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Joyce Clark Unfiltered

For "the rest of the story"

Jul 15

12

The case of the disappearing money

Posted by Joyce Clark on July 12, 2015
Posted in Arizona Coyotes • City Council Actions • City issue and actions • City of Glendale • Glendale elected officials • Glendale finances • Glendale's Fire Union  | Tagged With: , , , , , , , | 1 Comment

It has been 17 years and 191 days since the city’s pledge to build the West Branch Library.

A political committee, registered in Glendale, Glendale First! is sponsoring the recall of up to 4 June30-GlendaleFirst-Amendedcurrent Glendale city councilmembers: Vice Mayor Hugh, Councilmember Turner and Councilmember Tolmachoff (they have yet to pull a recall packet on Councilmember Aldama). These 4 councilmembers, along with Mayor Jerry Weiers, voted to cancel the Glendale arena’s lease management agreement with IceArizona.

On their website they say, “It is the opinion of Glendale First! that the recent actions of the Glendale City Council regarding their vote to cancel the arena management agreement with IceArizona (the Arizona Coyotes) was hasty, ill-conceived, politically motivated, and fiscally irresponsible.” They are angry about council’s action and for them it’s payback time. Revenge is a heck of a reason to mount recall elections. This is reason #1 and it is the major reason.

Obviously reason #1 for the recalls will not play well with Glendale’s residents and so, reason #2 is Glendale First’s accusation that these councilmembers did not support public safety. By public safety, don’t be confused – Glendale First! is referring exclusively to the Glendale Fire Department and more specifically the Glendale chapter of the fire union.

The Glendale police unions made it clear that they did not share Glendale First’s allegation. Justin Harris, president of the Glendale Law Enforcement Association, spoke at a recent city council meeting and recognized and thanked the city council for its continuing support of public safety. Then the Glendale Law Enforcement Association and the Glendale Fraternal Order of Police ran an ad publicly supporting the councilmembers under threat of Glendale First’s recall effort. As an aside, another ad was taken out by all of the opponents who ran against the sitting councilmembers in the last election. Their ad also supported these members of the city council and their vote to cancel the contract. Obviously the men and women of the Glendale Police Department did not support the allegations of Glendale First! – but the Glendale Fire Union did.

Make no mistake, the fire union wants more money and appears to have partnered with Glendale First! to try to make that happen. Their argument for more money rests on their claim of deteriorating fire department response times. Yet the former Glendale Fire Chief publicly stated the department’s response times have remained constant over the past five years. The fire department is accredited and their response time is one of the major criterions for successfully acquiring that accreditation.

The recent history of the fire department demonstrates the fire union’s tremenous influence within the department. During former Mayor Scruggs’ tenure she allied herself with John Holland, former president of the local fire union chapter. Because of her support of Holland and his union Glendale’s fire chiefs were reluctant to oppose the union’s desires and demands. The union grew in power and strength until today it virtually runs the fire department. It will be extremely difficult if not downright impossible for any Fire Chief, including Interim Fire Chief DeChant, to put the fire union genie back in the bottle. Yet that is what must be done to get the fire department back on track placing the needs of its citizens first.

So reason #2 of non support by council of public safety didn’t fly either. That led to reason #3 and their newest allegation, “ Glendale First! feels the City Council acted inappropriately when it reclassified the inter-fund advances used to fund payments to the NHL, essentially removing that nearly $40M liability from the City balance sheet with the stroke of a pen and a vote for the budget. In effect, what had been a loan from several enterprise funds was made to disappear with no requirement for repayment.”

Has that money and the promise to repay the Enterprise Funds disappeared as Glendale First! contends? No, it has not. Here is the real story as Paul Harvey would say. In 2011 and 2012 in an effort to keep the Coyotes in Glendale, city council agreed to the NHL demand of a payment of $25 million a year. Funds to make the NHL payments were borrowed from the Enterprise Funds and were recorded on Glendale’s ledger as long-term borrowing and became new debt owed to: Water & Sewer, Landfill and Sanitation. It added even more debt to Glendale’s bottom line and was recognized as such by the bond rating companies. They considered this debt as another long term liability for the city.

The action city council took was to approve renaming this debt from the term “inter-fund advance” to “inter–fund transfer.” It’s no more than an accounting trick. By renaming this debt it had the accounting effect of removing it as a debt (even though it still exists as a debt) which in turn, satisfied the bond rating companies and provided them with a rationale to raise Glendale’s bond rating profile. They did not dismiss their obligation to pay this debt.

Is the debt still there and is it being paid off? You bet it is. At a recent April, 2015 workshop Councilmember Tolmachoff asked to bring forward a resolution to make the General Fund FY 2015-16 Inter fund transfer July 11, 2015inter-fund transfers to the Enterprise Funds part of the budget process each year. It resulted in a City council approved Resolution 4943 New Series on May 26, 2015 making the inter-fund transfers to the Enterprise Funds permanent. Each year the city council will decide what the monetary amount of the inter-fund transfer to the Enterprise Funds will be. This Fiscal Year, 2015-16, the amount of the inter-fund transfer to the Enterprise Funds approved by the city council located on page iv within this year’s budget is in the amount of $600,000.

Glendale First’s reason #3 against these councilmembers which was that they had made the loan from the Enterprise Funds vanish is simply not accurate. The money did not disappear nor did the city’s commitment to repay the Enterprise Funds. It appears as if Glendale First! will have to get creative and come up with a new reason for recall of the councilmembers.

We can strike Glendale First’s reason #2 of council’s non support of public safety.

We can strike Glendale First’s reason #3 of council’s action to make money disappear.

That leaves Glendale First! with only publicly stated reason #1 left – the council cancelled the Coyotes contract.

© 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.

Jun 15

22

How much risk?

Posted by Joyce Clark on June 22, 2015
Posted in Arizona Coyotes • Camelback Ranch Spring Training Facility • City Council Actions • City issue and actions • City of Glendale • Gila River Arena • Glendale elected officials • Glendale finances  | Tagged With: , , , , , , , , , , , | 22 Comments

It has been 17 years and 171 days since the city’s pledge to build the West Branch Library.

I have not only read Glendale’s motion but printed it out. Here is the link if you wish to read the motion: City of Glendale motion June 18 2015 . I have read and reread the motion several times. I suggest that you pay particular attention to the footnotes. In some aspects they are as revelatory as the emails provided in the brief.

Glendale could not have chosen a better attorney to represent its interests in its decision to cancel its contract with IceArizona and subsequent litigation. Here is a link to Cynthia Ricketts’ biography: http://sacksrickettscase.com/our-team/cynthia-a-ricketts/ . She is well respected by her peers and has extensive expertise in the area of litigation that the city requires.

If you noted in state statute A.R.S. § 38-511 it refers to any person “significantly involved in initiating, negotiating, securing, drafting or creating of documents.” Many have focused on the word “negotiating” especially with reference to Julie Frisoni. Please go to Frisoni’s PR website (http://www.frisonipr.com/whoweare/). This is a direct quote from her site, “Crisis communications, including NHL Coyotes negotiations and the near bankruptcy of a city.” It appears that Ms. Frisoni can’t have it both ways. There seems to be a conflict (no pun intended) between her claim on her website citing experience in “NHL Coyotes negotiations” and her recent public denials that she was merely a Communications Director.

Based upon my personal experience as a councilmember from 2000 through 2012 Ms. Frisoni was a close confidant of Ed Beasley, former City Manager, and Craig Tindall, former City Attorney. I did not have a great deal of interaction with Ms. Frisoni for I lacked trust in her. While she may or may not have had a hand in direct, face-to-face negotiations of the currently cancelled contract it appears quite evident that she played an essential role in securing (and insuring) council approval of the contract.

Prior to the contract’s approval by city council, on June 26, 2013, she sent talking points in support of the contract to Councilmember Chavira. In fact, Councilmember Chavira, one of only 2 council votes (the other being Sherwood) that did not support the recent vote to cancel the contract, is using many of those same talking points in his current Glendale Today show on Glendale’s Channel 11. Frisoni also sent an email on June 30, 2013, to the four councilmembers in support of the contract with IceArizona: Councilmembers Sherwood, Chavira, Knaack and Martinez. She seems to have deliberately omitted those that did not support it. In that email she passes on Jeff Teetsel’s (Westgate manager) arguments supporting passage of the contract.

I am quite unhappy with the alleged actions of former city attorney Craig Tindall. When city council originally hired him I was quite pleased. He appeared to be competent and articulate. In 2011 I began to hear rumors that he was supportive of an outside group interested in buying the Coyotes. Back then no one could or would tell me who the group was. Reading the emails between him and Anthony LeBlanc, one of the current Coyotes owners, I was unaware of their obviously close relationship dating back to at least 2010.  Little did anyone know they were meeting at their “usual starbucks.” It is now very difficult to accept the current parsing of words in an effort to minimize Tindall’s involvement in negotiating the IceArizona contract. It appears he was involved up to his lips.

It made me recall an incident at the end of 2012. The city was in the process of negotiation with a Coyotes team purchaser, Greg Jamison. I called Mr. Tindall with some technical questions about the deal. Cryptically, at the end of our telephonic conversation he remarked that if the Jamison deal didn’t make there was another group waiting in the wings. When I asked who, he refused to respond. In hindsight it now makes perfect sense but it raises more questions for me. I remember Interim City Manager Horatio Skeete telling me that Tindall appeared to be stalling and would hold Jamison documents on his desk for days. Skeete would make repeated requests for them which eventually would be fulfilled. Did Tindall deliberately sabotage the Jamison deal in an attempt to make available the opportunity for LeBlanc, et. al.? I honestly don’t know. You will have to decide for yourselves.

Tindall’s seeming self dealing is quite disappointing. As far back as April of 2010 in an email exchange between Daryl Jones of Ice Edge (precursor to IceArizona) Jones says they enjoyed working with Tindall and Tindall responds with “Now that’s an offer.” Was that Tindall’s subtle signal that he was angling for a job with them? Who knows? You decide. Or what about Tindall’s March, 2011, email exchange with LeBlanc urging LeBlanc to take a look at investing in a local medical device company? That action would seem to reinforce the notion that they had a close relationship. Or how about LeBlanc’s asking Tindall in October of 2011 if it was time to have a “confidential chat with Ed” (Beasley) as well as an email exchange between Tindall and LeBlanc about LeBlanc’s May, 2010 meeting with Steve E(llman)? What were these all about? We now know that LeBlanc wanted to buy the Coyotes even before the Jamison offer. We now know through more emails of Tindall’s effort to break a roadblock on July 26, 2013 (after the contract is approved) regarding the city’s paying IceArizona’s lenders directly? He emailed the newly hired City Manager (now former City Manager) Brenda Fischer apparently asserting that it was a simple administrative matter and appears to be urging her to take action.

The email exchange between former Mayor Scruggs and former City Manager Beasley are revealing as well. It appears as if the mayor was determined to get LeBlanc’s Lakehead Yale Sports Holding LLC “Plan B” before the city council in March of 2012. Once again Tindall’s name comes up when she says, “I have checked with Craig Tindall and Mr. LeBlanc’s letter is eligible for discussion under the items as posted.” Tindall seemed to be advocating for any LeBlanc deal.

The emails provided in the city’s motion to modify the Temporary Restraining Order are troubling. They are facts. They are the words of the principals involved. They are damning and not easily explained away.

I end with excepts from an email memo to the entire city council dated June 25, 2013 (a few weeks before council approval) from then Interim City Manager Dick Bowers:

  • “Contrary to what might appear in the papers I don’t see this as a ‘done deal’. Far from it. Discussions continued over the weekend and we have come only slightly closer to comfortable than before. Gary B(irnbaum) has helped to illustrate to the Renaissance group’s (eventually IceArizona) attorney the concerns we have. I suspect this has given them a degree of discomfort.”
  • “Glendale cannot afford a failure. The potential of failure exists as a dark shadow in the absence of the investors standing by their own numbers with confidence enough to simply take them for themselves and do the deal for 6.5.”
  • “While there are many ways to describe the Renaissance’s reluctance I keep coming back to that same discomfort of Glendale having all the risk in this deal. My concerns could mean nothing or they could represent an existential question that must be considered. Will this work for the benefit of the City of Glendale and what makes us firmly believe that it will?”

Mr. Bowers’ crystal ball was certainly working that day yet a few weeks later, 4 councilmembers, Yvonne Knaack, Manny Martinez, Gary Sherwood and Sammy Chavira voted in favor of the IceArizona lease management deal. I can understand Sherwood and Chavira’s approval votes. They appear to have been blindly joined at the hip with each other as well as IceArizona. The pro votes of Knaack and Martinez are not so easily understood. Each cited the well being of Westgate as a motivator for their decisions. It is troubling that they appear to have put the well being of Westgate over the well being of the City of Glendale. Why did they not heed the words of Interim City Manager Bowers?

No matter. What’s done is done. The discovery of Tindall’s and Frisoni’s actions provide the city with an opportunity to rectify one source of its annual bleeding…whether one uses $15M or $8.7M a year as the loss figure for the city. Many point to the annual debt payment for the Camelback Ranch Spring Training Facility (CRSTF). They say why focus on the arena when CRSTF is just as much of a financial drain. It is. I suspect in due time that financial albatross will be addressed. Development that should have occurred surrounding this facility never materialized as a result of the national recession. Without any promise of current economic development it is an issue the city must address in light of the fact that this council continues to fail to rein in city expenditures.

The pity of it all is the devastation caused to the coaches and players of the Coyotes team. They have been through so much since Moyes declared bankruptcy in 2009. None of it was of their making. They have become undeserved collateral damage. I hope and pray that their futures will once again become whole and they can take pride in playing under the Coyotes banner.

© 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.

Jun 15

18

It speaks for itself

Posted by Joyce Clark on June 18, 2015
Posted in Arizona Coyotes • City issue and actions • City of Glendale • Glendale finances  | Tagged With: , , , , | 17 Comments

It has been 17 years and 167 days since the city’s pledge to build the West Branch Library. On June 17, 2015, Judge Dawn M. Bergin was presented the City of Glendale’s motion for modification of the Temporary Restraining Order in the City vs. Ice Arizona litigation. The city may  no longer be compelled to make its next quarterly payment of $3,750,000 to Ice Arizona on July 1, 2015.

Rather than comment at this time (that will come in a future blog) I have provided a link to the city’s motion and Exhibits A through Q as well as the  proposed judge’s ruling: City of Glendale motion June 18 2015 .

I would urge those of you interested in the latest events surrounding the city and Ice Arizona to read the motion in its entirety especially the emails provided as exhibits. I suspect that the email exhibits used for this motion to modify the Temporary Restraining Order are not the entirety of emails the city has in its possession. I assume that the city used a sampling necessary to substantiate their request for modification.

Question: What’s Ice Arizona’s next move? What will they do to cover the interest payments on their tremendous debt now that they might no longer have the city’s $15 million to use?

© 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.

Jun 15

13

Just think about it

Posted by Joyce Clark on June 13, 2015
Posted in Arizona Coyotes • City Council Actions • City issue and actions • City of Glendale • Gila River Arena • Glendale elected officials • Glendale finances  | Tagged With: , , , , , , | 19 Comments

It has been 17 years and 162 days since the city’s pledge to build the West Branch Library.

Unless you have been comatose by now you know that on June 10, 2015 the Glendale City Council voted 5 -2 to cancel its Lease Management Agreement with IceArizona for the city owned arena. Two days later, June 12, 2015 Ice Arizona successfully secured a Temporary Restraining Order (TRO).

Just think about it. The council vote was 5 -2 with Councilmember Jamie Aldama breaking ranks with Councilmembers Sherwood and Chavira. In his remarks he said that while he is pro business he felt compelled to uphold the integrity of the process.

Just think about it. The five councilmembers who voted to void the contract have divergent backgrounds in terms of educational levels, incomes, ethnicity, time served on city council yet collectively they found the facts available to them (and not to the public to date) compelling enough to move forward with voiding the contract.

Just think about it. This council has been characterized as being idiots, fools and all manner of the devil. They knew there would be an extraordinarily violent reaction yet they held fast and voted their consciences. Only senior management and the council know the facts relating to state statute § 38-511. They knew that IceArizona would sue; they knew there would be legal fees; they knew the fan base would come unglued; they knew the media, in its search for fresh red meat, would berate them. They knew…yet they still voted to cancel the contract. Didn’t any of these groups pause for just a nanosecond to consider that the city’s allegations could be quite legitimate?

Just think about it. The 5 members of city council that voted to cancel the contract must stay the course. They took an oath to uphold the law. They have a fiduciary responsibility to every Glendale taxpayer. If an opportunity for further dialogue with the Coyotes presents itself they should take advantage of that opportunity. If it brings no resolution then they must follow through on cancellation of the contract.

Just think about it. Many question why now? Quite frankly, it is irrelevant. The makeup of the city council changed with this past election. The original 4 councilmembers that approved the contract dwindled to 2 creating an environment that allowed the facts as known to the city to be considered and acted upon.

Just think about it. The greater question is what has happened to civil society?  America is great because one of its bedrock values is freedom of speech. Everyone, on either side of this issue, has the freedom to express an opinion but it should be tempered speech based on the facts. It is acknowledged that the Coyotes fans are stunned and angered by the recent city action. In their anger some have allowed emotion to override common decency.

Just think about it. One action that is stark in its viciousness was that of Ms. Rhonda Pierson on the night of the special voting meeting. Ms. Pierson expressed the beliefs of some Coyotes fans and she had the right to do so but the vindictiveness of her speech was out of bounds. Social media has turned her into a heroine of some sort despite the ugliness of her delivery. I didn’t catch it if she announced it but did she acknowledge that she was (or may still be) an employee of the Coyotes organization?

Just think about it. Then today, June 13, 2015, Mayor Weiers who had announced that he was willing to be tazed to raise money for the 100 Club (mission: support of law enforcement families) was tazed by Ms. Pierson. The event was intended to be a great gesture in support of law enforcement recently vilified nationwide. By choosing Ms. Pierson as the designated person to taze the mayor it turned into a distasteful event that made many people uncomfortable. It wasn’t done in the spirit in which it was originally intended but rather turned into a symbolic expression of vindictiveness for the city’s recent vote to void the contract. Those behind the choosing of Ms. Pierson to perform the act have sunk to a new low and are no better than those within the city they currently choose to hate. It was petty and mean spirited.

Just think about it. Social media is a platform that creates a herd mentality and its anoninimity emboldens some to exceed the bounds of common civility. It encourages an atmosphere that causes mass salivation of others’ perceived misfortunes or misdeeds and often reactions are based on raw emotion in the absence of any fact. The level of vituprativeness and ugliness of some folks’ speech has risen to an unprecented level not just locally but on issues throughout the country.

Just think about it. There are probably about 100 local fans that use social media on a regular basis. They have been whipped into frenzy, in part, by the comments made by Anthony LeBlanc as he recently made the media rounds. Did anyone bother to take note that he had to walk back some of his misstatements? Such as, they were never asked by the city to consider renegotiation or Tindall was the only former Glendale employee ever connected to the Coyotes.

Just think about it. There are about 239,000 residents of Glendale. The arena holds slightly north of 17,000. If everyone of the 17,000 was a Glendale resident that would be one twelfth of Glendale right now. In a survey done by one of the TV stations it was reported that 59% of the Glendale residents surveyed supported the cancelling of the IceArizona contract.

Just think about it. If some wish to boycott Glendale’s businesses in protest, that is their right. If some wish to mount recall petitions against every Glendale councilmember, that is their right but ugly expressions of anger directed to the city are not right if one respects the bounds of common decency.

Just think about it. The media has reported that in the next few days IceArizona and city personnel will meet. Let us hope that a long and costly court battle can be avoided. Let us hope that they can work out their differences regarding the contract. I really would like to see the Coyotes stay in Glendale but not at the current rate of taxpayer subsidization.

Just think about it. If nothing comes of their meeting I wish the Coyotes well, perhaps playing in Phoenix. The only nagging question that comes to mind is who is going to pay the Coyotes $15 million a year to play in their facility? The City of Phoenix? Or Robert Sarver?

© 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.

Jun 15

10

Coyotes contract cancelled tonight

Posted by Joyce Clark on June 10, 2015
Posted in Arizona Coyotes • City Council Actions • City issue and actions • City of Glendale • Gila River Arena • Glendale elected officials  | Tagged With: , , , | 30 Comments

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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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.

 

Jun 15

9

Special council meeting on June 10, 2015

Posted by Joyce Clark on June 9, 2015
Posted in Arizona Coyotes • City Council Actions • City issue and actions • City of Glendale • Gila River Arena • Glendale elected officials  | Tagged With: , , , , , | 23 Comments

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.

Jun 15

1

Something smells

Posted by Joyce Clark on June 1, 2015
Posted in Arizona Coyotes • City issue and actions • City of Glendale • Glendale finances  | Tagged With: , , , , , , , | 10 Comments

It has been 17 years and 150 days since the city’s pledge to build the West Branch Library.

The Arizona Republic of June 1, 2015 has a front page story by Peter Corbett entitled Glendale staffer quits over altered arena audit. Here is the link: http://www.azcentral.com/story/news/local/glendale/2015/06/01/glendale-staffer-resigns-arena-audit/28289641/ . Corbett reports that Assistant City Auditor Andrea McDermott-Fields resigned as a result of a conflict with City Auditor Candace MacLeod over the Coyotes audit.

A little history is in order. Two years ago the city audited its Risk Management Trust Fund. The audit was performed by MacLeod. MacLeod was supported by and worked very closely with former City Attorney (now attorney for IceArizona) Craig Tindall. MacLeod was part of the Frisoni-Burdick group that lobbied me (and I assume, other councilmembers) to appoint Craig Tindall as Interim City Manager rather than Horatio Skeete. This is “inside baseball” stuff and wouldn’t be commonly known.

I, and I assume the other councilmembers, were not aware of the fact that MacLeod’s husband did contract work in broadcasting for the Coyotes until 2011. Just as in the case of former Assistant City Manager Julie Frisoni and her husband’s work for Insight Technology (a company that recently received a contract renewal from the city) there is a perception of conflict of interest. Just as Frisoni should have signed a disclosure statement it would have been prudent for MacLeod to divulge her possible conflict in reviewing the Coyotes recently submitted audit. The perception, rightly or wrongly, is that MacLeod might have had a reason to insure that IceArizona, owner of the Coyotes, didn’t look too bad.

What makes this situation even more questionable is that IceArizona stalled on releasing its audit. It should have been submitted to the city no later than September (60 days after the end of the Fiscal Year which ends June 30th). The city didn’t receive it until recently. In anticipation of receiving the IceArizona audit in a timely fashion the city hired Tony Tavares (once part of a group interested in buying the Coyotes) to audit the IceArizona submission. Presumably Tavares’ audit was completed and turned over to the city for confirmation. That is where MacLeod enters the picture. MacLeod assigned the job to McDermott-Fields but would have reviewed and approved the final work product.

According to Corbett McDermott-Fields in her April 21 letter of resignation said, “The basis of my resignation is that you have changed my findings in a way that is not acceptable to me or in accordance with the information that I have gathered.” As a result of McDermott’s resignation and the reason for it Jim Brown, the city’s human resources director did an inquiry regarding McDermott-Fields’ resignation but did not include a review of any of MacLeod’s changes to McDermott-Fields’ audit findings. Corbett related that “MacLeod told Brown that some of McDermott-Fields’ ‘documentation was inaccurate, incomplete, unclear, in some cases inflammatory and at times based on (McDermott-Fields’) opinion, which had not been confirmed with the city attorney or others’.”

MacLeod’s statement to Brown raises so many red flags I’m not even sure where to begin. In the article McDermott-Fields stated, “She is certified as an accountant, internal auditor and fraud examiner, adding that she has more than 25 years of experience.” Add to that she appears to have no ties or relationships to anyone associated with IceArizona and the Coyotes. She probably has more experience than MacLeod. She appears to be a neutral party and called it as she saw it.

It seems as if MacLeod trashed McDermott-Fields’ work because she didn’t like the result. I am also intrigued by McDermott-Fields’ comment, “MacLeod seemed hostile to her when they met to discuss the audit findings and (MacLeod) ‘accused me of throwing her under the bus’.” That also raises red flags. What was MacLeod upset about in McDermott-Fields’ audit findings? Who is MacLeod trying to protect? The city, IceArizona or both? No, something stinks about the whole situation.  It appears to be another CYA move by Brown and Tom Duensing in an effort to avoid city embarrassment because an employee called the audit as she saw it and it might have shown that the city was being short changed by IceArizona in the revenues it received.

The shame of it all is that we will never know the results of the city’s audit. Why? Because former City Manager Brenda Fischer, in an apparent stunning lack of competence, signed a separate agreement with Anthony LeBlanc of the Coyotes, agreeing to keep the audit confidential. She didn’t have to do that. The management agreement between the city and IceArizona stipulated that the city has the right to audit and there was no requirement of confidentiality. If the agreement had been followed without the separate Fischer-LeBlanc amendment the audit would be publicly available. Then we would know who was right in her findings…MacLeod or McDermott-Fields. Somehow or another I’m betting McDermott-Fields was right on the 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.

Apr 15

18

Where’s Waldo?

Posted by Joyce Clark on April 18, 2015
Posted in Arizona Coyotes • City issue and actions • City of Glendale • Gila River Arena • Glendale elected officials • Glendale finances  | Tagged With: , , , , , , | 10 Comments

It has been 17 years and 107 days since the city’s pledge to build the West Branch Library.

USA Today photo

Andrew Barroway, Anthony LeBlanc Courtesy USA Today

On December 31, 2014 we were greeted with an announcement released by Coyotes Co-Owner, President and CEO Anthony LeBlanc, “Today is an exciting day for the Arizona Coyotes and our great fans. The addition of Andrew Barroway to our ownership group further solidifies the Coyotes long-term future in the Valley. Our entire ownership group is excited about this opportunity to work with Andrew in taking this franchise to the next level. It’s a great day for hockey in Arizona!” Here is the link: http://heatwaved.com/2014/12/31/andrew-barroway-approved-buy-arizona-coyotes/ .

We were told that Andrew Barroway’s purchase made him majority owner of the team holding 51%. The deal was praised as a means of creating financial stability for the team and some of the money would be used to raise payroll. Barroway said, “he and the nine minority owners were committed to infusing $30 million back into the team, with up to $9 million going directly to upgrading the on-ice product through trades and free agency.” As majority owner, Barroway would be the team governor, current governor George Gosbee would be alternate governor, and Anthony LeBlanc would remain as chief executive officer.

Two days later, on January 2, 2015 Craig Morgan of Fox Sports News interviewed Barroway. Here is the link: http://www.foxsports.com/arizona/story/q-a-with-coyotes-majority-owner-andrew-barroway-010215 . Morgan asked Barroway how active he would be as the new owner. Barroway indicated that he planned to be an active owner and would take part in all major decisions regarding the team. Morgan also asked if there would be any major changes and Barroway responded that he didn’t expect any.

th6FIKDB1J

Where’s Waldo?

That was 4 months ago. So where’s Waldo? Er, Andrew Barroway? Sources inside Glendale City Hall indicate that Barroway, as the  majority owner of the team, has not signed the lease management contract. At the very least, that should have occurred after the Board of Governors approved the sale to Barroway on December 31, 2014. Does Barroway’s absence from the team scene and Gila River Arena plus a lease management contract without Barroway’s signature signal trouble with the deal? At the last game of the season the Coyotes distributed their annual book replete with statistics, photos and bios of everyone (except God) including the owners minus any mention or photo of Andrew Barroway. It makes you scratch your head and ask what’s going on.

thDYDNS84PThere’s another Where’s Waldo moment…the failure of the Coyotes to submit a certified financial team audit to the City of Glendale as stipulated in the lease management agreement. It was due September 30, 2014…7 months ago. In anticipation of receiving the audit the city hired Tony Tavares in December of 2014 to perform the city’s audit.

Peter Corbett of the Arizona Republic in an April 17, 2015 article offered some very interesting comments from principals involved. Here is the link: http://www.azcentral.com/story/news/local/glendale/2015/04/17/glendale-arizona-coyotes-first-season-audit-drags/25922095/ . He reported that:

  • “Coyotes officials said the reports were late because it was the organization’s first year of operations under the new deal and more complications surfaced when a new majority owner acquired the team at the end of last year.”
  • “The financial-reporting delay has created tensions with Glendale officials who are frustrated that the team has not closed the books on its first season even as the second season wrapped up April 11 on the ice at Gila River Arena.”
  • “Ian Hugh, Glendale vice mayor, said the Coyotes must be held accountable for the money the team is taking from taxpayers. ‘I expect both sides to live up to our agreement,’ he said. ‘Our auditor is still trying to get information from the Coyotes’.”
  • “Jeff Shumway, Coyotes CEO from 2006-09, said that during his tenure the team typically completed its audits by November. The audit reports were public documents that were available to anyone who made a records request to Glendale, he said.”
  • “The current Coyotes arena-management agreement includes language that requires the city to protect the team’s proprietary information.”

What’s so “proprietary” about an audited financial statement of profit and loss submitted to the City of Glendale that shouldn’t be a public record? After all, Glendale’s taxpayers are paying $15 million dollars a year. You would think we would be entitled.

The team’s financial audit wasn’t “proprietary” when Steve Ellman and/or Jerry Moyes owned the team. Did LeBlanc fudge in his public statements about the team’s losses? Who knows? Apparently we, the public, the taxpayers of Glendale and the fans supporting the team with ticket sales, will never know the truth. Former President Ronald Reagan said, “Trust but verify.” LeBlanc and company want all of us to trust but at the same time they don’t seem to want us to verify.

Questions remain unanswered…Where is Waldo? Where is Andrew Barroway and where is the certified team financial audit? There are answers but we are not getting them.

Post Script: Today is the NHL Draft Lottery. Coyotes placed third in lottery line up. Anthony LeBlanc tweeting a good face on the situation…but Where’s Waldo?

© 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.

Apr 15

6

“Here to stay”…but in Glendale?

Posted by Joyce Clark on April 6, 2015
Posted in Arizona Coyotes • City Council Actions • City issue and actions • City of Glendale • Gila River Arena • Glendale elected officials • Glendale finances  | Tagged With: , , , , , , , | 2 Comments

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.

Mar 15

16

IceArizona submits audit to Glendale

Posted by Joyce Clark on March 16, 2015
Posted in Arizona Coyotes • City issue and actions • City of Glendale • Gila River Arena • Glendale finances  | Tagged With: , , , , , | 13 Comments

On Friday, March 13, 2015 we learned that the Coyotes had finally finished their audit and submitted it to the City of Glendale. What is troublesome is the fact that the results were submitted to Glendale five months late. The first question is, why? IceArizona’s rationale is sure to be that the Barroway purchase was the cause of the delay. But his purchase was in December and it is now March. Audits do take time but not this much time.

Another troublesome aspect is IceArizona’s inability to abide by the arena management agreement stipulation 8.16.1 (c) Annual Financial Reports, “Not later than 90 days after the end of each Fiscal Year (June 30), provided, that if all necessary information from the NHL related to the following items (a), (b) and (c) shall not have been received by the date which is 30 days after the end of each Fiscal Year, then interim reports shall be provided within the normal time frame and final reports shall be provided within 60 days after the receipt of all necessary information from the NHL related thereto): (a) a balance sheet relating to Arena Facility operations as to the end of such Fiscal Year, (b) a statement of profit or less for Arena Facility operations during such Fiscal Year, and (c) a statement of charge of financial condition for Arena Facility operations during such Fiscal Year, each prepared in accordance with GAAP as consistently applied (if there are multiple interpretations of the application of GAAP, GAAP as traditionally interpreted by the Arena Manager and the Team Owner shall apply) (collectively, the “Annual Financial Reports”), and accompanied by a report containing an opinion of the Arena Manager’s accountants, stating that such Annual Financial Reports relate, that such Annual Financial Reports have been prepared in accordance with GAAP as consistently applied and that the examination by the Arena Manager’s accountants in connection with such financial reports was made in accordance with GAAP.” The agreement then states in 8.17.1. Audits, “The City shall have the right to conduct an independent audit of the management and operation of the arena (or any part thereof) and the Account Records (or any part thereof) and the Team Owner Records (or any part thereof) by the City Staff or by an independent certified public accounting firm selected by the City.”

The City should have received an Interim Audit about October 1, 2014. Instead it received the Final Audit on March 13, 2015, five months late. On November 4, 2014 in anticipation of receiving the expected Audit, the City hired Proeminent Sports, LLC, and a Nevada limited liability company, to audit the information IceArizona was supposed to provide in a timely fashion and to present its findings by December 15, 2014.

Note that the City’s expectation was that the audit would take about Coyotes Audit contract_Page_26 weeks, not months and months and months. Tony Tavares, former president of the Anaheim Mighty Ducks and Los Angeles Angels and Managing Member of Proeminent Sports, is the lead in conducting the audit. Tavares just happened to have been involved with Chicago White Sox owner Jerry Reinsdorf in 2011 when Reinsdorf was trying to purchase the Coyotes from the NHL. Is there any conflict of interest?

On March 13, 2015 the media began sharing leaked results of the audit. Since the city has not publicly posted the audit results the leaking appeared to have been on the IceArizona side. What has been reported by some media traditionally sympathetic to the Coyotes is a total loss figure of $34,831,000.  It breaks out into operating losses of $16,458,000 and one time charges of $18,373,000. Their argument is that one should only look at the operating losses of nearly $16.5 million dollars and should not consider the nearly $18.4 million dollars in additional losses because they are one time charges and will not recur. They are correct in stating those specific charges will not recur but it is reasonable to assume that there will be other, onetime charges each and every year. While they will not be the specific ones attributed to this Fiscal Year, there are bound to be other onetime charges annually.

I attended the Blackhawks game last week and couldn’t help but notice that the majority of attendees were Hawks fans. The robust chants for the Hawks in our house were downright embarrassing. It appeared as if nearly every Coyotes ticket holder had sold their seats to Hawks fans. With a team that is not performing well it is not surprising to see the fan base shrink. Fans are fickle. Everyone loves a winner…a losing team? Not so much.  It may well be that operations and team revenue earnings will reflect this downward trend this Fiscal Year.

That brings us to the troublesome “out” clause that IceArizona may exercise after 5 years of losses totaling $50 million dollars or more. There has been considerable past discussion that lingers to this day over that particular clause. Many fans asked why the stipulation was necessary if the owners’ intent is to keep the team in Arizona. Others, from the Glendale resident side, called for the very same stipulation for the city. Quietly, oh so quietly, the IceArizona owners retained the “out” clause and the city never received such a stipulation in its favor. Is it any wonder that speculation about the owners’ long term intent has surfaced again upon learning that first year losses are $38.4 million dollars? After all, that figure is more than half of the $50 million dollars required in demonstrated loss before the owners can exercise the “out” clause.  

In a March 13, 2015 Craig Morgan story for FoxSports Arizona CEO Anthony LeBlanc stated, “Naysayers will try and bring up the out clause at every opportunity… It leads to a simple question: If the franchise is successful financially, why would you even consider exercising it? The out clause was a protection mechanism.” The better question is…if the franchise is successful financially, why are you, Mr. LeBlanc et.al, keeping it? There would be no speculation every time Las Vegas or Seattle is mentioned if there was no “out” clause.

© 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.

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