suggest that long before Beasley let the city's elected officials know that the Coyotes were in trouble, he was helping to wire the deal for Reinsdorf and Kaites.

And that begs the question: Was Beasley trying to find the best ownership deal for the team or favor some longtime associates?

Here's what I've learned:

In the fall of 2008, Coyotes owners Jeff Shumway and Jerry Moyes began explaining to City Manager Beasley just how bad the team's financial situation was. They asked the city to sweeten the pot and give them incentives to help the team stay in Glendale.

Instead, in October, Beasley inked a deal with a small Massachusetts firm, Beacon Sports Capital Management. (Because Beasley kept the contract below $50,000, he didn't need the city council's involvement. To date, Beacon has come in just under the threshold, at $48,175.)

Beacon was ostensibly hired to assess the Coyotes' finances. Its report, filed in January, has become Exhibit A in the city's argument that the current ownership screwed up and that another group could do a better job. That, of course, opened the door for Reinsdorf and Kaites.

But get this.

Beacon was in Glendale for just three days. And during that time, according to Beasley's own calendar, the sports analysts actually had a meeting with Kaites and Reinsdorf!

To understand how shocking that is, you have to understand the timing. Kaites and Reinsdorf weren't being talked about by anyone as prospective buyers at that point. At that time, in December, as far as owners Shumway and Moyes knew, they were asking City Hall for help — not a buyer.

Some of the best investigative reporting on the Coyotes situation has come from Channel 12's Brahm Resnik. But even Resnik doesn't put Kaites and Reinsdorf into negotiations with the city until February.

Yet Beasley's calendar shows that the Reinsdorf and Kaites were in the loop as early as December.

And new information makes me suspect that Beacon's hire was little more than a setup to bring in Reinsdorf and Kaites — which puts the duo in the picture even earlier.

Michael Reinsdorf, Jerry's son, had been hired to help manage the Arizona Cardinals' stadium in 2004. (His firm, IFG, got the contract as a joint venture with Global Spectrum, a Philadelphia-based firm that just happens to employ Kaites as a lobbyist.)

In the fall of 2008, Glendale hired Michael Reinsdorf's IFG to assess stadium operations at the Coyotes' home, Jobing.com Arena. It was IFG — which, again, is Michael Reinsdorf's firm — that suggested Glendale hire Beacon, as city officials confirmed to me.

The Reinsdorfs have a history of working with Beacon. In fact, court records show Beacon was sued in Los Angeles by a client who claimed Beacon had leaked a confidential report to, yes, Michael Reinsdorf.

So when the Coyotes ran into trouble, Ed Beasley brought in Michael Reinsdorf's firm. At the suggestion of IFG, he brought in a second company, one that had a history of dealing with Michael Reinsdorf. Then he stood by as that firm secretly met with Kaites and Jerry Reinsdorf.

And now we're supposed to look at the firm's analysis as neutral, looking out for Glendale's best interests?

I simply don't buy it.

In May, the Coyotes filed for bankruptcy. Its current owners want to sell to an investor who'd move the team to Canada; it's their only hope to recoup even part of their investment, they say. Meanwhile, for reasons that are still unclear — to me, at least — Kaites and Reinsdorf have become the NHL's pick.

KEEP PHOENIX NEW TIMES FREE... Since we started Phoenix New Times, it has been defined as the free, independent voice of Phoenix, and we'd like to keep it that way. With local media under siege, it's more important than ever for us to rally support behind funding our local journalism. You can help by participating in our "I Support" program, allowing us to keep offering readers access to our incisive coverage of local news, food and culture with no paywalls.
Sarah Fenske
Contact: Sarah Fenske