This will be my last posting until after Christmas Day. With less than a week before Christmas family and friends, last minute shopping and baking consume my time. Here goes. This council is often disappointing because of their lack of substantive engagement. Their December 17, 2013 council workshop had a myriad of issues, some of them quite important.
When it came to the presentation on the Monthly Arena Reports we learned some new or corroborating information. The figures that are used by the city are figures provided by IceArizona. Mr. Duensing, Executive Director of Financial Services, stated that the expected annual arena revenue for this fiscal year will be $6,791,540 and the expected deficiency will be $7.1M. He indicated that as of November 30, 2013 (covers period from Aug. 5 to Nov. 30, 2013) the amount of revenue accruing to the city is $1,168,880. This means the enhanced IceArizona revenues to cover the $9M unbudgeted will be short by approximately $2M by June 30, 2014 (end of current Fiscal Year). I find it amazing that his forecasted estimate of annual revenue is so precise, down to the penny. Nevertheless, it portends that the city will be short a boat load of arena revenue this year.
The city budgeted $6 million dollars for arena management of the $15 million dollar total fee and expected IceArizona’s enhanced revenues to cover the $9 million dollars unbudgeted. Looks like that ain’t gonna happen. Mr. Duensing also answered a question posed in one of my latest blogs regarding the Supplemental Ticket surcharge of $1.50 per qualified ticket. He said we won’t see this total until the end of this fiscal year per the agreement. Fine but why isn’t a monthly amount being offered to the city in the monthly reports? After all, it’s their specific line item. I’ve been told that an escrow account has been established. It would be nice if the city received confirmation that X amount of dollars is being deposited monthly into that account. After all, it is an interest bearing account and the entire amount, including interest, could very well end up going to the city.
It also raises the question of the definition of what is a qualified ticket. Here is the agreement’s definition: “Qualified Ticket” means a Ticket to a Fee Activity for which (i) the Team Owner, with respect to Hockey Events; (ii) The Arena Manager or sponsor or promoter, with respect to Team Revenue Events, City Revenue Events and other Fee Activities that are not Events; or (iii) the City, with respect to City Sponsored Events, receives valuable consideration (whether in money, services, foods or other value). Any Ticket for which (i) the Team Owner, with respect to Hockey Events; (ii) the Arena Manager or the sponsor or promoter with respect to Team Revenue Events, City Revenue Events and other Fee Activities that are not Events; or (iii) the City with respect to city Sponsored Events, (a) receives no value, or (b) receives money (but not any other services, goods or other value) for such Ticket in an amount less than 25% of the retail priced stated on the face of such Ticket, shall not be a “Qualified Ticket”; provided, however, that, if the aggregate number of Tickets described in the immediately preceding clauses (a) and (b) that are distributed by the Team Owner for a given Hockey Event (other than a Hockey-Related Event) exceeds 1,750 then the Tickets described in the immediately preceding clauses (a) and (b) distributed by the Team Owner for such Hockey Event that exceed 1,750 shall be deemed “Qualified Tickets” for such Hockey Event, unless the City and the Team Owner mutually agree otherwise.”
I suspect the city has one interpretation of this paragraph in mind and IceArizona has another. I’ve learned that arena employee tickets purchased at a discount were counted as qualified tickets in previous years. Apparently now they are not by IceArizona. Is it because the discount is greater than 25%? What other categories of purchased tickets are no longer considered as qualified by IceArizona? Is IceArizona discounting a large number of tickets? If so, as a result, how much surcharge money is the city not receiving?
Apparently there is some sort of agreement that the number of complimentary tickets to be given away would average no more than 1,000 per game. It appears that IceArizona has far surpassed that average and in one case gave out 3,500 complimentary tickets for one game. The rationale for capping the number of complimentary tickets per game is that it frees up a greater number of qualified tickets to earn the city surcharge. I am hopeful that a Fiscal Year- end audit commissioned by the city will clear up many of these questions.
What was council’s reaction to the dismaying news that arena revenues will experience an approximate $7M deficit? Not a word. Not one single question asking how the projected deficit would be covered. Instead there was a chorus of “thank yous” to staff for bringing this information forward and making it publicly available.
The other substantive issue on council agenda was the Five Year Forecast. As presented by Mr. Duensing the bottom line is that the city faces everything from a minimal deficit of approximately $250,000 next Fiscal Year up to a substantial deficit of $30 million dollars within 5 years. He asked council to approve staff’s development of a short term plan and a long term plan to deal with these expected deficits. He received council approval to do so along with a chorus of confidence from councilmembers that the deficit can be overcome. Mayor Weiers said it best by asking everything be placed on the table and he hopes council has the courage to make some very difficult decisions. Every citizen of Glendale hopes council has that courage. What better Christmas present could there be?
© Joyce Clark, 2013
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