Author: Paul Giblin
GLENDALE, Ariz. - The prospect of buying the Phoenix Coyotes lured four investors from across North America to risk their reputations and fortunes in professional sports.
Just seven months ago, they didn't even all know one another. But last week, the new partners' investment group bought the beleaguered franchise from the NHL for $170 million.
The four executives are well-established in the finance and energy industries, but they readily concede that they're rookies in the sports industry.
During their first official Coyotes news conference at Jobing.com Arena last week, the new team governor, George Gosbee, was asked how running a sports enterprise differs from running other businesses.
"Well, we're about to find out," he said.
The investment group's principals are:
-Gosbee, 43, of Calgary, chairman and CEO of AltaCorp Capital Inc., an investment-banking and financial-services firm.
-Anthony LeBlanc, 43, of Thunder Bay, Ontario, former vice president of global sales for BlackBerry.
-Avik Dey, 35, of Houston, president and CEO of Remvest Energy Partners, an investment firm that specializes in the oil industry. He's originally from Calgary.
-Daryl Jones, 39, of New Haven, Conn., director of research of Hedgeye Risk Management, an investment-research firm. He's from Bassano, Alberta.
The most important qualification for the new owners is their liquidity, said Robert Modanski, who specializes in business valuations and emerging business for the consulting firm Rosen Seymour Shapss Martin & Co. in New York.
"When things are going well in Arizona, you guys support the teams as well as anyplace in the country. When things don't go well — with a hockey franchise especially — they'll need cash to support the operation," Modanski said. "It's really up to them. If they commit to putting a good team on the ice, they'll be successful," he said.
The new owners, who use the corporate name IceArizona, said they're prepared to burn through $50 million, and perhaps more, to fund a turnaround operation.
The Coyotes had been in a state of limbo for four years, ever since former owner Jerry Moyes placed the team in bankruptcy. The NHL acquired the team and ran it while trying to sell it to private investors. Several potential ownership groups came and went.
The first semblance of IceArizona dates to Ice Edge Holdings, an investment group headed by LeBlanc. That group, which included Jones and others, made a run at purchasing the team years ago but never completed a deal.
LeBlanc stayed largely on the sidelines as other successive potential buyers emerged and faded over the years.
He saw a new opportunity early this year after former San Jose Sharks executive Greg Jamison failed to corral enough investors to buy the team to meet a deadline imposed by Glendale to secure a lucrative management deal to run the arena.
LeBlanc and Jones were interested in another go, but they needed investors who were willing to operate the team at a loss for at least a couple of years. Jones suggested Gosbee, a business partner and friend he had known for about 15 years.
Jones thought that Gosbee, a well-connected businessman with a maple-leaf tattoo and a deep love for hockey, just might be interested. After all, Jones updated Gosbee fairly regularly during the Ice Edge days.
Gosbee already was interested in owning an NHL club. While LeBlanc and Jones made their first run at the Coyotes, Gosbee entertained the idea of buying a different franchise, but the deal didn't feel right, so he backed out, he said.
Jones told Gosbee that he felt the new effort to buy the Coyotes presented a compelling opportunity, in part because the team had been under-managed for years. The NHL also had reached a collective-bargaining agreement with its players, providing new financial stability for team owners.
Gosbee said he told Jones that he wasn't interested. The idea of hockey in Arizona simply didn't make any sense. Jones kept in contact anyway.
"He was really strongly convinced that under stable ownership, hockey would work here," Gosbee said. "I know when Daryl sets his mind on something, he's just really determined."
Gosbee did some preliminary research. The Phoenix market was emerging from a deep recession. Perhaps, coupled with the right ownership, there might be a possibility. He agreed to meet Jones and LeBlanc in Glendale for a Coyotes game against the Calgary Flames on Feb. 18. They toured Jobing.com Arena, met the team's front-office staff and players, and watched the game from a suite.
The arena, which opened in 2003, was first-class, Gosbee said. Players liked living in a warm-weather city. Fans were excited.
"This is a very unique team," he said. "It's a really good culture and a really good atmosphere around this team. All the pieces started coming together."
The next day, the group reviewed LeBlanc's proposal.
Gosbee called other NHL owners for their input. They told him that a hockey franchise in a warm-weather market could survive, perhaps even thrive, like the Los Angeles Kings and Dallas Stars.
Just as important, Gosbee and LeBlanc determined that they could work well together.
LeBlanc said, "I don't know what way to describe it other than to say that we clicked. We clicked very quickly."
LeBlanc is a classic front man. He picks out familiar faces in a crowd, leads with an extended hand, and is comfortable speaking in front of a bouquet of microphones. Gosbee is more reserved, observational, quiet.
Gosbee said it seemed like it might be the right deal. His next call was to Dey, a friend and business associate, who still has a yellowed 1989 front page of the Calgary Herald from the day the Calgary Flames won the Stanley Cup taped to the door of his childhood bedroom in his parents' home.
Gosbee reached him in Houston, where he was involved in the gas industry.
"He said, 'I have a crazy idea. I came across the Ice Edge guys, Anthony and Daryl, who have been looking at this for a long time. Do you want to go down to Phoenix and check it out?' " Dey recalled.
"I said, 'Are you crazy? The Phoenix Coyotes? I mean, haven't they been losing money? Didn't they go into bankruptcy?' He said, 'Yeah, but I think it's worthwhile,' " Dey said.
Dey agreed and met with Gosbee and LeBlanc in Glendale. They met again with the Coyotes executives and players. They caught a couple of games. There was still a buzz in the arena.
They went back to their corners of North America to consider what they had seen. Later, the four principals spoke by phone.
Gosbee and Dey said they were impressed enough to consider the deal further.
They agreed to dispatch Dey to Glendale again to conduct a full-on investigative financial analysis of the team.
"I came back out here and spent a week in a data room, grinding through all the fun stuff like financial statements, forecasts, budgets and putting together our own pro forma on the team," Dey said.
Gosbee and Dey liked what they saw and told LeBlanc and Jones that they were in. By early March, the principals went to New York to meet with NHL Commissioner Gary Bettman to let him know they wanted to submit a bid.
The potential investors came across as well-organized and dedicated to putting together a deal, Bettman said.
"My impression was that if they could deliver on everything they were talking about, this was going to be good," he said.
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The four formed Renaissance Sports & Entertainment, a name inspired by the Renaissance Glendale Hotel & Spa, a hotel next to the arena, where by then they had become regulars.
"That happened fairly early. Within the first three or four weeks, we were committed and we knew what it would take to get this deal done," Dey said.
They worked to secure additional financing from both private-sector financiers and the league. At one point, it became apparent among the four that Gosbee would write the biggest check, propelling him to the top position among them.
LeBlanc said he was OK with the new arrangement. "Money talks," he said.
They reached a framework of a deal to purchase the team from the NHL within a month or so.
The only real question left was whether they could reach an agreement with Glendale to use the city-owned arena. By then, the Glendale City Council had issued a request for proposals from independent arena operators to run the facility.
The Renaissance partners didn't want any part of that bidding process, reasoning that they alone could guarantee the Coyotes staying in Arizona.
Bettman and other top NHL officials introduced Gosbee and LeBlanc to Glendale Mayor Jerry Weiers and five other council members in a series of private meetings at City Hall on May 28.
"We didn't know how long it would take. We didn't know the stops and starts and turns it would take," Dey said.
"None of us had really been in a deal that was being monitored and evaluated publicly like this one," he said.
The Renaissance executives and acting City Manager Dick Bowers negotiated the deal largely behind closed doors. LeBlanc said he racked up more than 75,000 frequent-flier miles traveling between Ontario and Arizona nearly weekly.
The council approved a complicated $225 million deal on a 4-3 vote on July 2, just 35 days after the formal introductions.
The deal calls for the city to pay the hockey team $15 million a year and for the team to reimburse the city a projected $9 million a year with revenue derived from naming rights, ticket surcharges, parking fees and other sources.
The team sought and received an out clause that can be triggered for a limited time after the fifth season if the team loses a cumulative $50 million, but the investors say they'll never have a reason to use it.
COLUMN: Ditch the out clause
"Once we had the semblance of a deal, that's when we brought in the investment partners," Dey said.
Gosbee rounded up other investors to form the larger investment group, IceArizona. He tapped people he had worked with before. Many are involved in the energy industry and have winter homes or business interests in Arizona. In all, there are 11. The four Renaissance men serve as the managing partners.
The group's lack of experience in the sports industry shouldn't be an impediment, said Larry Grimes, president of the investment banking firm the Sports Advisory Group, of Gaithersburg, Md. "In fact, most new owners don't have any specific background in it," he said. Generally, the right background is acumen for business and passion for sports, Grimes said. "It's pretty simplistic: I love sports and why not own something that I can have fun with at the same time?" he said.
Gosbee said he continues to be surprised by his new venture. Coyotes staff members urged him to set up a Twitter account. He sent his first message last Monday, just after the purchase closed, to thank fans.
"Within three hours, I had 500 followers," said Gosbee, whose Twitter name is @Goz100. "If that's the type of energy and momentum that the fan base has here, it shows you how hard-core the fans are."
Paul Giblin writes for the Arizona Republic, a Gannett property