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Salt Lake City is “by no means the end for Quebec”, says Gary Bettman - Dose.ca
It's now official:
On November 27th, the Glendale city council (including 3 outgoing councilmembers) voted in favor to pay $320M over the next 20 years to a potential Coyotes owner Greg Jamison and his mystery unknown group of investors.
Precisely, the city will have to cut $20M and lay off 150 to 160 city employees in the next few years.
Didn't the residents just approve a rise in sales tax in order to avoid some of those cuts?
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Arena lease deal with Greg Jamison for Coyotes |
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Quick Summary: - Total of $320M over 20 years. - Average of $16M/year from city to tenant - Tenant collects parking lot fees - Tenant has to pay city $500,000 per year for lease |
Glendale citizens just agreed to pay more tax. In the near term, they will still lose jobs, public services and libraries in order to keep a hockey team that draws the worst attendance in the league. The Coyotes cost the city $50M in the last two years just to repay some of the annual deficit the team draws to the NHL. Glendale still owes half of that amount but has yet to find the funds.
In order to help pay the NHL and keep the team, Glendale had to grab $50M from water and sewer funds to keep the Phoenix Coyotes at the city-owned arena for the past two years.
Interim city manager Horatio Skeete, who renegotiated the terms of the new deal with potential Coyotes owner, was asked if he recommends the city sign the deal:
"While the Jamison deal may be in the long-term interest of the city, it would force Glendale to make steep cuts within five years", he said.
About the city quest to keep the team: "It's a job well done, but we can't afford it".
Skeete also added: "Lay off 150 to 160 employees in the near term, I cannot recommend it.."
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Glendale general debt history: |
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Total debt in 2001 (before building Jobing.com Arena): |
$ 199,382,255 |
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Total debt in 2011: |
$1,123,836,916 |
That's more than 5 times the amount of debt the city had 10 years before.
Debt on Jobing.com arena has yet to be repaid. Glendale still owes $12.6M/year for the next 20 years, $252M in total.
The cost of the arena, which opened it’s doors in 2003, initially was $180M.
And then, there's the Camelback Ranch. The ballpark currently has a $200M debt; $13M per year payments. According to Ballpark digest, "that number could double to $400 million once debt-servicing costs are included."
Glendale councilmember Joyce Clark is the public Pro-Coyotes figure in this saga and one of the councilmember’s that will be replaced in January. She voted in favor of the deal.
In November, Clark's election campaigners included diehard hockey fans George Fallar and Bea Wyatt, both of whom are living in Cave Creek, AZ, many miles from the City of Glendale and Jobing.com arena.
Apparently, CM Clark, Fallar, Wyatt and Phoenix resident Ronda Pearson are now organizing rallies to "inform" and prevent Glendale residents from signing a "BACK TO SANITY" petition.
This petition (which will require about 6000 signatures) is intended to put the deal on referendum and let the residents of Glendale decide if they want to pay a potential tenant and Coyotes owner that amount of money.
What's the potential of hockey in Glendale? What's Glendale’s capacity to repay their debts?
When councilmember Normal Alvarez asked Skeete if the Coyotes ever made profits, the city manager answered no.
Basing himself on past figures, he estimated that normal lease agreements should cost the city about $6M to a tenant who wants to manage the arena. Since the city agreed to pay an average of $16M a year to Greg Jamison, some citizens and groups (like Goldwater Institute) believe Glendale is giving a major subsidy to tenant and based on the Gift clause in the Arizona State Law, it's illegal.
Former Coyotes team owner Jerry Moyes went bankrupt with the team in 2009. The NHL had to buy the Coyotes from Moyes. Since then, the team has lost around $20M/year. It is unclear if it includes the two $25M payments Glendale paid in last couple of years. If it does, that would mean the NHL loses about $45M/year just with the Phoenix franchise.
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Phoenix Coyotes Operating income (Forbes) |
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2003 |
$-21,1M |
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2004 |
$-7,8M |
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2005 |
LOCKOUT |
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2006 |
$-6,0M |
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2007 |
$-11,4M |
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2008 |
$-9,7M |
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2009 |
$-18,5M |
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2010 |
$-20,1M |
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2011 |
$-24M |
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2012 |
$-20,6M |
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Total |
$-139,2M |
The team alone lost $139.2M since arriving to Glendale.
Here are some interesting pieces of articles Lisa Halverstad wrote earlier this year:
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"The city this year expects to collect about $10 million from those sports venues and surrounding commercial development, such as Westgate City Center, to help pay the debt. The annual debt payment is two to three times that, $23 million to $29 million this year, depending on whether the city can successfully refinance. In addition to the debt payment, the city will pay millions more for someone to manage Jobing.com Arena." (...) Glendale first venture into professional sports began a decade ago with the Phoenix Coyotes. City leaders said the $180 million investment into the hockey and concert arena wouldn't cost taxpayers anything. Financial projections in the 2001 deal showed the city would collect an average of $20 million annually in sales taxes, parking fees and other revenue to cover the debt and then some. The revenue has never come close to that." |
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"A Republic analysis revealed that even if the Coyotes went to the Stanley Cup Finals for the next 20 seasons and the arena booked 30 sold-out concerts each year for the next 20 years, Glendale could still expect to lose about $9 million annually. That figure does not include the city’s annual arena debt payments, which will average about $12.6 million a year over the next 20 years. |
The city is expected to refinance their debts in order to be able to repay them.
The city and the Pro-Coyotes say the city will be better with the team in the long run. History tells us they were wrong in the past. The assumptions they made about the arena and Westgate always went worse than expected. What if they were still wrong today? The city never tried to put arena management on bid. They have put hundreds of millions of dollars in sports and pretended it will surely be successful. Look at where Glendale is today.
Should Glendale keep the Coyotes at any price?
When the election was over, newly elected mayor Jerry Weiers said in his winning speech: "We all love the coyotes and the cactus league, but we cannot sacrifice our way of life so they can maintain theirs".
He added: "Glendale is not your cash register!"
Outgoing mayor and longtime Pro-Coyotes Elaine Scruggs also thinks the city should push the brakes while they still can:
"We are really going to destroy what Glendale is."
The Moody's Investor Service, few days after city's approval to pay Greg Jamison 320M$ on 20 years, downgrades Glendale's general obligation bond rating. In a text wrote only 3 days after Glendale's vote, they cites payments to NHL for operating losses of the Phoenix Coyotes as a reason why.
Sources
- AZCentral, City officials spar over Coyotes deal, November 20th 2012
- @smunshi twitter account
- Ballpark Digest, Glendale: We need to rework spring-training leases, October 8th 2012
- AZcentral, Lisa Halverstadt, june 6th 2012
- AZcentral, Glendale's sports dream turning into a nightmare, Sept. 28, 2012
- Forbes.com
- City of Glendale document "Debt Management Plan", June 30, 2011
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Commentaires
C'est très apprécié!
http://www.moodys.com/research/Moodys-downgrades-Glendale-AZs-GO-rating-to-A2-senior-excise--PR_261198