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Joyce Clark Unfiltered

For "the rest of the story"

In my last blog $3,109,580 was identified as the shortage Glendale faces with acceptance of the Renaissance Sports and Entertainment (RSE) bid. This requires looking at the city’s overall financial health. A useful measurement is to look at the city’s General Fund “Ending Balance” (it may be called Contingency Fund or Rainy Day Fund). It will be helpful to refer to slides presented at the city council workshop of June 29, 2013. Here is the link:

http://www.glendaleaz.com/Clerk/agendasandminutes/documents/062813CoyotesandArenaMgt.pdf .

coins 1Some historical context is in order. In the early to mid 2000s Glendale’s economy, along with the rest of the nation’s, was robust. The arena had been built, Westgate was taking shape and growing, developers were buying land in the surrounding area and submitting development plans faster than they could be processed. When the national recession first took shape the city had General Fund revenues of $131,807,000 and maintained an Ending Balance of $49,338,000 (well over the city policy of 10%). All “expert” advice, at that time, projected a deep recession of 3-5 years and a slow recovery. Council had the choice of starting to make major budget cuts (including lay-offs) or using its Contingency Fund. It chose to use its Contingency Fund to avoid lay-offs and to weather the recession. Was it the correct decision? Obviously not, but “Hindsight is 20-20.” We now know that budgetary cuts should have been made then, just as municipalities all over the valley did, for cuts are cumulative and can help to alleviate the need for drastic cuts in the future. There were some budgetary cuts made at the time and employee furloughs were instituted but those strategies were not strong or deep enough and came too late to create the desired outcome. Those following the Coyotes saga no doubt recall former Mayor Scruggs complaining bitterly and saying that we were told that Glendale was different and no cuts were necessary. What was done was done but it set up the current fiscal crisis the city now faces. By the end of the decade with the national economy still in recession the previous council had learned a painful lesson and was committed to making budget cuts and began a plan to do so.

We come to the present. The city’s total General Fund revenues for Fiscal Year (FY) 14 are $161,500,000 and projected to increase by a mere $800,000 over the next 5 years (FY 18) to $162,300,000. In the intervening years there are General Fund revenue increases of nearly $18M but they are temporary increases based upon the raised sales tax due to sunset in 5 years. After the 5th year, FY 2018, the sales tax increase sunsets and the General Fund revenue will revert to the level of FY 14. The temporary sales tax increase was designed to do one thing only. That was to provide the city some breathing room while it continued to make budget cuts of $5M a year for 5 years totaling $25M over 5 years AND rebuild its Ending Balance to a minimum of 10% of its General Fund revenues. It WAS a sound plan and a plan that allowed for a hockey lease. It is not the plan of the newly elected council for there are only scheduled cuts of $4.8M in FY15 and $9.5M in FY18 for a total of $14.3M. That is $10M shy of the amount that is needed to replenish the General Fund and will present problems when the sales tax increase disappears—unless this council decides to continue the sales tax increase ad infinitum. I suspect that is exactly what will occur despite its sunset promise included to gain citizen voter support to ratify the increase.

Now add a couple of facts.  First, the Fire Department had a structural deficit of $3.5M this Fiscal Year, FY 14. It was fixed by budget amendments passed by council 6 weeks ago and on June 28th. It solved the problem—for this year only. Next year the Fire Department will face the same structural deficit of $3.5M with no direction given by this council as to where and how this money is to be found. Our contractsecond fact is at the June 25th voting meeting of Council a restructured contract with Southwest Ambulance was approved. (FYI: SW’s Martin Nowakowski, its Public Affairs Director, is a friend of Norma Alvarez and Sammy Chavira and supported both in their election bids) The old contract called for 2 ambulances that were in operation 5 days a week for 9 hours a day. The new contract calls for 3 ambulances in operation 7 days a week for 24 hours a day. It results in an increase of future expense to the city, in this contract of $1M. It is possible that SW may pick up $400,000 of the million dollars but there is still an increased contract cost of $600,000 that is a new city obligation. And it may interest you to know that city personnel assisting on these ambulances are paid overtime pay by Glendale. What a sweet deal. Council was briefed and was made fully aware of the increased cost to the city. Neither example of fact has corresponding cuts in other areas. In particular, the Southwest Ambulance vote passed without a single councilmember question regarding it. These two fiscal examples demonstrate that council still refuses to recognize the serious financial condition of the city.

The city’s Ending Balance for this Fiscal Year, FY 14, is $8M and equals only 5% of the General Fund revenues — not a good position in which the city finds itself. The good news, however, is that it does grow in the next 5 years and by FY 18 is $20.3M (or 12% of General Fund Revenues).

Why is the Ending Balance or Contingency so important? First, it is a measurement that bond raters look to in order to determine a city’s creditworthiness. It’s like an individual’s FICO score. The higher it is the lower the interest rate. It serves a second purpose in that it can be drawn upon in an emergency or when unexpected expenses occur. For instance, the $120,000 paid for a search of a new City Manager and the $500,000 for the audit as well as the Beacon consultancy contract were paid from Contingency as these were new, unbudgeted expenses. Contingency can be used to cover increases in the price of gas for city vehicles and it can be used to cover unplanned increases in medical premium costs. Right now, with only $8M in reserve, the city is living on the edge.

How does acceptance of the RSE bid affect the city’s Ending Balance (Contingency Fund)? Instead of $8M in reserve this year, it drops to $5.7M or 4% of the city’s revenues. By FY 18 instead of a healthy Contingency of $20M it is only $8.6M (in other words, in 5 years, it is exactly the same as today).

How does acceptance of the RSE bid affect the city’s budget? Its revenues do not change but its expenses have increased by $9M as the city goes from paying a $6M a year management fee to a $15M a year management fee. We must factor in the “enhanced revenue streams” and in doing so the city projects a $2.3M shortage for this budget year (FY 14). I have shown a figure of $3.1M which I believe to be more realistic. However, whichever figure is used, there is a shortage that has to be covered.

If the RSE bid is accepted there are only three ways that the shortage can be covered. Some explanation is required to better understand Option #3 offered below. The city established an escrow account by borrowing money from other funds, i.e., Sanitation, Vehicle Replacement, etc. It has $20M in it – not quite the full $25M owed to the NHL for the second year of arena management. If the RSE bid is accepted the NHL has publicly stated that they will accept payment of that $25M in installments of $5M a year for 5 years. The options are:

  1. question 3The city can make further budget cuts in FY 14 by reducing service levels to residents, cutting more employees or trying to find further efficiencies
  2. It can pay the shortage from the  Contingency Fund by drawing down the balance to $2 or $3M instead of the current $5.7
  3. It can use the $20M reserved in its escrow account, earmarked for the second NHL payment of $25M, and bring down the reserved escrow amount by paying the NHL $5M this year and covering only this year’s shortfall of $2-3M

Imagine yourselves as a current councilmember for just a moment—not a Coyotes fan or a Ken Jones aficionado—but as someone charged with sound financial decisions for the city. Would you accept or reject RSE’s bid? If you chose to accept RSE’s bid which of the 3 options would you choose? Would you reexamine this council’s current financial plan to make strategic cuts and perhaps save Westgate and its future or would you make a leap of faith and decide that an anchor tenant is not necessary? It’s in your hands. In my next installment I will review items within the RSE contract that remain problematical for the city and could be resolved with further negotiation.


prop 202A number of people have asked me (as a former councilmember) to weigh in, pro or con, regarding the Renaissance Sports and Entertainment bid. It may very well become a moot issue if RSE rejects the city’s latest proposal to have the same 5 year opt-out clause as RSE enjoys. Until now I have instead spent all of my time since the original bid was made public reviewing and analyzing it. Note that a revised version has since been made public. In the newest public version changes that had been discussed at the city council workshop of June 28, 2013 are incorporated. There is now a joint defense clause, removal of all “novation” provisions and the city receives all insurance proceeds in the Casualty and Condemnation provisions. These changes and others make it a better deal for the city. Council gave direction to continue negotiations up until the eleventh hour (Tuesday, July 2nd council meeting at 7 pm). We can hope that RSE and the city will continue in the spirit of cooperation.

numbers 2As for the deal itself let me share my analysis. Let’s look at the numbers. The first premise is that RSE MUST have $15M a year guaranteed by the city. Why? An assumption, that has never been refuted, is that RSE needs $15M a year guaranteed by the city to satisfy the lender’s (Fortress Investment) requirements. The city has an approved budget that allocates $6M a year thereby creating a $9M a year shortfall for the city. RSE has proposed to sweeten the pot and supplant that $9M a year by creating “enhanced revenue streams.” Some are revenue streams whose numbers can be accepted with some sense of surety. The hockey ticket surcharge is based on 41 games with an average attendance of 12, 630. Those are reasonable numbers based on past performance. You may think the average attendance figure is low but it is RSE’s number and to be applauded because of their conservative approach. The “enhanced revenue” produced from this calculation is $1,553,490. It is a number we can accept as valid.

The next number is the team rental of $500,000 a year. That is, of course, a reliable number. One obvious question is why does this number not increase over time? In previous deals the team rental charge escalated over time. Another fairly reliable number is the sales tax generated at hockey games. RSE pegs it at a little over $600,000 a year; the city uses a little over $400,000 a year. I am inclined to accept the RSE number for the sake of argument.

So far, so good. We know the city can rely on these “enhanced revenue streams” of Hockey ticket surcharge, team rental payment and sales taxes generated from hockey games. Those items total $2,690,420 and we can be confident in realizing that revenue.

numbers 1But a look at the rest of the estimated revenue numbers show they appear to be overinflated. Let’s take the easiest one first, Naming Rights for which the city will receive 20%. Typically this fee is paid in installments. For argument’s sake let’s peg the Naming Rights fee at $10M. Generally, this would be paid over a period of years and often it is a 10 year period. That payment would be approximately $1M a year and the city’s portion would be $200,000 a year for 10 years. So instead of the RSE Naming Rights figure of $671,600 a year, a more conservative and reasonable number is $200,000 a year. As a point of comparison, this is similar to the Naming Rights deal at Chase Field and it receives a payment of $1.1M a year.

The parking revenue figure is highly inflated. The presumption is that all 5,500 parking spaces will generate $10.00 a space at every hockey game. Did you know that there are an additional 9,500 parking spaces at Westgate not subject to this surcharge? Hockey fans can park at Tanger, behind the AMC Theater, etc. and it is a short walk to the arena. Sooner or later, the owners of these businesses will become very unhappy to see hockey fans occupying their customer parking and will begin to charge…$5 a car which will be reimbursed to their patrons. I have also been informed that should there be a new parking fee imposed by the city and the team the Cardinals will charge $5 a car for their 6,000 spaces on Maryland Avenue, across the street from Jobing.com arena. There is also a secondary, but an equally important issue, the number of hockey fans parking in the Desert Mirage neighborhood across the street from Jobing.com arena will most surely increase. It is a neighborhood of over 1,200 homes and some hockey fans (although a minimal number) already park in their neighborhood on hockey game days. The RSE number also includes parking for non-hockey events with 23 events a year and 15,000 attending each of those 23 events. In my estimation it is unrealistic. More about that when we review the $5 per ticket surcharge for non-hockey events. RSE, and the city accepts, a figure of over $2M for parking revenues. This is way too optimistic and a more conservative and realistic figure is half that, or about $1M for parking revenues.

The last number RSE offered was revenue generated per year of $1,725,000 for a non-hockey ticket surcharge of $5.00 per ticket for 23 events a year and attendance of 15,000 at each event. I dug out old material I had related to arena event and attendance figures and I also reached out to people knowledgeable in the concert venue business. From 2003 (the year the arena opened) until today the maximum number of events ever held at the arena in one year that generated an attendance of 15,000 or more has been 15 events. Did you know that throughout the entire Phoenix Metro area there are typically 25 major concerts (what is called in the business, Type “A,” such as a Justin Bieber) a year? 4 of them were held in Jobing.com Arena this year. RSE’s estimate of 23 such concerts drawing 15,000 or better is wishful thinking. A more realistic revenue number for the non-hockey ticket surcharge would be under $1M a year. For the sake of argument, we will use $1M a year. How do these numbers add up? $200,000 a year for Naming Rights; $1M a year for Parking Revenue; and $1M a year for the ticket surcharge for non-hockey events totaling $2,200,000.

question 3Let’s add our reliable, take-it-to-the bank number of $2,690,420 and our far more conservative number of $2,200,000. The total is $4,890,420 and the magic number in “enhanced revenue streams” that must be achieved to make the city whole is $9M. Oh wait, there’s still the Supplemental Ticket surcharge of $1.50 on every ticket. RSE’s number is $1,294,245. It is an overestimate because it is based on that same pesky non-hockey event estimate of 23 events with 15,000 or greater attendees. A more realistic estimate would be no more than $1M a year. So add another million dollars to our $4,890,420 and our final total of “enhanced revenue streams” is $5,890,420 – not the $6.7M used by the city or the $7.3 used by RSE.  Yet we need $9M a year. We are short $3,109,580. How can that shortage of a little over $3M a year be covered by the city? Where will the money come from? In my next blog we’ll look at the city’s budget and its overall financial health.


A disclaimer: I have not made a decision on the Renaissance Sports and Entertainment bid to manage the city’s arena. It is not possible until I have read the document. To date it is not available to the public.

I don’t usually post 3 blogs in one day but this appears to be one of those days that demands it.

On June 25, 2013, Paul Giblin, a reporter for the Arizona Republic issued the following story online, Glendale still unsure about Phoenix Coyotes deal. Here is the link: http://www.azcentral.com/community/glendale/articles/20130625glendale-unsure-phoenix-coyotes-deal.html . Several aspects of his story are troubling. One issue is that a vote is still scheduled for hidden agendaTuesday, July 2, 2013. It is my understanding that the council has requested another Executive Session for Thursday, June 27, 2013. The city had better made sure that notice of another Esession on June 27th is properly posted 24 hours in advance. Which means that the meeting notice has to be posted on Wednesday, June 26th…today. However, even more worrisome is that with an Esession scheduled for June 27 the very earliest the deal points could be posted publicly would be on Friday, June 28th or even as late as on Monday, July 1st. Could the city post as late as 24 hours before a scheduled vote? Yes, they could but would they? I hope not as suspicions will shoot through the roof if the public is given one day to review and understand any deal between Renaissance Sports and Entertainment (RSE) and the city.

city hall 2

Glendale City Hall Complex

Now, about that second $25M the NHL has offered (at the 11th hour) to take payments on of $5M over each of the next 5 years. Great…too little, too late and it doesn’t solve the city’s problems. The $30M leaseback of City Hall was designed to replenish the city’s Enterprise Funds, Vehicle Replacement Fund and Technology Replacement Fund.  Glendale staff crafted a brilliant strategy. Now that strategy has been tabled by council until after the scheduled Coyotes vote on July 2nd… Hmmmm…The $20M the city has held in an escrow account for the NHL payment simply isn’t enough to cover all of the city’s needs. It will pay back some of the loans leaving $5M still outstanding.  While a generous offer on the part of the NHL, it could have been done a long time ago and in fact, I and several former councilmembers called for just such an arrangement. Why now? I suspect it is in reaction to what they perceive as a very negative story about the city planning to enter a leaseback of City Hall to pay back loans directly related to the $50M partially paid and partially still owed to the NHL.

To discover that councilmembers are not on top of the revenues derived from either the Westgate area (remember those revenues are already being used to pay off the original construction debt on the arena and are NOT new found money) or the arena is disturbing to say the least. At least one of them has touted himself as an expert on the entire RSE deal.

Norma Alvarez

Norma Alvarez

Lastly, good old Councilmember Alvarez and her statements have got to have you snapping your heads in double-take mode. Alvarez said, “I called them knuckleheads, because they don’t get it. They don’t get it. They don’t get it. They’re going to continue discussions. Discussions of what? We’re selling City Hall because of paying $50 million. C’mon. C’mon.” Factually she is incorrect. The city is proposing a leaseback arrangement not an outright sale of City Hall with visions of employees moving out after a sale. As for continuing discussions, they should continue but they don’t have to result in acceptance of the deal…not if RSE cannot or will not guarantee “enhanced revenue streams” for the city.


A disclaimer is in order. I neither support nor reject the current RSE bid to manage Jobing.com Arena. I cannot make an informed decision until I have had the opportunity to review the proposed lease management agreement and that document is not yet publicly available.

Boy, thanks to SRP, leave a person without power…or the Internet…or air conditioning… for not just a day but 5 hours on the first day and 10 hours on the second day can make a person very grumpy and very testy. In an effort to play “catch-up” on today’s Coyotes’ news I was sent a link to KTAR radio’s Karie Dozer opinion piece entitled Final Word: Phoenix Coyotes aren’t the economic engine Glendale needs posted on June 25, 2013. Here’s the link: http://ktar.com/100/1644653/Final-Word-Phoenix-Coyotes-arent-the-economic-engine-Glendale-needs?fb_action_ids=566353163423827&fb_action_types=og.recommends&fb_source=other_multiline&action_object_map=%5B504510449622426%5D&action_type_map=%5B%22og.recommends%22%5D&action_ref_map=%5B%5D#

baseball 1hockey 1Dozer, Dozer, mmmm, that name sounds awfully familiar. Is Karie Dozer the wife of Rich Dozer, one of the Arizona Diamondbacks’ former Presidents?? I think so. I am sure Ms. Dozer is an expert on baseball, especially the Arizona Diamondbacks but an expert on anything hockey related?? I don’t think so. She made some amazing statements that certainly warrant comment. One was, “Look, I like hockey. What great fun, especially in Phoenix, IN JUNE, to go into an ice palace for sports. But I don’t like it enough to pay for it.” Of course she wouldn’t like hockey enough to pay for it. It is a sport in direct competition for your sports entertainment dollar with her husband’s business, the Arizona Diamondbacks.  If she were to attend any sports event you can bet it would be baseball. Does she get the best seats in the house? Are they free of charge? Could there be a conflict of interest on her part?

In an effort to show genuine concern for the residents of Glendale and her perception of the drastic loss of services because of hockey she goes on to say, “This in a city where 911 service was at risk last year.” What bunk. As a councilmember until January of 2013 I can tell you that the city’s 911 service has NEVER been at risk. Chief Black spoke at several council meetings in the past few months reassuring everyone that police service and most specifically, 911 service (especially Priority One calls involving imminent bodily danger or loss of life), would remain at the same level of service that Glendale’s residents have enjoyed for years.

She then opines, “I know, a lot of people’s jobs depend on the Coyotes. Shops at Westage (sic) and security jobs all could go away if the Coyotes leave.” First, it’s WESTGATE, not Westage. Second, how about a minimum of 1600 jobs in the immediate Westgate area (restaurants, hotels and retail)…and that does not include the almost 2,000 jobs at Tanger Outlet Mall, Cabela’s or Humana. Throwing 1600 jobs out the window doesn’t seem to bother her but what the heck, she’s got a radio hosting job.

Lastly, she said, “I think sports teams CAN be a great economic engine. This one just isn’t.” Really, Ms. Dozer? Of course she thinks sports teams are a “great economic engine.” She appears to enjoy the financial benefits of one of those “great economic engines.” To say that the Coyotes are not  shows her lack of history or knowledge about the Coyotes since they came to Glendale in 2003. For she would know that the team, through circumstances not of its own making, has never had the opportunity to demonstrate its ability to become a “great economic engine.” Stick to baseball, Ms. Dozer.


Glendale Star…sad, sad, sad

Posted by Joyce Clark on June 26, 2013
Posted in Jobing.com arena  | Tagged With: , , | 2 Comments

newsIt is truly sad when a local newspaper such as the Glendale Star will report ridiculous stories simply to “gin” up its readership and that is exactly what they have done. In an “exclusive” article by Darrell Jackson, updated on June 25, 2013 entitled Proposal gives city option to purchase the Coyotes it is reported there is a company that had reached out to and would work with the city to buy the Coyotes ala the Greenbay Packers. Here is the link but please consider not going there. Reading this inane article will just warm the cockles of the editor’s heart and perhaps encourage more of this!


greed 1It is a travesty of journalistic reporting when if one had taken the time to fact check one can read the NHL By-Laws to find out that it is not possible. Add to that an NHL statement from a few years back, when the idea first surfaced and quickly died, that categorically denied the viability of that strategy.

We know the Glendale Star is trying to compete with the big boys but this reporting ranks right up there with their expectation of finding a pot of gold in City Hall as a by-product of the $500,000 city audit.

While there may have been an email proposing such a scheme it would have been rejected by the staff immediately knowing the NHL’s position on the issue. That’s why the mayor has said he has not seen such a proposal. Bringing it forward would have been a waste of time and resources.

Readers would like, although they often do not get, reporting that is fair, accurate, unbiased and based upon the facts not fantasy designed to titillate its readership.


hidden agendaThis week, June 24-28, 2013 there are 3 city council meetings scheduled. First up is a Special workshop meeting at 1:30 PM today. It consists of Executive session (Esession) items only, meaning a secret session. We all know the topic of discussion is the Renaissance Sports and Entertainment (RSE) bid for arena management. It has been reported that the details of the bid may be released on Wednesday, June 25th. The only reason for this meeting is because RSE and the city (COG) are still negotiating the terms of the deal. There would only be two outcomes: 1. the council has accepted the terms and is comfortable with them or 2. the council still has issues with the final terms. Either way, this council has signaled that it is ready to put this issue to bed and vote on it on July 2nd. Keep in mind that just because the RSE bid has finally made it to a voting meeting does not insure a positive outcome. What it does signal is that the council is ready to vote, up or down, RSE’s bid and be done with the issue.

gambling 2The evening meeting (voting meeting) of July 25, 2013 has 3 financial items of interest. The first, Item #8 is prepayment of $5.6M of General Obligation bonds (usually paid for from the city’s secondary property tax collection) by the Water and Sewer Enterprise Fund. This is an interesting strategy and may free up General Obligation bond capacity for future bonding…on what? We can only wait and see.

man moneyThe second item, Item #26 is Authorization for Lease Financing of the City Hall Complex. In 2010, the city had to pay the NHL $25M to run the arena. This $25M has been paid to the NHL. Here’s where the money came from:

  • $21M loan from the city’s Landfill Fund
  • $4M loan from the city’s Sanitation Fund

In 2011, with the Coyotes ownership issue still not resolved, the city agreed to pay the NHL a second $25 to operate the arena. This $25M is still being held in a city escrow account. Here’s where that money came from:

  • $15M loan from the city’s Water and Sewer Fund
  • $2M from the city’s Technology Replacement Fund
  • $3M from the city’s Vehicle Replacement Fund
  • $5M to be paid with an unidentified source to NHL

This lease-back deal will replace:

  • $15M loan to the City’s Water and Sewer Fund
  • $4M to the city’s Sanitation Fund
  • $2M to the city’s Technology Replacement Fund
  • $3M to the city’s Vehicle Replacement Fund
  • $5M whose source had been unidentified and unfunded to pay the last of the NHL’s second $25M
  • $1M as a new project to upgrade the city’s Human Resources software

As you can see, that leaves 1 loan payment outstanding and that is the $21M loan from the city’s Landfill fund. That $21M is part of a reserve account to cover landfill closure. Since the landfill is not anticipated to close for 30 years, the city can afford to repay this reserve account over the next 30 years. Is this a good strategy? Yes, it is. It replenishes those Funds so that they can once again operate effectively and gives the city some breathing room to pay back those costs associated with the NHL’s operation of the arena for 2 years. It is a strategy that hopefully this council will approve.

The last item, Item #27 is an increase in rates, primarily to commercial customers for roll-off bins and disposal rates. The rental cost of a roll-off bin increases from $160 to $175 and the disposal fee per ton increases from $18 to $20. These are fees that have not been adjusted in quite some time. As usual, when there are rate increases, it becomes a double-edged sword. As the rates go up, the number of customers may decrease dependent on market competition by private sanitation companies. Nevertheless it is an increase long overdue.

budget 3The third and Special Meeting is scheduled for June 28, 2013. Do not look for a vote on the Coyotes unless this meeting agenda is changed and posted by 5 PM on Wednesday, June 26th. . The city, by law, must have its tax increasefinal adoption of Fiscal Year 2012-13 Budget Amendments and the Fiscal Year 2013-14 Property Tax Levy before July 1, 2013. These items satisfy that legal prescription and will be largely unnoticed by Glendale residents due to its final adoption on a Friday morning at 9 AM. The other two items, fire-related for strength training and medical transport, were added simply because they could be at this meeting.

There you have it. Three meetings scheduled. Only one of which is the Coyotes ownership issue and we are not privy to its goings on. The other two meetings deal with financial issues created by or related to arena management.

deadline 1The finale of the Coyotes ownership RSE bid is still scheduled for July 2, 2013. Are there 4 affirmative votes? Only the councilmembers know or think they know. If RSE still wants $15M a year as the management fee and cannot or will not guarantee a minimum of $9M in “enhanced revenue streams” to the city this council may find it a difficult deal to swallow. Are we about to experience deju vu? The very mechanics of the deal could cause the Goldwater Institute to reappear. I suspect they are watching very, very closely. Then there is Ken Jones and his ilk who absolutely hate anything Coyote related. Could they mount another referendum drive? Yes, they could and would just to stall the deal. After all, how long will Fortress Investment Group leave an open-ended loan available to RSE?


Pond Update…end of June

Posted by Joyce Clark on June 24, 2013
Posted in fish pondKoi pond  | Tagged With: , , , , , | 3 Comments

Time for another pond update! The pond water, despite temperatures of over 100 degrees in Arizona, remains clear enough to enjoy watching the fish feed every evening. We find ourselves spending about an hour every evening watching their antics.

Water clarityWe also have Gambusia (Mosquito fish) in our pond. The females grow to about 2” to 2 1/2” and the males are about 1 1/2”. They live for a year, year and a half. They breed prodigiously and breed at least 2 times during our summers. They are our “canaries in the coal mine.” If something is going to happen to the water quality, they will die off first. So far, so good. No losses of Gambusia, Goldfish or Koi.

FeedingThe hula hoop aka feeding ring is working. It now sits about a foot from the edge of the pond, over the fish cave. The big fish, being ever wary, took a few days to get used to being so close to us but now they all come into the ring to eat.

Hand feeding 2Hand feedin 1We find that the littlest Koi are very curious and will come over and check out our legs when we are working in the pond. So the other day we decided to try to hand feed them. No problem! They readily came over and joyously ate to their hearts’ content without being bothered by the big guys.

Globe 1The Aqua-Sphere that we purchased several weeks ago is not a hit…yet. When floating food is placed within it the Gambusia will readily enter and eat the food. The Koi want no part of it so far. We have also discovered that it has to be taken down and cleaned about every 2 weeks. Since we get so little rain in Arizona it becomes quite dusty on the outside and whatever algae is in the pond tends to collect within it. We will hang in there for awhile longer, waiting for cooler weather to see if that makes a difference.

Yerba ManzaWe also did some work around the pond. We have discovered that Yerba Manza is almost weed-like (or else it really likes our pond environment). So we ruthlessly cleaned it out and ended up with at least 3 large trash bags of cuttings and root balls and still have plenty left around the pond.

In July I will be in California and plan to visit Andrews Koi International in Anaheim and the Laguna Koi Ponds in Laguna Beach. I plan to take plenty of photos and will share them here. I have also visited EBay’s auction site and checked out the Koi that they auction on that site. So far I have not been successful in acquiring a fish because I often forget to go back and check my bid status. I do not want to pay “an arm and a leg” for a fish when the shipping charge for overnight is $35.00 so I tend to be a very cheap bidder!!


Hockey fans…check your tickets

Posted by Joyce Clark on June 20, 2013
Posted in City of Glendale  | Tagged With: , , , | 5 Comments

When the original Arena Management docs were signed and recorded in November, 2002 I made sure to keep them. After all, one did not know if and when they would come in handy for reference or review.

Part of the RSE deal is rumored to include a parking fee. Did you know that you already pay a parking fee and a base recovery fee? If you look at the fine print on your ticket it says, “Included in the face value of this Ticket is a $2.80 City Parking Fee, a $1.55 Base Recovery Fee, and other fees when applicable. Fees are subject to change without notice.”

The original 2002 Arena Management docs had established these fees for the city and currently every ticket purchaser pays a total of $4.35 in fees. Under Article 7. Arena Accounts. Section 7.7 City Parking Fee Account it states the following: “The Arena Manager shall, prior to the Operations Start Date, establish and maintain (for the benefit of the City) one or more trust accounts (requiring the signature of only the City for withdrawals) at a federally-insured institution(s) having offices in the State of Arizona for the deposit and disbursement of City Parking Fees ( the “City Parking Fee Account”), and shall make deposits into the City Parking Fee Account as required by Section 8.1. Interest earned on amounts held in the City Parking Fee Account shall not be Operating Revenues and shall be the property of the City. The City may make withdrawals from the City Parking Fee Account at any time and from time to time in the City’s sole discretion.”

Article 7. Arena Accounts. Section 7.8 Arena Recovery Fee Account is also established.

In Article 8. Parking: Arena Recovery Fees. Section 8.1.2 (e) states in part, “The City Parking Fee shall be in the amount of Two Dollars and Forty-Five Cents ($2.45) per Qualified Ticket with respect to each Fee Activity (for which the City has not waived the City Parking Fee) That occurs during the Fiscal Year in which the Operations Start Date occurs or the first full Fiscal Year thereafter, and shall be increased by Five Cents ($0.05) for each and every Fiscal Year thereafter, beginning with the second full Fiscal Year after the Fiscal Year in which the Operations Start Date occurs, $2.55 during the third full Fiscal Year after the Fiscal Year in which the Operations Start Date occurs, and so forth).”

Article 8. Parking: Arena Recovery Fees. Section 8.2.(d) states in part, “The Base Recovery Fee shall be in the following amounts:

(i)                  For the first sixty (60) months after the Operations Start Date, $1.00 per Qualified Ticket;

(ii)                For the 61st through 120th months after the Operations Start Date, $1.50 per Qualified Ticket; and

(iii)              Commencing with the 121st month after the Operations Start Date and continuing for each month thereafter until the last month of the 30th Full Hockey Season after the Home Game Obligation Effective Date, $2.00 per Qualified Ticket.”

Until I left office on January 15, 2013 neither I or the rest of council were ever told by staff that the city is no longer collecting those fees. To the best of my knowledge ticket holders are paying $4.35 in fees on tickets. Just thought you’d like to know the facts.



Gary Sherwood

Here is the transcription of Councilmember Gary Sherwood’s Sports 910 radio interview of Wednesday, June 19, 2013. There is no transcription of the last question asked as it was related to the Cardinals. There is no commentary offered. His words speak for themselves.

Radio Question 1 (RQ 1): “What got accomplished if anything last night, Gary?”

Sherwood Response 1 (SR 1): “Pretty much went the way I had anticipated. For most of the could they were seein’ some of the deal points for the first time. You know, had discussion on ‘em and I think there’s a lotta good that came out of it. I think there’s couple of things that had to go back to the Renaissance. I think they’re very doable. I think we’re waiting right now to get those things in writing and then there’s another meeting scheduled for Friday morning. Hopefully we’ll have consensus to take that to a public meeting. My concern, you know, was that we give the public time to vet this. So even though there’s a place holder meeting for the 28th of June there could also be one on July 2nd. So, we’re sittin’ here on the 19th, we’ll discuss this again on the 21st. If we’re good to go on it in terms of we think we have council support then either that information gets out later in day or Monday at the latest and the public has that week to vet it. We could still vote on it on the 28th. I think by Charter we’re to have it out there for 72 hours. I think we’ve always tried to do a little better than that. Again, this just came to us about four weeks ago. We had to quit acting like car dealers and each of us come with our best, you know, what we needed and their best deal instead of taking two months to go back and forth. And I think that’s what’s occurring.”

RQ 2: “That’s good to hear now. But it does sound like there’s sill some negotiation that have to take place. Do you have time to execute all that?”

SR 2: “I think so…I think so. I mean, you know, they really haven’t give us a deadline. I’ve always had July 9th nailed on my calendar. I don’t know that that maybe…I’m hearing some undertones that it’s gotta be July 2nd. I don’t know that July 9th works. There’s a few people that are going to be out of town on that week. So, I think, again we’re lookin’ at, you certainly can’t have a meeting on the 5th because that’s a long holiday weekend and I think the public would think we’re trying to pull something over on ‘em. So, I think the 2nd. Although no one’s called it that. I think that’s the date we’re shootin’ for. It could happen the previous Friday. Again, I think, I think what came out of yesterday was to be expected. There was a couple of things that we felt uncomfortable with. But surprisingly they were kinda simple things in the scheme of things. So, with that, I know our Acting City Manager in on the phone again this morning and my understanding is that those are gonna be doable in some kind of form or fashion. That should make it a go although I guess I gotta be careful of that because we’ve been down this path so many times.”

RQ 3: “Gary, when it comes to the actual lease, I mean is there an out clause? I mean is that stuff that’s still being negotiated?”

SR 3: “ Yeah, you know, I know previous council have been hung up on the length of those because they didn’t feel like there was enough time to give, you know, the fans, the sponsors, you know, people would be vested that they thought they’d have the rug pulled out from underneath them. But again, when you look at five year, uh, if truly someone’s makin’ an effort on this we gotta know whether hockey will make a go of it. I think, if ya look at the last 3 or 4 years with the threat of the team leaving every year you gotta five the folks over there, Mike Nealy, Jim Foss, and company a lot of credit for what they were able to do, um, with what sponsorships they were able to sell and keepin’ the fan base somewhat energized, um, and of course we had a good product, you know, this is a fickle sports town. We know that if you don’t have a winning product, you know, a lot has been said you know, about attendance figures over the years…10,000, 11,000. So when the DBacks made their run in their last championship they weren’t…their average attendance wasn’t even 50% of their capacity so and I know, baseball’s a little bit different to compare to there, those say hockey and basketball. But, you know, we got knocked a little bit for that. I…I think we truly, um, can make this a go, um, it just hasn’t, you know, it was under managed before, um, we got good management in there and then we didn’t have an owner. So, you know, there’s a lot of things, good things, that occurred over the last 3 and 4 years and givin’ the team with a little bit more of a budget that I’m sure they coulda done more and, um, so I’ve always been optimistic on this. And it’s not just for hockey for me. It’s just for that area. You know, if you don’t have a major tenant there, um, it basically can almost be shuttered. And again, for the mega events we’re trying to attract next door, you know, at the stadium and also the arena, the NCAA Four, the WWE, you know, all the things we’ve been kinda missin’ out on. You gotta fill that arena up. I mean, you gotta have, there’s gotta be more attractions around the area. And again, it was starting to come to fruition before the downturn and all those get put on hold and then the receivership. So that whole area, um, has a lot to gain. That’s why the city never intended to make money on the franchise, just wanted to break  even which we were doin’ until we got it with that first $25 million. And then all of a sudden, you know, again, that was supposed to be short term, we were gonna get an owner. We all know the history in the last 4 years. But when you go back in and look at the lack of revenue streams that the city had, havin’ to pay a management fee, well, then you can see that, um, that’s what we needed to make this deal work. And I think that, uh, the Renaissance group has done a good job at understanding that, uh, I guess I would feel a little better if there was more equity but there’s even some, uh, you know, there’s uh, I mean there’s even some talk about maybe more sweetin’ the pot there. But that’s hyperbole (couldn’t pronounce the word correctly!) right now. So, I feel, I’ve gone from cautiously optimistic to optimistic and again, Friday will be the proof of the pudding. I believe, again, talkin’ to the NHL they wanna know by the 24th, 25th, that we’re close, uh, and then they’ll extend. There’s no magic date but they’re not gonna have a tolerance for much later than that and again, I’ve been hearin’ the date of like, the 2nd. The 9th is maybe a little too late.”

RQ 4: “Gary, I want to piggy back on the management fee because we hear so many different numbers. Have you been able to bridge the gap and I know possibly you can split the parking and some of the other stuff. Just talk about how important that is.”

SR 4: “Well, I mean we have to, I mean, everyone knows what our budget is for that and um, and we can’t afford much more right now. So, uh, yeah, I think, I think with what we say yesterday, uh, a good part of that was closed, and, uh, we’re just lookin’ for, I guess I’ll just use the word ‘certainty.’ And it’s about really, all I can really say on that. And I think it’s, uh, I think it’s, uh, I felt it was an easy things to do and we’ll see whether they come through with that, um, later today or tomorrow. And then we’ll talk about it again on Friday and then it’s hopeful that they give us mostly what we want on that and um, then we come to agreement.”

RQ 5: “All right now. Did it surprise you to learn that the NHL has had contingency plan discussions with the City of Seattle?”

SR 5: “No, not at all. I mean, that’s somethin’ that they haven’t had in the past and uh, of course, I mean there’s 5 or 6 cities there and we hear from them all the time. So, no, I mean, Quebec, I mean they really think they’re in the running. Um, Seattle’s gotten little active here recently and, you know, whether a lot of that. I know Bill Daly, Gary Bettman have been very careful not to, you know, they’ve been through this enough times. They let out just enough information to put a little hear on us and just to let us know that, you know, and again, that’s just all the gamesmanship. You know, I listen and we’ve talked on it before, I was a little surprised is that they came out last week, with um, you know, during their um, their opening press conference for the series and said what they said but again, um, they’ve got as much, ah, experience on this as we do for the last 3 and 4 years. So, I think, that they’re just lettin’ us know that, um, that they have a plan. And whether all that can happen in time or not or whether they have to play in the stadium, arena, for a couple moths, half season, um, they are still negotiating with the players’ union for the all-star, I’m sorry, for the Olympics. So that’s another reason why their schedule’s comin’ out late. I’m sure we’re another reason but it’s comin’ out later than normal and that’s probably helpful, givin’ us a little time as well but still ya have to get goin’. And it would be nice, ya know, it was reported yesterday that Tippet’s under, he started negotiations and of course ya got free agency on the 5th. So it would be nice, well, tha this wraps up in our favor in terms of keepin’ the team here and then that we can do it by the 2nd so that, um, they have a little bit more to go on for the free agency.”

RQ 6: “All right now. There were some rumblings last week that there might be a mystery party getting involved or wanting to get involved. The Commissioner, himself, has said that his phone has been ringing a lot recently. Are you guys convinced that you’ve got the best deal in front of you, the best party, the best potential partner in front of you?”

SR 6: “Yeah. I think it’s funny how at the very last moment all these other sources start bubbling to the top and yet, ya know, we’ve had this for how long? Yeah, I’m convinced of that. There was some, they were comin’ from good sources and those, um, particular potential owners admitted they were out there, you know, lookin’ at some things that maybe they hadn’t looked at before but yeah, no, it’s really way too late for that. Um, it’s been rumored that some of them, or one in particular, may just want to add some equity to, even though, they’re completely out of it they may just want to add some equity on this deal, just to help it. Just because they want to see hockey here in the Valley even though they’re not, um, local residents. They own property here. So that’s the equity piece I spoke of earlier.”

RQ 7: “Right. What’s interesting to me is OK, you guys now, if you’ve got 3 votes and you need a fourth, then you guys need to be able to discuss and come to the agreement that the deal is doable and workable for everybody. Yet, before that even happens, you have to have a trust in the motivation and long term intent of this partner and I know that this 4 or 5 year out clause and the fact that Seattle could be such a lucrative move if a team ever went that direction. There’s fears that maybe they’re using Glendale as a stepping stone to elsewhere. Can everybody get beyond that fear? Are you confident in the intent of Renaissance Sports and Entertainment?”

SR 7: “Um, I am, I mean…I mean you have that in the back of your mind. Um, you know, what’s our alternative? You know, that we just give up on this right away? And then we’re left with whatever. We’re left with which is kinda scary for me. So, you know, if you give it a shot for 5 years and everyone puts their best foot forward and see, ya know, that we continue, you know, with the same management team that guiding the Coyotes and, um, and we do see that attendance can increase and we get those reneue streams. You know, I mean again, uh, sponsors are gonna…sponsors haven’t been paying top dollar for signage and the suites and such. A low percentage of the suites are sold. You know, if all that gets put together and we show those improvements then, you know, then the owners, the new prospective owners then are gonna be convinced to keep it here. So, you know, I mean, so, 4,5 years, ah, I think it’s certainly worth it if it’s not costin’ the city anything additional. I mean, you can do the numbers and see that it costs more money, it cost the city more money without the team than with it, you know, in lost revenue. You’ve got the arena debt service regardless of what’s in there. So, the lack of development, er, the delay of development around there. And of course, you know, attracting the major events. So, yeah, I mean it’s always goin’ to be in the back of the mind. But again, what’s the alternative? You know, at least we get a 5 year chance at this and I think we’re convinced that this particular group, um, really wants to make a run at it but um, they’re not going to stick themselves with a bad deal that they can’t get out of. So, we’re not as hung up on that and when I say ‘we’ obviously I’m new to council but speaking from the city, they…they’re really hung up on that last time around. Uh, they really wanted that out of Jamison deal there was a, that, you know, there was penalty clauses for leavin’ early and do, I, we don’t have that. I don’t believe we have that in this particular arrangement and, um, and again, I don’t know that we coulda got anyone to sign up that way.”

RQ 8: About the Cardinals. Did not transcribe.


Some of those on council believe that all of Jobing.com’s problems regarding increasing its revenue can be solved by finding a management company that will book a ton of non-hockey events, especially major concerts.  I thought it would be interesting to take an Internet walk through the entertainment promotion industry. I don’t pretend to be an expert on this issue and I am sure somebody will correct me on something!

prop 202The gorilla in the room is LiveNation. In 2005 (last year for which I could find numbers) earned $1.3 billion dollars world-wide. It has relationships (contracts) with 135 venue sites world-wide and 92 of those are in the United States. It has relationships with Desert Sky Pavilion, Talking Stick, Comerica and Celebrity Theater (as of 2005) in the Phoenix Metropolitan area. It, like other promoters, also has a roster of national, well known artists that perform exclusively at LiveNation venues.

enter 1 The second largest is Anschutz Entertainment Live (AEG). In 2005 it earned $417 million dollars—only 20% to 30% of LiveNation’s income.  In September, 2012 AEG announced it was selling off its Entertainment Live subsidiary only to reverse that action in March, 2013. AEG is the company that currently manages Glendale’s Jobing.com Arena. The third largest company is the House of Blues Entertainment. In 2005 it earned $245 million dollars—about 10% of LiveNation’s income. But wait…the following year, 2006, LiveNation acquired the House of Blues and picked up Casino Arizona as another contract in the Phoenix area. There are many small firms (less than a handful in the Phoenix area) whose annual income is less than $20 million dollars a year.

Let’s look at the two most comparable venue sites to Jobing.com Arena. One is US Airways, home to the Phoenix Suns. It is run and events are booked by Phoenix Arena Development (one of the two bidders to be considered by Glendale). It is also the home of the Arizona Rattlers and Phoenix Mercury. In essence, it has 3 anchor tenants. Between June and December, 2013 there are 10 major concerts booked. The other comparable site is Chase Field, home to the Arizona Diamondbacks, its only major anchor tenant. SMG World manages this venue (and is also a finalist in Glendale’s bidding process) and uses Select Artists Associates of Scottsdale as its event promoter. It has 3 major concerts booked between June and December, 2013. It will be very interesting to see what each of these companies want in terms of an annual management contract. Will there be penalties in the contracts if a named minimum number of events is not achieved? Will there be an incentive if the company exceeds a mutually agreed upon goal?

As you can see, the Phoenix Metro area is a highly competitive market. There many venues from which to choose and LiveNation have contracts with many of them. You can be sure LiveNation, with a virtual monopoly in this country, dictates the terms and fees for the major events it books.

enter 3Just to give you an idea of how competitive our market is, here are just some of the sites that can and do host major concerts: ASU Gammage, Desert Sky Pavilion, Celebrity Theater, Chandler Center for the Arts, Chase Field, Comerica Theatre, Fort McDowell Casino, Herberger Theatre, Grand Canyon University Arena, Jobing.com Arena, Mesa Arts Center, Scottsdale Center for the Performing Arts, Orpheum Theatre, Talking Stick Resort, Tempe Center for the Arts, US Airways Center and University of Phoenix Stadium. This list is by no means complete and does not include dozens of smaller venues. This market is not an easy one. Steve Ellman, when he controlled Jobing.com Arena was highly successful in booking major concerts. When Jerry Moyes and the NHL took control of the arena that was not their focus and so we saw fewer and fewer major events at Jobing. This year the number of major events booked was so few that it is embarrassing.

What can a venue manager do in this highly competitive market of at least 17 major venue sites if there is no relationship with LiveNation or AEG? They host smaller, less lucrative events such as rodeos, religious groups and family events. That works well if your venue is small but large ones like Jobing.com Arena need large events to offset the costs associated with hosting. Note than even the UofP Stadium hosts RV and car sales nearly every weekend in addition to gun shows in an attempt to shore up its bottom line. I suppose a venue manager could undercut the big boys and offer the venue for rock bottom rental fees and hope to cover all or part of the loss with concession and parking revenue but that is risky on so many levels.

Hiring a non hockey arena manager has never been in the best interests of the arena or Glendale. A permanent team owner hired to manage the arena guarantees 41 nights of hockey with “butts in seats.” It will be in the owner’s best interest to mount a strong marketing campaign for the Coyotes and put even more butts in seats as well as to work to acquire as many non-hockey events as possible to increase the bottom line of profitability. This is not a difficult concept to understand and yet there are those on Glendale’s city council who refuse to acknowledge this concept—out of sheer stubbornness or because of another agenda?