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Joyce Clark Unfiltered

For "the rest of the story"

Feb 16

4

Glendale chooses AEG to manage its arena

Posted by Joyce Clark on February 4, 2016
Posted in Arizona Coyotes • City Council Actions • City issue and actions • City of Glendale • Gila River Arena • Glendale elected officials • Glendale finances  | Tagged With: , , , , , , , | 3 Comments

It has been 18 years and 49 days since the city’s pledge to build the West Branch Library.

The City of Glendale received 3 bids to manage its arena. The bids were from AEG Facilities, Comcast Spectacor and SMG. All are extremely reputable, large national companies, experienced in operating venues throughout the country. After senior management reviewed all 3 bids it recommended AEG to the city council. All of the discussion with council was done in executive session and the public is not privy to those discussions. On January 2, 2016 in its executive session council approved AEG and directed staff to negotiate a final contract over the next 60 days.

It is a very positive development. AEG can add another premier venue to its portfolio that is sure to benefit Glendale when AEG negotiates packages of venues with performers. It had previous experience operating the Gila River Arena from 2006 – 2009 and during that period it acquired some major performers: one that comes to mind is Bruce Springstein. It manages over 120 facilities worldwide and the majority is located in the United States.

What does that mean for the Coyotes? I, and many others, remain hopeful that AEG and IceArizona can negotiate a deal that benefits both. That still is the best option for all parties: the city, IceArizona and AEG. Anthony LeBlanc, an owner of IceArizona and its spokesperson, continues to play poker when discussing the situation with such recent comments as, “The good news is that all of the discussions we have had have been pretty open as have other organizations — be it the city of Phoenix or Tempe or Arizona State. Everybody has been pretty open that we have had discussions with and they have all been positive (www.arizonasports.com, Rodney Haas).” If this is his attempt to raise the ante with Glendale or AEG it doesn’t seem to be working. One has only to look back upon his previous history of blustery statements that were found to be less than forthcoming.

If the Coyotes are serious about moving there are still major hurdles to overcome. A new facility would not be available for at least 3 years. No matter whether is it Phoenix, Tempe or Timbuktu, pesky voters will have to be swayed to support the construction of yet another sports venue. Voters are becoming more discerning and will question the value of diverting precious tax revenue away from community needs and to another subsidized sports facility. In today’s day and age, it is not an easy sell as it once was.

Then there is the issue of location…location…location. Larry Feiner, a Coyotes fan, recently tweeted the results of an informal poll he did about the difficulty of the commute. His responses were split right down the middle, 50/50. Those fans who live in the east valley consider the commute to Glendale a hassle. Those fans who live in the west valley consider the commute to the east valley a hassle. The question for the Coyotes is will the ticket holders they pick up from the east valley offset the losses of west valley fans? All of the good will created among west valley fans could be lost. That is a question only the Coyotes will be able to answer. For the past 10 years the Coyotes have had a home in the west valley and it has served them and their fans well. It is a wonderful facility build exclusively for hockey. It is not to be dismissed lightly in a pique of anger because the city is no longer subsidizing losses to the tune of $15 million dollars a year.

I remain positive and believe that a successful accommodation can be achieved between all parties. Can the Coyotes?

©Joyce Clark,2016  

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Aug 15

24

Glendale arena Request for Proposal

Posted by Joyce Clark on August 24, 2015
Posted in Arizona Coyotes • City Council Actions • City issue and actions • City of Glendale • Gila River Arena • Glendale finances  | Tagged With: , , , , , , , | 3 Comments

It has been 17 years and 235 days since the city’s pledge to build the West Branch Library.

On Tuesday, August 25, 2015 the Glendale city council will go into executive session. One of its topics is sure to be council’s setting of goals for and approval of a Request for Proposal (RFP) for future management of Glendale’s arena. It is a good move.

An RFP will provide information on what is the fair market value for management of its arena. The previous RFP yielded results that indicated that a fair management fee was in the $6 million dollars per year range. Those results can lead to a totally independent firm managing the arena and removing that responsibility from the Coyotes. It sets up a scenario that has the Coyotes as tenants only.

One area that will have to be resolved is that of the parking fees. Apparently under the temporary 2 year agreement the Coyotes continue to keep parking and ticket surcharge revenues. Why? These schemes…for that’s what they were…were created specifically to generate revenue for the city. They were designed to reimburse the city for the $15M a year it was paying as a management fee.

The  amount generated was approximately $8-$9M a year, not enough to cover the $15M annual management fee. Ticket surcharge revenues had always gone to the city even before the latest agreement with IceArizona. In all previous agreements there had been an escalator clause that incrementally raised the surcharge annually.

Whether the arena manager is a new entity or the Coyotes, it’s time to deal with these surcharges to the benefit of the city. Either parking is once again free as it had been before IceArizona or the parking revenue, if utilized, should go to the city. The same can be said of the ticket surcharge…either it goes away entirely or the revenue goes to the city. If the surcharges were to go to the city and the city continues to pay a $6M annual management fee it is possible that the city may actually cover that annual cost and perhaps generate some revenue to be used for the benefit of Glendale’s citizens. Now, that’s a nice thought, isn’t it? Glendale’s taxpayers have been subsidizing the arena for quite some time. It would be wonderful if the arena actually made some money. It’s time for the city to play hard ball and to stop giving away the farm.

© Joyce Clark, 2015

FAIR USE NOTICE

This site contains copyrighted material the use of which is in accordance with Title 17 U.S. C., Section 107. The material on this site is distributed without profit to those who have not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democratic, scientific and social justice issues, etc. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in Section 107 of the US Copyright Law and who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use,’ you must obtain permission from the copyright owner.

Jul 13

3

Congratulations !!!

Posted by Joyce Clark on July 3, 2013
Posted in City of Glendale • Jobing.com arena  | Tagged With: , , , | 5 Comments

celebrate 1Congratulations to all who worked so hard to keep the Arizona Coyotes in Glendale. Your tremendous effort has been rewarded. Now the hard work begins…not for the fans but for the principals — RSE and the city — in the deal. I wish them much luck now and in the future. I respect the current council’s decision and can appreciate what it took for them and out of them to arrive at their decision-having been there several times previously.

This 4 year odyssey has taken its toll in friendships and relationships as nerves and tempers frayed. That is my only regret. Just as with many of you, it is time for a brief hiatus — time to recharge and renew. For the next week I will do exactly that and no blogs will appear. When I come back…roaring…there will still be many other Glendale issues — and the pond to write about.

See you back here in a week!

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Jul 13

1

Analysis of the Renaissance Sports and Entertainment bid…Part 3

Posted by Joyce Clark on July 1, 2013
Posted in City of Glendale • Glendale finances • Jobing.com arena  | Tagged With: , , , , , | 7 Comments

words 6bargaining 3I want to commend attorneys for both Glendale and RSE. When I received the original June 26th draft of the Agreement consisting of 93 pages it took me quite a few hours to review it line by line. I ended with 18 pages of notes and they have been quite handy and well worth my time. I had quite a few issues with the original document. In reviewing the latest version dated June 28th I am quite pleased to see that many – not all – but many of my issues have been addressed. One that made me laugh out loud was the provision that Glendale would receive 100% of the Naming Rights for a future theater/stage space to be constructed within the bowl. Further along in the original document it specified that Glendale must pay for its construction or the Arena Manager would receive the proceeds of Naming Rights and apply them as reimbursement for construction costs. That provision, thankfully, has been changed and it is no longer Glendale’s responsibility to fund its construction but it still has the right to receive 100% of the Naming Rights. It appears that cooperation and communication by both sides has gone a long way to resolve many of the issues.

contractHowever, there remain several major, outstanding issues. One of those issues is that of the Noncompetition/Non-Relocation Agreement. The original June 26th agreement refers often and specifically to the dual concepts of non-competition and non-relocation although the document was never provided publicly. So there was no companion document to review. This, in conjunction with the absence of any exhibits accompanying the release of the original version, is troubling but that is for another time. In the new version of the agreement reference is now made solely to a Non-Relocation Agreement. The concept of non-competition has been removed in its entirety. Is this positive or negative? There is no way of knowing since there is nothing with which to compare the current Non-Relocation Agreement.

threaten 1Another major shift from previous deals is the concept of mediation vs. arbitration. In previous deals arbitration was the “Dispute Remedy.” In all versions of the RSE Agreement mediation is the dispute resolution mechanism. There is a difference between the two procedures. In mediation a neutral third party acts as a facilitator but is not a decision maker. Neither party is required to complete the process nor is it legally binding. The mediation resolution can be appealed through the legal system. In arbitration the neutral party acts as judge and jury. The decision is generally binding and cannot be appealed, except under very special circumstances. Mediation can be more expensive because it allows for legal appeal as opposed to arbitration which is legally binding. So the question becomes why RSE’s insistence on mediation for it seems to be upon their insistence and not that of the city.

enter 3We now know that RSE used a figure of 23 non-hockey events with attendance of 15,000 per event. Those numbers are a component of their calculations in determining the revenues from the parking surcharge and ticket/supplemental surcharges. It appears to be over inflated but it is their number, not mine, not the city’s. That goal should be acknowledged within the Agreement by incorporating accompanying performance penalties and incentives. If RSE meets less than its self-proclaimed goal of 23 non-hockey events there should be a monetary penalty. It is a concept only used in the Agreement in conjunction with hockey games. If less than 41 games are played in the arena, there is a $150,000 penalty per game paid to the city. However, if RSE overachieves or underachieves in booking non-hockey events, it should be rewarded/penalized for doing so but there is no mention of such a concept within the Agreement. Fairness dictates that non-performance be penalized and success rewarded.

man moneyAnother interesting concept within the Agreement is language that exempts the Arena Manager from governmentally imposed lease taxes on the property. If, for some reason, the Arena Manager does have to pay them, that amount will be deducted from the City’s total annual revenue to be received. Hmmmm. Should there be lease property taxes imposed that have to be paid the city is required to pay them.

It also appears that instead of allowing the city’s contribution to the Capital Improvement Fund to accumulate year over year, the Capital Improvement Fund is set to “0” every year and the funds within it revert to the Renewal and Replacement Fund that is spent solely at the Arena Manager’s discretion.

The last major change to the document is the city addition of its own opt-out provision. The city views this action as entirely appropriate. Their assumption may be based on the notion that the city has more “skin in the game” than does RSE. $15M for each of 5 years equals $75M. It has been widely reported that RSE’s equity (or “skin”) is $45M. The proposal is that after 5 years, each side should have the option of deciding whether to continue, especially if one side or the other has accumulated over $50M in debt. That option, if it remains in the Agreement, would signal that RSE’s “enhanced revenue streams” did not perform as advertised. The city’s financial shortfall in this deal is of its own making. The current council will either be comfortable in its assumption that it can weather the effects of the shortfall or it will not. Continued insistence by the city on this provision destroys RSE’s ability to secure loans because it nullifies the very element they MUST have, which is a guaranteed $15M from the city.

agenda 1In my notes I have probably identified another two dozen minor issues that require further negotiation. Listing all would turn this blog into a book. I will not inflict that agony on you. It appears that with some further negotiation and communication this Agreement could work but it does not resolve Glendale’s fundamental issue of covering a monetary shortfall of $3M annually.

Many have asked me to reveal my position on this issue. That I will not do. I have provided you with financial information on the “enhanced revenue streams” as well as information on Glendale’s precarious financial position and Agreement points that need further resolution. Many of you reading this blog have expertise in business budgets and corporate negotiating. My role is to offer municipal expertise and to provide context to balance that.  It is up to you to decide if this is a good deal for Glendale.  This is exactly polling 1what every current councilmember is wrestling with. As leaders of this city they have the prime responsibility of insuring the continued financial health of the city. My feeling is that some are now struggling with recent decisions and recent votes and beginning to realize the effects of those decisions.

confusion 3Will this Agreement help or hinder Glendale’s continued financial health? Of course there is the overwhelming element of politics. Some councilmembers’ positions will be taken as a result of ego; others simply wouldn’t say ‘yes’ even if God invited them into the Pearly Gates; still others have only a partial grasp of the entirety of the deal. But it is not my call. I am no longer a sitting councilmember. Whatever their collective decision I will accept it and abide by it, as everyone should reasonably do.

Fasten your seat belts — if past history is any indication we are in for a bumpy ride. I hope that I am wrong but there may very well be challenges to this Agreement.

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Jun 13

26

Troubling times

Posted by Joyce Clark on June 26, 2013
Posted in City Council Actions • Jobing.com arena  | Tagged With: , , , , , , | 9 Comments

A disclaimer: I have not made a decision on the Renaissance Sports and Entertainment bid to manage the city’s arena. It is not possible until I have read the document. To date it is not available to the public.

I don’t usually post 3 blogs in one day but this appears to be one of those days that demands it.

On June 25, 2013, Paul Giblin, a reporter for the Arizona Republic issued the following story online, Glendale still unsure about Phoenix Coyotes deal. Here is the link: http://www.azcentral.com/community/glendale/articles/20130625glendale-unsure-phoenix-coyotes-deal.html . Several aspects of his story are troubling. One issue is that a vote is still scheduled for hidden agendaTuesday, July 2, 2013. It is my understanding that the council has requested another Executive Session for Thursday, June 27, 2013. The city had better made sure that notice of another Esession on June 27th is properly posted 24 hours in advance. Which means that the meeting notice has to be posted on Wednesday, June 26th…today. However, even more worrisome is that with an Esession scheduled for June 27 the very earliest the deal points could be posted publicly would be on Friday, June 28th or even as late as on Monday, July 1st. Could the city post as late as 24 hours before a scheduled vote? Yes, they could but would they? I hope not as suspicions will shoot through the roof if the public is given one day to review and understand any deal between Renaissance Sports and Entertainment (RSE) and the city.

city hall 2

Glendale City Hall Complex

Now, about that second $25M the NHL has offered (at the 11th hour) to take payments on of $5M over each of the next 5 years. Great…too little, too late and it doesn’t solve the city’s problems. The $30M leaseback of City Hall was designed to replenish the city’s Enterprise Funds, Vehicle Replacement Fund and Technology Replacement Fund.  Glendale staff crafted a brilliant strategy. Now that strategy has been tabled by council until after the scheduled Coyotes vote on July 2nd… Hmmmm…The $20M the city has held in an escrow account for the NHL payment simply isn’t enough to cover all of the city’s needs. It will pay back some of the loans leaving $5M still outstanding.  While a generous offer on the part of the NHL, it could have been done a long time ago and in fact, I and several former councilmembers called for just such an arrangement. Why now? I suspect it is in reaction to what they perceive as a very negative story about the city planning to enter a leaseback of City Hall to pay back loans directly related to the $50M partially paid and partially still owed to the NHL.

To discover that councilmembers are not on top of the revenues derived from either the Westgate area (remember those revenues are already being used to pay off the original construction debt on the arena and are NOT new found money) or the arena is disturbing to say the least. At least one of them has touted himself as an expert on the entire RSE deal.

Norma Alvarez

Norma Alvarez

Lastly, good old Councilmember Alvarez and her statements have got to have you snapping your heads in double-take mode. Alvarez said, “I called them knuckleheads, because they don’t get it. They don’t get it. They don’t get it. They’re going to continue discussions. Discussions of what? We’re selling City Hall because of paying $50 million. C’mon. C’mon.” Factually she is incorrect. The city is proposing a leaseback arrangement not an outright sale of City Hall with visions of employees moving out after a sale. As for continuing discussions, they should continue but they don’t have to result in acceptance of the deal…not if RSE cannot or will not guarantee “enhanced revenue streams” for the city.

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Jun 13

26

Glendale Star…sad, sad, sad

Posted by Joyce Clark on June 26, 2013
Posted in Jobing.com arena  | Tagged With: , , | 2 Comments

newsIt is truly sad when a local newspaper such as the Glendale Star will report ridiculous stories simply to “gin” up its readership and that is exactly what they have done. In an “exclusive” article by Darrell Jackson, updated on June 25, 2013 entitled Proposal gives city option to purchase the Coyotes it is reported there is a company that had reached out to and would work with the city to buy the Coyotes ala the Greenbay Packers. Here is the link but please consider not going there. Reading this inane article will just warm the cockles of the editor’s heart and perhaps encourage more of this!

http://www.glendalestar.com/news/article_fa5c1c68-dab5-11e2-9599-001a4bcf887a.html

greed 1It is a travesty of journalistic reporting when if one had taken the time to fact check one can read the NHL By-Laws to find out that it is not possible. Add to that an NHL statement from a few years back, when the idea first surfaced and quickly died, that categorically denied the viability of that strategy.

We know the Glendale Star is trying to compete with the big boys but this reporting ranks right up there with their expectation of finding a pot of gold in City Hall as a by-product of the $500,000 city audit.

While there may have been an email proposing such a scheme it would have been rejected by the staff immediately knowing the NHL’s position on the issue. That’s why the mayor has said he has not seen such a proposal. Bringing it forward would have been a waste of time and resources.

Readers would like, although they often do not get, reporting that is fair, accurate, unbiased and based upon the facts not fantasy designed to titillate its readership.

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Jun 13

25

City Council workshop, meeting and special meetings…Whew!

Posted by Joyce Clark on June 25, 2013
Posted in City of Glendale  | Tagged With: , , , , , , , | 13 Comments

hidden agendaThis week, June 24-28, 2013 there are 3 city council meetings scheduled. First up is a Special workshop meeting at 1:30 PM today. It consists of Executive session (Esession) items only, meaning a secret session. We all know the topic of discussion is the Renaissance Sports and Entertainment (RSE) bid for arena management. It has been reported that the details of the bid may be released on Wednesday, June 25th. The only reason for this meeting is because RSE and the city (COG) are still negotiating the terms of the deal. There would only be two outcomes: 1. the council has accepted the terms and is comfortable with them or 2. the council still has issues with the final terms. Either way, this council has signaled that it is ready to put this issue to bed and vote on it on July 2nd. Keep in mind that just because the RSE bid has finally made it to a voting meeting does not insure a positive outcome. What it does signal is that the council is ready to vote, up or down, RSE’s bid and be done with the issue.

gambling 2The evening meeting (voting meeting) of July 25, 2013 has 3 financial items of interest. The first, Item #8 is prepayment of $5.6M of General Obligation bonds (usually paid for from the city’s secondary property tax collection) by the Water and Sewer Enterprise Fund. This is an interesting strategy and may free up General Obligation bond capacity for future bonding…on what? We can only wait and see.

man moneyThe second item, Item #26 is Authorization for Lease Financing of the City Hall Complex. In 2010, the city had to pay the NHL $25M to run the arena. This $25M has been paid to the NHL. Here’s where the money came from:

  • $21M loan from the city’s Landfill Fund
  • $4M loan from the city’s Sanitation Fund

In 2011, with the Coyotes ownership issue still not resolved, the city agreed to pay the NHL a second $25 to operate the arena. This $25M is still being held in a city escrow account. Here’s where that money came from:

  • $15M loan from the city’s Water and Sewer Fund
  • $2M from the city’s Technology Replacement Fund
  • $3M from the city’s Vehicle Replacement Fund
  • $5M to be paid with an unidentified source to NHL

This lease-back deal will replace:

  • $15M loan to the City’s Water and Sewer Fund
  • $4M to the city’s Sanitation Fund
  • $2M to the city’s Technology Replacement Fund
  • $3M to the city’s Vehicle Replacement Fund
  • $5M whose source had been unidentified and unfunded to pay the last of the NHL’s second $25M
  • $1M as a new project to upgrade the city’s Human Resources software

As you can see, that leaves 1 loan payment outstanding and that is the $21M loan from the city’s Landfill fund. That $21M is part of a reserve account to cover landfill closure. Since the landfill is not anticipated to close for 30 years, the city can afford to repay this reserve account over the next 30 years. Is this a good strategy? Yes, it is. It replenishes those Funds so that they can once again operate effectively and gives the city some breathing room to pay back those costs associated with the NHL’s operation of the arena for 2 years. It is a strategy that hopefully this council will approve.

The last item, Item #27 is an increase in rates, primarily to commercial customers for roll-off bins and disposal rates. The rental cost of a roll-off bin increases from $160 to $175 and the disposal fee per ton increases from $18 to $20. These are fees that have not been adjusted in quite some time. As usual, when there are rate increases, it becomes a double-edged sword. As the rates go up, the number of customers may decrease dependent on market competition by private sanitation companies. Nevertheless it is an increase long overdue.

budget 3The third and Special Meeting is scheduled for June 28, 2013. Do not look for a vote on the Coyotes unless this meeting agenda is changed and posted by 5 PM on Wednesday, June 26th. . The city, by law, must have its tax increasefinal adoption of Fiscal Year 2012-13 Budget Amendments and the Fiscal Year 2013-14 Property Tax Levy before July 1, 2013. These items satisfy that legal prescription and will be largely unnoticed by Glendale residents due to its final adoption on a Friday morning at 9 AM. The other two items, fire-related for strength training and medical transport, were added simply because they could be at this meeting.

There you have it. Three meetings scheduled. Only one of which is the Coyotes ownership issue and we are not privy to its goings on. The other two meetings deal with financial issues created by or related to arena management.

deadline 1The finale of the Coyotes ownership RSE bid is still scheduled for July 2, 2013. Are there 4 affirmative votes? Only the councilmembers know or think they know. If RSE still wants $15M a year as the management fee and cannot or will not guarantee a minimum of $9M in “enhanced revenue streams” to the city this council may find it a difficult deal to swallow. Are we about to experience deju vu? The very mechanics of the deal could cause the Goldwater Institute to reappear. I suspect they are watching very, very closely. Then there is Ken Jones and his ilk who absolutely hate anything Coyote related. Could they mount another referendum drive? Yes, they could and would just to stall the deal. After all, how long will Fortress Investment Group leave an open-ended loan available to RSE?

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Jun 13

20

Hockey fans…check your tickets

Posted by Joyce Clark on June 20, 2013
Posted in City of Glendale  | Tagged With: , , , | 5 Comments

When the original Arena Management docs were signed and recorded in November, 2002 I made sure to keep them. After all, one did not know if and when they would come in handy for reference or review.

Part of the RSE deal is rumored to include a parking fee. Did you know that you already pay a parking fee and a base recovery fee? If you look at the fine print on your ticket it says, “Included in the face value of this Ticket is a $2.80 City Parking Fee, a $1.55 Base Recovery Fee, and other fees when applicable. Fees are subject to change without notice.”

The original 2002 Arena Management docs had established these fees for the city and currently every ticket purchaser pays a total of $4.35 in fees. Under Article 7. Arena Accounts. Section 7.7 City Parking Fee Account it states the following: “The Arena Manager shall, prior to the Operations Start Date, establish and maintain (for the benefit of the City) one or more trust accounts (requiring the signature of only the City for withdrawals) at a federally-insured institution(s) having offices in the State of Arizona for the deposit and disbursement of City Parking Fees ( the “City Parking Fee Account”), and shall make deposits into the City Parking Fee Account as required by Section 8.1. Interest earned on amounts held in the City Parking Fee Account shall not be Operating Revenues and shall be the property of the City. The City may make withdrawals from the City Parking Fee Account at any time and from time to time in the City’s sole discretion.”

Article 7. Arena Accounts. Section 7.8 Arena Recovery Fee Account is also established.

In Article 8. Parking: Arena Recovery Fees. Section 8.1.2 (e) states in part, “The City Parking Fee shall be in the amount of Two Dollars and Forty-Five Cents ($2.45) per Qualified Ticket with respect to each Fee Activity (for which the City has not waived the City Parking Fee) That occurs during the Fiscal Year in which the Operations Start Date occurs or the first full Fiscal Year thereafter, and shall be increased by Five Cents ($0.05) for each and every Fiscal Year thereafter, beginning with the second full Fiscal Year after the Fiscal Year in which the Operations Start Date occurs, $2.55 during the third full Fiscal Year after the Fiscal Year in which the Operations Start Date occurs, and so forth).”

Article 8. Parking: Arena Recovery Fees. Section 8.2.(d) states in part, “The Base Recovery Fee shall be in the following amounts:

(i)                  For the first sixty (60) months after the Operations Start Date, $1.00 per Qualified Ticket;

(ii)                For the 61st through 120th months after the Operations Start Date, $1.50 per Qualified Ticket; and

(iii)              Commencing with the 121st month after the Operations Start Date and continuing for each month thereafter until the last month of the 30th Full Hockey Season after the Home Game Obligation Effective Date, $2.00 per Qualified Ticket.”

Until I left office on January 15, 2013 neither I or the rest of council were ever told by staff that the city is no longer collecting those fees. To the best of my knowledge ticket holders are paying $4.35 in fees on tickets. Just thought you’d like to know the facts.

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Jun 13

19

Non hockey management is not a silver bullet

Posted by Joyce Clark on June 19, 2013
Posted in City of Glendale • Jobing.com arena  | Tagged With: , , , , , , | 3 Comments

Some of those on council believe that all of Jobing.com’s problems regarding increasing its revenue can be solved by finding a management company that will book a ton of non-hockey events, especially major concerts.  I thought it would be interesting to take an Internet walk through the entertainment promotion industry. I don’t pretend to be an expert on this issue and I am sure somebody will correct me on something!

prop 202The gorilla in the room is LiveNation. In 2005 (last year for which I could find numbers) earned $1.3 billion dollars world-wide. It has relationships (contracts) with 135 venue sites world-wide and 92 of those are in the United States. It has relationships with Desert Sky Pavilion, Talking Stick, Comerica and Celebrity Theater (as of 2005) in the Phoenix Metropolitan area. It, like other promoters, also has a roster of national, well known artists that perform exclusively at LiveNation venues.

enter 1 The second largest is Anschutz Entertainment Live (AEG). In 2005 it earned $417 million dollars—only 20% to 30% of LiveNation’s income.  In September, 2012 AEG announced it was selling off its Entertainment Live subsidiary only to reverse that action in March, 2013. AEG is the company that currently manages Glendale’s Jobing.com Arena. The third largest company is the House of Blues Entertainment. In 2005 it earned $245 million dollars—about 10% of LiveNation’s income. But wait…the following year, 2006, LiveNation acquired the House of Blues and picked up Casino Arizona as another contract in the Phoenix area. There are many small firms (less than a handful in the Phoenix area) whose annual income is less than $20 million dollars a year.

Let’s look at the two most comparable venue sites to Jobing.com Arena. One is US Airways, home to the Phoenix Suns. It is run and events are booked by Phoenix Arena Development (one of the two bidders to be considered by Glendale). It is also the home of the Arizona Rattlers and Phoenix Mercury. In essence, it has 3 anchor tenants. Between June and December, 2013 there are 10 major concerts booked. The other comparable site is Chase Field, home to the Arizona Diamondbacks, its only major anchor tenant. SMG World manages this venue (and is also a finalist in Glendale’s bidding process) and uses Select Artists Associates of Scottsdale as its event promoter. It has 3 major concerts booked between June and December, 2013. It will be very interesting to see what each of these companies want in terms of an annual management contract. Will there be penalties in the contracts if a named minimum number of events is not achieved? Will there be an incentive if the company exceeds a mutually agreed upon goal?

As you can see, the Phoenix Metro area is a highly competitive market. There many venues from which to choose and LiveNation have contracts with many of them. You can be sure LiveNation, with a virtual monopoly in this country, dictates the terms and fees for the major events it books.

enter 3Just to give you an idea of how competitive our market is, here are just some of the sites that can and do host major concerts: ASU Gammage, Desert Sky Pavilion, Celebrity Theater, Chandler Center for the Arts, Chase Field, Comerica Theatre, Fort McDowell Casino, Herberger Theatre, Grand Canyon University Arena, Jobing.com Arena, Mesa Arts Center, Scottsdale Center for the Performing Arts, Orpheum Theatre, Talking Stick Resort, Tempe Center for the Arts, US Airways Center and University of Phoenix Stadium. This list is by no means complete and does not include dozens of smaller venues. This market is not an easy one. Steve Ellman, when he controlled Jobing.com Arena was highly successful in booking major concerts. When Jerry Moyes and the NHL took control of the arena that was not their focus and so we saw fewer and fewer major events at Jobing. This year the number of major events booked was so few that it is embarrassing.

What can a venue manager do in this highly competitive market of at least 17 major venue sites if there is no relationship with LiveNation or AEG? They host smaller, less lucrative events such as rodeos, religious groups and family events. That works well if your venue is small but large ones like Jobing.com Arena need large events to offset the costs associated with hosting. Note than even the UofP Stadium hosts RV and car sales nearly every weekend in addition to gun shows in an attempt to shore up its bottom line. I suppose a venue manager could undercut the big boys and offer the venue for rock bottom rental fees and hope to cover all or part of the loss with concession and parking revenue but that is risky on so many levels.

Hiring a non hockey arena manager has never been in the best interests of the arena or Glendale. A permanent team owner hired to manage the arena guarantees 41 nights of hockey with “butts in seats.” It will be in the owner’s best interest to mount a strong marketing campaign for the Coyotes and put even more butts in seats as well as to work to acquire as many non-hockey events as possible to increase the bottom line of profitability. This is not a difficult concept to understand and yet there are those on Glendale’s city council who refuse to acknowledge this concept—out of sheer stubbornness or because of another agenda?

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Jun 13

18

Council news door opens a crack…

Posted by Joyce Clark on June 18, 2013
Posted in City of Glendale  | Tagged With: , , , , , , , | 3 Comments

cit mtg 2Wow, we just saw a window into council priorities. Since January and the new council began meeting, their meetings are conducted with lightning speed, usually lasting half an hour and on rare occasion because of the sheer number of items on their agenda it may go as long as an hour. Today, June 18, 2013 there were only 6 items on their workshop agenda and it took them over an hour to deliberate. Why? Because these were all items that have a direct impact on them and their business.

Here’s the lineup:

  1. Council has changed the voting meeting time from 7 PM to 6PM.
  2. The Vice Mayor’s position will follow a calendar year (Jan. to Jan.) rather than the fiscal year (July to June).
  3. Council subcommittees will remain annual appointments with a 2 year consecutive term limit. After serving 2 consecutive terms a councilmember must move to the other subcommittee (there are only two). After being off for 2 years councilmember may again sit on committee vacated.
  4. Response time for Council Items of Special Interest remains 30 days for staff response.
  5. Council has traded Moment of Silence for Prayer after they have opportunity to review suggested guidelines for conducting a Prayer.
  6. Workshop meeting location has moved from Council Chambers back to its old haunt, Room B-3, or the “basement” as Mayor Weiers likes to call it.

calendarInterim City Manager Bowers announced that at the June 25, 2013 meeting the Internal Audit will come forward. After the open meeting, Council went into Esession and it was an unusually long one for them, starting at 2:45 PM and ending at about 6:30 PM. The issues were substantive. From various statements made to the media by the City Attorney and some councilmembers there will be no vote on the Coyotes deal on June 25th. So look for June 28th or July 9th. However, Council has a vacation break in July so it makes more sense for it to become an agenda item at the specially called meeting for June 28th.

polling 1We know council was briefed on the PAD and SMG bids and council probably learned their asking price to manage the arena. It probably made Councilmember Alvarez’ heart beat faster and I imagine she offered an impassioned but hardly eloquent plea for acceptance of one of them. We know another topic of discussion was the Renaissance Sports and Entertainment (RSE) bid. Councilmember Sherwood publicly admitted that there were deal points that caused council difficulty. I would think the city’s guarantee of $15M (or X number—you fill in the blank) a year without any guarantee that there would really be the elusive $8M-$11M in enhanced revenue going to the city could have been a stumbling block. Whatever the issues were, council would have given direction to staff to go back to RSE and renegotiate those deal points. The ball in now in RSE’s court. If RSE is serious, it will have to make further concessions that demonstrate their skin in the game. Councilmember Sherwood also publicly acknowledged that the deal points need to be publicized one week before the vote. I applaud council for their stance on the side of reasonable and prudent public disclosure.

Councilmember Alvarez walked out of Esession in disgust, complaining that council was making “too many concessions” to RSE. The mere idea of entertaining the RSE bid is a “concession” in Alvarez’ mind. One other Alvarezism from the open meeting springs to mind. While discussing putting public comments at the beginning of the meeting she virtually accused her fellow councilmembers of not championing Democracy and the American Way by accusatorily saying, “We’re not dictators.”

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