Goldwater Institute – Phoenix Coyotes

April 14, 2011

Transcript:

Ted Simons: Good evening and welcome to "Horizon." I'm Ted Simons. Canada or Arizona? The future home of the Phoenix Coyotes has been on thin ice since the team went bankrupt and the NHL assumed ownership back in 2009. The city of Glendale is the team's current home, and city leaders want to keep it that way. That's why the city wants to sell as much as $116 million in bonds so it can give a Chicago businessman $100 million to help him buy the Coyotes. But the Goldwater Institute has threatened to sue the city of Glendale, saying its deal violates the gift clause of the Arizona constitution. Joining us now is Goldwater Institute president and CEO, Darcy Olsen. I should note that the city of Glendale declined our invitation to appear on this program. Good to see you. Thanks for joining us.

Darcy Olsen: Thanks for having me on.

Ted Simons: The gift clause, illegal government subsidies. Why is the Goldwater Institute threatening to sue?

Darcy Olsen: Well, the Arizona constitution is very clear about this. The government cannot single out you, or a company, for a particular subsidy. That it wouldn't give to everybody else. It's illegal under something called the gift clause and in this case, we believe that Glendale is at risk of violating that law.

Ted Simons: Is this different than what we saw with the cardinals, with the Diamondbacks, with the spring training stadiums, with business ventures, with Intel first solar? How does this differ?

Darcy Olsen: The devil is always in the details as you know with any legal situation. In this particular instance, this is very much like the City North case from a couple of years ago where the city of Phoenix tried to give $100 million taxpayer dollars to a Chicago businessman to build a mall north of Phoenix and the Supreme Court said, no, that's a violation, it's a gift. The taxpayers would be giving somebody something and not getting something in exchange. The deals that are valid which many of those may very well be, the taxpayers are getting something in equal proportion to what they've given.

Ted Simons: In equal proportion or is there enough of a reasonable and rational risk to allow some of these ventures to go forward?

Darcy Olsen: It doesn't have anything to do with risk. It has do with whether it's a outright gift. They come over and give you $100 million so you can help buy the team and anybody else and that is the problem here.

Ted Simons: Again, government bonds, city bonds, I should say. $100 million, the owner pays off in part with the parking charges and we can get into that a little bit, but why not the owner wants -- $97 million to manage the arena. A 30 year lease, shared revenue as fees and profits, rents for 30-some odd years. Why isn't that something that not to mention surrounding businesses that would benefit from having the Coyotes there. Why isn't that at least equitable as far as Glendale is concerned?

Darcy Olsen: There are a lot of details and one of those is that the buyer has supposedly put a guarantee on the table. The trouble is it's not a guarantee. He has set up a dummy corporation which has no assets in it. If the Coyotes were to go bankrupt again, the taxpayers would be on the hook for not just $100 million but what could be $350 million plus interest and we're trying to prevent the taxpayers from being on the hook and we've encouraged the buyer to actually put his skin in the game and buy the team with his own resources.

Ted Simons: Have you done that in person? Because you have been criticized for not meeting with the NHL and Glendale, first of all, have you met with them?

Darcy Olsen: We've had literally dozens of meetings and - last month and because we had been criticized, we invited Glendale to meet with us, as long as it could be on the record. In other words, a journalist or somebody could be present to document what handed and we had no response from the city and seems that the city is actually not interested in meeting with us.

Ted Simons: Is that something that the Goldwater Institute does pro forma, is that something you usually do in the sense of asking for a reporter when you meet with a reporter or governments or organizations?

Darcy Olsen: No, it's unfortunate but Glendale has made that necessary. This situation with them is going back a couple of years and they were ordered to release public records to the public to journalists regarding this deal. They didn't, the court had to order them to do that. And they continued to withhold documents, they instructed their staff not to comply with the law and we had so many mis-dealings with them and so many situations where they were not perfectly forthcoming that we said, you know what, no more back-room deals, you need to do this in public, the public has a right to know what's happening and so that's why we put that little provision in there.

Ted Simons: John McCain is on the record saying your refusal to meet with the NHL is disgraceful and he and critics are also questioning your role in the sense that you are in essence deciding the future of this team and the future of this business and it's not necessarily your role. Elected representatives in Glendale were put there by the taxpayers to make these kinds of decisions and you're not an elected organization, it's not your place to do this. How do you respond?

Darcy Olsen: The Goldwater Institute is a taxpayer watchdog and it's our job to watch out for taxpayers in this state. Ultimately, it would be up to a court and judge to determine whether the deal is legal but we're here to stand up for taxpayers and no city and no elected official is above the law. That includes Glendale and senator McCain.

Ted Simons: But again, by threatening the suit, you are in essence affecting the deal. And so what they're saying -- it's -- those folks that are supporting this deal and against your position. What they're saying is you're in a position of influencing city business where the taxpayers are your primary concern. They've already put these folks into office.

Darcy Olsen: You know what, this is America and I think every voter out there tonight, they know they have the right to speak up anytime, anyplace about anything in this country and that's exactly what we're doing here. We sense something very deeply illegal and unconstitutional is going on. We asked for public records, the city did not want to give us those public records and they still haven't disclosed all the information and we're doing the job that taxpayers asked us to do.

Ted Simons: Have you sent letters to bond agencies?

Darcy Olsen: Yes. We did.

Darcy Olsen: We -- as we always do, when we have information on something like this, we share it with any relevant party, we try to get it out to the public, if there are specific policymakers involved, we do that as well.

Ted Simons: NHL says those letters are illegally interfering with the cities business affairs. How do you respond?

Darcy Olsen: We don't think. So just -- the Goldwater Institute is like any other individual. You have a first amendment right to speak out and speak your opinion and we looked at this law, looked at what they were doing and said this violates the law and what they're trying to do is intimidate the Goldwater Institute so we won't proceed with this lawsuit.

Ted Simons: Is -- there's a lot of personal accusations flying. Senator McCain saying disgrace, we had a former owner of the Coyotes saying that the Goldwater Institute -- I think his quote was childish, sophomoric and unprofessional. There are concerns with your board, the wife of a Diamondbacks owner Ken Kendrick, his wife sits on the board of the Goldwater Institute. Are these valid concerns?

Darcy Olsen: Well, what's the old saying in law? If you don't have the facts, pound the table. And I think that's what is going on here. All of that is a distraction from the main issue, which is that the city of Glendale has struck a deal with the NHL and an out of town businessman from Chicago to give $100 million to help somebody buy a team in violation of the Arizona constitution and that is the beginning and the end of the story here.

Ted Simons: If the city uses this enterprise fund, which sounds like there is $400 million to use at its discretion, if the city used that to sweeten the deal or change the parameters of the deal, is that something that would still be unacceptable?

Darcy Olsen: We don't have the parameters of that deal so we'd have to analyze that, what we do know is that if taxpayers are taken off the hook here, we will have a victory. I mean, if Matthew Hulsizer would buy the team with his own money, as he can afford to do. That would be fantastic. We would keep the Coyotes here and taxpayers wouldn't be on the hook for this team.

Ted Simons: Sounds like the bottom line is the team actually leaving and that arena being empty and all of those surrounding business, not having those folks, that's still a better deal for Glendale taxpayers than this particular arrangement?

Darcy Olsen: I don't think it's a case of this arrangement or nothing. The Coyotes play 40 nights a year and the rest of the year you have to fill up the arena with other activities. They used to have road runners and minor teams that could play and a lot of opportunities, I think what we would like to see is what most Arizonans would like to see. A way to keep the Coyotes that is legal. That has the business owner of the team paying for the team and bearing the risk. This is a team in 15 years of being in the valley has lost money every year and is in bankruptcy and this is why it's so important that the buyer take that risk. In the city of Glendale right now, they have a billion dollars in sports-related debt. That is $13,000 per household. Per family, already, without even going into this deal.

Ted Simons: Before I let you go, I got to ask you one more time. You've got taxpayers and you're concerned about taxpayers, but Glendale's been in the pro-sports business for a while now, they seem to like the mayor and council who kind of go in that direction, haven't they already spoken?

Darcy Olsen: Three out of seven councilmen disagreed with that deal, so it certainly was not unanimous. The worst thing you can do in a situation like this is add to the debt and add to the risk when you've already got a debt load that's three times the national -- a national city of its size.

Ted Simons: All right, Darcy, good to see you. Thanks for joining us.

Darcy Olsen: Thank you.