This is an archived version of a Field of Schemes article. Comments on this page are closed. To find the current version of the article with updated comments, click here.
April 12, 2010
Glendale outlines Coyotes bailout offers
The city of Glendale, as promised, released its proposed lease deals with the two prospective buyers of the Phoenix Coyotes on Friday, with a final council vote set for tomorrow. You can read the Arizona Republic summary of the proposals, or go right to the source by downloading the memorandums of understanding themselves (Jerry Reinsdorf's here, and Ice Edge Holdings' here; neither is more than four pages long).
Both bidders had previously indicated that they'd want a payoff from Glendale in exchange for keeping the Coyotes in town, and both leases provide for that:
- In Reinsdorf's case, this would include a city-created "community facilities district" that would generate $65 million in unspecified "revenues" (including, but no doubt not limited to, parking fees at Coyotes games) to be used to help defray Reinsdorf's purchase price, as well as $25 million a year to offset any losses the Coyotes accrues on Reinsdorf's watch (capped at $100 million over seven years). Reinsdorf could sell the team after five years, at which point Glendale would have to find a buyer willing to pay him $103 million, his initial investment — in effect guaranteeing that Reinsdorf would come out of the deal with his annual operating losses covered and his investment intact.
- Ice Edge would get a CFD as well that would take over control of arena parking, but in its case it would get only $7.5 million a year in parking fees, $5 million a year to offset losses, and $2 million a year from a ticket tax on all arena events. The MOU explicitly states that the city would have to supply enough cash to the CFD to make all of these payments, in the event that parking fees were insufficient.
Not included in the MOUs: where this CFD money is supposed to come from, though sales and business taxes are considered likely.
There are already reports that the NHL prefers Reinsdorf's bid, and it looks like Glendale does too, considering how much sweeter his deal would be. But then, he's a guy who knows how to use leverage.
Meanwhile, I'd love to provide more info on tomorrow night's council hearing, but all I can find on the Glendale council website is this.
When you get into bed with the sports industry, you're going to get screwed, as the citizens of Glendale are learning. Jerry Reinsdorf didn't become wealthy by doing anything stupid like putting his own money into sports teams or arenas; the city of Glendale (ultimately its taxpayers) will subsidize his purchase of the team, his losses in running it, and finally they will help him sell it when he's done. This idiocy began when Glendale got all starry-eyed over a hockey arena, and it won't end anytime soon. Now it's just throwing good money after bad.
Posted by Dave Boz on April 12, 2010 06:46 PM
I just want to know what actually happens when a city doesn't put any money to subsidize a sports owner because...there is NO money to pay for anything? (Magic dust called stimulus doesn't count, either) How would a judge rule on this little matter if it ever gets to court?
At some point, it stops being one-sided in favor of sports owners simply because survival instincts take over and any whines from spoiled individuals be damned. In a sense, it would be like the National Debt and Social Security but on a more local scale. I don't know how the courts could force a city to pay if there is no money for pay for it.
Posted by Transic on April 12, 2010 09:20 PM