Be fair, Neil. You're putting "management fees" in quotes but arenas do cost a lot to operate. It was this very site that reported not that long ago that Bankers Life Fieldhouse was costing the Pacers $15 million/year to operate. And Kansas City is paying AEG eight figures to operate the Sprint Center. I would imagine that whatever figure Jamison and the city of Glendale agree on will contain some sort of subsidy, but let's not act like this is a straight giveaway.

Let's try a thought experiment. I build an office building, and you agree to put your company there. When I ask you how much you'll pay me in rent, you say, "You should pay me $20 million a year! My expenses are really high!" When I ask why I'd want to pay you to rent my building, you say, "Management fees!" Then I back slowly away from you, while calling security.

If Glendale gets some sort of cut of the profits of the arena in exchange for the Coyotes "managing" the place, then I guess you could argue that they're actually paying for a service. Otherwise, though, this is just paying the team an annual subsidy to stay in town.

Totally different and you know it. The $15-20M appears to have to cover all expenses for the building. I mean, you're acting like it is unusual for the owner of a building (sports stadium or otherwise) to pay someone to manage it.

Also, we don't know the terms of the management fees and how that relates to building revenues. If the Coyotes are keeping all arena revenues from concerts, etc. or if the city of Glendale is paying for arena costs on top of the management fee, then it could be an annual subsidy to stay in town.

The ownership group must be confident that the NHL will be able to get concessions out of the players association this summer. Even with a massive subsidy it's hard to see how this team will ever be viable. The arena's in a terrible location and the coyotes lag behind high school sports in popularity.

If the alleged management fee were a true arm's length transaction, the city would be seeking competitive bids to manage the facility through an RFP process.

They aren't.

Not only is the deal a financial hole for the city, Jamison is refusing to put a clause in it that he has to stay beyond 5 years. Which means even IF this somehow goes through, the money losing team would be free to leave for greener pastures in 5 years time.

Or to demand $30 million a year starting in 2017.

John #1- I still refuse to believe the bad stadium location as it's 15 minutes away from the old stadium downtown and next to a football stadium and tons of other entertainment. Unless Glendale subsidizes them all of course.

You raise a very credible point though with the players association. This is the new(ish) Donald Fehr era and it will be interesting to see him duke it out with Bettman & Daly this summer.

I loved the press conference of Bettman passive aggressively trying not to mention the Goldwater Institute but still blaming them for the last fail.

Speaking of Goldwater...any word from their camp or do you think they are just waiting for the official details?

Probably waiting for it to actually be approved which has yet to happen.

If you skeptics can show that the Coyotes are keeping non-Coyotes arena revenues or that Glendale is paying arena operating costs on top of the $15-20M management fee, then you'd have a point. Otherwise, this is far from a $15-20M team subsidy.

The arena is in a bad location for most residents. That part stinks, but the market has shown interest in hockey before and there are too many other positives (supposedly good arena [which I will finally visit this weekend], big market, attractive location for players, owner with a good history, no disruption of other teams' markets) to abandon the Phoenix area and move somewhere right now.

Ben, what exactly do you think the city of Glendale is getting back in exchange for these "management fees" that's worth $15-20 million a year?

Untold millions saved by not having to re-negotiate lease terms with every Westgate tenant.

Preventing the closure of a large hotel, which in turn would likely disqualify the UoP football stadium next door from ever again hosting major events like WrestleMania or the BCS Championship game.

Maintenance of the arena, which can cost $10-15 million per year in some cases.

Revenues from concerts, UFC shows and any other non-Coyotes events held at the arena.

Anything else ya need?

Mr. deMause.
Your absolutely right for your experiment of the management fee of the Jobing.com arena. Why a city council would have to pay a private owner for management fees? It should be the opposite.

Let's get Glendale residents pulse. Just ask them to buy at least 13000 Coyotes season tickets for the next 5 years, like they did in Winnipeg last year (which by the way, sold all season tickets available in 4 hours). If they do, this will guarantee that hockey can work in the desert and then (and only then) the city council can subsidize the owner. But I bet no one will commit to this.

For comparison, in Kansas City the fee for AEG to manage the Sprint Center is $50 million ... that is, AEG is paying the city $50 million for the right to manage the arena. Yes, they're getting a large cut of those non-sports revenues in exchange (non-sports being the only revenues there are in KC), but unless those profits are truly huge, it's a far better deal for a city to get paid for management rights than to pay an eight-figure fee for them.

Also, Ben? Glendale doesn't have to tear down its arena and stop holding concerts there even if the Coyotes move out — and if it did, it would no longer have to pay operating costs. When you include both the revenues from concerts and avoiding the cost of operating the arena for those concerts as benefits, that's double-counting.

Neil,

This very site is the place I read that AEG will be made whole and guaranteed a 12% return on that $50M before even a penny of arena revenues are counted towards any money that would be returned to the city. In effect, that's the city paying AEG so that AEG will manage the arena.

On Glendale, nobody said the city would shutter the arena, but I'd bet every penny I've paid in Miller Park sales tax that the leases with all Westgate merchants stipulate that at least 43 hockey dates per season will happen at the arena. And that hotel already struggles. Without visiting teams, fans and media 40+ dates per year, it could very well go under.

Neil,

This very site is the place I read that AEG will be made whole and guaranteed a 12% return on that $50M before even a penny of arena revenues are counted towards any money that would be returned to the city. In effect, that's the city paying AEG so that AEG will manage the arena.

On Glendale, nobody said the city would shutter the arena, but I'd bet every penny I've paid in Miller Park sales tax that the leases with all Westgate merchants stipulate that at least 43 hockey dates per season will happen at the arena. And that hotel already struggles. Without visiting teams, fans and media 40+ dates per year, it could very well go under.

1) Yes, AEG is being subsidized as well, by getting arena revenues at a discounted rate. But that doesn't mean that paying the Coyotes for their operating expenses isn't a subsidy — it's just two different ways of providing the same cash.

2) Sure, but if it goes under, you don't have to maintain it. And if it doesn't go under, you can still hold concerts there. So you can't count both operating expenses and lost concert revenues as costs, because they can't both happen at once.

On #1, of course you're right. But that also means that the $15-20M number is not 100% subsidy. Maybe a few million are a subsidy, but probably not even eight figures.

On #2, I must have been unclear. I think that if the Dogs leave, the arena will stay open but the hotel will go under and the Westgate businesses will either leave, go out of business or demand to re-negotiate lease terms in the tenants' favor. That leaves Glendale paying expenses on an arena while losing the events that the hotel allows to happen (WrestleMania, BCS championship and maybe even a Super Bowl or Final Four) and getting less money in rent from Westgate business. I mean, that's why Glendale has been paying an inflated management fee in the first place. If the Dogs go that whole Westgate project is screwed.

On #1, sure, we need to see the revenue split as well, plus the operating costs. Either way, though, it's a whole mess of money to spend just to guarantee five more years of hockey.

On #2, mightn't it be cheaper just to subsidize the hotel? No way that losing the Coyotes' business would cost it $20m a year, would it?

I'd have to imagine that Goldwater would have a field day with the city subsidizing the hotel. At least with the arena management fee the city can use Indy as an example where the management fee is in the same ballpark,

I also think the Westgate tenants would get absolutely hammered if the Coyotes left. It would be like LA Live without Staples Center, maybe even worse.

JB (hey, wait a...):

Goldwater Institute cannot reasonably oppose an agreement until it has been made by the local (or state, in other circumstances) authorities. It would be akin to charging a driver with what you believe to be "intent to speed".

They could say that they don't think it passes muster, but they don't actually know what the deal is yet. What Bettman and Jamison have is a preliminary agreement/MOU in regard to the manner in which the Coyotes will be purchased and funded by the prospective new owner. A high proportion of that funding comes from a party that has not been involved (at least officially) in the Jamison/NHL negotiations.

The deal could change dramatically (for either better or worse...) or be scuttled entirely during the next phase of negotiations involving the Jamison people and the city.

It might be a slightly less bad deal than the Hulsizer/Reinsdorf ones, but if what I've read is an accurate portrayal of it, not by much.

I would hope the city has the fortitude to reject it out of hand. In fact, if past performance is any indicator, they will likely approve it gleefully (especially if some kid with a dog cries in a meeting), then wait for Goldwater to challenge it once it is "approved".

As with the last heavily subsidized proposal, I believe several of the councillors (even the ones that voted for it) may be secretly hoping GWI does successfully challenge this deal. That would give them the thing that all politicians desire most... someone else to blame for a lengthy chain of their own tragically stupid decisions.

Thanks for that JB er a....I mean John Bladen.

Your whole post makes a lot of sense. Part of me wonders if the NHL is also putting a crazy one sided deal out there just for it to get challenged by GWI as well and they can then wash their hands of Phoenix as well with as little backlash as possible.

Jamison could still be the new owner of the team with intent to move but that is further down the road.

My prediction is that the Coyotes have 25% chance of playing in Phoenix next year and will most likely be playing in QC (I put that at 50%)...longer shot is KC & SEA.

Just what did "mcmikex" post on Twitter? I clicked on the link and got a "this account does not exist" error. Hopefully, you remembered.