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Joyce Clark Unfiltered

For "the rest of the story"

It has been 18 years and 23 days since the city’s pledge to build the West Branch Library.

Over the holidays there wasn’t much news about the Coyotes. Now that we are in a new year on January 7, Paul Giblin had a story in the Arizona Republic citing the results of a recent poll on the subject of a Coyotes relocation. Here is the link: http://www.azcentral.com/story/news/local/glendale/2016/01/07/poll-arizona-coyotes-should-stay-gila-river-arena-glendale/78314406/ . He reported, “Approximately 54 percent of frequent voters in Maricopa County surveyed believe the Coyotes should remain at Gila River Arena in Glendale, according to the poll that was conducted Dec. 29 for Phoenix-based public-relations firms MBQF Consulting and Marson Media.”

The problem for any other governmental agency attempting to locate the Coyotes will be to garner enough public support to pay for yet another very expensive sports facility. Thirteen years ago, in 2002, the cost to build the Gila River Arena was about $180 million dollars. The cost today to build the same type of facility has exploded. It is expected that the cost would be in the $400 million dollar range. The sixty four dollar question is can enough public support be generated in some other Valley community to use precious and scarce taxpayer dollars?

Public support would probably be found if the economy was booming and world affairs were stable. That is not the case. The economy staggers along as the middle class continues its death spiral. The general public fears more ISIS inspired events on our soil as the Middle East explodes into further turmoil while China’s stock market takes a dive and North Korea’s bomb tests reminds us that we, as a nation, are vulnerable. This is not an environment that is conducive for public sentiment to use taxpayer dollars on yet another sports facility.

Anthony LeBlanc, one of the Coyotes’ owners and apparent Public Information Officer, has had to walk back some of his previous assertions about the Coyotes.  He has hired a sports consultancy firm to assist him in his quest for a new location. It seems likely that a location in any other Valley municipality will be very difficult, if not impossible, to achieve. His only hope may be can he cut a deal for another new facility funded and built by the Gila River Pima Maricopa Indian Community? His refusal to bid for management of the Gila River Arena may come back to haunt him.

Which leads to another bit of recent news. The City of Glendale received 3 bids to manage its Gila River Arena submitted by AEG Facilities, Spectra by Comcast Spectacor and SMG. All three are “big guns” in the sports management business. All have the experience and knowledge required to successfully manage Glendale’s arena. Currently the bids are TOP SECRET. In the next few weeks Glendale’s senior management staff and city council will each receive separate briefings regarding the specifics of each proposed bid. This management deal is more complicated because the Coyotes will play in the arena for another season and it is expected the chosen management company contract would begin this July 1, 2016. That means that the preferred management company and the Coyotes would have to negotiate revenue streams for one year of Coyotes occupancy. There is always the remote possibility that a deal could be crafted comfortable enough for the Coyotes to create an incentive for them to stay at the Gila River Arena beyond their final year.

The city council may be ready to vote on an arena manager as early as February 9, 2016. If a vote is not taken around that date expect that one of the bids is in further negotiation before final acceptance. The public, as is the case with mushrooms, will be left in the dark and fed horse manure. There is no opportunity for public input in this process. While everyone understands the theory of representative government they also understand the theory of transparency. It seems that once again “father knows best” trumps the public’s right to know.

© Joyce Clark, 2016

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This site contains copyrighted material the use of which is in accordance with Title 17 U.S. C., Section 107. The ‘fair use’ of any such copyrighted material as provided for in Section 107 of the US Copyright Law and who have expressed a prior interest in receiving the included information for research and educational purposes. For more information material on this site is distributed without profit to those who have not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democratic, scientific and social justice issues, etc. We believe this constitutes a go to http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use,’ you must obtain permission from the copyright owner.

It has been 17 years and 336 days since the city’s pledge to build the West Branch Library.

It seems that Thanksgiving got in the way of much blog writing recently. I hope your Thanksgiving Day with family and friends was enjoyable. I hope you ate too much, laughed too much and watched too much football.

It was announced that the Coyotes hired Mitchell Ziets, CEO of Tipping Point Sports, LLC, to assist in an exploration of options for the team including a move to another venue from the Gila River Arena in Glendale. Let’s explore the reality of this option.

In a November 2, 2015 story by Craig Morgan several possible venues are offered for consideration by the Coyotes. Here is the link: http://arizonasports.com/story/436156/coyotes-in-discussions-with-at-least-three-separate-groups-for-new-valley-arena/ .

In his story Morgan offers this comment from Anthony LeBlanc, “At some point you have to make a decision that you can’t continue to talk to a wall, Coyotes co-owner, president and CEO Anthony LeBlanc said. You have to accept reality and look at what your alternatives are. That’s where we are right now.” From the time LeBlanc’s group, IceArizona, commenced its deal with Glendale for the use of its arena the Coyotes simply refused to talk to and to share information with Glendale. They were decidedly off the reservation. It has only been since the new, two-year deal was inked that IceArizona has decided to play nice with Glendale.

IceArizona may very well leave Gila River Arena in two years but options to play elsewhere in the Valley are more limited than current speculation would lead one to believe. LeBlanc admits to “conversations” with Phoenix about the possibility of a shared arena with the Phoenix Suns. Out of curiosity I checked the 2015-2016 playing schedules for both teams. Here are some comparisons:

                                                            Phoenix Suns                 Arizona Coyotes

Season                                                10/28/2015-4/13/2016     10/9/2015-4/13/2016

Number of total games                                     82                                        82

Number of home games                                   40                                        41

Out of the 40+ plus home games each team plays at its current venue, if they currently played at the same shared venue, 12 playing dates would conflict. That is ¼ or 25% of their home games. To be fair, we know that can be remedied by the leagues with a gnashing of teeth and the pulling of hair. It has worked before when the Coyotes and Suns shared a venue. One would think the Coyotes fans have warm memories of their experiences in sharing a venue with the Suns and are eagerly looking forward to do so again.

In a recent December 2, 2015 Paul Giblin story in the Arizona Republic, he cites issues that Phoenix would have to consider. Here is the link: http://www.azcentral.com/story/news/local/glendale/2015/12/02/arizona-coyotes-arizona-cardinals-wont-bid-manage-glendale-gila-river-arena/76564718/ .

  •  How much would a new arena cost? The Milwaukee Bucks’ planned new arena is pegged at $500 million.
  • How much would be privately funded? How much publicly funded? Would the public-funding source be municipal, state or some combination?
  • Can voters be sold on the idea of picking up any portion of the bill?
  • Where specifically would an arena be built?
  • When would it open?
  • Can the Suns and Coyotes work out an agreement to split revenues?

Let’s look at other possible venues. Tempe and/or Scottsdale are possible candidates. Would the voters of Tempe and/or Scottsdale approve the construction of a $180 million dollar building (cost of Gila River Arena construction in 2005) and agree to subsidize, year after year, a team that is not profitable? Remember those who do not read history are doomed to repeat it. I would think many voters would be very aware of Glendale’s history and that could certainly cause them to think twice about such a proposal.

Arizona State University has been mentioned as well. ASU receives substantial funding from the Arizona State Legislature. It is conceivable that a majority of legislators may balk at the idea of state taxpayer money being used to subsidize a for-profit company.  If ASU can fund and subsidize such a project with new, private dollars and not divert private dollars already committed for existent programs then it is possible. But wait, didn’t ASU Hockey just commit to playing its games at Gila River Arena? If that is the case, wouldn’t ASU have to build a new venue?

The last location on the menu of possibles is Talking Stick. That is certainly do-able. An Indian reservation is not subject to federal, state, county or local laws. The tribe is free to build what it wants to build on reservation land.  One has to wonder if this tribe would be willing to invest in the construction of another major venue as well as subsidizing the team in perpetuity.

There was an interesting article published on October 20,2015 by the Flordia’s Sun Sentinel regarding the NHL Florida Panthers and a Broward County proposed deal. Here is the link: http://www.sun-sentinel.com/local/broward/fl-panthers-subsidy-debate-20151020-story.html .

In some ways their deal is like comparing apples and oranges for Broward County has a population of 1.87 million people and includes 24 cities. That in itself is much different from Glendale’s population of approximately 240,000 and the fact that it is one city having to deal with a hockey arena. Some elements of their proposed deal are eerily similar to the Glendale/Coyotes deal. As of this date their deal has yet to be approved but here are some of the deal points which would expire in 2028:

  • The Panthers would continue making $5.3 million annual debt payments toward the county’s $15.3 million obligation.
  • Receive $86 million from the county, or $6.6 million a year on average, but in a schedule of front-loaded payments that starts at $12 million a year. Of the total, $39 million must be used for capital expenses at the arena, $45.5 million for operating expenses like paying the electric bill or property insurance, and $1.5 million to lure a “high impact event.”
  • Provide an irrevocable letter of credit to protect the county’s financial investment if the team defaults, files bankruptcy or relocates.
  • Grant the county development rights on land surrounding the arena, where a mixed-use entertainment complex could be considered.
  • Share proceeds with the county if the NHL expands between 2015 and 2021 and gives teams expansion proceeds. After the Panthers’ losses are covered, the county would get the remainder of the one-time expansion payment.
  • Give the county 10 percent of profits if the team, made more valuable by this new deal, were sold.
  • Give the county authority to approve where the money for capital projects is spent, and authority to replace the Panthers’ Arena Operating Company with another arena manager if needed.
  • Allow the Panthers to get out of the contract in eight years if it’s not working out. They’d have to give a year’s notice, show losses of $100 million over seven years, and pay a termination amount. For example, if the Panthers leave in year 8, they’d pay back the full $72 million the county would have given them by then.

No matter where the Coyotes end up in the Valley, whether they remain in Glendale or move to another location, their quest to be subsidized by a governmental entity is surely a public policy question deserving of much public discussion. The people of any city have a right to weigh in on the question of their tax dollars being used to subsidize a private, for-profit company.

© Joyce Clark, 2015

FAIR USE NOTICE

This site contains copyrighted material the use of which is in accordance with Title 17 U.S. C., Section 107. The ‘fair use’ of any such copyrighted material as provided for in Section 107 of the US Copyright Law and who have expressed a prior interest in receiving the included information for research and educational purposes. For more information material on this site is distributed without profit to those who have not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democratic, scientific and social justice issues, etc. We believe this constitutes a go to http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use,’ you must obtain permission from the copyright owner.

It has been 17 years and 237 days since the city’s pledge to build the West Branch Library.

Peter Corbett’s article in the August 21, 2015 edition of the Arizona Republic reports settlement of a 2014 law suit between the Coyotes and Jason Rose of Rose+Moser+Allyn Public & Online Relations firm. Here is the link:  http://www.azcentral.com/story/news/local/glendale/2015/08/21/coyotes-settle-lawsuit-scottsdale-polo-event/32112415/ .

The Coyotes had hired Rose’s public relations firm to work to defeat a citizen referendum in Glendale designed to block the arena deal between the Coyotes and the city. The referendum was unsuccessful and the Coyotes subsequently owed the firm a base fee of $25,000 and a $250,000 bonus. To pay off the debt the Coyotes were supposed to sponsor the Bentley Scottsdale Polo Championships (Rose’s baby) to the tune of $55,000 annually and give two front row hockey tickets for 8 games a season for 5 years.

Then LeBlanc seems to have stiffed Rose. The public relations firm got its base fee of $25,000 and one year of sponsorship in 2013…not the $55,000 promised but only $25,000. After that the spigot closed and the Coyotes did not pay another dime.

The judge handling the case granted the public relations firm’s motion for a jury trial. Can you imagine? Another round of negative publicity from a jury trial for the Coyotes? You can be sure after that motion was granted the real negotiation for a final settlement began. Last week both sides finally settled.

What is in this final settlement? No one knows. The terms are undisclosed and no one is talking…not the Coyotes and not Rose. Rose probably got his pound of flesh or he wouldn’t have settled. LeBlanc probably shouldn’t have promised what appears he didn’t intend to deliver.

It raises an issue of concern. The city’s cancelling of the original lease management agreement was a wise move. What was LeBlanc failing to report that the city had no means to verify? If and when the city reenters negotiation with the Coyotes for another long term agreement hopefully the city will include protections and means of verification that were absent in the original agreement. However, it would be prudent for the city to wait until the RFP bids have come in. They will be very helpful in determining fair market values. This time around there are lessons to be learned from recent history. Let’s hope the city does its homework.

© Joyce Clark, 2015

FAIR USE NOTICE

This site contains copyrighted material the use of which is in accordance with Title 17 U.S. C., Section 107. The material on this site is distributed without profit to those who have not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democratic, scientific and social justice issues, etc. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in Section 107 of the US Copyright Law and who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use,’ you must obtain permission from the copyright owner. Read more

It has been 17 years and 230 days since the city’s pledge to build the West Branch Library.

NOTE: Many have taken the opportunity to email me and berate me because my blogs have not been as frequent as usual. Personal matters have had me traveling out of state on a regular basis and have not allowed me the opportunity to write about Glendale issues on my usual schedule. Hopefully the end of August will provide some relief and I will be able to resume my normal schedule of blogs.

On August 14, 2015, Glendale First! issued a press release saying in part, “Today Glendale First has officially abandoned and withdrawn our sponsorship of recall efforts against Glendale, AZ Councilmembers Hugh, Turner and Tomalchoff.

We are satisfied the city has endorsed a new short term relationship with the Arizona Coyotes that is currently in the best interest of all involved. We’re hoping sincere efforts result in a long term agreement being reached between the City and the Arizona Coyotes in the near future.

These recall efforts shined a bright light on actions by councilmembers that negatively impacted public safety budgets and that put at risk the City of Glendale’s relationship with the Arizona Coyotes. We applaud the unanimous action taken by City Council on July 24th. We thank both the Coyotes and the City for striking a suitable arrangement.

We hope the pledge of the City Council to examine the needs and deficiencies in the two public safely departments bears fruit in the form of reduced response times.”

I contend, as I did originally, that Glendale First! used a public safety issue as a smoke screen for their primary anger over the action taken by a majority of Glendale’s city council canceling the original lease agreement with the Coyotes’ ownership. If they were really concerned about public safety issues they would have continued their recall effort. In this press release their angst over public safety is almost an after thought, easily dismissed now that the Coyotes are staying for the next two years.

We can assume that the Coyotes’ ownership counseled Glendale First! to cut it out and to quit its puny attempt to unseat the existing councilmembers as ownership seeks to mend fences with the Glendale city council as it enters a period of renegotiation of a new, more permanent lease agreement.

The Glendale citizens who have contacted me via email, to a person, want the city to issue an RFP for the arena’s management. They believe the city may get a better deal. While they want the Coyotes as arena tenants in the light of past history, they are not convinced it is in the best interests of the city to use the Coyotes’ ownership group for the arena’s management. They want city council as President Reagan once said, “trust but verify.”

The best way to verify what is a fair market price for Glendale’s arena management is to solicit bids. If the Coyotes’ ownership wants to continue to manage the arena they can respond to the RFP just as any other company. Competition is good for a city’s soul and competition for securing an arena management company is a win proposition for the city and its taxpaying citizens.

© Joyce Clark, 2015

FAIR USE NOTICE

This site contains copyrighted material the use of which is in accordance with Title 17 U.S. C., Section 107. The material on this site is distributed without profit to those who have not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democratic, scientific and social justice issues, etc. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in Section 107 of the US Copyright Law and who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use,’ you must obtain permission from the copyright owner.

It has been 17 years and 214 days since the city’s pledge to build the West Branch Library.

On July 24, 2015 at a special voting meeting the Glendale City Council unanimously passed Ordinance 2949 and the First Amendment to AMULA Final. With these actions the city and Ice Arizona agreed to dismiss all lawsuits and also settled the issue of the million dollars sitting around in a special escrow account as a result of the 2009 bankruptcy filing.

Before the Kumbaya vote Anthony LeBlanc, spokesperson for the ownership group said, “We’re not going to renegotiate…never, never, never.” Oops. The afternoon of the fateful vote in a radio interview with Roc & Manuch, LeBlanc was heard to say, “We haven’t been open with them (the city).”And, “We haven’t been good communicators.” And, “They’ve done well for the taxpayers. They’ve got a win.” When asked if Ice Arizona would consider buying the city’s arena, LeBlanc said about arena ownership, “That’s not the business we’re in.” Should we believe him in light of his long history of “erroneous” statements?

Councilmember Gary Sherwood, IceArizona’s staunch advocate, in an earlier, same day radio interview (July 24, 2015) with Roc & Manuch, said that he had publicly staked out a position that “he was not going to vote.” We can assume his action was to be a public display of disapproval for council’s treatment of his good friends, the IceArizona owners. In his traditional flip-flop fashion, he reversed himself with a little help from his friends. He revealed that the night before the vote “he had discussions with ownership” (presumably Anthony LeBlanc). His remark is interesting in and of itself for the only meeting council had prior to the vote was an executive session on July 20, 2015.  Did he share the conversations and results of that executive session with his good friend LeBlanc? Sherwood went on to say that “ownership wanted a 7-0 vote in support of the new deal.” Always willing to oblige his friends, Sherwood did a 180 and not only voted but voted in favor and made sure his pal, Councilmember Sammy Chavira did as well.

There has been considerable opining in the news media and on social media as to whether this is a good deal…for anybody. I contend that it is a good deal for Glendale if for no other reason than a $197 million dollar liability is gone…poof! That action should warm the hearts of the bond rating agencies. That figure represents the annual lease payments for the balance of the original lease management agreement.

The city gained in reducing the management fee to $6.5M from the original $15M annually. The actual language is: “10.1. Management Fee. Commencing on the Amendment Effective Date, and during the remainder of the Term, in consideration of the Arena Manager’s agreement to perform the management and other services set forth in this Agreement to pay all operating and maintenance costs associated with the Arena Facility (other than capital costs as provided herein), provided there is no breach by the Team Owner of the obligations under the Non-Relocation Agreement or a material breach by the Arena Manager of its obligations under this Agreement, the City shall pay to the Arena Manager, by wire transfer of immediately available funds to an account specified by the Arena Manager, the annual Management Fee in the amount of Six Million Five Hundred Thousand Dollars ($6, 500,000), paid in quarterly (on a three calendar month basis) installments in arrears on or before each October 1st, January 1st, April 1st and July 1st during the Term.” The city was losing an estimated $8+M a year under the original lease agreement even with the shared revenue it received. This management fee is budgeted within the city budget for Fiscal Year 2015-16.

The city also won two important concessions. It now has its own “out” clause with this agreement which ends in two years, in 2017 with recognition that “19. Termination Date means June 30, 2017.”  It now has the freedom to choose its own arena manager in a year’s time as stated, “46. Change of Manager. Notwithstanding what may otherwise be proved in this Agreement or in this Amendment, the City shall have the option to replace the Arena Manager at any time after June 30, 2016…” Everyone hopes the city will craft an RFP immediately and put it out on the street in a time frame appropriate to exercising that option.

The city achieved what can be considered as payback. IceArizona will no longer use former City Attorney Craig Tindall or former Assistant City Manager Julie Frisoni in any capacity including as a consultant. It is in #4 of the Settlement Agreement which states, “No Other City Employee Involved with Arena Agreement. The Parties represent and warrant that, as of the Effective Date, to the best of their individual and collective knowledge, information, and belief, no other former employees of the City, other than Craig Tindall or Julie Frisoni, have become consultants to or employees of IceArizona, in any capacity, since July 8, 2013. Ice Arizona represents and warrants that neither Tindall nor Frisoni has, in any way and to any extent, no matter how substantial or insubstantial, been involved in initiating, negotiating, creating, drafting, or securing the First Amendment. In reliance on these representations and warranties and those in Section 6, the City, City Council, City Manager, and City Attorney, collectively and individually, represent and warrant that they will never in the future seek to cancel or void the Arena Agreement of the First Amendment based o the involvement of Tindall or Frisoni, no matter how substantial or insubstantial, in initiating, negotiating, crating, drafting, or securing the Arena Agreement or the First Amendment on behalf of Glendale, so long as Tindall and Frisoni are not employed or retained as a consultant by IceArizona or any of its affiliates, divisions, parent entities, or subsidiaries.” The language is quite specific. That is just plain Karma for Tindall and Frisoni.

Did IceArizona get anything out of the deal? It stopped a lawsuit in which ultimately the city would have prevailed. Note that the new deal contains a lot of verbiage enjoining the city from suing IceArizona, ever, for any reason, regarding Tindall and Frisoni. The major gain was that it bought IceArizona time…time to decide its future. If the owners cannot put a decent team on the ice this year their future is bleak and they know it. It’s not a matter of distance that fans must travel to a game. That rationale has been over used. When teams win people will eagerly travel long distances to watch the winner. A team that is a contender also fills seats in suites and attracts more expensive advertising dollars…the lifeblood of any team. Each extra playoff game earns in the neighborhood of a million dollars and can spell the difference between a bottom line in the black and a bottom line in the red.

Another important issue finally resolved is that of distribution of the bankruptcy Operating Reserve Account as follows: “10. The Parties acknowledge and understand that in the Bankruptcy Settlement, subject to approval by the Court, the Bankruptcy Lawsuit (the “Bankruptcy Court”), the Operating Reserve Account shall be distributed as follows: $350,000 to the City, $10,000 to the David Reaves, Chapter 7 Trustee of the Arena Management Group, L.L.C., and $640,000 to Ice Arizona.”

In the same radio interviews, Sherwood stated that he wants “to see a new contract (with IceArizona) in 6 to 9 months, by April of 2016.”  LeBlanc stated IceArizona “wants a contract extension immediately” to bring “certainty.” Obviously it is an option both parties will need to pursue. Let us hope they can be successful in crafting a lease extension that is not build on the backs of Glendale’s taxpayers. No one can object to a lease agreement that is fair and equitable.

Be advised it doesn’t matter what the action or situation is, municipal governments do not move quickly. While an immediate contract extension is IceArizona’s goal, the caution is to not become frustrated if the action is not completed quickly. I learned this lesson the hard way. When I first joined city council I had ideas for projects in my district. I mistakenly thought they could be accomplished instantly. Not so. I became satisfied if a project could be completed within a year. It’s the very nature of government. All action is slow, overly deliberate, and far more complicated than it often needs to be.

Everyone appears to be relieved the issue is resolved for now. Let’s hope this positive action leads to further positive outcomes for both parties.

© Joyce Clark, 2015

FAIR USE NOTICE

This site contains copyrighted material the use of which is in accordance with Title 17 U.S. C., Section 107. The material on this site is distributed without profit to those who have not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democratic, scientific and social justice issues, etc. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in Section 107 of the US Copyright Law and who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use,’ you must obtain permission from the copyright owner.

It has been 17 years and 210 days since the city’s pledge to build the West Branch Library.

Nearly all major battles we face seem to revolve around either love or money. In the case of the Coyotes vs. Glendale it’s definitely money. Before I post a blog on the current deal between these entities it’s important to understand the effects of the biggest driver — money.

Westgate and its sales tax revenue is an important component. It cannot be denied that the majority driver of retail sales tax revenue in Westgate comes from Tanger Outlets. Before Tanger’s opening in November of 2012 retail sales tax revenue was under a million dollars a year. Tanger, when it opened, was projected to earn $2M in sales tax revenue and in fact, from the start, has generated closer to the $2.5M mark.

As you can see from the chart below in calendar years 2013 and 2014 retail sales tax revenue was over $3.5M and almost all of it is attributable to Tanger. In October of 2014 Tanger expanded and the city can now expect an estimated $4.5M in retail sales tax revenue in 2015. Restaurant/Bar sales tax revenue has also increased over time and can be related to football games, hockey games and concerts held at the University of Phoenix Stadium and the Gila River Arena. This component is also attributable to the opening of new restaurants in Westgate. This sales tax revenue has grown as well and is estimated to earn some $3M. “Other” sales tax revenue is composed of bed tax, AZSTA stadium city sales tax, licenses & permits, etc. It is estimated to earn about $5M in 2015.

In 2015 estimated sales tax revenue from Westgate looks like this: Retail — $4 to $4.5M; Restaurant/Bar — $3 to $3.5M; and “Other” — $4.5 to $5M.

Westgate sales tax

The argument often used by Coyotes’ supporters is that the spillover effect from 42 nights of hockey games is essential to Westgate’s restaurants and bars survival and to the city. How much of that spillover is from 70,000 fans attending each of 10 football games? Admittedly it is substantial and could account for anywhere from 1/3 to ½ of the sales tax revenue generated from restaurants and bars annually.

The point is that Westgate has grown despite all of the drama and turmoil of the Coyotes and is strong enough to survive with or without them. If one looks at all of the factors that determine annual sales tax generation at Westgate the Coyotes (from hotel stays and restaurants/bars) are estimated at driving about $2M a year out of a total estimated annual sales tax revenue of a low of $11.5M to a high of $13M.

As long as we are on the subject of money there is another factor to consider. Many Coyotes fans are hoping that the Coyotes will move to downtown Phoenix or a new arena at Talking Stick. Dan Bickley in a recent July 26, 2015 Arizona Republic story entitled Coyotes not out of the woods – or Glendale – just yet said, Sarver says his Suns pay $23 million a year just to play at US Airways Center: $12 million in debt service, $8 million in arena management costs and $3 million in rent. A new arena capable of housing a NBA team and a NHL franchise starts at $500 million, and that’s being conservative.” Kudos to Robert Sarver for publicly offering some expense figures (no revenue figures, mind you). That’s more than anyone has seen from the Coyotes. Any public figures associated with the Coyotes have been minimized or denied by Anthony LeBlanc, an owner and visible spokesperson for the ownership group.

The question for the Coyotes becomes can they afford to move anywhere? Sarver is not in the charity business and I suspect that the owners of Talking Stick are not either. All bets are off if the Coyotes move out of Arizona. Is there an entity out there willing to pay the Coyotes to play in a newly constructed arena? Who knows? The Coyotes will have to pay to play anywhere else in Arizona and as long as they continue to suffer losses of an undetermined amount their options are very limited. No one is offering any love to the Coyotes these days and their entire future is being driven by only one thing – money.

© Joyce Clark, 2015

FAIR  USE NOTICE

This site contains copyrighted material the use of which is in accordance with Title 17 U.S. C., Section 107. The material on this site is distributed without profit to those who have not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democratic, scientific and social justice issues, etc. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in Section 107 of the US Copyright Law and who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use,’ you must obtain permission from the copyright owner.

On Wednesday, July 15, 2015 Darrell Jackson, for the Glendale Star, posted a story online in which he reported two sources (not councilmembers but apparently city administrative staff) have confirmed my speculation that the Monday, July 13, 2015 city council executive session was to discuss an offer made by the Arizona Coyotes. Not a bad guess for a former councilmember.

It raises more questions other than answering only one — what was the subject of the e session? If Jackson’s sources are correct the Arizona Coyotes had offered to drop their management fee to $8M for the next 3 years.

Without knowing any more details of the purported offer, the first thought is, don’t the owners of the Coyotes realize they are virtually confirming they plan to exercise the opt-out clause in 3 years? The second thought is city council is absolutely convinced they have a solid legal case against the Coyotes. You can be sure we have not seen all of the city’s cards when it comes to the 2 former city employees, Craig Tindall and Julie Frisoni. I suspect we will not find out how much more there is to know until the discovery phase of the trial — which seems more certain to occur than ever.

Offering to pay a lesser management fee while keeping the opt-out clause does not sound like much of a win-win deal. The city pays the team $8M a year to play in its arena for the next 3 years and then the team leaves? Again, who is going to pay the Coyotes $15M or $8M a year to play in their venue? You can be sure the City of Phoenix and Talking Stick won’t. They have management companies. No, the only thing they will expect is a hefty rental payment from the Coyotes. It seems as if the handwriting is on the wall. No one, other than gullible Glendale has been willing to pay them to play and now, even Glendale has decided that it’s not such a great idea.

If the Coyotes owners are as committed to staying as they claim they are, the first concession they should have made to the city was to remove the opt-out clause but they didn’t offer that carrot. Why? Because they plan on exercising the provision in 3 years. For all those die-hard Coyotes fans out there, what will it take to make you believe that it is quite possible that the Coyotes are not here for the long haul, despite what the sometimes dubious truth teller Anthony LeBlanc has been saying? You know which Anthony LeBlanc I’m referring to. It’s the one who denied Andrew Barroway’s purchase of 51% of the team only to retract his denial. Yes, I realize Barroway is no longer the majority owner but he was for a brief time and LeBlanc originally denied it when it was first reported.

Jackson reported that several administrative staff would like to see arena management separate from the team. At this point in time, that seems to be an idea worth embracing. Hang on folks. This is a new chapter of Coyotes history, barely written and I suspect there is much, much more to come before this chapter is completed.

© Joyce Clark, 2015

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On  June 10, the Glendale city council voted 5-2 to cancel the current lease management agreement with Ice Arizona. This was the agenda item:

“DISCUSSION AND POSSIBLE ACTION TO DIRECT THE CITY MANAGER AND CITY ATTORNEY TO CANCEL THE PROFESSIONAL MANAGEMENT SERVICES AND ARENA LEASE AGREEMENT BETWEEN THE CITY OF GLENDALE AND ICEARIZONA MANAGER CO., LLC AND ICEARIZONA HOCKEY CO., LLC, PURSUANT TO ARIZONA REVISED STATUTES § 38-511, AND TO PURSUE ANY AND ALL OTHER LEGAL ACTIONS AND REMEDIES NECESSARY TO EFFECTUATE CANCELLATION OR TERMINATION OF THE AGREEMENT.”

Here is the text of Arizona Revised Statutes §38-511:

38-511. Cancellation of political subdivision and state contracts; definition

  1. The state, its political subdivisions or any department or agency of either may, within three years after its execution, cancel any contract, without penalty or further obligation, made by the state, its political subdivisions, or any of the departments or agencies of either if any person significantly involved in initiating, negotiating, securing, drafting or creating the contract on behalf of the state, its political subdivisions or any of the departments or agencies of either is, at any time while the contract or any extension of the contract is in effect, an employee or agent of any other party to the contract in any capacity or a consultant to any other party of the contract with respect to the subject matter of the contract.
  2. Leases of state trust land for terms longer than ten years cancelled under this section shall respect those rights given to mortgagees of the lessee by section 37-289 and other lawful provisions of the lease.
  3. The cancellation under this section by the state or its political subdivisions shall be effective when written notice from the governor or the chief executive officer or governing body of the political subdivision is received by all other parties to the contract unless the notice specifies a later time.
  4. The cancellation under this section by any department or agency of the state or its political subdivisions shall be effective when written notice from such party is received by all other parties to the contract unless the notice specifies a later time.
  5. In addition to the right to cancel a contract as provided in subsection A of this section, the state, its political subdivisions or any department or agency of either may recoup any fee or commission paid or due to any person significantly involved in initiating, negotiating, securing, drafting or creating the contract on behalf of the state, its political subdivisions or any department or agency of either from any other party to the contract arising as the result of the contract.
  6. Notice of this section shall be included in every contract to which the state, its political subdivisions, or any of the departments or agencies of either is a party.
  7. For purposes of this section, “political subdivisions” do not include entities formed or operating under title 48, chapter 11, 12, 13, 17, 18, 19 or 22.

The special voting meeting was preceded on Tuesday, June 9, 2015 by a special workshop session when council immediately voted to go into executive session and then there was a regular workshop meeting. Did the executive session lead to council’s decision to hold the special June 10, 2015 vote about the IceArizona contract? We will never know for executive session cannot be discussed per state statute.

Interestingly Anthony LeBlanc revealed some executive session information when he was on the radio last week. Gary Hirsch, a Glendale resident, raised a question about LeBlanc’s radio comments during the public comment period of council’s regular meeting on June 9, 2015. He asked if anyone representing the city had filed a complaint. No one on council responded but that is not unusual as a statement is made at the outset that council is there to receive public comment but not to respond.

OK, so there is a state statute that allows a political subdivision to cancel a contract. So what? There is one more piece of information that is essential to this surprising action. Most of you do not have a copy of the IceArizona/Glendale Lease Management Agreement. I do and A.R.S. § 38-511 is cited in that contract on Page 84 (in an old contract, page 96 of newer version). I quote:

“24.13 Conflicts of Interest

24.13.3 (in newer contract this is 23.13.2) The Parties acknowledge that the provisions of A.R.S. §38-511, which are hereby incorporated in this Agreement by this reference, may create a situation in which the City might have a right to cancel this Agreement pursuant to A.R. S. §38-511.”

Who made sure this clause was included the Lease Management Agreement? And why? Was city council aware of this provision when they approved the contract? I doubt it. The Jamison contract written by Tindall is the framework for the Ice Arizona contract. There were modifications to specifically address the IceArizona deal. The first thought when reading 24.13.3 is Craig Tindall. How does Tindall fit into all of this? Here’s a quick timeline:

  • April 1, 2013 Tindall resigns as Glendale City Attorney but continues employment with city for 6 months
  • June, 2013 Tindall emails prior to approval of agreement demonstrate his extensive involvement in crafting the final language (please refer to my previous blog on Tindall. Here is the link: Former Glendale City Attorney Craig Tindall…Act 2 http://wp.me/p3aHul-xb )
  • July 3, 2013 Glendale IceArizona Lease Management Agreement approved by city council
  • August 20, 2013 IceArizona hires Tindall as its General Counsel
  • October 1, Tindall’s employment with the city officially ends

State statute says quite clearly that a political subdivision within 3 years after a contract’s execution may cancel the contract if any person is significantly involved in negotiating, crafting or drafting the contract on behalf of the political subdivision and is an employee or agent of any other party. Why did IceArizona accept this provision? Did Sherwood read this contract? If so, why did he not object to provision 24.13.3 within the contract? Why did Tindall and Nick Wood (another Coyotes attorney) allow this clause to remain within the contract? Was it deliberately placed within the contract to offer either side a way out without invoking the 5 year out clause? If it was deliberately left in and invoked by the city then the city wears the “black hat” – not IceArizona for invoking the hated 5 year out clause. Hmmm…

Councilmember Sherwood did not attend tonight’s meeting. Apparently he was in Salt Lake City.  I don’t know but one would think that such a critical vote would demand that he cancel his trip.  He did find time that afternoon to be interviewed on NBC Sports Radio 1060AM by Roc and Manuch.

Why cancel the contract now? The time limitation under state statute is 3 years.  This July 3, 2015, 2 years will have passed. If council’s move to cancel the contract did not occur now it would have happened sometime in the next 12 months. Why this exact moment? I don’t know.

Since the approval of the contract City council has changed dramatically with the departure of former Councilmembers Martinez, Knaack and Alvarez.  Martinez and Knaack supported the deal while Alvarez did not. The majority that approved the contract at the time of its approval was Martinez, Knaack, Sherwood and Chavira. With new councilmembers taking office in December of 2014 a seismic shift occurred. No longer did the deal appear to enjoy a 4 councilmember majority.

The city issued a press release on the morning of June 10, 2015 stating, “The City Council has scheduled a discussion and possible vote regarding Glendale’s contract with the Arizona Coyotes. Discussions and negotiations regarding the contract have been ongoing for months. Specifically, the City is open to a resolution but it must be one that provides certainty and fairness to both parties, especially the taxpayers. The Council has agreed to stand for transparency and the highest standards of ethics for any future agreement with the Coyotes.” Was the city’s press release forced by IceArizona’s threat to sue the city? Translating the government speak, the city appears to have taken the position that it wants the Coyotes to stay as the anchor tenant in its arena but it can no longer sustain the annual loss of revenue. Clearly it is sending the signal that it wants to renegotiate the annual management fee from $15 million a year to ??? Tom Duensing, Interim Assistant City Manager, has pegged this year’s loss to the city to be in the $8.7 million dollar range. To date IceArizona’s position is that they refuse to renegotiate the contract and they reiterated that statement when Barroway and LeBlanc met with Mayor Weiers and Vice Mayor Hugh. And why would they entertain a renegotiation? They are in the catbird’s seat and they retain that pesky 5 year out clause.

Some of the comments made by various individuals during the course of the meeting:

  • City Attorney Bailey – his office sought numerous outside opinions; the contract is the opposite of the goal of public-private partnership; management fee paid by the city not to be used to retire ownership debt; the purpose of the statute is to protect taxpayers from any employee having a dual relationship
  • Nick Wood (Attorney for the Coyotes) – city has no claim; said NHL and Coyotes will sue; claimed Tindall was a ‘former employee’; questioned timing of council action; predicted terrible things will happen to Westgate
  • Anthony LeBlanc (Coyotes minority owner) – the city’s action has had a significant financial impact on the Coyotes already; called council action ‘political grandstanding’; claims meeting on Monday with Mayor Weiers was the first time city had asked to renegotiate
  • Many citizens spoke for over an hour – majority were Coyotes fans; included Jeff Teesel, Manager of Westgate; however there were a few brave Glendale citizens who asked council to weigh the needs of the community vs. the needs of professional sports.

At the start of the meeting Councilmember Aldama made a motion to table for 2 weeks. Chavira seconded. The majority voted no on the motion. The vote on cancelling the contract was 5-2 with Aldama, Tolmachoff, Turner, Hugh and Weiers voting to cancel and Sherwood and Chavira voting to keep the contract. Mayor Weiers commented prior to his vote with the cryptic statement, “if you are breaking the law there is no exception.” He went on to say as time progressed more information would be available so that the public would understand why council voted as it had.

There’s more to say but I will save it for my next blog. I will offer one comment now. The meeting was ugly and the air was filled with threats, intimidation and breathless anger. If there are any typos or poor English please accept my apology. It was due to a rush to get this blog out. My only hope is that LeBlanc and crew reach out immediately to the city, willing to renegotiate the deal and living up to their promise to keep the Coyotes in Glendale.

© Joyce Clark, 2015

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It has been 17 years and 158 days since the city’s pledge to build the West Branch Library.

At 6 PM on Wednesday, June 10, 2015 the Glendale city council will meet to consider and vote upon an action to cancel the current Lease Management Agreement with IceArizona. Here is the only item on the agenda:

“DISCUSSION AND POSSIBLE ACTION TO DIRECT THE CITY MANAGER AND CITY ATTORNEY TO CANCEL THE PROFESSIONAL MANAGEMENT SERVICES AND ARENA LEASE AGREEMENT BETWEEN THE CITY OF GLENDALE AND ICEARIZONA MANAGER CO., LLC AND ICEARIZONA HOCKEY CO., LLC, PURSUANT TO ARIZONA REVISED STATUTES § 38-511, AND TO PURSUE ANY AND ALL OTHER LEGAL ACTIONS AND REMEDIES NECESSARY TO EFFECTUATE CANCELLATION OR TERMINATION OF THE AGREEMENT.”

There are rumors flying furiously on Twitter, Facebook, etc. speculating on the reason for the possible cancellation. That’s all they are…rumors. I can affirm that the reason has nothing to do with the infamous audit or the brough ha ha over naming rights. I have agreed to not say anything further until after the council meeting.

Don’t expect Councilmember Sherwood to be at this meeting or call in. Apparently he will be in Salt Lake City tomorrow. How convenient especially if the deal he brokered blows up. His pals (Chavira and Aldama), or as all three call themselves, the “Tres Amigos” (I like Three Stooges better), will have to vote without their “jefe” to keep them in line. Oh oh…

Bring your seat cushions for tomorrow night’s meeting folks. Expect it to be a long one with every possible Coyote fan in attendance reiterating over and over again how stupid this council is. Has it occurred to anyone that they couldn’t be that stupid if they have discovered a way out of the current contract?

You will see the agenda item makes specific reference to Arizona Revised Statutes § 38-511. I suggest anyone that is interested in this issue take the time to read it.

© Joyce Clark, 2015

FAIR USE NOTICE

This site contains copyrighted material the use of which is in accordance with Title 17 U.S. C., Section 107. The material on this site is distributed without profit to those who have not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democratic, scientific and social justice issues, etc. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in Section 107 of the US Copyright Law and who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use,’ you must obtain permission from the copyright owner.

It has been 17 years and 95 days since the city’s pledge to build the West Branch Library.

For 4 years, from the time Jerry Moyes declared the team bankrupt in 2009 until the end of 2012, as a councilmember I was part of the high drama surrounding the Arizona Coyotes and the arena, a city owned facility. Suitors to buy the team came and went with regularity. The city paid the NHL $25 million a year to manage the arena while everyone desperately hunted for a new owner. In 2013 a new city council was seated and promptly approved the current management agreement of $15 million dollars paid annually to IceArizona, the new owners of the team. If truth be told that $15 million goes directly to Fortress Lending and the NHL as interest payments on the IceArizona’s purchase debt owed by LeBlanc, Gosbee, and et.al. If you remember the cash raised for the team purchase was approximately $45 million. The rest of the purchase price of $170 million was strictly debt. Today Andrew Barroway is the majority owner (51%) of the team.

A recent article on March 30, 2015, by Mike Sunnucks of the Phoenix Business Journal entitled Could the Phoenix Suns, city build a new arena at Phoenix Convention Center site? It is intriguing to say the least. Sunnucks reports on speculation about where the Phoenix Suns will be playing its games in the future, “ ‘US Airways Center is owned by the city of Phoenix and the Suns lease doesn’t expire until 2029’, according to city spokeswoman Deb Ostreicher. The Suns could look to the city for renovations of the downtown arena or could look for a new home.” Sunnucks goes on to say, “One scenario being talked about — at least in real estate and downtown Phoenix circles — is a new arena being built where the current South Building of the Phoenix Convention Center is on Jefferson and Third streets. That is the oldest convention center building and is a block away from the Suns’ current arena.”

Granted all of this is extremely speculative but there is the possibility of the Phoenix owned US Airways Center becoming vacant if Phoenix and the Suns decide to build a new arena at the site of the south building of the convention center. Take it a step further and it is not outside the realm of possibility that Phoenix would attempt to lure the Arizona Coyotes to a newly renovated and vacant US Airways Center with better sight lines for hockey patrons.

Think about it. Since purchasing the team two years ago IceArizona has consistently lost money due to many factors. One of those factors has always been fan complaints about trekking out to Glendale for the games. Many in the East Valley as well as from other locations such as Tucson simply choose not to make the trip. A more centrally located arena in downtown Phoenix has a certain appeal for many.

One wonders if it appeals to Barroway. Today, 2015, the Glendale arena is 12 years old, having opened in December of 2003. In another 3 years, by 2018, the arena will be 15 years old and the Coyotes will have the available option of moving due to the opt out clause any time thereafter. One of Barroway’s imperatives is to keep the team viable over the next 3 years until some major decisions are made.

In 8 years, by 2023, the arena will be 20 years old and in need of major renovation and upgrades. In the meantime, if Barroway and the City of Phoenix worked out a deal regarding US Airways it could solve one persistent fan complaint by relocating to a more convenient and centralized location. It would certainly fulfill the owners’ mantra of “here to stay”…just not in Glendale.

© Joyce Clark, 2015

FAIR USE NOTICE

This site contains copyrighted material the use of which is in accordance with Title 17 U.S. C., Section 107. The material on this site is distributed without profit to those who have not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democratic, scientific and social justice issues, etc. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in Section 107 of the US Copyright Law and who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use,’ you must obtain permission from the copyright owner.