City Hall gave that impression last week when it mailed a Notice of Default to the Falcons' owners. The allegation: The owners breached their contracts with the city by abruptly halting team operations on Dec. 22.

The notice is the first step toward a possible lawsuit, City Attorney James Sanchez said.

There has been a lot of talk about the Falcons' demise. How could a franchise with a 60-year local history, one that survived life's inevitable cycle of good times and bad, die so suddenly?

Falcons partners Chris Cummings and Brian Glover (part of a group that bought the team in 2006) said they had no choice -- their financial losses ($1 million just since August) were too much to bear in a struggling economy.

City officials declined an offer to run the team, saying they couldn't justify the risk of spending money earmarked for public safety and other basic municipal services just to keep a minor-league hockey team alive.

But there's got to be more to the story. One question: Did City Hall have a legal right to refuse to operate the Falcons when they were on the verge of going belly up?

Let's explore a bit of background.

The city has spent millions of borrowed dollars in fixing up the Convention Center, including $5 million of Selland Arena improvements aimed directly at attracting the Falcons as a long-term tenant. A new chiller and a new ice floor were purchased. So were hockey baseboards and a Zamboni.

The city also spent millions on improved seating, renovated lockerrooms and a new scoreboard.

The Falcons had played their home games at Selland from the late 1960s through the 2002-2003 season, then moved to Save Mart Arena for five years. City officials wanted the Falcons back at Selland as part of their effort to make downtown more attractive as an after-hours entertainment center.

The city-Falcons marriage became official on Nov. 6, 2007. That's when the City Council approved several contracts with Falcons owners. These contracts included a 20-year lease, a pledge agreement and a non-relocation/continuous operation agreement

The idea behind these agreements is similar to the October 2000 agreements hammered out after months -- make that years -- of negotiating between City Hall and owners of the Fresno Grizzlies Triple A baseball team.

In the Grizzlies' case, city officials realized they were about to invest $40 million or more (turned out to be $46 million) in building a downtown baseball stadium for the Grizzlies. To make sure the public's money was safeguarded as much as possible, city officials drew up contracts that essentially made the Grizzlies a public entity.

The Fresno Diamond Group (the Grizzlies' original owner) had to play all home games at the stadium for the next 30 years. The annual rent was $1.5 million. The Grizzlies had to play ball in each of those 30 seasons, and they couldn't move to another city without the city's approval.

And, as an incentive to ensure that the Grizzlies' owners kept their word, the team itself was put up as collateral. If the Fresno Diamond Group broke its word, City Hall could take over the team and operate it until a buyer was found.

Sure, it might seem a bit odd if the worst-case scenario came to pass -- a municipal government charged with keeping cops patrolling, garbage-collectors collecting and the sewer farm churning also making sure the San Francisco Giants' top farm club had a place to play.

But city officials publicly and readily accepted this responsibility in October 2000. The reason: They had to convince taxpayers that the risk of spending millions of dollars on a stadium was really no risk at all. No matter what unforeseen calamities might befall the Grizzlies ownership, the stadium lights would keep burning, the Grizzlies would keep playing and ticket revenue to help pay that $3.5 million annual payment on the stadium construction bonds would keep flowing.

This last-ditch option -- City Hall taking over operation of the Grizzlies to protect the public's investment in the stadium -- remains to this day the cornerstone of that eight-year-old deal.

This last-ditch option is something else. It's also an insurance policy -- for the Fresno Grizzlies baseball team and its fans.

No matter what, the Grizzlies' franchise will operate. It will retain at least some value. It will have a foundation (however weakened) on which to rebuild.

And the fans will still have games to attend. This is no small asset, since their continued allegiance would be pivotal to the franchise's rebirth.

All of this was integral to the intense public debate leading up the October 2000 decision to build the stadium. After all, if City Hall wasn't prepared in an emergency to operate the Grizzlies to protect the public's $40 million stadium investment, then why insist on turning the Grizzlies' franchise into collateral for the deal?

And, more importantly in a democracy, if City Hall wasn't prepared to take over the Grizzlies in a pinch, why deceive the public with all this talk about collateral?

Fast forward to 2007.

The Falcons' return to Selland wasn't as controversial as the stadium saga, but it unfolded along a similar path.

Selland was old and musty. It needed sprucing up. All told, about $20 million was borrowed in two bond deals to renovate the arena and the rest of the Convention Center. Yearly payments ($1.34 million) on one bond deal go through 2027; annual payments (about $600,000) on the other bond deal go through 2013.

And Falcons owners wanted a better lease at Selland than they had at Save Mart Center. They ended up getting Selland for $180,000 a year, including a rebate that could have knocked off up to two-thirds of the rent if they had sold-out the arena for 36 games.

Glover recently said the Falcons were paying about $400,000 a year at Save Mart Center.

On Aug. 21, 2007, the City Council approved buying a new $1.5 million ice floor for the Falcons -- without a Falcons lease already in hand.

City officials said the old ice floor was a public hazard and had to be removed. They said a new ice floor made sense only if the Falcons played on it. Otherwise, it would be wiser simply to rent an ice floor for the occasional touring ice show.

Only Council Member Larry Westerlund wondered about the sequence of events: "If we don't have the Falcons in place, it doesn't make sense to put in a $1.5 million ice structure."

City officials replied that the Falcons wouldn't agree to return to Selland until City Hall had agreed to buy the new ice floor. The ice floor purchase was approved 6-0.

The Falcons' deal was approved by the City Council on Nov. 6, 2007. As in the Grizzlies' deal seven years earlier, there were pledge and non-relocation agreements.

The Falcons' "appropriate home is at Selland Arena," City Manager Andy Souza said.
Added Council Member Brian Calhoun: "I've never been so incensed as when they picked up (after the 2002-03 season) and moved to the Save Mart Center without so much as a thank you."

Calhoun wanted to make sure the Falcons' wouldn't suddenly move, leaving the city with expensive Selland improvements of little or no use.

Answered Souza: "If they attempt to move [the city] would have the opportunity to retain the team."

Falcons partner Cummings added: "We're entering into this as a 20-year lease. So, you've got us for a pretty long period of time ... If we attempted to relocate the team or move out of Selland Arena at a point prior to that 20th year, the city has the right to take over the team -- basically to take the franchise from us."

Again, Westerlund worried that the deals awaiting the council's vote didn't fully protect taxpayers.

"I don't want to own a hockey team," Westerlund said. "I don't think Fresno wants to own the Grizzlies baseball team or the hockey team."

Then Westerlund added a prescient comment: "Leases don't last as long as they're scheduled to on a regular basis."

But the council got the answers it wanted. The deals were approved 7-0.

With this background in hand, we come back to City Hall's threat to sue Fresno Hockey Club, LLC.

City officials are angry that the Falcons aren't still playing in Selland ... that the rent checks have stopped ... that the arena with so many expensive improvements isn't getting used ... that hockey fans aren't paying the parking fees so necessary to meeting the parking department's burgeoning debt ... that downtown revitalization has taken another detour.

And there, on page 2 of the pledge agreement -- dated April 30, 2008, signed by Cummings and assistant city manager Bruce Rudd -- is the "pledged collateral" covenant.

If the Falcons' owners don't perform as promised, then the city gets the team. All of it. Immediately. No league approval is necessary. The transition is seamless.

In the agreement, the Fresno Hockey Club "hereby grants" to the city "a security interest" in everything the Falcons own, in everything the Falcons are, in everything the Falcons were meant to be.

And, near as I can tell, City Hall has no written or implied option to say no.

Once again, who breached the contracts on Dec. 22?

Cummings and Glover are partners in the group that now owns the Grizzlies.