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Joyce Clark Unfiltered

For "the rest of the story"

Jun 24

23

Don’t count on Meruelo

Posted by Joyce Clark on June 23, 2024
Posted in Arizona Coyotes • City of Glendale • City of Phoenix  | Tagged With: , , , , , | No Comments yet, please leave one

Disclaimer: The comments in this blog are my personal opinion and may or may not reflect an adopted position of the city of Glendale and its city council.

The Coyote fan base was surprised, to say the least, to learn that the state land auction for a parcel that Meruelo wanted to buy had been cancelled. It comes as no surprise for several reasons.

Why would Phoenix want to give massive tax breaks to facilitate a venue that would be in direct competition to other concert venues located within the city? It would not. It would be safe to assume that the ‘powers that be’ in Phoenix had several conversations with the ‘powers that be’ at the state Land Department.

This recent action by the Land Department puts the ball in Phoenix’s court and I doubt Meruelo will get those tax breaks that he covets. Without those, Meruelo’s incentive to build will evaporate. Meruelo received a boat load of money by selling the team. There is simply no incentive on his part to try to get something in place in the Phoenix area in a few years, as required by the NHL.

He has no credibility left with Valley fans or former employees. He has treated both shabbily. The team’s sudden departure for Utah left fans stunned and demoralized. His treatment of his former employees by giving one month’s severance was uncaring and demonstrated how little he valued them.

Meruelo’s reputation is shot. Valley fans no longer trust him. Anyone who chooses to work for him does so at his/her peril.

If fans ever expect to see another team in the Valley it will be resurrected by someone other than Meruelo. It will have to be someone that truly values the sport of hockey; someone that will reach out to fans to develop a strong base; and someone that has the political savvy to work through local government to secure support.

In this case it was all about the Benjamins…and Meruelo got his. Sometimes a person’s greediness stuns all.

© Joyce Clark, 2024    

FAIR USE NOTICE

This site contains copyrighted material the use of which is in accordance with Title 17 U.S. C., Section 107. The ‘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 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 material. 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 24

30

Will the Coyotes return? Maybe…maybe not

Posted by Joyce Clark on April 30, 2024
Posted in Arizona Coyotes • City of Glendale • Phoenix Metro issues  | Tagged With: , , | No Comments yet, please leave one

Disclaimer: The comments in this blog are my personal opinion and may or may not reflect an adopted position of the city of Glendale and its city council.

I feel badly for Coyotes fans. They have been treated horribly by Alex Meruelo and crew. It appears the owner knew he was working on a deal to sell long before it occurred. To drop that bombshell at the last minute, eroded fan loyalty and trust.

Now, I was never a rabid fan, but I was a fan. I enjoyed watching the Coyotes play until things went south. Steve Ellman seemed to be the only owner that seemingly cared about the Coyotes until he let Jerry Moyes buy his interest in the team. That was the beginning of the end. Moyes wanted to declare bankruptcy and the NHL took over the team to the tune of Glendale paying $50 million to keep the team in the Valley. Don’t ever tell me Glendale was the problem.

According to renowned economist Elliot Pollack Glendale will be the geographic center of the Valley. We are seeing that come to pass with all the new residents and development in cities like Buckeye, Surprise and Peoria. A whole new crop of hockey fans is descending upon the West Valley.

The NHL, seemingly desperate, sold the team to a series of apparently sleezy owners. I won’t go through the list. We all know who they were. Which brings us to the latest and least great owner of them all.

I no longer have any insider knowledge but just as the fans are speculating, so shall I. If fans are counting on Meruelo winning a bid for state land their hopes may very well be misplaced. Meruelo announced what he was willing to pay for the property, but he is willing to go higher? How much higher? I would bet there are developers just waiting to outbid Meruelo on this piece of land. If he is unsuccessful in acquiring this land, there is no backup plan.

Where is Xavier Gutierrez? He just announced his own sports consultancy and marketing firm. Has anyone heard from him or seen him in his Coyotes role since the sale?

Fans have hoped that Wayne Gretzky can put together a consortium of investors to resurrect the team. The costs would be enormous. Meruelo will command a sky-high price. Then there is land acquisition, navigating through layers of local government regulation and the investment required for building a facility. It may be more than anyone is willing to take on.

In essence, the Coyotes have vanished.

© Joyce Clark, 2024    

FAIR USE NOTICE

This site contains copyrighted material the use of which is in accordance with Title 17 U.S. C., Section 107. The ‘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 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 material. 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 24

13

Coyotes moving

Posted by Joyce Clark on April 13, 2024
Posted in Arizona Coyotes • City of Glendale • City of Phoenix • City of Tempe • Desert Diamond Arena • Phoenix Metro issues • VAI Resort • Westgate • Yucca district  | Tagged With: , , , , , , , , | 1 Comment

Disclaimer: The comments in this blog are my personal opinion and may or may not reflect an adopted position of the city of Glendale and its city council.

Yesterday, April 12, the Arizona Republic reported (“Arizona Coyotes Relocating to Salt Lake City, reports say”) that it appears that the Coyotes will be moving to Salt Lake City, Utah. The General Manager, Bill Armstrong, advised players of the impending move on Friday night.

I am sharing my thoughts on the news. The move was inevitable, but I thought Houston would be the team’s new home. I was wrong.

Leaving Glendale was the beginning of the end. Alex Meruelo sent this team down this path with his arrogance and stubbornness. He could have and should have been more reasonable and negotiated a deal in Glendale that was mutually beneficial to the city and to the team.

Guess what? Sometimes it’s better to stay with the person that brought you to the dance.

 For all the naysayers about Glendale as a viable location, there were several factors overlooked. When the Coyotes put a winning team on the ice, the arena was packed. Witness their one and only play-off season. It’s not where you play but the quality of the team that determines attendance. When a team is winning, fans will come from everywhere. With the completion of Route 202, travel time from the East Valley was substantially reduced. The Coyotes were successfully building a fan base in the West Valley. The Westgate area with 15 new apartment complexes and the construction of the VAI Resort and Mattel Adventure Park adds a whole new dynamic that would have helped to grow the fan base.

Personally, I’m glad that the Coyotes left the Glendale arena. Since their departure revenues to the city from events have skyrocketed. With the addition of the Rattlers football team, the revenue picture for Glendale looks even brighter.

When the Coyotes were unable to relocate to Tempe and instead ended up playing in the 5,000 seat Mullett Arena, many sensed that a move was going to happen sooner or later. Muerelo had to be bleeding money. Many of his costs were fixed and the revenue from 5,000 seats could not possibly cover those fixed costs, no matter the price point of the tickets. Add to that dynamic, the head of the players union’s demands to know where the players would be long-term.

As for the bid on state land in north Phoenix, who advertises what they are willing to bid? I suspect there are other types of developers out there that would have outbid the Coyotes. That scheme was certainly not a done deal. When Mayor Ortega of Scottsdale publicly voiced Scottsdale’s objections, sentiment about yet another location not making surfaced quickly. Realistically, had the Coyotes been successful, the hurdles they were about to face guaranteed that it would be years before a hockey arena could be built at that location.

I feel sorry for the fans. They have been steadfastly loyal to this team and have proven it many times. They are sad, angry, and upset. Rightfully so. For the fans and the players to learn of the relocation through social media shows how little respect Muerelo and management has for the fans and their players.

After all the assurances that they committed to stay in the Valley, it appears that the reported $1 billion that Meruelo is asking for the team, outweighed any promises of staying. It’s all about the money, baby.

© Joyce Clark, 2024    

FAIR USE NOTICE

This site contains copyrighted material the use of which is in accordance with Title 17 U.S. C., Section 107. The ‘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 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 material. 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.

May 23

17

Tempe citizens win and Coyotes lose

Posted by Joyce Clark on May 17, 2023
Posted in Arizona Coyotes • City of Glendale • City of Phoenix • City of Tempe • Phoenix Metro issues  | Tagged With: , , , , , , , , | No Comments yet, please leave one

Disclaimer: The comments in this blog are my personal opinion and may or may not reflect an adopted position of the city of Glendale and its city council.

Last night I checked the Maricopa County elections page to find out the results of the Tempe election. There were 3 propositions, all of which if passed, would have given the Tempe City Council and the Coyotes the green light to build a new hockey arena.

I am pleased to report that all three propositions were rejected by a margin of about 56% NO to 44% YES. I helped in a very small way by writing several blogs about Glendale’s experience with the Coyotes and even wrote an opposition statement in Tempe’s publicity pamphlet.

The Coyotes officially conceded last night, and Coyotes CEO Xavier Gutierrez issued the following statement after the vote results were released:

“We are very disappointed Tempe voters did not approve Propositions 301, 302, and 303. As Tempe Mayor Corey Woods said, it was the best sports deal in Arizona history. The Coyotes wish to thank everyone who supported our efforts and voted yes. So many community leaders stepped up and became our advocates and for that we are truly grateful. We also wish to thank the countless volunteers who worked so hard to try and make the Tempe Entertainment District a reality and the Tempe City Council for their support as well. While we wanted a different outcome, we remain grateful to all those who volunteered their time and talent. What is next for the franchise will be evaluated by our owners and the National Hockey League over the coming weeks.”

NHL commissioner Gary Bettman also issued a statement on @ArizonaCoyotes arena vote failing:

“The NHL is terribly disappointed by the results of the public referenda regarding the Coyotes’ arena project in Tempe. We are going to review with the Coyotes what the options might be going forward.”

I suppose they can try to find another location in Arizona. Who knows that may happen. Commissioner Bettman is absolutely glued to the Arizona market and will try his damnest to remain in Arizona. Alex Muerelo has a betting franchise in Arizona that could be worth more than the team. That also gives him a strong motive to stay here. It will be interesting to see how the next chapter unfolds.

In the meantime, here are just a few reactions from the fan base:

  • “My fellow #yotes fans, one day we will looks back and say, ‘Thank God it didn’t work out in Tempe.’ @ArizonaCoyotes there’s still so much love for you in the desert 🌵 We will rise my friends. This is the dark before the dawn. 🏜️”

 

  • “Completely gutted. What a devastating loss for our community. @ArizonaCoyotes you always had a fan in me. Through thick and the thinnest of thin. Really heartbroken. ♥️”

 

  • From reporter Brahm Resnick: “DEFEAT’S NOT AN ORPHAN Tempe voters’ resounding rejection of @ArizonaCoyotes proposal also a repudiation of mayor & council that backed project along w 4 former mayors who got behind it.”

 

  • “Sorry Gary but your Arizona Coyotes project was and continues to be a failure. It’s time to move the team.”

 

I’m glad the Tempe saga is over. My concern was that Tempe was about to be caught up in the drama of a financial maelstrom just as Glendale had been. When ordinary people, like me, are struggling to pay bills and are worrying about another recession it wasn’t the right time to ask for any kind of financial breaks for yet another sports team.

Tempe voters…you made the right decision. Congratulations.

© Joyce Clark, 2023     

FAIR USE NOTICE

This site contains copyrighted material the use of which is in accordance with Title 17 U.S. C., Section 107. The ‘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 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 material. 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 23

17

Alex Meruelo’s Folly

Posted by Joyce Clark on April 17, 2023
Posted in Arizona Coyotes • City Council Actions • City of Glendale • City of Tempe • Glendale elected officials • Phoenix Metro issues  | Tagged With: , , , , , , , , , , , | No Comments yet, please leave one

Disclaimer: The comments in this blog are my personal opinion and may or may not reflect an adopted position of the city of Glendale and its city council.

Tomorrow, Tuesday, April 18, 2023, the City of Tempe will send out mail-in ballots seeking the voters’ decision regarding the Tempe/Coyotes election. Voters will have the opportunity to approve or deny three propositions, 301, 302 and 303, needed to move the Coyotes proposed development forward.

An economic impact analysis of the Tempe/Coyotes proposed deal was released today, April 17, 2023, by Dr. Dave Wells. Dr. Wells is the Research Director of the Grand Canyon Institute and has a doctorate in political economy and public policy. He has no axe to grind for or against the proposed deal. He looked at the facts presented in the City of Tempe’s and the Coyotes’ economic analyses and ran the numbers. Here is the link to his analysis: GCI_Policy_Economic_Analysis_Tempe_Entertainment_District_Apr_17_2023

What was the Coyotes’ initial response? How about the Coyotes’ attorney Nick Wood calling the critique “silly.” How’s that for an intelligent, well-reasoned response?

There are major takeaways from Dr. Wells’ study. However, one not mentioned was the pace and character of the proposed development. What will be built first? Yep, the arena and the concert venue because these are the two money makers for the Coyotes. They also happen to be the two facilities that benefit from the Tempe giveaway of tax breaks.

Let me share a lesson that the Tempe City Council would do well to heed. I can remember the presentation made at a Glendale city council workshop by Mr. Ellman and staff on expected revenues from its proposed arena and surrounding development. To this day, I remember the graphics showing buckets of revenue dollars flowing into the city’s General Fund to pay the cost of the bonds needed to be issued for construction of the arena. The whole deal was predicated on Ellman’s promise to deliver an estimated two million square feet of retail and commercial development. What did he actually deliver? One tenth of the promised development and then he filed for bankruptcy. Tempe City Councilmembers, heed this lesson. You are dealing with a developer that Dun & Bradstreet, a major financial rating institution, found to be a risk.

The major conclusions of the study are startling. Perhaps the most important finding is, just as in Glendale, the proposed development isn’t going to produce enough revenue for the city to pay back the city’s financial investment. The study’s estimate is that Tempe will only get back about a third of the revenue it invests in the project. The study reveals that for every $2.70 in new taxes, Tempe will earn just $1.00 in new revenue.

Some final thoughts. Just as the last recession (2007-09) caused Mr. Ellman to abandon Westgate and the arena, today’s economy is difficult for all, including people having to dip into their savings just to pay ordinary bills. These very same voters, ordinary people struggling financially, can look to Glendale to realize that this is not a good deal for them.

For years, Gary Bettman, President of the National Hockey League, has pledged to keep the Coyotes in Arizona but he is bucking headwinds these days. Rumors abound that the league’s hockey team owners are fed up with the continual drama of the Coyotes. At some point, if they haven’t done so already, they will pressure Bettman to clean up the Coyotes’ mess once and for all. I suspect Bettman is still a pragmatist and knows when “to fold ‘em.” Maybe it’s time for Bettman to take a serious look at Tilman Fertitta and the Toyota Center.

Beware of the hype coming from Coyotes’ fans. They are an avid group whose only mission in life is to make sure the Coyotes remain in Arizona. Keep in mind that although a percentage of them live in Tempe and can vote, most come from the surrounding communities of Scottsdale, East Phoenix, Chandler, Gilbert, etc. They will not bear the financial burden imposed on Tempe taxpayers.

I hope Tempe voters look to the lessons of Glendale and learn from it. This is not a development that is in their best interests. I hope they vote ‘no’ on Propositions 301, 302 and 303. Tempe can do better and has a proven track record of benefiting their citizens. This time they missed the mark.

© Joyce Clark, 2023     

FAIR USE NOTICE

This site contains copyrighted material the use of which is in accordance with Title 17 U.S. C., Section 107. The ‘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 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 material. 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.

Feb 23

9

Don’t Puck with Tempe, Part II

Posted by Joyce Clark on February 9, 2023
Posted in Arizona Coyotes • City of Glendale • City of Tempe • Phoenix Metro issues  | Tagged With: , , , , , , , , | 1 Comment

Disclaimer: The comments in this blog are my personal opinion and may or may not reflect an adopted position of the city of Glendale and its city council.

In Part I of this blog, we looked at the finances of Alex Meruelo, majority owner of the Coyotes, and the Coyotes organization. Dun & Bradstreet rates all Meruelo- associated enterprises as moderate-to-high credit risks.

Are there risks for Tempe taxpayers based on the terms of the Tempe development agreement with Bluebird Development (Coyotes’ development entity)? Yes, there are. The deal relies upon providing Meruelo $700 million plus in tax breaks, in both sales & bed taxes and property taxes. For your reference, here’s is the link to the 175-page development agreement: Bluebird Tempe DDA 11162

The first part of the deal relies upon Tempe’s creation of a Community Facilities District (CFD) and the reallocation to the CFD of earned sales and bed taxes.  The CFD can issue bonds up to a maximum allowable amount of $247,134,726.00 million, which reimburses Meruelo for the cost of the land, remediation of the land, and the necessary infrastructure (which developers almost always pay for). These bonds are paid off by taking 0.9% of every dollar of city sales tax; 3.75% of every dollar of city hotel sales tax; and a 6% surcharge on every sale within the CFD (such as tickets, clothing, food and drink) and using the taxes to pay off the CFD bonds. It also creates a taxing district that can be charged an additional assessment if there are not enough taxes brought in – a heightened concern in the early phases of the project.

Within the agreement regarding the CFD, it states, “Developer has agreed…which costs for site remediation and development of certain other public benefits will be financed from the proceeds of the bonds issues by a community facilities district and certain other sources of the city…” This acknowledges that the city may use city funds other than those generated by the imposition of the sales and bed taxes explained above. Question: What other city resources could be on the chopping block to repay these bonds, if and when, these sales tax impositions do not raise the requisite bond repayments? Does the city tell you, the voter, what could be used? The first alarm bell should be going off.

Consider this fact when weighing whether the project has the capacity to generate enough sales and bed tax to pay back the CFD bonds. The project’s raw acreage is 46.26 acres. By the time all infrastructure is built, the useable acreage should be about 37 acres. Make no mistake, this development project can be called a mini-Westgate. But it will never be as large or as profitable as Westgate area which today encompasses nearly 3 square miles. Hear that sound? It’s another alarm bell.

Yet within the agreement, the developer states, “…that it believes it has available to it the financial resources…” Note the word “believes.” It does not state definitively that it has the financial resources but rather it believes it does. How is Tempe to be assured that the private development group is well capitalized? The city failed to hire a forensic economist to examine their financial resources but instead enlisted Beacon Sports, a marketing group that brings financial institutions, teams, and cities together but cannot go beyond the self-reported finances provided by the private developer Meruelo. Yet another alarm bell– this one screeching — should be going off about now.

The other major financial gift to Meruelo is the use of a GPLET (Government Property Lease Exercise Tax). This mechanism allows Meruelo to avoid paying property taxes by leasing each building, when completed, to the city. Cities do not pay property taxes. It amounts to tax avoidance for about 30 years of property taxes on the arena, practice facility and the music venue as well as 8 years of property taxes on the 2 hotels, approximately 316,000 square feet of retail, up to 1,995 of luxury apartment units, and office space. That’s approximately $494 million of property tax avoided (and that’s the Meruelo groups estimate). If Mr. Meruelo paid the property taxes, about $99 million ( or 20%) would go to Tempe’s General Fund. The other 80% (or about $395 million) would go to Tempe’s schools and community colleges in Tempe and the County. A great deal for Meruelo but not so great for schools.

There are two other issues not to be ignored. The first is transportation. Although fans complained about the time it took to travel from the East Valley to the West Valley, keep in mind the arena was directly and immediately off the freeway. This proposed site is several miles from the freeway I-10 but close to the 202 freeway and the exit to the airport..  The time East Valley fans complained about will now be replicated with the traffic jam in and around this site. Tempe recognizes there’s a problem and has required the Coyotes to help mitigate expected congestion at the airport entrance and to pay Valley Metro to try to ease the problem. We’ll see how well that works for Priest Drive, Rio Salado and surrounding neighborhoods, already plagued with traffic woes.

The other issue is the Coyotes’ history of charitable giving and civic involvement. In Glendale, it was crickets. There was no involvement. Have you noted the rash of the Coyotes’ very recent involvement in the Tempe community? I suspect it’s all for show. I assume they want you, the voter, to expect this same level of civic involvement once the deal is done. I suspect you shouldn’t hold your breath. Their current civic engagement is for selling purposes. Once Tempe has bought this deal, it will no longer be an imperative for them.

One issue that merits comment is why hold a Special Election? It seems quite simple. Don’t believe the hype that voters should decide this issue. It’s more basic than that. The Tempe City Council is seeking cover. They are your elected representatives. They are charged with representing your best interests and making the difficult decisions. They have more insider knowledge about this deal than you will ever hear about. The reason to put it to a public vote is, if and when, the deal goes south, your Council will not take the blame for it because it asked you, the public to decide and therefore, their hands are clean.

There is an organization that can provide you with further information about the Coyotes (Bluebird)/Tempe Development deal and that is Tempe1st.  Remember by voting “NO” on Propositions 301, 302 and 303 starting on April 19th (Early Ballots available) and through to the May Special Election on May 16th, you’ll will be telling the Tempe City Council that they can do better. I urge you to visit https://tempe1st.com. Get the facts from them. They have the resources to read the 175-page development agreement and to let you know what issues are problematical.

There is an adage, “A leopard cannot change its spots.” I suspect Meruelo can’t change his spots either. His organization’s propensity to stall on payments, to claim to forget or to claim human error, is not suddenly going to go away. Many observers of this new Coyotes saga believe he’s just looking for a new arena for his unethical practices and culture of dishonesty.

Are Tempe voters and its City Council who have not bothered to learn from history, especially that of Glendale, doomed to repeat it?

© Joyce Clark, 2023     

FAIR USE NOTICE

This site contains copyrighted material the use of which is in accordance with Title 17 U.S. C., Section 107. The ‘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 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 material. 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.

Feb 23

7

Don’t Puck with Tempe, part I

Posted by Joyce Clark on February 7, 2023
Posted in Arizona Coyotes • City of Tempe  | Tagged With: , , , , , | No Comments yet, please leave one

Disclaimer: The comments in this blog are my personal opinion and may or may not reflect an adopted position of the city of Glendale and its city council.

Even with the disclaimer above, I want to emphasize that this blog reflects my personal opinion as a resident of Glendale. It in no way reflects the public position of the Glendale City Council (of which I am a member) or any official position of the City of Glendale.

All the information cited in this blog is publicly available information acquired through various public internet search engines. No proprietary or private information is used.

This blog is directed specifically to the voters of Tempe. On May 16, 2023, Tempe will hold a Special Election consisting of three ballot propositions. These propositions, if approved by voters, will allow the Tempe City Council to finalize a development agreement with Bluebird Development, the entity created by the National Hockey League’s Coyotes and its majority owner, Alex Meruelo. If defeated by voters, Tempe City Council will reject the deal.

I would hope that Tempe voters defeat all 3 propositions.

It is a complicated issue, and there is much to consider. Hence the decision to divide the information into two blogs. Part I will focus on Mr. Meruelo’s and the Coyotes’ finances. Part II will tackle elements of the deal.

Meruelo holds business interests in banking, real estate, media, restaurants, food, casinos, and professional sports. He is the owner of Meruelo Group, as well as Meruelo Media, which owns five radio stations and two television stations in Los Angeles—KWHY-TV and KBEH-TV and radio stations KLOS, KLLI, KPWR, KDAY and KDEY-FM.

In addition, he is the owner of Fuji Food, two casinos, the Grand Sierra Resort in Reno, Nevada and the Sahara Las Vegas in Las Vegas.

The Meruelo Group has, among other entities, a construction and real estate development firm and has ownership of Neal Electric Corp, Select Electric Inc., and Doty Bros within the Southern California area.

The group also owns the Commercial Bank of California (CBA), which Meruelo co-founded in 2003. It was reported by PRWEB in November of 2022, that the National Merchants Association released an update about its ongoing lawsuit against CBA, a California chartered bank owned by the Meruelo Group, in the Superior Court of California, LA County, case number 21STCV44674 and JAMS Reference No. 1210038694.

In December 2021, NMA filed a seven-count suit against the Commercial Bank of California for various alleged violations, including, inter alia, breach of written agreement, breach of covenant of good faith and fair dealing, unjust enrichment and unfair business practices, among other issues.

NMA is suing for $280M. The trial is scheduled to take place in February 2023. The alleged unethical and unfair business practices include:

  • Taking NMA’s proprietary processes and information
  • Freezing assets for months at a time, resulting in vendors and partners not receiving payments
  • Misinformation about merchant risk reserves

In June 2017, the Meruelo Group purchased the SLS Las Vegas (formerly the Sahara Hotel and Casino) in Las Vegas. In May 2019, SLS brand owner SBE Hotel Licensing, LLC filed a lawsuit alleging that Meruelo’s Las Vegas Resort Holdings, LLC had failed to pay at least $450,000 in licensing fees since November 2018.

Meruelo owns the following private properties valued collectively at approximately $33 million:

  • A 8,500-square-foot, $7.05 million house at 36 Indian Creek Drive in Miami
  • A $10.79 million penthouse in The Langham, New York.
  • Colom Island in Spain for 3.2 million euros
  • A 22,000-square-foot, $12.1 million house in Paradise Valley, AZ.

The observation for every Tempe voter should be, why is this guy demanding that Tempe pay anything to help him develop the property?

One of Tempe’s councilmembers publicly shared the Dun & Bradstreet Financial Analytics of these Meruelo related entities. This information should have been a warning shot to the Tempe City Council:

How are the Coyotes doing under Meruelo’s leadership? The team looks like it’s a financial disaster. The Coyotes are running pretax cash losses of about $50 million a year. The team also has some $300 million of debt—$200 million from Frank McCourt’s MGG Investment Group at an annual interest rate of somewhere around 9% or 10% and another $100 million of NHL credit-facility debt.

According to Forbes, for yet another year, the Arizona Coyotes are considered the least valuable team in the National Hockey League. It listed the Coyotes as No. 32 at a $450 million valuation as of December 2022. It cites that Meruelo paid $300 million for the team in 2019. The valuation breakdown, according to Forbes is:

Currently the team is playing in ASU’s 4,600 seat Mullet Arena. The tickets are pricey. I have heard from others that as many as 2,000 tickets have been “comp’d” for games. Even in that case, it is said that not all the comp’d ticket holders show up.

The team seems to be bleeding money while it promises to pay Tempe for a lot of things to pursue their development becoming reality including footing up to a $250,000 bill to cover the cost of the May Special Election. They seem to be desperate and realize this is their last opportunity to remain a viable entity in Arizona.

Keep in mind that just last year the team owed $1.3 million in taxes to the State of Arizona including $250,000 to Glendale. That’s in addition to the previous year when the team owed Glendale at least $500,000 in back rental payments.

The team has promised that nothing like this will ever happen again…until the next time it does. Tempe City Council are you listening yet?

As Laurie Roberts said in one of her past Arizona Republic op-ed columns, “A business forgets to pay $1.3 million in taxes, dating to June 2020, due to an ‘unfortunate human error’? Anybody buying that?” It seems the Tempe City Council really, really wants to buy it and appears to be using this Special Election as cover.

Not to be forgotten are vendor and contractor complaints made over the years. Meruelo’s habit and pattern appears to be to stall paying them or disputing bills by threatening to go to court. Most of these entities are small and cannot afford the expense or time to fight in court. So, they end up settling for pennies on the dollar to at least salvage some payment from the job.

What can be learned about Meruelo and the team? Dun & Bradstreet considers all Meruelo associated entities as a moderate to high risk. The lowest amount of borrowing capacity resides with the Ice Hockey Arizona (the Coyotes) in an amount of $5,000; the highest amount of borrowing capacity is with Meruelo Enterprises at an amount of $1.4 million. That’s a far cry from the $2.1 billion plus needed to develop this project.

Team officials have assured Tempe that Meruelo has the real estate and financial bonafides to make this deal happen. But the only way it works is if Tempe will give a portion of city sales and bed taxes generated at the site to pay $230 million plus of the cost. This is from a guy who assured the public that he could generate the investor financing to cover the entire cost of this development.

© Joyce Clark, 2023  

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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 ‘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 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 material. 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 22

4

Coyotes’ fans…don’t count those chickens just yet

Posted by Joyce Clark on June 4, 2022
Posted in Arizona Coyotes • City Council Actions • City of Glendale • Gila River Arena  | Tagged With: , , , , , , | No Comments yet, please leave one

Disclaimer: The comments in this blog are my personal opinion and may or may not reflect an adopted position of the city of Glendale and its city council.

I would remind Coyotes fans that in 2010 and 2011 the City of Glendale paid the NHL $25 million a year to keep the Coyotes in Arizona. I guess no one remembers that if Glendale had not paid the NHL the team would have been sold and probably relocated at that time.

During that time fans heaped praise on Glendale and there was no lamenting of traffic difficulties in getting to a game in Glendale. My, how times have changed. The most often heard refrain today has been that it is too difficult to get to Glendale. That seems to be the owners and fans rationale for moving out of Glendale.

The fans have traded $25 dollar tickets and traffic inconvenience for $500 tickets and equally vexing traffic inconvenience. They will trade traffic at the Loop 101 for traffic at the Loop 202.

There are three major issues that it is believed will have to be satisfied if the Coyotes hope to locate in Tempe.

The first is the Coyotes’ proposal that Tempe pay $200 million to clean up the site. They propose a Tempe Community Facilities District. In essence, Tempe bonds for the $200 million which would be repaid by using the sales tax generated on the site for approximately 20 years or until the bonds are paid. In essence, Tempe taxpayers see no new revenue from this development until the bonds are paid and are not benefitting from the sales tax generated by the proposed project.

I would also historically point out that Steve Ellman when seeking City of Glendale financing to build the Gila River Arena represented development of over 1.2 million square feet that would generate enough sales tax to satisfy the annual debt payment. After 5 years there was only about 1/5th of the proposed economic development and that did not generate enough sales tax to pay the annual debt payment. The same scenario could be repeated forcing Tempe to use General Fund dollars to cover the short fall in the annual debt payment.

There has been talk that if the Tempe Council approves the development there will be citizen referendum petitions. If that occurs and enough signatures are acquired, it will put the project on the ballot and the voters of Tempe would decide whether the project moves forward. If this were to occur, add another year of uncertainty.

A second issue is the Coyotes’ proposal to construct 1,600 residential apartment units on the site. These residential units would be directly under Sky Harbor’s flight path. Recently four former Phoenix mayors offered an OpEd on this issue. Here is the link: https://www.azcentral.com/story/opinion/op-ed/2022/06/01/tempe-plan-arizona-coyotes-spells-trouble-sky-harbor-airport/9996700002/ . A little background is in order. In 1994, Phoenix and Tempe entered into an Intergovernmental Agreement (IGA). The purpose of the IGA was to stop residential development under Sky Harbor’s flight path. The concern was and is, that these new residents would complain about the noise generated by takeoffs and landings (at roughly one every minute). Residential complaints would most certainly have an impact on Sky Harbor’s continued and future development.

The four former mayors said, “For more than 25 years, Sky Harbor’s growth, expansion and development plans have been made with the IGA and adherence to its prescribed eastbound departure path in mind.

Tempe even appointed its own aviation commission to ensure that the terms of the agreement remain viable and enforced. All of this to protect Tempe neighborhoods from the life-altering experience of having a flight path directly over their homes.” They go on to say, “These residential units are proposed to be built directly under the very flight paths that were created by the intergovernmental agreement to protect Tempe residents.

As previously communicated by the Federal Aviation Administration, the Air Line Pilots Association, the airlines themselves and by the professional management of Sky Harbor, no residential development can be permitted in this area – less than 10,000 feet from the end of the two south runways – without compromising those flight paths and significantly threatening the airport’s continued operation and future growth.

As community leaders who embrace cooperation and compatible growth, it is essential, if the entertainment district proposal moves forward, that all residential development be removed from consideration.”

When you think about it, it won’t just be the 1,600 residences that will be impacted by the noise but really, everything on the site will experience the noise…people working in offices on the site and the fans while attending a game. Without the residential units, projected to earn income, is it still a viable investment?

The last and perhaps the most important issue to be considered is money. At the Tempe City Council’s June 2, 2022, meeting when approval was granted 5 to 2 to continue to negotiate with the Coyotes, one of the Tempe councilmembers publicly offered a slide depicting Dun & Bradstreet’s financial rating of the Coyotes, Alex Meruelo and associated affiliates. Here is that slide:

It’s not pretty. Tempe staffers circulated a Memo to the Tempe city council revealing staff’s rating of the proposed project. Here is the link: https://www.azcentral.com/story/news/local/tempe/2022/06/01/tempe-memo-gives-coyotes-proposal-low-marks-financial-strength/9973803002/ . In the Arizona Republic’s article about the memo it states, “On the financial front, a city memo released ahead of the June 2 City Council vote gave the team’s plan a 40% score for “financial strength/ability,” the lowest mark on the six-category evaluation completed by city staffers.”

To be successful and move forward the Coyotes will have to give up its ‘ask’ of $200 million from Tempe and its taxpayers, remove the 1,600 residential units to ensure continued viability of Sky Harbor Airport and ensure that a team that has lost millions of dollars year over year has the necessary guaranteed financial stability to successfully undertake a nearly $2 billion development. As Tempe has stated it will be months before the final decision is made and satisfactory answers to these three issues should be the basis for their decision.

© Joyce Clark, 2022      

FAIR USE NOTICE

This site contains copyrighted material the use of which is in accordance with Title 17 U.S. C., Section 107. The ‘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 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 material. 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.