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Joyce Clark Unfiltered

For "the rest of the story"

Jun 13

4

So much for transparency

Posted by Joyce Clark on June 4, 2013
Posted in City Council Actions • Jobing.com arena  | Tagged With: , , , , , | No Comments yet, please leave one

Glendale City Council

Glendale City Council

Today, June 4, 2013 Glendale council will conduct a workshop meeting. Here is the link to the agenda:  http://www.glendaleaz.com/Clerk/agendasandminutes/Workshops/Agendas/060413.pdf

Workshops are not like regular evening meetings. They are intended as a means of staff bringing forward subjects they believe are important or staff is responding to a councilmember’s request for further study on a subject. Unlike night meetings there is no opportunity for public comment.

The public agenda is short. There are only two items: an update on Glendale’s airport and council selection of its members for the two standing subcommittees, Government Services and Sustainability as well as selection of Vice Mayor. The airport issue is one that Councilmember Sherwood brought forward. For years the airport has been vexing as it has never reached its full development potential. That is a topic for another posting. We could see some interesting dynamics play out in the self selection of councilmembers to serve on the two standing subcommittees.

The more troubling aspect of the agenda is the Executive Session agenda. Executive Sessions are designed to allow council and staff to discuss, in a non-public setting, contracts, personnel and property leases/purchases. Its interpretation is often overly broad by a city’s legal department. There are 8 items on the Executive Session agenda. It is 4 times as long as the open session! Some of topics placed on the Esession agenda are questionable and were not decided in favor of the public.

One of the topics is the city’s external audit requested by this council. There have been several Esessions that included a secret discussion of this item. One would think that since this has been visited in Esession several times previously that a public update would be provided. Tsk…tsk, council. So much for transparency.

Another item that was previously discussed in workshop is the Cardinals training camp proposal. See this link to get more information from council’s March 5, 2013 workshop:  http://www.glendaleaz.com/Clerk/agendasandminutes/Workshops/Agendas/030513.pdf . The original proposal wasn’t so hot for the city. Since it was discussed in open session previously it probably would have been a good idea to bring this item forward publicly once again. So much for transparency.

jobing.com arena

Jobing.com arena

There are two more items that certainly deserve public scrutiny. Both relate to Jobing.com arena and the Coyotes ownership. The drop dead date for submissions to Beacon Sports, the city’s consultant, for arena management was May 31, 2013. Of course, at city discretion, it can accept bids after that date because of the disclaimer clause in the RFP. One Esession item deals with “potential agreements related to the management of the arena” and the other Esession item is to provide “instruction in connection with potential agreements related to the Hockey Team…”

Yet Mike Sunnicks in his story of June 3, 2013 in the Phoenix Business Journal quoting Glendale spokesperson Julie Watters, says, “Initial responses to the RFP have been received by Beacon Sports. The submissions are currently being reviewed by Beacon to determine completeness and if they qualify for further consideration,” Watters said. “We will follow up tomorrow (Tuesday) with Beacon to determine the status.” Sunnicks provides the reader with a rehash of old information — nothing new. This is the link to his story: http://www.bizjournals.com/phoenix/morning_call/2013/06/glendale-awaits-qualified-bids-for.html?ana=twt

Yet this is one of the secret items to be discussed by council at its workshop today (Tuesday). Methinks the council has been given a report by Beacon with those who have made bids (to date) to manage the arena. How else could council discuss this very topic?  So much for transparency.

Cardinals training camp proposal…external audit…management of city owned arena…the hockey team’s very survival in Glendale…all topics of extreme interest to the people of Glendale. Yet the only discussion to be had will be secret. So much for transparency.

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May 13

10

Numbers don’t lie…

Posted by Joyce Clark on May 10, 2013
Posted in Jobing.com arena  | Tagged With: , , , , | 2 Comments

There has been a great deal of furor since Paul Giblin of the Arizona Republic came out on May 5, 2013 with a number that Glendale would have to pay to run the arena of $5.1 to $5.5M per year. See this link: http://www.azcentral.com/community/glendale/articles/20130502phoenix-coyotes-jobing-arena-costs.html .

jobing.com arena

Jobing.com arena

On August 8, 2012 (9 months ago), Lisa Halverstadt, a former reporter with the Arizona Republic stated, “If the team stays, the city estimates it will cost about $12.2 million a year, or $54 per resident, when costs and revenue are factored. That’s in addition to the roughly $13 million a year to retire the debt on the arena in about 20 years. But the city says it would face even steeper financial challenges without the Coyotes. If the team leaves, Glendale will still be on the hook for the arena debt. But the city also projects it will then need to come up with millions of dollars a year to pay an arena manager and other expenses if there is no anchor tenant for the arena. The city estimates that would cost $15.8 million, or $70 per resident. With that in mind, Glendale projects it would save about $3.5 million annually by keeping the team.” Here is the link: http://www.azcentral.com/community/glendale/articles/20120801glendale-few-options-jobing-arena.html .

Even the vaunted Arizona Republic is not consistent in the numbers it offers to its readers. Nine months ago $12M a year to operate the arena was a good number. Now, apparently $5M is the number you should believe.

Below are the numbers from 2006 and 2007 when Jerry Moyes owned the team. Annual revenues were $6.4M to $7.1M. Total expenses were $13.4M to $12.9M. Net loss was $6.9M to $5.7M.

The auditor’s report shows the following :

…………………………………………………………..2006                                   2007

Revenues……………………………………………. $7,142,000                    $6,499,000

Expenses:

Event…………………………………………………. $5,616,000                    $4,413,000

General and Administrative……………………. $ 7,303,000                    $ 9,052,000

Total expenses……………………………………… $12,919,000                  $13,465,000

Net Loss……………………………………………..  ($5,777,000)                ($6,966,000)

These numbers from 6 years ago track with the current NHL numbers of revenues of approximately $6M; expenses of approximately $12M; and loss of approximately $6M.

numberFor months  I have consistently used these very same numbers obtained under a Freedom of Information request from the city. Moyes’ numbers come from an auditor’s report and the NHL numbers were submitted monthly to the city. There is no doubt in my mind that it takes approximately $12M to operate Jobing.com arena annually with revenues of approximately $6M and debt of $6M. The numbers don’t lie.

 

 

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May 13

9

Warfare erupting

Posted by Joyce Clark on May 9, 2013
Posted in Jobing.com arena  | Tagged With: , , , , , | No Comments yet, please leave one

fightingMy goodness! It’s really getting nasty out there as the deadline swiftly approaches for responses to Glendale’s Beacon Sports RFP or someone is announced as the buyer-of-choice by the NHL.

twitter warThere are those who discount Twitter. Do so at your own peril. It has become one of social media’s behemoths. Lately the newly renamed Ice Edge, now known as Renaissance Sports, has been taking potshots via Twitter at Pastor’s group and vice versa. There is also the tried and true tactic of not saying something directly but retweeting someone else’s tweet. One of my recent favorites is this from KCD Public Relations, in support of the Pastor group. KCD recently retweeted the following, “@HedgeyeDJ Ice Edge fails for 3 seasons to buy #Coyotes, then rebrands to RSE so they can annoy serious buyers?” A while back Daryl Jones, @HedgeyeDJ, tweeted “Silence is a source of great strength,” quoting Lao Tzu. Too bad neither side is heeding that sage advice.

Two_Mad_Teenager_Boys_Now warfare seems to be erupting between the City of Glendale and the NHL. There is Twitter talk that the NHL could have as long as ten years to vacate the arena as well as the current gossip that the City has not just been paying operating expenses for the arena but team losses as well. This shot across the ship of state (er…city) could be because Twitterdom has shared that the City of Glendale is blaming the NHL for not being better stewards of Jobing.com Arena and allowing the roof to go into disrepair and leak-big time.

All in an effort to win the hearts and minds of the public’s perception…included in that mix are hockey fans taking sides with one group or another right and left.

What is even more amazing are the plans of various groups to meet with the Mayor and Council despite the Beacon RFP admonition that speaking to officials of Glendale could disqualify an applicant at their (or someone’s) discretion. Pure politics. If you are the current favorite, it’s no big deal but heaven help you if you are not. This admonition will be played like a violin to get rid of unwanted players.

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May 13

7

Rumors are born, grow and die within hours

Posted by Joyce Clark on May 7, 2013
Posted in Jobing.com arena  | Tagged With: , , , , , | 4 Comments

On May 6, 2013 Dan Bickley posted a column on Arizona Central. Here is the link http://www.azcentral.com/insiders/danbickley/2013/05/06/coyotes-new-money-new-ownership-bid-new-problems/. It is entitled Coyotes: New money, new ownership bid, new problems. I typically do not read Mr. Bickley. He apparently is just as often wrong as he is correct in his reportage and now, as the Coyotes ownership saga comes to a head rumors are multiplying like rabbits and flying faster than a 747 jet.

Bettman

NHL Commissioner
Gary Bettman

What I did find interesting was this, “But the league wasn’t at all happy with Monday’s front-page story in the Arizona Republic, which listed the true cost of running Jobing.com Arena at less than $6 million.” Well, no one should be happy. Yesterday I posted facts and figures in three separate blogs, Fuzzy Math, A Magical, Mystical Number and There’s an Elephant in the Room. The true cost of operating Jobing.com Arena annually is about $12M.

Everyone is touting LeBlanc/Gosbee as the front-runners for ownership. Let me remind you that they are only the first participants in the parade of would-be owners. That does not make them sure-fire, guaranteed owners. Other parade participants are standing in line, Pastor, Jamison, Hulsizer, Reinsdorf and Kaites. Whoever was scheduled to meet with the current council first would have received the tag, “ front-runner.” That is exactly what it appears LeBlanc wants to happen. He would like to be declared the de facto winner of the contest and chase his other competitors away forever.

Leblanc

Anthony LeBlanc

Bickley goes on to say, LeBlanc’s group – Renaissance Sports and Entertainment “…is committed to absorbing $40 million in losses over the first four years, with an out clause if the economics don’t improve.” If Bickley’s reportage is accurate, this is a cause for concern. In the last go-round when LeBlanc was part of Ice Edge they wanted to play 4 or 5 games in Canada. I assume it was to dip their toes in the waters of the Canadian market to see if it was to their liking. A 5 year out clause, if LeBlanc is successful, may portend the Coyotes’ future. If we see another bid to play some regular season games in Canada that action will tell us more than mere words.

All of this conjecture becomes moot if there is no majority on council to support an annual lease management fee in the range of $10M to $12M. To date, it appears that this council is fixated on a $6M number. It’s a bogus number as I stated in my blog, A Magical, Mystical Number. It was created out of thin air and because it has been publicly stated ad nauseam, it is treated as if it’s a real number based on fact. What continues to amuse if it weren’t so sad, is that the current council really believes they can find an arena manger willing to take $6M a year, cover all operating costs (which means they begin by losing somewhere in the neighborhood of $6M annually) and float the city a loan to cover necessary capital repairs and replacements. Amazing! Stay tuned…Glendale’s version of the Amazing Race is not over!

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May 13

6

There’s an elephant in the room

Posted by Joyce Clark on May 6, 2013
Posted in Jobing.com arena  | Tagged With: , , , , | No Comments yet, please leave one

One issue not so far discussed is the issue of Capital Repairs needed for the arena. Keep in mind, my best guesstimate is that there is maybe $200,000 or $300,000 in the Capital Repairs Account. Below I’ve included Newco, LLC’s “wish list” of Additions and Capital Repairs for the Fiscal Year Ending June 30, 2014.

Newco capital repairs

Newco LLC proposed
capital repairs 2014

As you can see, the major issue is “Arena roof work” for $2M. The entire “wish list” comes to $5.6M. The roof is leaking. It needs work. Will it cost $2M? Maybe not. I heard that the city has called in an independent consultant to study the roof and report back (at what cost and this should be considered part of the tab to fix the roof). It may be a choice between a band-aid costing much less and major surgery costing far more.

billsThe point is that in addition to the $6 M a year, a figure to which this current council is wedded, they will have to find additional dollars to repair the arena roof. In addition  to asking the new arena manager to accept a figure of $6M a year blithely mandating that entity to be willing to lose $6M a year, they also want the new arena manager to participate in the cost of capital repairs based on the Beacon RFP.

This is from the Beacon RFP, “Investment. State the amount of a proposed investment in the Arena that the Respondent Manager is willing to provide (Please review the proposed Additions and Capital Repairs Schedule for Fiscal Year ending  June 30, 2014 for further details) [the very same document you see above]. Describe any restrictions/repayment requirements [read loan to be paid back by city] on any such investment. Also describe any additional fees, restrictions or incentives that may apply to any investment.”

How many prospective owners are out there willing to accept an annual $6M management fee knowing that the costs of operating the arena are double that amount? Then ask how many prospective owners will be willing to make a loan to the city to cover all or a partial list of capital repairs?

The time has come for this current council to understand the situation factually. They also need to understand that whether the Coyotes stay or go there is a substantial bill to be paid. Having the Coyotes as an anchor tenant helps the situation not hurt it. It guarantees 40+ nights of activity at Westgate and its attendant sales tax revenues. Surely they realize the significance of that and how much it helps their bottom line. Losing the Coyotes and going it alone on managing the arena, no matter how convinced they are that it will work is a recipe for further financial disaster.

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May 13

6

A magical, mystical number

Posted by Joyce Clark on May 6, 2013
Posted in Jobing.com arena  | Tagged With: , , , , , , | No Comments yet, please leave one

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

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

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

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Apr 13

19

Through a former councilmember’s prism

Posted by Joyce Clark on April 19, 2013
Posted in Jobing.com arena  | Tagged With: , , , , , , | 5 Comments

Coyotes logoThe entire Coyotes ownership saga began with the Glendale city council’s decision to accept Steve Ellman’s proposal for a sports and entertainment district that included the construction of an arena for the express purpose of having the Coyotes as its anchor tenant. Their first game was played in the new arena in 2003. The original lease management agreement did not require a payment to the manager of the arena. That concept died with the Moyes’ bankruptcy in 2009. I was part of the drama until January 15, 2013 as a councilmember. I speak for myself and not for any Glendale elected officials, past or present.

homework 1During my 16 year service on Glendale City Council one of my imperatives was to make decisions that were fully informed. As a councilmember one does that by “doing one’s homework.” That means a commitment to read the material you are provided. Ascertain all of the facts of the proposal. Question staff by asking follow up questions on material not always presented. Talk to people in the industry and talk to the stakeholders, i.e., prospective developers and business owners, and last but certainly not least, one’s constituents by informing them of the facts of the proposal and asking for their comment. You take this vast amount of information and process it through a personal sieve. One overriding parameter is to make a decision that you believe to be in the very best interest of your city, economically and socially.

diff people 2Just as all people are different so, too, are all councilmembers different. During my time on council, I have met some councilmembers who were lazy and didn’t bother to do their homework or who became wedded to a position immediately and would not budge and let facts get in the way. I have even observed some who let personal prejudice determine their position. I have also observed councilmembers who did, in fact, do their homework. Their final position may have been different from mine but that was because their personal framework of reference led them in a different direction. No matter, they earned my respect because they were not swayed by personal prejudice or preference.

city hall 2I was first elected in 1992. I think I can be considered as a Councilmember Emeritus. There are very few of us still living much less living in Glendale. In fact, there are less than a dozen. There are former Mayors Renner and Scruggs, Councilmembers Heatwole, Tolby, McAllister (living out-of-state), Eggleston, Frate, Goulette, Lieberman (living out-of state) and myself. Former Councilmember Hugh is serving once again and former Mayor Klass and former Councilmember Huffman are deceased.

mallarrowhead02From that perspective one has to appreciate Glendale’s recent history. Prior to the 1980’s Glendale was an unremarkable town that offered residents a quiet, hometown quality of life. In the early 1990’s we had an opportunity to create the first major economic engine in the city – the Bell Road Corridor to be anchored by Arrowhead Mall.  I was present for the signing of the beam that was used in the construction of Arrowhead Mall, the anchor tenant for the area.   Glendale had its first major economic engine.

Glitters_lightsGlendale’s second major economic engine became its downtown in the mid 1990’s with the advent of its first, annual major festival, Glendale Glitters and its synergy as an antique center in the state. Since then, downtown commercial has diversified. It is still not all that anyone envisions it can be but it continues to make progress. Its major anchor tenant could be considered City Hall, the Civic Center and the investment the city continues to make in hosting major downtown events. Glendale has its second major economic engine.

Courtesy Christopher B.

Courtesy Christopher B.

In the early 2000’s another opportunity for a third major economic engine was created with the relocation of the Coyotes Hockey team and the construction of Jobing.com arena for the team. The national economy was humming and I and the rest of council were planning for Glendale’s future. The city created a new zoning classification, “Sports and Entertainment District” and Westgate was born. Nearly all of the land surrounding the original core of Westgate to date has been approved with the Sports and Entertainment zoning classification and with Westgate’s and the arena’s stability there will be a surge of development. I won’t relate the history of the arena and the team from 2003 to the present for that has been covered in my other postings.

question 4Today uncertainty about Coyotes ownership and the fate of Jobing.com arena still swirls. Many have asked me for my personal assessment. There is the Beacon RFP and how it plays. There is the current crop of prospective owners: Jamison, LeBlanc/Gosbee, Pastor, Hulsizer and Reinsdorf/Kaites. Do not ignore the non-hockey bids to manage the arena: Global Spectrum, AEG and IFG. They cannot be discounted as players. I am not going to comment at this time and when I do it will be through the prism of what I, personally, believe is good for Glendale. There will be plenty of time to dissect the situation after decisions are made. It’s time to let this situation play out. I think the NHL has come to a decision and it would not surprise me to hear the announcement next week. That much is logical. Whomever the NHL has blessed must get a submission together to respond to the Beacon RFP by May 24. The finish line is in view and the winner is…?

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Apr 13

17

Beacon RFP for arena management hits the street today

Posted by Joyce Clark on April 17, 2013
Posted in City of Glendale • Jobing.com arena  | Tagged With: , , , | 6 Comments

BeaconToday the Beacon RFP for arena management was made public and is posted on the city’s website at  http://www.glendaleaz.com/purchasing/bidopportunities.cfm. You can read the entire document for yourself.

One of the most important elements of the RFP is the duties of the manager. There is one that is the most telling and confirms that the new manager perhaps may not be the owner of a team/anchor tenant, “Act as agent for the City in executing the operational requirements of any license/lease agreements with professional sports team(s) and/or anchor tenant(s) (i.e. manage day of game activities and interact with the sports teams regarding use of the Arena).”  As you can see, the city is seeking an entity to be its agent in dealing with any sports team that wishes to use the arena.

This manager would be responsible for booking all events, be a party to all marketing efforts and have control over the concessions.

In terms of qualifications, the manager must be a nationally recognized company (this banishes the very thought of the Phoenix Monarch Group forever); have three years experience in managing a facility with an NBA or NHL team; and “The Manager must have current experience in operating such a facility on behalf of a public entity, such as the City of Glendale.” Two entities immediately come to mind: AEG, which is managing the arena now for the NHL or Global Spectrum, which manages the University of Phoenix Stadium for the Arizona Sports and Tourism Authority (AZSTA).

The preferred term of the arena manager contract is 5 years with 2 options to renew for additional 5 year terms. It is up to the prospective candidate to bid on the cost the city would pay for such management. It is clearly understood that it contains an “at-risk” provision meaning any losses would be borne by the manager. The city is also asking for an alternative compensation plan that would enhance revenues that the city gets. The city is also asking that the arena manager plan to invest in the arena, “State the amount of a proposed investment in the Arena that the respondent Manager is willing to provide (please review the Proposed Additions and Capital Repairs Schedule for the Fiscal Year ending June 30, 2014 for further details). Describe any restrictions/repayment requirements on any such investment. Also, describe any additional fees, restrictions, or incentives that may apply to any investment.”

The evaluation criteria are as follows:

  • Business/Marketing/Transition plan worth 30%
  • Compensation price worth 30%
  • Experience and organizational structure worth 15%
  • Personnel worth 10%
  • Investment worth 10%
  • References worth 5%

All responses are due no later than May 24, 2013 at 5 pm EDT. But perhaps the most interesting element of the proposal is, “INQUIRIES OR OTHER CONTACT WITH ANY OFFICER, AGENT, OR EMPLOYEE OF THE CITY OF GLENDALE REGARDING THE ARENA AND/OR THIS REQUEST FOR PROPOSAL, INCLUDING CONTACT BY PROPOSER’S CONTRACTORS, AGENTS, REPRESENTATIVES AND CONSULTANTS, COULD RESULT IN A PROPOSAL BEING DISQUALIFIED.”  The very first question that occurs is why is Mayor Weiers scheduled to meet with Pastor and his group on Friday, April 19th? Either Pastor has no intention of managing the arena or he is not aware that such a meeting could disqualify him.

Well, there you have it. The RFP is pretty much what we expected it to be. Although at this point, Beacon and the RFP seem to have no relevance in an owner’s attempt to acquire the team. The NHL has staked out that territory and will let the city know whom it has chosen. With city council still holding fast to the notion of a $6M annual management fee to any prospective owner I dare say when they see current average annual revenues of $6M and current annual expenses of $12M, they may very well say Hmmmm.

Expect more commentary on this RFP after you and I have had more time to digest it. I thought it important to made public as quickly as possible so that it receives the widest public scrutiny and commentary as possible.

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Apr 13

5

Glendale…will they or won’t they?

Posted by Joyce Clark on April 5, 2013
Posted in Jobing.com arena  | Tagged With: , , , , , , , , , , | 3 Comments

Late on Friday, April 4, 2013, Craig Morgan, who covers sports for Fox Sports Arizona among a growing list of other media, did an outstanding job of summarizing the recent Coyotes saga. To read his entire article, please go to http://www.foxsportsarizona.com/nhl/phoenix-coyotes/story/Coyotes-ownership-saga-hits-stretch-run?blockID=889001&feedID=3702.

board-gosbee

George Gosbee

Leblanc

Anthony LeBlanc

I have chosen some of the most salient snippets for further commentary. He said, “The group led by George Gosbee and Anthony LeBlanc has already submitted its purchase bid to the NHL, and Darin Pastor’s group submitted the paperwork for its proposal to the league on Friday. Greg Jamison’s group is still working on a proposal, but it is expected that they will submit it by the middle of next week, likely under pressure of an imposed NHL deadline.”

Image2

Darrin Pastor

Jamison

Greg Jamison

The latest rumors say the LeBlanc/Gosbee deal is for 15 years, with no opt-out clause and an option to buy the arena. There is no word on the kind of deal submitted by the Pastor group. That’s odd after his flurry of recent publicity. I am especially gratified to see that Greg Jamison is still a player. I must admit that I hope he prevails. I have met him and talked to him in depth and it is still my belief that this man is a perfect fit for the Coyotes. Morgan offers that Matt Hulsizer may still be in the hunt as well. Maybe…maybe not. Mr. Hulsizer, a successful businessman, married into a family of wealth. They were willing to support him on his first attempt to buy the Coyotes…and why not? A hundred million dollars would have come from the City of Glendale. Yes, the family investment was still healthy but not as much was on the line as the city’s investment under Hulsizer. My guess is that there is no will to continue on the part of the family. I could be wrong for I have proven so in the past but somehow or another, I am willing to write him off.

Mr. Morgan then goes on to say, “What is likely to happen soon is that the NHL will choose an exclusive buyer, then approach Glendale to negotiate the lease agreement. The Glendale City Council hired Beacon Sports Capital in late March to solicit bids from management companies to run the arena, as well as to handle negotiations with any prospective owners.”

Bettman

Gary Bettman

This confirms my assessment in previous blogs that the League is in the driver’s seat this time. They will choose the buyer and Glendale will either come to terms with that buyer or not. The option of relocation of the team is certainly not dead yet.  This council may have thrown good money after bad in hiring Beacon Sports Capital. It appears that Beacon will have no role in the process when the NHL selects the owner. There will be no one to vet. If, however, Glendale cannot or will not come to terms with the newly selected owner, Beacon will then have a role as council will most likely Mayor Weiers’ Plan B with the use of 4 managers for the arena.

In additon, Morgan states, “What that lease agreement will look like is anyone’s guess. Glendale City Councilwoman Yvonne Knaack said recently that the annual fee to the city could “be anywhere from $6 (million) to $10 million on operating, and then maybe another $9 million on debt.” 

Councilmember Sherwood publicly recognized a figure of at least $10M to $12M annually for a lease management agreement.  Vice Mayor Knaack acknowledged a similar figure as well. She is also correct about the arena construction debt of approximately $9M a year. This is where it gets dicey. Will this council accept a deal that requires a substantial annual payment along with the annual construction debt? Combining the two, the figure will be somewhere in the $20M range annually. greed 1But that requires this council to cut expenses elsewhere to absorb the costs of the deal and to continue to build a contingency reserve fund. To date there has been absolutely no will to cut by the new council. In fact, they are considering adding 15 firefighter positions and a new $650K truck and 31 police positions to this budget. They simply cannot do both – manage the annual costs associated with the arena while creating new budgetary expenditures.

Norma Alvarez

Norma Alvarez

We have heard enough from Councilmember Alvarez to know that she wants to pay nothing for the arena and I suspect she thinks there is some group out there that will pay the city for the privilege of managing the arena. Not even her beloved Phoenix Monarch Group was willing to fall for that. If you remember, their base fee was $7M for a limited number of events…read tractor pulls. Nevertheless, she stubbornly holds to that position and has even managed to elicit support from Councilmembers Hugh and Chavira. Councilmembers Martinez and Sherwood recognize the importance of keeping an anchor tenant at the arena for the future of a vibrant Westgate that attracts new development in and around it.

Knaack

Yvonne Knaack

Weiers

Jerry Weiers

That leaves two question marks, Vice Mayor Knaack and Mayor Weiers. Vice Mayor Knaack is on the horns of a dilemma. I suspect in her “heart of hearts” she knows that keeping the team as an anchor tenant would be the right choice. But her strongest backers, the fire union, will put tremendous pressure on her if they see their 15 additional firefighter positions and new truck evaporate in this year’s budget. Mayor Weiers, on the other hand, derided the deal the previous council had with Greg Jamison. He should be reminded that Anthony LeBlanc has said publicly that any deal with the city must be similar to the previous deal on the table with Jamison. Weiers is also looking for a deal on the cheap. It will be time for these two people to decide what is more important. Is it more important to send the team packing and leave the legacy of an uncertain future for the arena and Westgate because it’s what their supporters in their previous election now expect of them? Or is it more important to accept that for the sake of Glendale, of Westgate and of West Glendale’s future development potential that sometimes one has to make the difficult and unpopular decision? We will see…soon enough. We all hope that they realize the importance of keeping an anchor tenant at the arena.

I am pleased that this long, painful Coyotes ownership saga is coming to an end. I wish all theCoyotes logo potential owners well although I continue to root for Greg Jamison.  The Coyotes team has been beleaguered and beaten for too long. They, more than anyone or anything else, have earned certainty about their futures.

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Apr 13

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Darrin Pastor…too good to be true?

Posted by Joyce Clark on April 3, 2013
Posted in Glendale elected officials • Jobing.com arena  | Tagged With: , , , | 3 Comments

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Darrin Pastor

I, just as many did, listened to the Darrin Pastor interview on Roc and Manuch, NBC Sports Radio, 1060AM on April 4, 2013.  I wish him well but as a tried and true skeptic, the jury is still out.  Let’s take a closer look at some take-aways from that interview.

 

 

Six months of due diligence

calendarPastor claimed that he has done six months of due diligence. That due diligence should have included finding out what the City of Glendale’s expectations are. This is the start of April and going back six months puts him in October, 2012. I was a councilmember until January 15, 2013, and I never heard of him until his press release of several days ago. He certainly wasn’t talking to anyone in the city. That place is like a sieve. If he had talked to anyone, it would have become common knowledge around City Hall.

Why does any deal take so long?

This must be naiveté on Pastor’s part although he is a very intelligent businessman. It comes as a bit of a surprise to hear that statement from him. Surely he’s done hundreds of deals using legal counsel and should know that lawyers tend to make everything take twice as long. He also claimed that he is using lawyers with municipal experience. So it certainly shouldn’t be a surprise to realize that working with a municipality is slow and cumbersome. It isn’t as if any one prospective deal took the entire four years that the Coyotes have been ownerless. Over those four years there has been a succession of bridesmaids but never the bride. We are all painfully familiar with the list . None of them took longer than 12-18 months before biting the dust.

Glendale is where the team is going to stay

jobing.com arena

Jobing.com Arena

We have heard that from every prospective buyer of the team. The question should be, not is the team going to stay in Glendale?… but how long will you keep the team in Glendale? There should be a ten year or better commitment before an opt-out clause is executed. That indicates a commitment to build the team and build a solid fan base. If the opt-out clause is five years or less, whoever buys the team will take the money and run…somewhere else. Better yet, would be to get an assessment from each of these would-be buyers of his estimate of how much time he feels is necessary to turn the team around and become profitable. Realistically, no prospective owner wants to commit “sports suicide” and pour money down a rat hole. Each one of them (you would think) has developed a strategy to turn the team around and become profitable.

Return on investment

ROIMr. Pastor uses “banker-ese” terms. He labels the team as an “undervalued asset.” This gentleman (and his family) didn’t become successful because of pixie dust. He is a very astute businessman. If he is successful in purchasing the team using capital from family investments, there will most definitely be an expectation of profitability down the road. Again, the question becomes how long is that road?

Where is Beacon Sports?

Mr. Pastor said directly, “Beacon Sports is not involved.” His statement should be of concern and can be interpreted several different ways. Is Beacon not involved because Pastor has no interest in managing the arena and simply wants to pay rent as a tenant? Why isn’t Beacon involved as the city hired the company to vet and to negotiate with any prospective arena manager?

Got his homework today

homeworkMr. Pastor said that he received paperwork from the NHL today and would begin working on it immediately. Good for him. If that is the case, don’t expect any quick resolution. Plan to wait a month or two. He also said he had met with and talked to Mike Nealy but that he was talking to and dealing directly with Bill Daly. I expect Mr. Daly is talking to a lot of prospective owners these days.

Mr. Pastor looks good on paper and is saying the things we all want to hear these days. Shades of Matt Hulsizer. Hulsizer went very public and was obviously an avid hockey fan but his deal went south when the Goldwater Institute questioned the city’s sale of $100M worth of bonds whose proceeds would be paid to Hulsizer. The devil is in the details…of the deal.

Mr. Pastor meets Mr. Weires

Mr. Pastor in his meeting with Mayor Weiers today characterized at least twice, the mayor as “refreshing.” Glad they enjoyed meeting with one another. If Pastor really was politically savvy or had received advice from his municipally-wise lawyers, he would have introduced himself to all of the councilmembers, remembering that Mr. Weiers is just one vote of seven.

I wish all of the prospective buyers well and would like nothing more than for someone to succeed with a long term commitment. Call me jaded. I have been “around the block” quite a few times on this issue and have seen prospective owners come and go. To date there’s been a lot of public posturing, first by LeBlanc/Gosbee, now Pastor. It’s all sound and fury signifying nothing.

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