It has been 17 years and 195 days since the city’s pledge to build the West Branch Library.
Recently ‘thevintageguy,’ one of the regular commenters to my blog posts, offered an interesting idea. He calculated that if every hockey ticket for every game had a surcharge of $24 it would generate $15M annually in revenue. If that surcharge were applied IceArizona would not need the City of Glendale to pay $15M a year for a management fee.
I decided to explore that idea but first, some history. The city owned arena opened in December of 2003. Let me remind you there was no arena management fee that the city had to pay. Steve Ellman led a group of investors who bought the Coyotes. Ellman may be many things to many people but he took immense pride in the arena, the Coyotes and the events he booked. Back then concerts were far more frequent. Bette Midler, Britney Spears, Elton John and U2, to name just a few performers, played at the arena in its early years. During the years of his ownership of the team the Arizona Sting (now defunct) also played all of its games at the arena. While the Arizona Sting was probably not a money maker during the years of its existence from 2003-07, each year it successfully increased its fan base. It certainly was not a deterrent to Jerry Moyes’ acquisition of Ellman’s interests.
Ellman realized how important it was to his bottom line to keep the arena busy all year long. Ellman’s downfall was his inability to develop a substantial amount of commercial and retail surrounding the arena quickly enough. To focus on that aspect of his business he sold his interest in the hockey team to Jerry Moyes. Then the national recession hit and he was unable to hold on to his interests within Westgate.
Under Moyes there was no arena management fee that the city had to pay. Moyes seemed not to be as committed to the health of the team and its bottom line as Ellman had been. Unfortunately Moyes ran the team’s finances into the ground. Apparently he diverted team revenue to his other businesses and subsidiaries. By 2009, Moyes asked the city to begin payment of a management fee of $12M a year. The city refused. Moyes declared team bankruptcy all the while working a secret deal with Jim Balsillie to buy the team out of bankruptcy. The court stopped that scheme and the NHL assumed control of the team. The NHL demanded an annual management fee of $25M knowing that the city needed to buy time until a new team owner was secured. It was precedent setting. From that point forward any potential owner of the team had a green light to require that the city pay a management fee.
In 2013, IceArizona bought the team with the NHL’s blessing and so the management fee scheme was retained with the city paying $15M annually. The IA management agreement has a revenue sharing component but the revenues generated annually and paid to the city have been approximately $8M short every year in covering the annual $15M payment.
Recently the city council voted to cancel the contract with IceArizona (IA) alleging a conflict of interest by two former city employees. IA immediately went to court and obtained a Temporary Restraining Order (TRO). The judge required the city to make its quarterly payment of $3.75M on July 1, 2015 to pay for services already rendered and the city has done so. The court also required IA to post a bond of $1M and IA has done so. On July 29, 2015 both parties will be back in court and the judge will make a determination if the TRO should become permanent pending the outcome of the suit regarding the contract cancellation.
On Monday, July 13, 2015, the Glendale city council met in executive session. It is my strong belief that the subject of that meeting was the litigation between IA and the city. I suspect IA made an offer amending the existing contract and their offer was rejected. It appears as if the city council is convinced that its allegations are solid and provable in a court of law. Just think about it. If there had been a desire on the part of council to accept an offer from IA there would have been a press release issued after executive session. That has not occurred.
Back to the ‘vintageguy’s’ idea. Basic research reveals the following annual attendance figures for the Coyotes, courtesy of hockeyDB.com at http://www.hockeydb.com/nhl-attendance/att_graph.php?tmi=7450 .
“Phoenix Coyotes Yearly Attendance Graph. This is a graph of the home attendance of the Phoenix Coyotes, a hockey team playing in the National Hockey League from 1996 to 2015. Attendance is based on numbers from a team or league, either released as an official yearly per-game average figure, or compiled into an average from individual boxscore attendance. In some cases when boxscore attendance is unavailable for a small number of games, the attendance is computed omitting the missing games and annotated as approximate. Clicking on a season’s bar will bring you to a graph of all teams in the league.”
The average attendance figure for the Coyotes for the last 5 years is 13,133. Multiply that figure by 41 games a year and the average total attendance for a season of 41 games is 538,453. If you divide $15M (annual city payment of management fee) by 538,453 each ticket for each and every game would require an additional $27.85. If a hockey fan were to buy a ticket for each of the 41 games per year the additional annual amount he/she would pay would be $1,141.85. What do all of these numbers mean? If hockey fans paid more for every ticket IceArizona would not need the $15M a year from the city. Now that sounds like a plan.
Let’s look at it another way. Each year even with IA’s revenue sharing the city is in deficit for the $15M annual payment by about $8M a year. If revenue sharing were to remain and the same ticket increase scheme were used to cover the $8M a year deficit, each ticket would need to be increased by $14.85 which comes to a total increase for a fan attending all 41 games of $608.85 a year.
I believe my figures are correct but even if they are off a bit don’t get bogged down in the numbers. Instead consider the concept. If fans were charged more per ticket per game with or without IA revenue sharing there would be no need for the city to pay an annual management fee of $15M. That would surely solve the city’s annual Coyotes related deficit. Whether it is $27.85 or $14.85 per ticket per game the sixty four dollar question is are Coyotes fans willing to pay either extra amount to keep the team in Glendale? Is it possible for them to redirect their negative anger to a more positive action – that of paying more to keep their team?
© Joyce Clark, 2015
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City of Glendale should be paying the fans to have to watch the games in that stinky city. The bad smell of manure and the long drive are horrible. Please just move the team to Scottsdale or Phoenix.
I will definitely pay more and about a third of everything I get from retirement a year goes to the Yotes….and If I count my Dback season ticket…heck maybe close to half!!!!
No problem!!!! I came from a part of the country that didn’t have these sort of things..
I don’t want to lose ANY of these professional organizations…..
NO PROBLEM! Send me the bill! I’ll just put it on the payment plan.
A very wonderful idea indeed!!!! Everybody wins… Ice Arizona gets to keep making money they wouldn’t otherwise have to pay the loan to buy the team, City of Glendale can go back to being a NORMAL city that doesn’t have to PAY somebody to occupy their property, and the Coyotes fans get to keep watching Shane Doan!! 🙂
But wait… One problem… What is the actual PAYING attendees to these games? The “announced” attendance numbers are highly exaggerated by Leblanc and co., and I have a feeling we may learn more of this in the coming months, thanks to the audit done by Tavares, whom CoG hired to do so.
The Coyotes have been notorious for many years for giving away “complimentary tickets”, and Ice Arizona have been no different. The only difference being is that IA has a MAXIMUM amount they can give away per year. Perhaps they exceeded this amount, gave CoG a far less amount for surcharges, and Tavares picked up on it… We’ll see…
Anyway, again, this is a great idea, and I’m sure the few Coyotes fans out there would be more than willing to pay more. Problem is there are far too FEW of them.
I do hope you are right, Joyce. I hope CoG turns down ANY silly “offer” from Ice Arizona that requires the taxpayers to pay ANYTHING for this supposed group of “capitalists” to occupy their building.
So Carl….
What’s your opinion about the taxpayers in Quebec forking out $370 million dollars (TWICE what Glendale spent) for an NHL arena?? And being prevented legally from protesting about it or allowed to have it forced to a public vote??
Especially considering not all residents of Quebec are Nordiques fans, or even hockey fans??
The mayor was elected twice on the platform to build the new Arena with around 70 to 75% support with public fund from the city and the province of Quebec. The old Colisee is beat down and needed to be replaced anyways. Furthermore, the new arena will be managed by Videotron who will be paying the city (not the other way around). Quebec in not anti-coyotes. We are baffled though by a team that is not supported by a majority of local fans even with bottom line ticket prices. All the energy around this saga should have been spent on getting the Glendale arena packed through the years. Like Joyce wrote, it was built with the idea that the city didn’t have to fork over 8 to 15M$ a year. I think that’s the breaking point for this whole affair. Still, best of luck to Glendale, its citizens, the coyotes and their fans (get that arena packed and the troubles will go away — with regular NHL priced tickets that is…)
My small grain of salt…
The arena in Quebec cost more because it was built TEN YEARS AFTER Glendale built theirs. Simple economics, Legend. But I will agree that it’s not right to legally prevent any protest.
But I will say there is a HUGE difference between a taxpayer funded VENUE and a taxpayer funded TEAM.. You know that.
Both of you are completely ignoring the fact that Quebec City is building an arena with taxpayer money for a private enterprise to profit from..
Carl…. if they don’t build that arena…. they don’t have a chance to have an NHL team return, right?
Danny… doesn’t matter if or how the city gets paid. PKP and Quebecor reportedly have the wealth to have built the arena had they wanted to. So why didn’t they?
They re-elected Elaine Scruggs in Glendale even after things with Westgate, Camelback Ranch etc, began going south. Not sure you can equate the re-election of one official as a mandate.
For me I’m perfectly fine with what Quebec City is doing. What I’m not fine with are people who keep condemning cities like Glendale spending exorbitant money for sports arenas, but casually play off or excuse other cities for doing to same.
No Legend.. YOU are missing the point… plenty of cities build arenas and stadiums with taxpayer money for local teams to play in.. None PAY THE TEAM to play there though. NONE. The TEAM PAYS TO PLAY THERE. Plain and simple. And if you truly believe this $15M/yr is actually a “management fee”, then you are not on the same page as the rest of the capitalistic “free” world.
So, what you’re saying is that Coyotes fans should be paying actual NHL cost for their tickets… like in 29 other cities. Only took 20 years to figure that out…
The average cost of a Coyotes ticket for the 2014-2015 season was ranked 26th among the 30 NHL cities.
Source: http://www.thehockeynews.com/blog/toronto-maple-leafs-most-expensive-ticket-in-nhl-all-teams-listed-1-to-30/
So you are going to convince us that the four teams sitting below the Coyotes were paying NHL prices? Or that the fans from those cities two or three spots above were paying NHL prices??
And of course the entire “attendance” thing is pretty shaky anyway..
Corporations own the entire lower bowls of seats of many NHL arenas.
Many nights on TV, Ive seen nobody watching the game in the lower bowls of a Detroit game, yet astonishingly you see the next day in the paper a full house reported..
Same in Toronto and that really came out this year…
Here in Phoenix, there are more hockey fans than in most hockey cities.
The people who planned on this arena and hockey in the valley, thought that hockey fans who moved here from other parts of the country would in some way WANT to be a part of the community..
You’d think most people after choosing to move here from the colder climates, would to some degree at least want to be a part of the community.
It was a misjudgment.
Most hockey fans (and baseball fans Ive seen) move here for the sun..They move here to take advantage of the everything the warmer climate has to offer..
Yet they don’t feel compelled to be a part of this community to ANY degree.
Every single game in that arena last year all around me were people screaming at and against the Arizona team and the vast majority of them, went home to their beds in …….Phoenix.
Not one time did I look around me and see the same people..
42 games, 42 different faces all around me. Lots of potential fans..more than in most hockey cities..
Where in their sections of the arena the same corporate faces can be seen.
If the marketing department can figure that part out to get our FELLOW ARIZONA citizens in that arena….it can work out….
Very interesting idea. However, how many in those numbers are die-hard Coyotes fans and how many are just people who decide to attend a hockey game? I’m not a hockey fan, and I know I wouldn’t want to pay an extra $15, and definitely NOT $28 more, for a ticket. If you could count on every attendee paying the extra charge, then it might fly; but I fear you might have a huge drop in attendance.
Mary…
Ticket prices for the Coyotes have been inching upwards. Anthony LeBlanc made that clear in an open “town hall” meeting not long after they took over ownership. Eventually they could get to a composite average to the rest of the league but it’s something that you can’t just do overnight.