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Joyce Clark Unfiltered

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Oct 14

13

Gila River Arena management agreement

Posted by Joyce Clark on October 13, 2014
Posted in Arizona Coyotes • City Council Actions • City issue and actions • City of Glendale • Gila River Arena • Glendale finances  | Tagged With: , , , , , | 3 Comments

Ever since the news of Andrew Barroway’s purchase of a 51% interest in the Coyotes (expected to be ratified by the NHL’s Board of Governors) there have been questions about the original management agreement between IceArizona and the City of Glendale.

One of the questions that surfaced was would there be an opportunity to renegotiate the agreement. In reading the contract there does not appear such an opportunity.  Technically Barroway is becoming the majority owner of the team and for now the arena manager remains the same.

The arena manager is responsible for the operation of the arena and for leasing space to the team. The issue is addressed in Section 5. Demise of Arena and Use Rights. In 5.1, Demise of the Arena it states, “The City hereby demises and lets to the Arena Manager, and the Arena Manager hereby takes and leases from the City, effective on the Closing Date, for the Term and upon the provisions (i) The Arena Facility…” In Section 5.2, Grant Use of Rights, it says, “In addition to the rights granted by the City to the Arena Manager in the other provisions of this Agreement, the City hereby grants to the Arena Manager, and approves the right of the Arena Manager to grant to the Team Owner, during the Term, the exclusive right and obligation to use and occupy the Hockey Event Spaces…”

In Section 6.2., Sublease of Exclusive Team Spaces, it says, “The Team Manager hereby subleases the Exclusive Team Spaces to the Team Owner…”  The team is a subtenant of the arena. We know that Barroway is securing a 51% interest in the team but we do not know if he is also acquiring a majority interest in the arena management company.

Even if Barroway became a majority owner of the arena management company in Section 4.2.3, Arena Sub-Manager, “The Arena Manager may, from time to time, delegate all or a portion of its duties and responsibilities to an Arena Sub-Manager…” There is no provision that I can find whereby a change in team ownership requires a renegotiation of the lease since: (1) the lease is with the arena management company and (2) the arena management company can sub-lease to an arena sub-manager without city approval as long as all duties and responsibilities continue to be met satisfactorily.

The other question that has been raised is the city’s ability to audit. A little background is in order. Under the team ownership of Ellman and Moyes the city received financial reports but had to accept them without any corroboration. This eventually became problematical for the city. City Council wanted a mechanism whereby it could verify what the arena manager was reporting in terms of revenues and costs associated with the arena’s management and operation. Hence Section 8.16, Financial Reports and Section 8.17, Audits were incorporated into the agreement. Financial reports must be submitted to the city monthly, quarterly and annually. To ensure the veracity of the reports submitted, in Section 8.17.1, “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 City Staff or by an independent certified public accounting firm selected by the City.” This section clearly grants the city the right to audit not just arena manager financial records but financial records of the team as well.

Keep in mind that this agreement was devised by attorneys and as a result, their interpretations of the terms can vary. That’s how they earn their fees…by arguing exactly what a term or provision of a contract actually means. They could argue how many gnats are on the head of a pin.  

As a result you can be sure that every sentence within the agreement can be disputed and argued by attorneys. On the face of it, it appears the city has no legal right to renegotiate the management agreement with IceArizona. IceArizona would have to agree to do so voluntarily and that’s not going to happen. However, the city does have a legal right to audit manager and team financial records and to thereby confirm the revenues and expenses that are reported to it.

© Joyce Clark, 2014

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.

Oct 14

8

It’s a Coyotes kind of day

Posted by Joyce Clark on October 8, 2014
Posted in Arizona Coyotes • City Council Actions • City issue and actions • City of Glendale • Gila River Arena • Glendale finances  | Tagged With: , , , , , , , | 7 Comments

Today, October 8, 2014 is a grey, overcast day in the Phoenix metro area…a rarity to be sure. Anywhere else it would portend a day of steady rain but Phoenix is a desert and because it looks like rain, it doesn’t necessarily mean it will happen. It’s a good day to let thoughts rumble around.

A blog reader recently sent me two news stories of interest. One is from the October 5, 2014 Seattle Times entitled Key Arena turns a bigger profit than it ever did with the Sonics by Ashley Scoby. Here is the link: http://seattletimes.com/html/localnews/2024708723_keyarena05xml.html. The other is a Deadspin article entitled The Coyotes were damned close to moving to Seattle by Barry Petchesky dated October 8, 2014. Here is the link: http://deadspin.com/the-coyotes-were-damned-close-to-moving-to-seattle-1643791488 . Each article compliments the other.

In the Deadspin story three sources confirm that the Coyotes were a hair’s breadth from moving to Seattle. Ray Bartoszek and Anthony Lanza had formed a buyers’ group with plans to move the Coyotes to Seattle’s Key Arena the day following the Glendale City Council vote on the IceArizona arena management agreement if it had failed to gain approval. The new information in the story is confirmation that the NHL had blessed the scheme. Everyone knew how imminent the move could be….the NHL knew; the presumed buyers had moving trucks on standby; Glendale senior management knew; the Glendale City Council knew; and IceArizona knew. The only ones in the dark were Glendale residents.

Which leads to the second news story about Seattle’s Key Arena. Everyone presumed in 2009 without the Sonics as an anchor tenant the arena would die a pitiful death. How wrong. An average annual loss to Seattle with the Sonics was $1.5 million. In 2013, without the Sonics, the arena generated $1.2 million in profit. The loss of the team didn’t hurt for it opened up more desirable dates for performing artists to utilize the arena. Artists such as Kanye West, Rihanna, Maroon 5 and Bruno Mars performed at the Key in 2013.

I had always supported keeping a professional sports team at the Gila River Hockey Arena because it was my belief that the arena and Westgate could not survive without one. Seattle’s Key Arena disproves that belief. If the Coyotes arena management agreement had failed on that fateful July, 2013 day Glendale would have moved on, just as Seattle did. Glendale would have joined with an AEG-type partner and could have enjoyed the same kind of success that we see today at Seattle’s Key Arena.

P.S. Here’s a link to yet another Seattle Times news story about an almost move to Seattle: http://seattletimes.com/html/hockey/2024716050_seattlenhl07xml.html#.VDWTTHFMEBI.twitter

© Joyce Clark, 2014

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.

Oct 14

2

Coyotes’ saga continues

Posted by Joyce Clark on October 2, 2014
Posted in Arizona Coyotes • City issue and actions • City of Glendale • Gila River Arena • Glendale finances  | Tagged With: , , , , | 12 Comments

On October 2, 2014 Larry Brooks, a reporter for the New York Post, reported that a 51% interest in the Coyotes is in the process of being acquired by Andrew Barroway. Barroway is managing partner and founder of Merion Investment Management LP based in Radnor, PA. He is a failed suitor in the purchase of the Devils and Islanders.  At this point the story is speculation as neither the NHL nor the Coyotes’ owners have confirmed the deal. Here is the link: http://nypost.com/2014/10/02/spurned-islanders-buyer-to-purchase-coyotes-instead/. As an exercise, let’s speculate some more.

Why is Barroway acquiring a majority interest in the team? He wants to own a hockey team. That is evident in his two failed attempts. But he wants more than that. He wants to be in control and to make the ultimate and final decisions about the team’s fate at a future date. The team cannot and will not leave for 5 years. We can enjoy hockey in the Valley through the 2018-2019 season. After that you will need to consult your crystal ball.  Although I would expect that when the fans finally realize the team’s days may be numbered attendance will drop like a stone.

According to the agreement the team cannot leave for 5 hockey seasons and must demonstrate $50 million in operating losses. Here is the exact language in the management agreement: Section 3. Term. 3.3. Early Termination by Arena Manager/Team Owner. “Notwithstanding the other terms and provisions of this Agreement, Team Owner and Arena Manager jointly shall have the right to terminate this agreement without penalty or cost by delivery of written notice to the City at any time within 180 days following the end of the fifth (5th) hockey season year after the execution date if (a) neither terminating Party is in material default of any term or condition of this Agreement, and (b)Team Owner has incurred a cumulative Operating Loss of $50,000,000 or more, calculated as the sum of Team Owner’s operating income/loss for each the Fiscal Year periods then ended, provided that if such notice is given during any NHL hockey season, the termination shall not be effective until the end of the applicable hockey season, including all Home Games associated with the season. In this regard, Team Owner shall deliver to the City, not later than ninety (90) days following the end of each Fiscal Year, a statement (certified to the City by the Team Owner’s chief financial officer or the Team Owner’s certified public accountants, at the option of Team Owner) of the Team Owner’s claimed operating income or loss for such Fiscal Year, which statement shall be subject to audit by the City and the result f such audit shall thereafter be conclusive upon team Owner with respect to the determination of Operating Losses.” This exact same provision applies to the city as well.

The New York Post story cites the team loss in its first year of operation at $24 million. Educated rumors are that it’s on the low side and could be more. As long as we’re speculating, let’s peg their losses at $20 million a year. At the end of 5 years the team’s losses will be north of $100 million and will meet the terms of the agreement.  Barroway’s investment in the team now will cover those expected losses and he will be in the cat bird’s seat to decide the team’s future move.

Let’s wait to see if a majority interest is indeed sold to Barroway. That will deliver a strong message to everyone and you can then decide how much of an emotional investment you wish to make in the team. And just when we thought the Coyotes saga was closed…so it continues.

© Joyce Clark, 2014

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.

Sep 14

17

Welcome to the Gila River Arena

Posted by Joyce Clark on September 17, 2014
Posted in Arizona Coyotes • Casino • City Council Actions • City issue and actions • City of Glendale • Gila River Arena • Glendale finances • Jobing.com arena  | Tagged With: , , , , , , | 1 Comment

On September 9, 2014 at its regular council meeting the Glendale City Council approved a new name for its arena. It will now be known as the Gila River Arena. The following day there was a press conference to announce the name change. Anthony LeBlanc, one of the Coyotes’ owners was there; Gregory Mendoza, Governor of the Tribe was there; Jan Brewer, our state Governor was there; and Jerry Weiers, Mayor of Glendale was there.  Guess who wasn’t there? Our infamous “gang of four,” Councilmembers Alvarez, Sherwood, Hugh and Chavira. It’s perfectly understandable. After all, their allegiance is to the Tohono O’odham Nation. Alvarez was also the lone negative vote on the name change to Gila River. Instead she stubbornly questioned staff on the necessity of bringing the name change before council for ratification.  It appeared as if she questioned the action long enough and hard enough she could make the need for a council vote disappear. Didn’t happen. Apparently Norma’s love for minorities does not extend to the Gila River Community.

However, it’s not so strange a move. Gila River has been a long time partner of the Arizona Coyotes hosting the Gila River Club within the arena proper. If I were the Gila River I would be secretly smug and taking enormous satisfaction in the fact that their name will be prominently displayed across the street from their duplicitous sister tribe, the Tohono O’odham’s new casino.

Here’s a reminder that today, Wednesday, September 17, 2014 at 2:30 PM Eastern time, the Senate Committee on Indian Affairs will have a legislative hearing on Senate bill 2670, Keep the Promise Act of 2014, introduced by Senators McCain and Flake. It can be viewed online live.  Panel One of the hearing will have Governor Mendoza of the Gila River Indian Community, Ned Norris Jr., Chairman of the Tohono O’odham Nation, Glendale Mayor Jerry Weiers and Glendale Councilmember Gary Sherwood. It should prove interesting as 2 champions of the casino face off against 2 opponents of the casino. Hopefully, the bill will move out of committee paving the way for a full senate vote.

Considering the fact that Glendale did not recoup its $14,002,055 (not a full fiscal year, prorated for 11 months) paid for the management fee and capital improvement fund and that you can add another $12 million for the arena construction debt, you would think Alvarez would welcome the new Gila River name and the 20% of the fee paid by Gila River to IceArizona. It will offset the approximately $20 million in arena costs, not by much, but every penny is welcome. A lot of Glendale’s residents are anxiously awaiting the audit of IceArizona’s budget and hope it is made public and put on the city’s website. If not, don’t be surprised if there are a lot of FOIA requests for a copy of the audit.

There was no council workshop on Tuesday, September 16, 2014 because there was not a quorum. How many of Glendale’s council is attending the Senate Committee on Indian Affairs legislative hearing today? I guess we’ll find out.

© Joyce Clark, 2014

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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