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Joyce Clark Unfiltered

For "the rest of the story"

Feb 17

3

Coyotes bill SB 1474 introduced and dead…courtesy of ASU

Posted by Joyce Clark on February 3, 2017
Posted in Arizona Coyotes • City issue and actions • City of Glendale  | Tagged With: , , , , , , , , , | 6 Comments

Disclaimer: I am presenting my views as a private citizen who blogs about Glendale issues. The thoughts and opinions expressed do not represent the Glendale city council or its leadership staff.

As I write this blog, news has just been issued that ASU has pulled out of the plan to allow the Coyotes to use property within their athletic district. Never the less, the information below may help shed some light on why legislation introduced on February 1, 2017 would not have passed. Here are links to stories just published: http://www.azcentral.com/story/sports/nhl/coyotes/2017/02/03/asu-pulls-out-plan-bring-arizona-coyotes-tempe/97460974/ and http://www.abc15.com//sports/sports-blogs-local/arizona-state-backs-out-of-tempe-arena-deal-with-arizona-coyotes?utm_source=SilverpopMailing

Don’t ya just love it? SB 1474 was introduced to the Arizona legislature this Tuesday, February 1, 2017. The media announced the proposed legislation today, Friday. Fridays are always good days to introduce anything controversial as this is sure to be. It gets buried amidst a weekend, filled with fun activities and is generally ignored by the media, much less noticed by the general public.

SB 1474 is a proposed amendment to well established state tax code. The amendment proposes the creation of a “community engagement district.” Here is the link to the bill’s full text:

https://apps.azleg.gov/BillStatus/GetDocumentPdf/447123 .  Who introduced this bill?

  • Senator Kate Brophy McGee, Republican, representing District 28 in Phoenix
  • Senator Sonny Borelli, Republican, representing District 5 of Lake Havasu City
  • Senator Karin Fann, Republican, representing District 1 of Prescott
  • Senator Frank Pratt, Republican, representing District 8 of Pinal County
  • Senator Bob Worsley, Republican, representing District 25 of Mesa
  • Representative Douglas Coleman, Republican, representing District 16 of Apache Junction and Pinal County
  • Representative Thomas Shope, Republican, representing District 8 of Coolidge
  • Representative Bob Thorpe, Republican, representing District 6 of Flagstaff                                                                    

Please note that with the exception of Senator McGee (Phoenix) and Senator Worsley (Mesa), all of these legislators represent areas outside Maricopa County…hmmm.

It proposes the establishment of a “community engagement district pursuant to Section 48-3802.”  What’s in Section 48-3802? It sets the parameters under which this community engagement district may be established. Under A. it says, “The governing body of a city in which a university athletic facilities district has been established (read ASU’s district) pursuant to Section 48-4202, Subsection C may also establish a community engagement district in the city pursuant to this section if the governing body (Tempe) determines that the public convenience, necessity or welfare will be promoted by the district’s establishment…but must satisfy both of the following requirements:

  1. On the petition of the owner or owners of all of the real property on which a public facility will be located, the governing body of the city in which the property is located, on or before December 31, 2018, must adopt a resolution as described in this section.”

Most interesting is, “The district board of governors must have received, from the municipality in which the district is located (Tempe) or from any lawful nongovernmental source (ASU? Coyotes?), a financial commitment in an aggregate amount equal to or greater than the total amount to be distributed to the district under this section…” That aggregate amount has been stated publicly as $200 million dollars toward a $400 million dollar facility.

Lastly, the district will levy and excise tax on business activity in the district of no more than 2%. This is in addition to regular, state, county and city taxes.

I’m no lawyer but upon reading this proposed bill it seems to call for Tempe to pass by resolution a community engagement district since it is the jurisdiction in which the Coyotes arena would be built. Tempe must hold a public hearing on the matter. Bring your seat cushions because that promises to be one heck of a long public hearing.

Under this proposed legislation it appears that if Tempe creates such a district, “…that the establishment of the district may result in the levy of taxes to pay the costs of improvements constructed by the district and for their operation and maintenance.” It seems as if Tempe could have the authority to levy taxes upon every resident in Tempe if there is an annual deficit in revenues produced by this community engagement district. Beware of those bearing gifts in Coyotes’ clothing…the team sold Glendale by promising that the “enhanced revenues” it would receive would cover the costs to the city annually. Never happened.

The proposed bill also seems to require some entity to put up a bond (sort of) to be held in a separate account equal to the $200 million dollars the Coyotes want from the taxpayers…you. Well, we all know it won’t be the Coyotes. So that leaves Tempe or ASU to put up the money. Most likely ASU’s money would come from private donations rather than the annual public subsidy granted by the state legislature to all 3 of Arizona’s universities. I suspect private donors expect their money to go toward improving student education. I’m not so sure they’d be happy to learn that their money is actually going to guarantee the development of a private, for-profit entity such as the Coyotes.

I believe there is a good case to make for why the Coyotes belong in Glendale:

  • The Gila River Arena was built in 2003…specifically for the Coyotes.
  • The arena is 14 years old and is still one of the best, state-of-the-art arenas in the National Hockey League.
  • Glendale has proven its loyalty to the Coyotes by paying the NHL $50 million dollars to run the arena after Jerry Moyes declared bankruptcy in 2009. That act of loyalty nearly drove the city into bankruptcy. You would think that NHL Commissioner Gary Bettman would be loyal to Glendale and stand behind keeping the Coyotes in Glendale.
  • The Coyotes pay $500,000 in rent annually and have the use of the arena for all practice games. This is a unique to the Coyotes. Most NHL teams own and operate their own separate practice facilities at their own expense.
  • The Coyotes have the second sweetest arena deal in the entire Hockey League. The team gets 100% of the parking revenue, merchandise sales, concession sales and ticket surcharges as well as 80% of the naming rights.
  • Between 2015 and 2050, the West Valley will have an estimated population of 1.2 million; Phoenix will have an est. population of nearly 700,000 and the East Valley nearly 650,000. Between 2000 to 2010, the West Valley added about 300,000 people, Phoenix added about 125,000 people and the East Valley almost 250,000 people. MAG predicts future population growth in the West Valley will be nearly equal to the combined population growth of both Phoenix and the East Valley.
  • Well respected economic analyst Elliot Pollack predicted that Glendale will become the geographical center of the entire Valley
  • The new loop 202 bypass route known as the South Mountain Freeway will be completed by 2019 providing a significantly improved connection between the East and West Valleys

Anthony LeBlanc decided to teach Glendale a lesson when the city cancelled the contract that included a direct subsidy to the team. He is not acting in the team’s best long-term interests. While he gets short-term revenge, he fails to acknowledge and recognize the tremendous long-term growth of the West Valley and that is where his customers will come from. How long before he decides that the East Valley was a mistake because a booming West Valley customer base doesn’t want to commute eastward? After all, that is, in large part, his rationale for trying to move to the East Valley.

There have been many chapters written in the on-going Coyotes’ story. Some of those chapters were written by the National Hockey League; some of those chapters were written by the City of Glendale. But the latest chapters of turmoil and uncertainty about the Coyotes’ fate were written by the Coyotes themselves. The team attributes its lousy attendance to East Valley fans unwilling to commute to the West Valley. Perhaps they should acknowledge that the team’s performance is driving the lack of attendance these days.

There is no doubt that the Coyotes should remain in Glendale, Glendale has paid the price to keep them (something that the most rabid of Coyotes fans and LeBlanc fail to acknowledge). The Gila River Arena is a Class A hockey facility. The Coyotes have a very good revenue deal. With the explosion of growth occurring in the West Valley, this is the best location…for now and into the future.

It’s time for LeBlanc to make peace…not war…with the arena manager, AEG, and the City of Glendale. Glendale has proven its commitment to the Coyotes. It’s time for the Coyotes to prove its commitment to Glendale.

© Joyce Clark, 2017        

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.

Nov 16

16

Another chapter in the Coyotes saga opens

Posted by Joyce Clark on November 16, 2016
Posted in Arizona Coyotes • City issue and actions • City of Glendale  | Tagged With: , , , , , , , | 2 Comments

On Monday, November 14, 2016, Anthony LeBlanc, representing the NHL Arizona Coyotes, announced the possibility of a Coyotes move to a new arena in the East Valley. Note that I, as others, used the word “possibility.”

Here are the links to major stories about the announcement:

As one read media reports or watched TV reports about the announcement the impression given was that it was a done deal and we could expect construction of a new arena immediately. A very few of the media did admit that the Coyotes face tremendous obstacles. Everyone should take a deep breath and sit back and wait until next June to learn the results of on-going negotiations. 

What was really said at the announcement? Simply this…Catellus Development Corporation, master developer of the ASU Athletic Facilities District, and the Arizona Coyotes are in negotiation. In 2010 ASU was successful in getting the Arizona legislature to approve an athletic district, a special revenue district for lands owned by state-supported universities, which could be used as a funding source for some of its athletic capital projects such as the $268 million dollar renovation of Sun Devil Stadium. Shortly thereafter, in 2014, ASU announced Catellus as its master developer of the Karsten land.

The Catellus Development Corporation is described by Bloomberg as, “Catellus Development Corporation, a real estate investment trust (REIT), engages in the ownership and development of primarily industrial properties in the United States. The company operates in Core segment, and Urban, Residential, and Other segment (URO). Core segment manages and leases its rental portfolio, as well as acquires and develops suburban commercial business parks for its own rental portfolio and for selling land and/or buildings to users and other parties. URO segment manages residential projects and urban development activities, as well as the desert land sales. As of July 28, 2005, the company’s rental portfolio totaled 41.1 million square feet. It operates principally in California, Illinois, Texas, Colorado, Georgia, and New Jersey. The company has elected to be treated as a REIT and would not be subject to federal income tax, if it distributes at least 90% of its taxable income to its shareholders. Catellus Development is headquartered in San Francisco, California.”

What I found to be most interesting about Catellus is that was a spin off of a major railroad company. This is from http://www.muelleraustin.com/about/catellus/ : “Catellus was founded in 1984, following a proposed merger of two railroad giants. When Santa Fe Industries (which owned the Atchison, Topeka and Santa Fe Railway) proposed a merger with the Southern Pacific Company (which owned the Southern Pacific Railroad), the new company created a wholly owned subsidiary named the Santa Fe Pacific Realty Corporation. The subsidiary was charged with managing the company’s non-railroad landholdings and turning unproductive parcels across the country into revenue generating assets. In 1990, after the merger of the railroads was denied, Santa Fe Pacific Realty Corporation spun off as a publicly traded company named Catellus Development Corporation (NYSE:CDX).”

Everyone by now is aware of the proposed site location and the proposal of a 16,000 seat, $400 million dollar Coyotes arena. What the announcement signals is Catellus has granted the Coyotes until June 30, 2017 to review the land and get the political, developmental, architectural and financial plans required to build it.

Take special note of two words…political and financial plans. Where were the political figures as this announcement was made? Governor Ducey, Phoenix Mayor Stanton, Tempe Mayor Mitchell, ASU President Crow or anyone representing the state legislature were all AWOL.  In fact, it was reported, “Phoenix Mayor Greg Stanton who has pushed for a new hockey-basketball arena downtown, threw cold water on the Coyotes’ plan.”  He said, “A deal is far from complete, and appears to require new levels of support from both state of Arizona and City of Tempe taxpayers. My thinking hasn’t changed: Building a third professional arena in this market doesn’t make sense, especially when it would likely require new public dollars as a part of the deal.” The Governor’s office declined to comment. Mayor Mitchell of Tempe didn’t even know about it until the public announcement was made. Even Deputy Commissioner Daley’s comment was lukewarm, “I’m very pleased with where they are. I think this is an incredible opportunity for an exciting new future in the Valley.” Coyotes coach Dave Tippett reflected what many others are feeling these days when there is an Anthony LeBlanc announcement, “It’s good news. It’s early. A lot of us have been through a lot of this before. Hopefully, everything turns out as wonderful as it sounds.”

The Coyotes expect the state legislature to create a special taxing district that would require taxpayers to pay $200 million of the $400 million needed. They floated the idea last legislative year and were told to come back in 2017 for possible consideration. General sentiment is that the Republican-controlled legislature will view the Coyotes’ latest request for public subsidy with a decided lack of enthusiasm.

One has only to look at the snapshot poll run recently by TV Channel 10’s Sean McLaughlin. At last check 31% of the poll respondents supported using tax dollars for construction of another sports facility. 45% of the respondents did not support use of public money and 24% wanted the Coyotes to remain in Glendale. If this poll is an accurate gauge of public support, it isn’t there with 69% opposed to using taxpayer dollars. It appears the public/political will to use $200 million dollars of taxpayer money for another sport facility is no where to be found.

As for the financial aspect, the Coyotes said they would pony up $200 million dollars. Let’s revisit some history. When IceArizona purchased the team, relatively speaking, very little of investor money was used. Instead two loans were granted for the team’s purchase… one from the National Hockey League and one from Fortress investment. The actual cash investment by the IceArizona investment group was less than a third of the purchase price. The investment group came out of the gate heavily in debt. It is no secret that the Coyotes lose millions every year. That’s why the City of Glendale’s annual taxpayer subsidy was so important to them. It made the annual bleeding a little less.

If the Coyotes really want to control their own destiny, why not just buy Glendale’s arena? It certainly would be cheaper than building a brand new $400 million dollar facility and it would give them the advantage of having complete control of the building and all of the revenues it generates.

I have heard but not enough for ironclad confirmation, that AEG, new manager of the Glendale arena, offered the Coyotes a smokin’ deal. Reportedly LeBlanc’s response was to reject the offer and walk out of the meeting.

Where are the Coyotes going to find $200 million dollars for their portion of the deal? There are only so many Andrew Barroways around. Mr. Barroway currently owns 54% of the team and according to Forbes: http://www.forbes.com/teams/arizona-coyotes/ , the team is valued at $220 million as of November, 2015. Here are additional facts provided by Forbes:

  • Price Paid: $170 M
  • Year Purchased: 2013
  • Revenue2: $92 M
  • Operating Income3: $-4.5 M
  • Debt/Value4: 63%
  • Player Expenses5: $60 M
  • Gate Receipts6: $20 M
  • Wins-to-player cost ratio7: 62
  • Revenue per Fan8: $11
  • Metro Area Population: 4.5 M

It should be disconcerting to Catellus, ASU and Tempe to hear that the Coyotes hope the project “pays for itself” or as Barroway says the Coyotes finally might break even with a new Tempe arena. Glendale should be an object lesson for them. Even with all of the revenue sharing schemes in its deal with the Coyotes, the Coyotes’ projections never became reality and those revenues never compensated Glendale for its annual subsidy.

LeBlanc brought much of the continual speculation and fan pressure upon himself. He repeatedly assured everyone that an announcement about a new site was forth coming. Before the draft…after the draft…beginning of the summer…end of the summer. What he provided publicly with this announcement is merely a fig leaf designed to cover his…

I believe the Coyotes best option remains the Glendale arena. I, personally, would like to see them stay.Glendale’s City Manager Kevin Phelps said it best, “the city will keep operating as if their arena will house the Coyotes long-term, noting that new arenas are very expensive to construct. I don’t think the last chapter of this book has been written — and until it is written, we’re going to keep doing our part to see how we can add value to the Coyotes.”

© Joyce Clark, 2016        

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.

Mar 16

1

Coyotes want another short term lease

Posted by Joyce Clark on March 1, 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: , , , , , , , , , , | 6 Comments

It has been 18 years and 75 days since the city’s pledge to build the West Branch Library.

On February 26, 2016 Arizona Sports ran a story on Anthony LeBlanc’s reaction to Mayor Jerry Weiers’ remarks at his State of the City address. Here is the link:  http://arizonasports.com/story/566510/arizona-coyotes-ceo-glendale-may-want-us-to-stay-but-not-being-realistic/ .

In his prepared remarks with reference to the Coyotes the Mayor said, “I need to be clear about this. I want the Coyotes to stay in Glendale. The city wants the Coyotes to remain in Glendale. We have, since day-one, invited them to remain engaged in this process.”  In his recent remarks Mr. LeBlanc said this about the Coyotes’ refusal to engage in the bid process to manage Glendale’s arena, “…the team did not submit a bid to manage the arena because it refused to participate in a ‘flawed process’.” LeBlanc did not elaborate on his characterization of a “flawed process.”

Mr. LeBlanc went on to say, “I think they do want us to stay, but I don’t think they’re looking through a realistic lens of what that means.” Translate this statement to read that in his view “a realistic lens of what that means” is the Coyotes would only stay if Glendale continues to subsidize a portion of their annual loss. LeBlanc, et. al., may have retired their Fortress loan by adding additional owners but don’t forget they still owe a boat load of money to the NHL for another loan that covered buying the team.

What governmental entity is not only going to build a new hockey arena but also subsidize the Coyotes’ annual loss? It’s Glendale all over again. Tempe? Scottsdale? Probably not. Phoenix? Perhaps it can bury its subsidization of the Coyotes within possible plans to build a new facility for joint use by the Suns and the Coyotes.

The Coyotes want to manage their own facility. Then they collect all of the revenue generated by non-hockey events and they can claim a management fee that not only covers their cost to manage but off-sets their annual loss.

LeBlanc praised a recently approved deal between Broward County, Florida and the NHL Florida Panthers. The deal allows the Panthers to get nearly all of the arena revenue and reduces any profit-sharing between the Panthers and the county. Since the Panthers first season in 1993-94 the Broward county’s public subsidy of the team has been $342 million (an estimated $14 million a year). It should be noted that the Panthers lost $36 million last year and another $27 million the previous year. Of course LeBlanc would think that’s a wonderful deal. Reality is that the majority of NHL teams can’t survive without public financial support. That has been the model for years but many governmental entities are under financial pressure and can no longer afford this type of model. It is a model destined to die in the future as the public clamors for sports franchises to pay their own way.

LeBlanc said three options are still being discussed. They are a shared arena with the Phoenix Suns in downtown, a partnership with Arizona State University or an arena in Scottsdale’s Loop 101 corridor. Hey, if the City of Phoenix wants to pony up and pay the Coyotes to play downtown, congratulations to all. Previously the Suns and the Coyotes shared an arena downtown and it was the fans who suffered with terrible sight lines while watching the games.

Is the Arizona State Legislature delusional? It has budget problems. Will it allow a portion of its allocation of state public money to be used to pay for a new hockey arena instead of educational purposes? It seems doubtful that Scottsdale will wish to pay the Coyotes to play in their town. It would be déjà vu as they refused to do so in 2001.

LeBlanc said if a new arena is built it will take at least three years. He went on to say they would “rather not move twice in five years.” Here is where the situation becomes problematical. Glendale and IceArizona currently have a two year agreement that allows IceArizona to manage the arena for $6 million per year. The first year of that agreement is nearly up leaving only one more year of IceArizona’s management. After that it is assumed AEG, the presumed new arena manager, and IceArizona will have to negotiate short-term tenancy for two more years. Will they be able to craft a mutually satisfactory tenancy arrangement? Then the question becomes if IceArizona can live with the deal for two years, why can’t it live with the deal permanently? Can LeBlanc and company afford to rebuild its fan base in another part of the Valley while it continues to rebuild the team?

No matter what the outcome I continue to have greatest respect and admiration for the players. They have endured a great deal since Jerry Moyes put the team into bankruptcy in 2009. They are a great group of men who certainly deserve more stability than they have had. They deserve better. Let’s see if cooler heads can prevail and a deal that benefits all entities can be achieved permanently. Isn’t it time?

© Joyce Clark, 2016

 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.