Glendale, Arizona faces a hard reality. Can the town afford to host a National Hockey League (NHL) franchise team, the Phoenix Coyotes? Bad enough that Glendale publicly financed a dedicated structure for a professional hockey team, and that team chose to remain branded to its bigger neighbor, but now Glendale has chosen to additionally burden its citizens with arena management fees, formerly funded by team owners.
When former Coyotes owner Jerry Moyes tossed in the towel three years ago, the NHL assumed ownership under league rules, which prohibited private business interests from acquiring and moving the team to Canada. The NHL desired a continued presence in the sixth largest market in the U.S, the Phoenix metropolitan area. Glendale looking to protect its sports brand, also called foul any team relocation efforts, but incurred stiff penalties for interim administration of team operations by the league, fees amounting to $25 Million per year.
Independent management cost estimates were sought by Glendale officials as an aid to negotiations with future team owners. Since before 2009, operating expenses were a team responsibility, so post-bankruptcy, arena operating costs were a mystery to Glendale officials. Perhaps city officials were distracted by their ongoing legal battle with the Tohono O’Odham tribe over ownership of unincorporated Glendale land, less than a mile from Glendale’s sports district. This property was taken into reservation by the tribe, with the intention of building a casino/resort. Why Glendale failed to protect real estate within eyesight of both the arena and the football stadium suggests a reoccurring theme, a lack of proper city planning.
Last year when a price of $14-15 Million was given by an arena-consulting firm as a reasonable estimate to operating Glendale’s hockey facility without any specific tenant; city officials could not refute the numbers. With only these figures, Glendale bargained with perspective buyers of the team, agreeing to pay new owners $16 Million per year over the next 20 years, in pursuit of a promise to keep the team in Glendale. This negotiated offer was less than the ransom now being paid to the NHL under league ownership. Yet even this sweet-heart deal fell through this year, suggesting team profitability in even a worse state than previously imagined.
In a council meeting last year just a few weeks after the above cost estimate was made public, actual management figures of about $6 Million per year, were revealed by Glendale City Attorney Craig Tindall, as he maneuvered to counter alleged city misuse of public funds by the Goldwater Institute. April of this year, Glendale put out to bid solicitations, seeking private management of the arena, and actual management expenditures incurred by the NHL holding company currently managing the facility since 2009 were offered as hard fact.
So where is the justification for Glendale paying $25 million/year, the past two years to the NHL, when real operating costs were only $5.1 – 5.5 million, according to league figures? Either the NHL is gouging Glendale, or the Coyotes are indeed a net-loss franchise in the desert southwest. The truth is probably something of a mix. That the new mayor and city council members wish to plead ignorant to these findings when detailed costs are available in public documents out-to-bid, accentuates the real negligence in the bleeding of taxpayer monies.
Kudos to Paul Giblin’s recent article in the AZ Republic providing much background material.
Tags: big business, Corporate welfare
Your conclusion-by-way-of-a-question, Jeff, speaks volumes about not only this transaction but so many others in similar genres. Nothing will get you to the speaker’s platform like a cheering crowd and nothing promotes your cause like a “consultant” or two with charts. It would not be far-fetched to consider the Coyotes a losing team, any more than it would be to realize that this is all, ALL about paying the piper with the manipulated conclusion, and no matter that the payer is the citizen of Glendale.