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Joyce Clark Unfiltered

For "the rest of the story"

The Glendale Monthly Arena Report for March, 2014 is now online at the city website. Here is the link: http://www.glendaleaz.com/finance/documents/FY14MonthlyArenaReport-20140331.pdf . It tracks similarly to the previous reports with qualified ticket sales (of 14,061) being up slightly. April’s report will have the figures from the last 5 games. That report, also, will look quite similar. Here is the March Report: Mo Arena Report Mar 2014

I have also prepared a Summary of the last 7 months’ worth of financial information. Here it is: Mo Arena Report Summary May 2014_Page_1Mo Arena Report Summary May 2014_Page_2Take aways from the Summary show that all “enhanced revenues”, and I included the Supplemental Qualified Ticket Surcharge of $1.50 per ticket, to date have totaled $3,641,547. The city’s expenditures to date total $6,502,055.

Note that some items are prorated. The Agreement start date was August 5, 2013. It is one month and 4 days shy of a full fiscal year. As a result, the Base Rent for the first year is not $500,000 but rather $326,712. The Safety & Security Fee is not $174,122 for the first year but rather $156.948. The big one is the Management Fee the city pays of $15 million a year. The first year it is $13,750,00.

The extreme right column labeled “FY Est.” is an educated guess, based upon 7 months of fiscal performance to date, of the final numbers for the Fiscal Year. I have relied upon publicly available figures. The Fiscal Year estimated revenues to the city are $5,523,000 and the expenditures are $14,200,68.

The city has $6 million budgeted leaving it with a deficit for the year of $8,677,685. Add to that figure an annual construction debt payment of about $12 million a year. This year’s loss on the arena will come in somewhere around the $20 million mark.

The city’s Contingency Fund sits at zero as it was used to pay a portion of the management fee. If there is an immediate crisis the city will have to reapportion some regular line item amount to cover it. I’m sorry but I don’t see how the new senior management has done any better at managing the city’s money than the old regime. No matter what, the current situation is…Unsustainable.

© Joyce Clark, 2014

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Sherwood

Councilmember
Gary Sherwood

Here is the transcription of Councilmember Gary Sherwood’s Sports 910 radio interview of Wednesday, June 19, 2013. There is no transcription of the last question asked as it was related to the Cardinals. There is no commentary offered. His words speak for themselves.

Radio Question 1 (RQ 1): “What got accomplished if anything last night, Gary?”

Sherwood Response 1 (SR 1): “Pretty much went the way I had anticipated. For most of the could they were seein’ some of the deal points for the first time. You know, had discussion on ‘em and I think there’s a lotta good that came out of it. I think there’s couple of things that had to go back to the Renaissance. I think they’re very doable. I think we’re waiting right now to get those things in writing and then there’s another meeting scheduled for Friday morning. Hopefully we’ll have consensus to take that to a public meeting. My concern, you know, was that we give the public time to vet this. So even though there’s a place holder meeting for the 28th of June there could also be one on July 2nd. So, we’re sittin’ here on the 19th, we’ll discuss this again on the 21st. If we’re good to go on it in terms of we think we have council support then either that information gets out later in day or Monday at the latest and the public has that week to vet it. We could still vote on it on the 28th. I think by Charter we’re to have it out there for 72 hours. I think we’ve always tried to do a little better than that. Again, this just came to us about four weeks ago. We had to quit acting like car dealers and each of us come with our best, you know, what we needed and their best deal instead of taking two months to go back and forth. And I think that’s what’s occurring.”

RQ 2: “That’s good to hear now. But it does sound like there’s sill some negotiation that have to take place. Do you have time to execute all that?”

SR 2: “I think so…I think so. I mean, you know, they really haven’t give us a deadline. I’ve always had July 9th nailed on my calendar. I don’t know that that maybe…I’m hearing some undertones that it’s gotta be July 2nd. I don’t know that July 9th works. There’s a few people that are going to be out of town on that week. So, I think, again we’re lookin’ at, you certainly can’t have a meeting on the 5th because that’s a long holiday weekend and I think the public would think we’re trying to pull something over on ‘em. So, I think the 2nd. Although no one’s called it that. I think that’s the date we’re shootin’ for. It could happen the previous Friday. Again, I think, I think what came out of yesterday was to be expected. There was a couple of things that we felt uncomfortable with. But surprisingly they were kinda simple things in the scheme of things. So, with that, I know our Acting City Manager in on the phone again this morning and my understanding is that those are gonna be doable in some kind of form or fashion. That should make it a go although I guess I gotta be careful of that because we’ve been down this path so many times.”

RQ 3: “Gary, when it comes to the actual lease, I mean is there an out clause? I mean is that stuff that’s still being negotiated?”

SR 3: “ Yeah, you know, I know previous council have been hung up on the length of those because they didn’t feel like there was enough time to give, you know, the fans, the sponsors, you know, people would be vested that they thought they’d have the rug pulled out from underneath them. But again, when you look at five year, uh, if truly someone’s makin’ an effort on this we gotta know whether hockey will make a go of it. I think, if ya look at the last 3 or 4 years with the threat of the team leaving every year you gotta five the folks over there, Mike Nealy, Jim Foss, and company a lot of credit for what they were able to do, um, with what sponsorships they were able to sell and keepin’ the fan base somewhat energized, um, and of course we had a good product, you know, this is a fickle sports town. We know that if you don’t have a winning product, you know, a lot has been said you know, about attendance figures over the years…10,000, 11,000. So when the DBacks made their run in their last championship they weren’t…their average attendance wasn’t even 50% of their capacity so and I know, baseball’s a little bit different to compare to there, those say hockey and basketball. But, you know, we got knocked a little bit for that. I…I think we truly, um, can make this a go, um, it just hasn’t, you know, it was under managed before, um, we got good management in there and then we didn’t have an owner. So, you know, there’s a lot of things, good things, that occurred over the last 3 and 4 years and givin’ the team with a little bit more of a budget that I’m sure they coulda done more and, um, so I’ve always been optimistic on this. And it’s not just for hockey for me. It’s just for that area. You know, if you don’t have a major tenant there, um, it basically can almost be shuttered. And again, for the mega events we’re trying to attract next door, you know, at the stadium and also the arena, the NCAA Four, the WWE, you know, all the things we’ve been kinda missin’ out on. You gotta fill that arena up. I mean, you gotta have, there’s gotta be more attractions around the area. And again, it was starting to come to fruition before the downturn and all those get put on hold and then the receivership. So that whole area, um, has a lot to gain. That’s why the city never intended to make money on the franchise, just wanted to break  even which we were doin’ until we got it with that first $25 million. And then all of a sudden, you know, again, that was supposed to be short term, we were gonna get an owner. We all know the history in the last 4 years. But when you go back in and look at the lack of revenue streams that the city had, havin’ to pay a management fee, well, then you can see that, um, that’s what we needed to make this deal work. And I think that, uh, the Renaissance group has done a good job at understanding that, uh, I guess I would feel a little better if there was more equity but there’s even some, uh, you know, there’s uh, I mean there’s even some talk about maybe more sweetin’ the pot there. But that’s hyperbole (couldn’t pronounce the word correctly!) right now. So, I feel, I’ve gone from cautiously optimistic to optimistic and again, Friday will be the proof of the pudding. I believe, again, talkin’ to the NHL they wanna know by the 24th, 25th, that we’re close, uh, and then they’ll extend. There’s no magic date but they’re not gonna have a tolerance for much later than that and again, I’ve been hearin’ the date of like, the 2nd. The 9th is maybe a little too late.”

RQ 4: “Gary, I want to piggy back on the management fee because we hear so many different numbers. Have you been able to bridge the gap and I know possibly you can split the parking and some of the other stuff. Just talk about how important that is.”

SR 4: “Well, I mean we have to, I mean, everyone knows what our budget is for that and um, and we can’t afford much more right now. So, uh, yeah, I think, I think with what we say yesterday, uh, a good part of that was closed, and, uh, we’re just lookin’ for, I guess I’ll just use the word ‘certainty.’ And it’s about really, all I can really say on that. And I think it’s, uh, I think it’s, uh, I felt it was an easy things to do and we’ll see whether they come through with that, um, later today or tomorrow. And then we’ll talk about it again on Friday and then it’s hopeful that they give us mostly what we want on that and um, then we come to agreement.”

RQ 5: “All right now. Did it surprise you to learn that the NHL has had contingency plan discussions with the City of Seattle?”

SR 5: “No, not at all. I mean, that’s somethin’ that they haven’t had in the past and uh, of course, I mean there’s 5 or 6 cities there and we hear from them all the time. So, no, I mean, Quebec, I mean they really think they’re in the running. Um, Seattle’s gotten little active here recently and, you know, whether a lot of that. I know Bill Daly, Gary Bettman have been very careful not to, you know, they’ve been through this enough times. They let out just enough information to put a little hear on us and just to let us know that, you know, and again, that’s just all the gamesmanship. You know, I listen and we’ve talked on it before, I was a little surprised is that they came out last week, with um, you know, during their um, their opening press conference for the series and said what they said but again, um, they’ve got as much, ah, experience on this as we do for the last 3 and 4 years. So, I think, that they’re just lettin’ us know that, um, that they have a plan. And whether all that can happen in time or not or whether they have to play in the stadium, arena, for a couple moths, half season, um, they are still negotiating with the players’ union for the all-star, I’m sorry, for the Olympics. So that’s another reason why their schedule’s comin’ out late. I’m sure we’re another reason but it’s comin’ out later than normal and that’s probably helpful, givin’ us a little time as well but still ya have to get goin’. And it would be nice, ya know, it was reported yesterday that Tippet’s under, he started negotiations and of course ya got free agency on the 5th. So it would be nice, well, tha this wraps up in our favor in terms of keepin’ the team here and then that we can do it by the 2nd so that, um, they have a little bit more to go on for the free agency.”

RQ 6: “All right now. There were some rumblings last week that there might be a mystery party getting involved or wanting to get involved. The Commissioner, himself, has said that his phone has been ringing a lot recently. Are you guys convinced that you’ve got the best deal in front of you, the best party, the best potential partner in front of you?”

SR 6: “Yeah. I think it’s funny how at the very last moment all these other sources start bubbling to the top and yet, ya know, we’ve had this for how long? Yeah, I’m convinced of that. There was some, they were comin’ from good sources and those, um, particular potential owners admitted they were out there, you know, lookin’ at some things that maybe they hadn’t looked at before but yeah, no, it’s really way too late for that. Um, it’s been rumored that some of them, or one in particular, may just want to add some equity to, even though, they’re completely out of it they may just want to add some equity on this deal, just to help it. Just because they want to see hockey here in the Valley even though they’re not, um, local residents. They own property here. So that’s the equity piece I spoke of earlier.”

RQ 7: “Right. What’s interesting to me is OK, you guys now, if you’ve got 3 votes and you need a fourth, then you guys need to be able to discuss and come to the agreement that the deal is doable and workable for everybody. Yet, before that even happens, you have to have a trust in the motivation and long term intent of this partner and I know that this 4 or 5 year out clause and the fact that Seattle could be such a lucrative move if a team ever went that direction. There’s fears that maybe they’re using Glendale as a stepping stone to elsewhere. Can everybody get beyond that fear? Are you confident in the intent of Renaissance Sports and Entertainment?”

SR 7: “Um, I am, I mean…I mean you have that in the back of your mind. Um, you know, what’s our alternative? You know, that we just give up on this right away? And then we’re left with whatever. We’re left with which is kinda scary for me. So, you know, if you give it a shot for 5 years and everyone puts their best foot forward and see, ya know, that we continue, you know, with the same management team that guiding the Coyotes and, um, and we do see that attendance can increase and we get those reneue streams. You know, I mean again, uh, sponsors are gonna…sponsors haven’t been paying top dollar for signage and the suites and such. A low percentage of the suites are sold. You know, if all that gets put together and we show those improvements then, you know, then the owners, the new prospective owners then are gonna be convinced to keep it here. So, you know, I mean, so, 4,5 years, ah, I think it’s certainly worth it if it’s not costin’ the city anything additional. I mean, you can do the numbers and see that it costs more money, it cost the city more money without the team than with it, you know, in lost revenue. You’ve got the arena debt service regardless of what’s in there. So, the lack of development, er, the delay of development around there. And of course, you know, attracting the major events. So, yeah, I mean it’s always goin’ to be in the back of the mind. But again, what’s the alternative? You know, at least we get a 5 year chance at this and I think we’re convinced that this particular group, um, really wants to make a run at it but um, they’re not going to stick themselves with a bad deal that they can’t get out of. So, we’re not as hung up on that and when I say ‘we’ obviously I’m new to council but speaking from the city, they…they’re really hung up on that last time around. Uh, they really wanted that out of Jamison deal there was a, that, you know, there was penalty clauses for leavin’ early and do, I, we don’t have that. I don’t believe we have that in this particular arrangement and, um, and again, I don’t know that we coulda got anyone to sign up that way.”

RQ 8: About the Cardinals. Did not transcribe.

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