Glendale council okays AEG arena management deal, hopes this one won’t suck quite as badly

The Glendale city council gave its blessing to the AEG management deal for the Arizona Coyotes‘ arena last night:

The Glendale City Council voted unanimously Tuesday night to approve a $28 million deal with the Los Angeles-bases AEG Facilities to operate the Gila River Arena.

The new deal is an effort to keep the Coyotes in Glendale beyond the 2016-2017 season.

Okay, none of that is exactly right, 12News: Whereas normally a “$28 million deal” means you get paid $28 million, here Glendale will be paying AEG $28 million over five years. Plus it’s not really an effort to keep the Coyotes in Glendale so much as an effort to reduce the fiscal bleeding that was put in place by the Coyotes’ 2013 sweetheart lease for the arena, now canceled. Plus you misspelled “based.”

As discussed here yesterday, the new lease is about $2-3 million a year cheaper for Glendale than the old Coyotes one, though it’s about on par with the temporary management contract the Coyotes signed last summer to tide everyone over until the open bidding was complete. (The Coyotes owners decided not to submit a bid, because screw that competitive-bidding crap.) AEG can renegotiate the lease if the Coyotes move, or opt out of it entirely if the two sides then can’t agree on new terms.

In all, it’s best to look at this as a compromise between putting up with the original Coyotes deal and shutting down the arena entirely: The hockey team is still there for the immediate future, after all, and AEG is really good at booking concerts, so maybe they can make a go of it. If it works out, Glendale saves itself maybe $10 million or so, and ends up with a slightly more viable arena, with or without hockey; if it doesn’t work out, the arena probably still shuts down, but Glendale still saves the $10 million. Unless some future council gets suckered into renegotiating a worse deal just because “we spent all this money on an arena, we don’t want to waste it,” but hopefully by now everyone in Glendale has learned the hard lessons about sunk costs.


13 comments on “Glendale council okays AEG arena management deal, hopes this one won’t suck quite as badly

  1. “If it works out, Glendale saves itself maybe $10 million or so, and ends up with a slightly more viable arena, with or without hockey”

    There’s no reason AEG can’t run the arena just for concerts, like they do with the Sprint Center in Kansas City. Though if the Coyotes and Suns each end up with their own arenas not in Glendale — not likely, but possible — then that’d pretty well glut the concert market to where you think something would have to get torn down eventually.

  2. They can always turn an extra arena or two into a Bass Prop Shop (a la Memphis) or a church (a la Houston)! :)

  3. I am sorry. Stop your pure horse manure, uneducated comments. Its 100% an effort to keep the Coyotes, if it wasn’t the COG would not have agreed to the out clause. Please stop your nonsense.

    As for AEG running it like KC. More pure lack of knowledge. KC doesnt have near the competition with arena and concert sites. NOT CLOSE. That may be the most mis-informed thing you have ever said. Please stop trying to make people think you know about this situation. Add in the new new arena’s that will be built in the next 5 years CLOSER to middle Phx and with light rail access. Sorry sir, but you are out of your league in this situation. Stop trying to unintentionaly mis lead your readers

  4. http://www.thehockeynews.com/blog/sorry-haters-but-hockey-in-arizona-is-continuing-to-grow/#.VyD-u2uSQgA.twitter

  5. Which is why I just said above that if Phoenix gluts the market, then AEG couldn’t profitably run the Glendale arena for concerts — i.e., exactly what you said.

    James, I genuinely appreciate your comments here, since you know a lot about the Coyotes situation (and were able to point out the rent/naming rights thing yesterday, for example). I don’t get why you feel the need to accompany everything with vitriol, though, even when you’re *agreeing* with me.

  6. James,

    I don’t think anyone hates the Coyotes. But I think it is fair to say that you don’t lose that much money without working hard at it.

    Hockey is a great sport, and it is great people like playing it. The college numbers don’t really mean a thing. Brown (not really a team with a great hockey lineage, but whatever), is literally 10% the size of Arizona State. ASU is nearly 30 times the size of Colgate.

  7. Sir, I actually agree with much of what you say. My vitriol is because you want to skew everything to your point, even when it doesnt apply. IMO you want to take any shot anytime you can. If you want to say that Glendale should never have built the arena…………thats one thing. Once it was built and the things that have gone on dont fit the box you want to put this situation in. You dont know the complete history and factors that have driven this total mess.

    There have been a couple years the team should have made a profit if the owner didnt take money from the team to prop up his failing trucking company. take loans at very high interest rates and funnel that money to his other company. Pay a coach $8.5M. Moyes took out an $80M loan at 12.5% annual interest only pmts. Thing was. most of that money went to his trucking company but the Yotes had to pay the payments. He paid himself $2.5M a year for rent in a building he owns from team money. Pay $1M a year more in team travel to a company he owns. Moyes paid his trucking company VP $2.5M mil a year to run the Yotes. One problem, he did next to nothing concerning the Yotes. In 2 of the years Moyses owned the team, he had $25-27M in needless or excess expenses. Both he and Ellman did all they could to screw the team. Ellman just wanted the arena to prop up his Failed Westgate project.

    I think you have maybe intentionally misrepresented the entire truth and reality of THIS situation. Everytime I see a story from you with no lies, but not entirely truthful, I get upset. If you dont have the time to fully vette a story, dont print it.

  8. GDub…………..you are right, no one loses that much money w/o working at it. Thats what clueless ownership gets you. The current owners have severely cut the loses. They understand about investing in the community. They are doing what should have been done when the team 1st arrived. They get it. They have put the team on solid ground and are now working to take it forward.

    To another question asked by someone else. Yes, if the Yotes leave the building will get torn down in the not to distant future. It will be a White Elephant of epic proportions.

  9. Believe me, I have no desire or reason to misrepresent anything — that’s why, when you pointed out the extra $900k a year in lost rent and naming rights (which, as you noted, was missed by just about every reporter out there), I made sure to add it into my post. As for the rest, that’s a difference of opinion/interpretation, and something we should be able to discuss without calling each other names. That just leads to yelling back and forth, and doesn’t get anyone anywhere.

    What I’m trying to do with this site is to provide an overview of stadium news around the country, using press reports, my knowledge from 20 years of writing about the topic, and whatever additional research I can cram in without this expanding to take up my whole day. (While I’m hugely appreciative of the donations that readers make to keep this site going, I still need to do additional journalism work to pay the bills.) Sometimes I can get an additional paid assignment to do deeper reporting and research. Sometimes I won’t, and I’ll miss something because all the press reports missed it, and I had no other way of knowing it. Sometimes I’ll miss something just because I’m human. But I’ll stand behind my work here as equally or more accurate than 90% of what’s being reported.

    Like most blogging, this site is, as the old journalism line goes, the first draft of history. If you don’t like it, feel free to argue where you think I’ve gotten it wrong. But the hurling of abuse really needs to stop — and you don’t do it to other commenters, so I know you can turn it off. Please, disagree with me, or anyone else, all you want, but do it without the personal attacks, because those are both unhelpful and against the commenting rules, for reasons I hope I made clear above.

  10. AEG has I believe direct contracts with the acts they book to only perform in AEG owned or controlled venues. Even if the Phoenix mayor decides to sell out his taxpayers those acts won’t follow. Thirty percent of the NHL haven’t folded because of taxpayer operating subsidies. Its a great spectator sport but has major foundation problems and demographic issues.

  11. If the arena was to be demolished (as some have suggested) the bond holders will have to be paid out. In cash.

    Don’t see that happening… even in a city in which stupid and self defeating decisions seem to be routine.

    It is not incompetent ownership that has left this franchise floundering economically either. The NHL used that argument to slam Moyes before they took over… and promptly lost more money than even Moyes (with his questionable contracts with non-arms length companies… something he was not alone as a sports owner in doing, btw) did.

    If incompetent ownership was the problem, the NHL surely would have made strides when running the franchise itself. It didn’t. Arguably, things were worse with the NHL in charge.

  12. Wait — the Glendale arena bonds aren’t being paid out of arena revenues, right? They’re being paid out of Glendale tax receipts.

    If the arena is losing money for Glendale over and above the bond payments — which I’m not saying will necessarily be the case, but it’s certainly a possibility — wouldn’t it make sense to shut it down?