The City of Glendale is expected to approve a 20-year, $300 Million deal to keep the Coyotes in Glendale. Mike Sunnucks of the Phoenix Business Journal explains the details.
Ted Simons: Good evening. Welcome to "Arizona Horizon." I'm Ted Simons. Glendale City Council voted to approve a deal to keep the Coyotes in the city for the next 20 years but the new owner still needs to secure financing, the NHL still has to give its okay and the Goldwater Institute is planning another court challenge. Here with more is Mike Sunnucks who has been covering the story for the Phoenix Business Journal. What exactly did the council approve?
Mike Sunnucks: It was a 20-year deal $15 million a year to manage the arena. That's $300 million dollars that's a big chunk of change, probably the biggest arena management deal in the country. I haven't found a bigger one than that. He does pay rent if he buys the Coyotes the city will have a surcharge on tickets, $2.75, $3 a ticket. The city will get a piece of naming rights revenue if they rename Jobbing.com arena and Mr. Jameson's group also gets the right to charge for parking. They don't charge for the Coyotes games now. It's a controversial deal. It's geared towards helping grease the skids to get the sale done and bring in the investors and equity that he needs to make it happen.
Ted Simons: It sounds like he's supposed to manage and improve the arena. What does that mean?
Mike Sunnucks: He will manage the arena like somebody would manage any arena throughout the country. Most deals aren't big, flat fees like that, though. They might get a piece of revenue if they do a lot of concerts. They may control all the revenue and not get paid. This is a different kind of deal it's a flat fee that the city will shell out every year for him to do it ranging between 17, 20, down to 10 after a while. It's geared toward giving a long-term tenant in there long term money streams for Jameson's group.
Ted Simons: Did I hear there was also something in the deal allowing him to actually buy the arena after a certain amount of time?
Mike Sunnucks: He would have the option to buy at whatever the market value is. First right if the city wants to sell it. It'll be interesting to see what happens to the arena deal. Someone said, "If he buys it we won't have to pay the arena management fee but who would buy the arena when you have that revenue stream coming in?" It's a controversial deal. The city thinks it's legal under the gift clause. They think it fits in, if you take all the revenue going out and coming in, it may not be the best deal in the world to people but it doesn't go against the court cases on gift clause subsidies.
Ted Simons: Yet this is a city with $35 million shortfall, layoffs in cuts and services, tax issues as well. That obviously has to play. The city council meeting, what was the mood there?
Mike Sunnucks: More people have come out against this deal than the other Coyotes deals that have come out. In the past deals you had a lot of Coyotes people show up and a lot of fans show up. You had Gary Batman and Jameson and Bill Daily from NHL were all there talking about how this is important but there was much more animosity towards the council this time. Couple folks running for mayor out there they testified against it. There's a realization that it's Glendale. We have budget problems out here. The Coyotes are losing money. But they are in this quandary. Maybe hockey doesn't work out there what happens with the arena? I think the Glendale folks that voted think they see this arena if it will be a white elephant if we let it go and West Gate will follow.
Ted Simons: And yet the mayor saw past that.
Mike Sunnucks: The mayor voted no. She's been in the past a vociferous Coyotes supporter. She supported past deals. Her patience ran out this time. She's more skeptical about whether the sale will get done. We have heard this for a couple years. The city approves it, the sale is going to get done, just fork over a few more bucks and we'll make this happen. I think she's skeptical. One thing they did which would spark what Goldwater sued over was the flow of public documents was not coming out until the last week. They wanted to keep the information away from Goldwater so they couldn't scuttle this deal like in the past. That worked against the mayor because felt left out of the loop.
Ted Simons: Interesting, I know that the Goldwater Institute is looking at two different avenues in public information and access, or lack thereof, and the gift clause. What is the Goldwater Institute saying?
Mike Sunnucks: They will come back most likely and try to get the vote voided saying they violated open meetings, public records laws. Glendale released a lot of information kind of last second. They tried to get the vote stopped on Friday. The judge said, "No you can't really do that but if you want to try to void it afterwards you can." That's still a tough go to have a court void an elected body's action. Then they will come back with the gift clause argument and maybe go after that. I think what could happen here is Goldwater doesn't need to win in court to scuttle the deal. If Jameson's investors are so tenuous or not there right now and there's a lot of uncertainty and lawsuits, that may be enough to scare them off. This is a tough sell.
Ted Simons: And that happened the last time.
Mike Sunnucks: Absolutely.
Ted Simons: They got scared off because of threat of a lawsuit.
Mike Sunnucks: The city wanted to sell bonds, Goldwater sent letters to the banks saying we're going to challenge this. That scared everyone off. That may be the end game for Goldwater. He better have his money in place to get this done.
Ted Simons: Yes or no: closer than ever for a deal here?
Mike Sunnucks: Skeptical. It is. This certainly helped move the puck along but it's a tough deal. Tough sell.
Ted Simons: Alright, good to have you here. Thanks for the information.
Mike Sunnucks:Reporter, Phoenix Business Journal;