Glendale’s new arena lease to require shoveling less money at AEG than city was shoveling at Coyotes

Glendale’s proposed arena lease with AEG is finally out, and ready for the city council to vote on! So who’s paying what to whom?

The city would pay AEG $5.6 million a year; one payment of $2.8 million, then two more payments of $1.4 million each.  The contract is for an initial period of five years with the possibility to renew for five additional years.

Glendale had been paying the Arizona Coyotes between $6.5 million and $8.7 million a year to run the place (the total varied depending on arena revenues), so looks like Glendale saved itself between $900,000 and $3.1 million a year by opening up the arena management contract to competitive bidding. [EDIT: A commenter notes that the city is also giving up about $900,000 a year in naming-rights and Coyotes rent revenues to AEG, so this deal is pretty much a wash with the Coyotes’ current revised stopgap lease, though still a good bit better than the long-term one that Glendale decided to terminate last spring.] Two cheers, Glendale! (The third cheer would have been if the city had included “run the arena ourselves” or “shut the damn place down instead of throwing good money after bad” as potential options, but I suppose those are still possibilities as they consider the AEG offer.)

The full proposed management contract is here; for those wondering what it says about the Coyotes, it hands over to AEG the right and responsibility to “negotiate, enter into, administer, amend and terminate all contracts relating to the use of Arena facilities and services, including the Coyotes Lease,” i.e., “you guys work it out now.” Though there’s also a clause at the very end that AEG can renegotiate the deal (or cancel it if the two sides can’t come to a new agreement) if the Coyotes were to stop playing games in Glendale, which could end up dragging the council back into negotiations if Coyotes owner Anthony LeBlanc gets serious about any of the umpteen arena plans in other towns that he’s pursuing.

All in all, the proposed AEG lease is not as awful as the old Coyotes one, but it’s not great, either — the result you’d expect after spending public money to build an arena that no one really needs for a hockey team that no one really follows and then deciding that it’s too big to fail as a way to get people to shop at the neighboring mall. I still like the idea of taking $5.6 million a year in small bills and having city staffers stand in the mall and hand them out to shoppers, but I know it’s tough for elected officials to think outside the box that way.


18 comments on “Glendale’s new arena lease to require shoveling less money at AEG than city was shoveling at Coyotes

  1. LOL. If you read the agreement, AEG has the option to renegotiate and if thats not successful (and given Glendales history it wont be) the option to OPT OUT of the agreement. So, the reality is the agreement depends on AEG keeping the Coyotes in Glendale.

    That wont happen unless the Yotes get a better deal than they had before. Joke on Glendale.

    So, in the long run it was better the COG save a couple million a year by canceling the agreement, but will chase the Coyotes out to another valley city. The COG will be faced with an aging white elephant for running the Yotes out of town.

  2. Wasn’t Glendale at one point paying 25mill. Giving the public history here and the lack of competition in the arena management still better than subsidizing the NHL.

  3. Im a season ticket holder..I LOVE the Coyotes. They are the most exciting sporting team in town..
    That being said: The city of Glendale did what any of us would do if we were on the bad end of a bad deal.
    Try and get a better deal. The city did just that.
    They won this battle and I would have done the same thing in their place.
    The blame for all of this is the sorry fan base.
    The fans are here, many, many hockey fans but most of them will not support the team that is located in the city they live in.
    These fans are back stabbers. They cheer against the Yotes then you see them at Fry’s shopping the next day. They only go to one or two games a year.
    Then there are the location excusers.
    The real problem was that at most games the team was losing a half million dollars per game in empty seats alone.
    The fans knew of the problem but didn’t care. The city saw this as a failed business that was hurting their bottom line and decided to do something about it.
    They did. Anybody would have. I hope it works out for both sides most of all I hope the team stays and the fans of hockey who have decided to live in this city finally decide to support this great team in th city that they live in……

  4. The real problem was that at most games the team was losing a half million dollars per game in empty seats alone.

    Don’t blame the fans for Bettman’s blunder. The NHL should have known that selling hockey in places like Arizona doesn’t work unless the fans are willing to pay NHL prices. Florida is having the same issue and had to curtain off parts of the arena because they couldn’t sell enough tickets. They even tried to give discounted/free tickets and it didn’t work because the team received an $86 million subsidy from Broward County (see articles below). If you can’t even make a profit in a new arena (which both Arizona and Florida got thanks to the tax payers) than the location is the real problem. How come Winnipeg is not losing money while playing in the smallest arena in the league? Because they have real hockey fans willing to pay NHL ticket prices.

    Florida Panthers will give you a seat in exchange for losing lottery tickets
    http://sports.yahoo.com/blogs/puck-daddy/florida-panthers-seat-exchange-losing-lottery-tickets-201633720–nhl.html

    Broward Commission gives $86 million to Florida Panthers
    http://www.sun-sentinel.com/local/broward/fl-panthers-subsidy-vote-20151208-story.html

  5. Its not ticket prices.
    Yotes tickets (depending on who you read) are either the cheapest tickets in the NHL or 3rd cheapest and Ive read both.
    It’s another sad excuse (the Dostoyevsky excuse) Is every hockey fan or every sports fan in Phoenix broke?
    The other cities don’t have a problem. And Winnipeg? An undersized arena in a city with what else?
    it may be impossible for the sports fans of Phoenix to come together and support this sport in their city.
    Phoenix is huge city.
    But, it is no community.
    This whole sad episode is an example of this.
    Lets hope for the best.

  6. There’s really no shame in saying, “Some people are big hockey fans in Phoenix, but not all that many of us.”

    Unfortunately, that doesn’t really help make a viable business model for a franchise. The NHL really needa to decide if it’s so committed to a team in Arizona that it will subsidize it itself through revenue-sharing, or if the team would do better elsewhere. “We want to keep the team there but only if somebody else subsidizes it” isn’t really fair (and may or may not work regardless, depending on what the Arizona legislature decides about tax kickbacks).

  7. Are there any teams that are privately owned?
    There may be a couple but those teams are the usual suspects (Toronto? Montreal?)
    Im not against paying more of my money in taxes for a quality product such as the Yotes..
    I realize that not everyone is and I support that.
    The problem is that in EVERY city there are only so many fans of a certain sport.
    The fans of this great sport in Phoenix stabbed this franchise in the back.
    They don’t support them, ridicule them and despite this we still fill the arena to over 80% every game.
    If by these standards the NHL and eventually the owners give up on the fans who LIVE HERE in Phoenix and won’t support the team..
    I’ll volunteer to drive the forklift to load the trucks to get out of this hole.
    On the last trailer out, on the back of it I’ll spray paint a “finger” and below it write “Thank you hockey fans of Phoenix”

  8. All teams are privately owned. Do you mean arenaa? If so, yes, a few, but not most — and besides, ownership of the arenas is less important than ownership of the arena’s revenue streams (while trying to make someone else pay for both construction debt and operating costs). Whose name is on the deed doesn’t much matter, except for property-tax purposes.

    Yes, in every city there are only so many fans of a certain sport. But that’s why leagues tend to put teams in cities where there are more of them, since it makes it easier to sell tickets.

  9. As usual, you miss several key points. This agreement is no different than the current one in place with the Coyotes.

    While it LOOKS like the COG is paying AEG less than they were paying the Yotes this year, they ARE NOT. The COG gave up its portions of naming rights to AEG……….The COG also gave the $500K rent from the Yotes to AEG.

    So, lets recap. The COG didnt even go to the Yotes to see if they would extend the current agreement with Glendale. Never talked with them before opting out and putting it to bid. So, by doing that they allowed the Coyotes to move and the new agreement is exactly the same money wise. The COG gave up over $900K a year to bring the total to actually $300K more than the were paying the Coyotes. Plus, if AEG thought it would work without the Coyotes, why would they have the very easy to execute out clause if the Yotes leave? They, by far DUMBEST group of people in the world in the Glendale City Council.

  10. Not to be an annoying accountant (most notably because I’m not an accountant) but what does “The real problem was that at most games the team was losing a half million dollars per game in empty seats alone.”

    There is not really a cost for a seat. I mean I guess they occasionally break and you have to buy a bolt or even a replacement seat, but there really isn’t a cost per seat. An arena has a cost. A team’s payroll is a cost. Both are largely fixed no matter how many seats are sold. Promotions, etc. are costs. The empty seat itself has little or no cost.

    What you really mean is “the Coyotes are not bringing in enough revenue to cover the team’s per-game cost” not that they are “losing a half million dollars per game in empty seats alone.”

  11. James: Glendale’s $8.5m loss for FY2015 was net of the Coyotes’ $500k in rent and $600k in naming-rights fees, so giving up those isn’t an additional cost:

    http://www.azcentral.com/story/news/local/glendale/2015/05/26/glendale-arizona-coyotes-attendance-revenue-dips-arena/27792029/

  12. Sorry dude, you are wrong. THIS year the Yotes are being paid $6.5M to run the arena.. Above that the COG gets $500K rent and $600K in naming rights.

    The agreement you are speaking of is the old one, not the one in place now.

    So now they get they pay $5.6M and DONT get the rent or naming rights.

  13. I wish you had an edit key on this. LOL. The COG will pay AEG $5.6M a year. They also are turning over around $900k in revenue they received in the 1st year of the 2 year deal they had with the Coyotes @ $6.5M a year to run the arena. They COG opted out of the 2nd year of that agreement.

    The reality is the new agreement actually cost the COG more than the current one with the Coyotes. Once again, on top of that, the COG gave AEG an out clause if the Yotes leave.

    A couple notes. The $15M deal the COG had with the Coyotes had a clause that the Coyotes had to guarantee a certain amount of events above their games. Why didnt the COG require a certain amount of events from AEG?

    If you saw the intro meeting of AEG to the COG council, most of the time AEG talked about how un-certainl the industry is and they couldnt guarantee anything. They made a ton of excuses.

    This agreement is a joke. These IMO, idiots could have offered the Yotes a long term deal at the $6.5M a year BEFORE putting it out to bid with not offering to the Coyotes. Now, its likely in 3 years the COG will have a white elephant with no tenant and no arena manager.

  14. That’s the stopgap lease that was agreed to *after* Glendale terminated the old lease, allowing the Coyotes to move if they wanted. So there was never an offer on the table for the Coyotes to be paid $6.5m/year long-term — if LeBlanc had wanted to do that, he could have either 1) submitted a bid himself, or 2) done so last summer, avoiding the whole bidding process.

    You’re correct about the naming-rights and rent compared to the current lease, and I’ll correct that above. But “Never talked with them before opting out and putting it to bid. So, by doing that they allowed the Coyotes to move and the new agreement is exactly the same money wise.” is incorrect.

  15. From the Nebulous Verbosity link:

    “In that clause, AEG says ‘If the Coyotes leave, we leave unless Glendale ponies up a LOT more cash.\'”

    Well, no. It says “if the Coyotes leave, AEG can renegotiate the lease.” Since the lease includes $500k in rent from the Coyotes, that makes sense. Whether they’d then use this as an excuse to demand “a LOT” more cash, we don’t know. (If they demanded too much, presumably Glendale could go back to one of the losing bidders from this round.)

    This is by no means a terrific lease, hence my decidedly non-cheery headline. It’s somewhat better monetarily than Glendale would have done if they hadn’t terminated the original lease, though.

  16. James Jerome you should of wrote the article as you know the facts. Maybe next time the writer of the article will get his facts straight so he can actually report the truth and not the bs the cog is reporting.

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