One issue not so far discussed is the issue of Capital Repairs needed for the arena. Keep in mind, my best guesstimate is that there is maybe $200,000 or $300,000 in the Capital Repairs Account. Below I’ve included Newco, LLC’s “wish list” of Additions and Capital Repairs for the Fiscal Year Ending June 30, 2014.
As you can see, the major issue is “Arena roof work” for $2M. The entire “wish list” comes to $5.6M. The roof is leaking. It needs work. Will it cost $2M? Maybe not. I heard that the city has called in an independent consultant to study the roof and report back (at what cost and this should be considered part of the tab to fix the roof). It may be a choice between a band-aid costing much less and major surgery costing far more.
The point is that in addition to the $6 M a year, a figure to which this current council is wedded, they will have to find additional dollars to repair the arena roof. In addition to asking the new arena manager to accept a figure of $6M a year blithely mandating that entity to be willing to lose $6M a year, they also want the new arena manager to participate in the cost of capital repairs based on the Beacon RFP.
This is from the Beacon RFP, “Investment. State the amount of a proposed investment in the Arena that the Respondent Manager is willing to provide (Please review the proposed Additions and Capital Repairs Schedule for Fiscal Year ending June 30, 2014 for further details) [the very same document you see above]. Describe any restrictions/repayment requirements [read loan to be paid back by city] on any such investment. Also describe any additional fees, restrictions or incentives that may apply to any investment.”
How many prospective owners are out there willing to accept an annual $6M management fee knowing that the costs of operating the arena are double that amount? Then ask how many prospective owners will be willing to make a loan to the city to cover all or a partial list of capital repairs?
The time has come for this current council to understand the situation factually. They also need to understand that whether the Coyotes stay or go there is a substantial bill to be paid. Having the Coyotes as an anchor tenant helps the situation not hurt it. It guarantees 40+ nights of activity at Westgate and its attendant sales tax revenues. Surely they realize the significance of that and how much it helps their bottom line. Losing the Coyotes and going it alone on managing the arena, no matter how convinced they are that it will work is a recipe for further financial disaster.