Glendale, Arizona, has not had smooth sailing in its dream of becoming a sports mecca. Relations have been strained with both the Cardinals and the Coyotes, and the latter relationship has taken a turn for the worse: the Glendale city council voted to terminate its lease agreement with the team at the Gila River Arena. Council members voting for the termination cited Arizona Revised Statutes §38-511, which permits a political subdivision to cancel a contract within three years of its making if there is a conflict of interest. The city’s position is that former city attorney Craig Tindall’s hiring by the Coyotes gives rise to the conflict. A temporary restraining order has put the case on hold temporarily. Professor Rodney Smith discusses the case in this report.
Prof. Smith says that Glendale will have to establish that Tindall had significant involvement with the negotiation of the contract in order to void it. If the city were trying to rely on any other claimed problem with the contract, they would have to give the Coyotes the opportunity to cure the problem with the agreement. Prof. Smith opines that “they are searching for some anchor to make their case on.”
The statute also permits a political subdivision to "recoup any fee or commission paid or due to any person significantly involved in initiating, negotiating, securing, drafting or creating the contract.” That provision would only help the city, Prof. Smith notes, if it can prove that Tindall had significant involvement in initiating the contract. And the evidence that has surfaced so far doesn’t appear to show “significant involvement.”
One possibility, Prof. Smith suggests, is that the city is using the lawsuit to terminate the agreement as a bargaining tool to help it renegotiate its agreement with the Coyotes, or perhaps to find a way to work with a different management company to run the arena. But, Prof. Smith says, “It is hard to imagine that the losses under that scenario wouldn’t be higher than their losses under the current one.” It seems most likely that the city wants to continue the agreement, but under more favorable terms.
Prof. Smith says he is perplexed that the city hasn’t done an analysis to determine “what the true value of the agreement is to them.” The city has focused on the amount it contributes to the effort, but it has not mentioned what it gets in return in sales tax and other kinds of benefits. And none of that even reaches the issue of any public relations value the city has received from having the Coyotes in the arena.
An unintended consequence of the lawsuit against the Coyotes is that it may cause other businesses to be wary in the future of dealing with the City of Glendale. As to the future of the lawsuit, there will be a hearing on June 29 that will begin to get into the merits of the lawsuit. Prof. Smith notes that the Coyotes have mentioned $200 million as a damage amount, but they will not be able to prove consequential damages in the amount the Coyotes are talking about.
Rodney K. Smith serves as the Director of the Sports Law and Business Program at the Sandra Day O'Connor College of Law at Arizona State University. He previously served as a Distinguished Professor of Law at Thomas Jefferson School of Law. He is the author or co-author of three scholarly books: Public Prayer and the Constitution: A Case Study in Constitutional Interpretation (1987) Sports Law, West Publishing Company (1986) (with Schubert and Trentadue) Sports Law and Regulation: Cases, Materials and Problems, Aspen Publishers (2005, 2009) (co-author with Davis, Mitten, and Berry). The Legal Broadcast Network is a featured network of the Sequence Media Group.