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Joyce Clark Unfiltered

For "the rest of the story"

Bag of Money ClipartEveryone is using a $6 million annual figure to operate Jobing.com arena. Where did this magical, mystical number come from? Paul Giblin in his article of May 5, 2013 states,”Scruggs said she changed her position after former City Attorney Craig Tindall sent a memo to council members last spring that advised them that the city had provided documents to the Goldwater Institute that showed the actual cost was about $6 million a year.” I saved all documents Coyotes related from my time on council. I even have the original agreements executed between the city and Steve Ellman. I searched through them all for former City Attorney Craig Tindall’s memo and do not have it. That does not mean that it doesn’t exist. I don’t remember it and apparently did not save it.

I can’t fathom where or how Tindall could have arrived at a $6M figure. In going back through the financial documents that I have – even the figures for Jerry Moyes (removing what he said his partners were owed) comes in very close to the Newco, LLC. numbers and that is $12+M annually to operate the arena; total revenues of $6M and total losses of $6M. Giblin in his article is willing to concede that, “…the arena-consulting firm International Facilities Group, of Chicago, told the city that a reasonable estimate to operate the arena without an anchor sports tenant would be in the range of $13.8 million to $14.7 million a year.” I have that study and can confirm what it says. There was also a TLHocking & Associates study done in January, 2012 entitled Comparison of Operating Costs for Similar Arenas, that compared 3 arenas with NHL teams with average operating costs of $15 million to $17 million.

During 2012 council participated in endless and continual public discussions (read polite arguments) about the cost of operating the arena. At some point, then Mayor Scruggs whipped out a figure of $6M. She said at the time, that she had done no research, had no basis for such a number and that she pulled it out of thin air. Somehow or another, probably because she used it incessantly publicly, it became the “real” number, so much so, that now Assistant City Manager Horatio Skeete used it as a “place holder” in the city’s current proposed budget. There is no basis in fact for a $6M annual operating figure for Jobing.com arena. If there is, I challenge anyone with that factual information to bring it forward for all to see. Show us all the money!

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In a previous blog I shared the speculation that,upon the recommendation of Michael Reinsdorf, Managing Member and Co-Founder of the International Facilities Group, LLC (IFG), the City of Glendale hired Beacon Sports to negotiate with any and all potential buyers of the Coyotes. George Fallar, in his blog, www.nebulousverbosity.com, has fleshed out a great deal of information about Beacon Sports.

It’s time to revisit Beacon Sports. We know that the City hired them to produce a report, Survey of Professional Sports Venue Agreements – January 2011. There remains speculation about Beacon’s involvement in the Moyes bankruptcy. It appeared that IFG did not want to get involved in the bankruptcy and Michael Reinsdorf may have suggested the use of Beacon.

Why does any of this matter? Well, in 2005 suit was filed against Beacon Sports, IFG and Michael Reinsdorf by West Coast Arena Ventures, LLC in the Superior Court of California. That is fact. Since I do not know the disposition of the suit, I will use “allegedly” liberally.

Two groups, The Schwartz Group and John Cambianica Associates Architects formed West Coast Arena Ventures, LLC and hired Beacon to evaluate the project’s potential and to assist in development of the project. Allegedly, Gerald Sheehan, Managing Director of Beacon, signed a confidentially and non-compete clause with West Coast in pursuit of the development of a sports complex “in the High Desert of Southern California” (from filed complaint, page 3).

The suit then goes on to allege that Beacon presented the project to Michael Reinsdorf and IFG Palmdale 1allegedly shared material confidential information without having Reinsdorf or IFG sign a confidentiality/non-compete agreement. In the complaint Reinsdorf is alleged to have met in person on behalf of IFG with officials from the City ofPalmdale 2 Palmdale to present what was essentially West Coast’s project. It is claimed in the suit that as a result West Coast lost a business opportunity with Palmdale as a result. All of this information is readily available.

So what does this have to do with the City of Glendale? We know that Glendale hired Beacon
Sports to do a study in 2011 to provide a positive rationale for the Hulsizer deal. That deal included the City’s purchase of parking rights for $100M. We know that Glendale already has a business relationship with Jerry Reinsdorf, owner of the White Sox and one of the tenants of Camelback Ranch, a city owned facility. We know that the City hired IFG to manage construction of Jobing.com arena. We know that, allegedly, Beacon Sports, breached a previous confidentiality/non-compete agreement in 2004-05.

Who is to say that if the City has indeed hired Beacon Sports to negotiate a sale of the Coyotes, whether Beacon Sports would share information with a Reinsdorf?? If the Coyotes end up being purchased by a Reinsdorf, it should be examined very carefully.  Based upon the original Reinsdorf proposal to buy the Coyotes, they wanted an “opt out” clause of 5 years. That is not enough time toTrianglef build the kind of fan base needed to make the team viable. From all appearances the Coyotes would be moved. How many dedicated fans are willing to invest financially and emotionally in a team that could move?

 

 

 

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