The Glendale Monthly Arena Report for February, 2014 is now available. The $3 qualified ticket surcharge for hockey events is reported by IceArizona at $163,082. Divide that number by the $3 ticket surcharge and the qualified ticket attendance for the month is 54,360. The number of hockey events for the month was 4. Divide the 54,360 by 4 and the average qualified ticket attendance per game is 13,590. The publicly announced attendance figures are higher. If a game was sold out at 17,750 that means that approximately 4,000 tickets would be non-qualified, either comped or sold at a discounted price and the city does not receive the surcharge.
IceArizona, by comping and selling discounted tickets, is not generating the revenue it needs. Publicly they have announced that some of the games are the highest revenue generators to date. True enough but if they had sold more qualified tickets their bottom line would be stronger. How long before its losses reach the $50 million figure? Five years? Three years?
Let’s look at the non-hockey events. There were two in the month of February. The qualified ticket surcharge reported by IceArizona to the city is $59,884. Divide that figure by $5 per qualified ticket for a qualified ticket attendance of 11,976. Divide that figure by the 2 non-hockey events and there was an average of 5,988 of qualified ticket attendance per event. Again, the publicly announced attendance figures were higher but again, the balance of the tickets were either comped or sold at a discount, making them non-qualified ticket sales.
Parking figures are only reported by quarters of the year so the next parking revenue statement will be available at the end of April, 2014. The city continues to show a total loss of slightly over $3 million to date.
As has been reported, council budgeted $6 million in this Fiscal Year toward the payment of the $15 million annual management fee. The council meeting of March 25, 2014 will have council voting to transfer $6,680,160 from its Contingency account to cover the balance of the arena management fee due this year. The total management fee for this year is $13,551,370. It is not the full $15 million because the management deal did not become effective until August, 2013. The lower management fee for this year reflects the proration starting date in August. The city pays out $13.5 million and receives $3.2 million in “enhanced revenues” (that includes sales tax inside the arena) to date. It looks like the city’s arena loss to date is about $10 million. This figure will drop with the reporting of revenues from the games played in March and April. Hopefully there will be some playoff game revenue as well. It is estimated that the city’s loss for the year will be in the $7 million range. Couple that with the $12 million annual arena construction debt payment. It isn’t a pretty picture, is it?
© Joyce Clark, 2014
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Come on … the $12M annual arena construction debt payment is completely independent of any management deal; it’s there whether the arena gets used or not.
And a city loss of $7M for the year is only $1M off the budgeted amount (a far cry indeed from the numbers being thrown out by Hugh and Alvarez in all their hand-wringing leading up to the vote).
As far as the city’s end of this management deal, it’s looking like it’s going rather well indeed in this first year. The team’s finances (and whether that could drive a change in 5 years) is the real wild card here. But if the arena deal is such a large part of “not a pretty picture” for Glendale (as you seem to imply), then why would the team hitting the $50M in losses relocation requirement be a bad thing (as you also seem to imply)?
Oh, and spoiler alert:
The ticket surcharge figures for March will be a hair under $250,000 over 6 games. The numbers have been rather predictable, actually.
The arena construction debt of $12M annually is there — whether IceArizona or someone else manages the arena. It’s part and parcel of the expenses that the city must pay to own it.
The city put $6M in its budget for arena management, leaving it $9M short and unbudgeted. Mr. Duensing believes that even with the “enhanced revenues” city will not receive another $9M from IceArizona.
I don’t think anyone is saying they’ll receive another $9M this year. But Mr. Duensing’s estimate of a $7M loss tells me they believe they’ll receive another $8M from IceArizona.
Don’t get me wrong; there’s a lot of good info in this block post. But it’s basically just describing a $1M hole in the budget, is it not?
(typo: blog post… not block post)
Clearly there were 3 hockey events in February no matter what the spin will be on this..I don’t really want to get in to motive or anything else but when this team is getting kicked around by misinformation….at least I as a military officer retired dedicated to honor and honesty must speak up …The games for February right off my calendar is as follows:
Pittsburgh 17362 SRO
Dallas 12257
Chicago 17525 SRO
For an average 15714.666
What a timely negative article…
I concur that there were games with outstanding attendance. The thrust of my comments is that many of the attendees received comped or discounted tickets which are considered non-qualified. IceArizona only pays the City of Glendale for qualified ticket sales per its management contract. Non Qualified tickets are to be no more than 1,000 per game yet the average of non qualified tickets appears to be in the 4,000 range per game.
As Fishbert pointed out the last (or fourth) game was played at the end of January. Since the reporting lags by 2 days that game was added to the February total number of games. That’s why even though there were in reality ovly 3 games in February the fourth is carryover from January.
Not a Pretty Picture at all.
And again, I assemble some numbers from the budget workshops. At the March 18th workshop, a proposal was presented for “balancing” the budget — NOT my idea of true balancing, but anyway. One item was reducing the contingency goal from 5% to 3% (it used to be 10% before the financial crises). Then there were several other “balancing” proposals.
Before any “balancing” proposals were submitted, the annual deficit ranged from 14-17 million per year. I presume that includes a FULL $9 million in surcharges and fees coming back to the city. Which it is obviously NOT doing now. What that means to me is that there is now a new deficit — the shortfall in revenue from the surcharges and fees of $7 million (or maybe higher).
If all this is true, then the 3% contingency that is proposed will not cover the shortfall in revenues from the surcharges and fees.
Bottom line: The financial mess continues and even with “balancing” measures, this new deficit creates a new financial issue that won’t be covered by any revenue increases proposed so far.