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Joyce Clark Unfiltered

For "the rest of the story"

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.


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.


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!


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.


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!