Coyotes owner demands $200m in tax kickbacks for arena, says this isn’t asking for government money

So apparently Arizona Coyotes owner Anthony LeBlanc did say something about how he planned to pay for a new hockey arena in Tempe yesterday. And it was: Give us great gobs of tax money.

The Arizona Coyotes will ask the state Legislature to divert up to $200 million in tax dollars to help pay for the team’s planned $400 million arena in Tempe, Coyotes executives said at a news conference Monday.

The team would contribute the other $200 million to a project that “pays for itself,” said Anthony LeBlanc, the Coyotes’ chief executive officer.

“There’s no question that we’re going to have some form of public-private partnership to make this work,” LeBlanc told reporters.

“That is a very typical model. We are not going in and asking for government to build us an arena.”

The state money would come in the form of rebates to the team on sales tax and other tax revenue generated by the arena.

Well, yes, actually you are asking for government to build you an arena — or to build you half an arena, anyway. There’s a longstanding gambit among sports team owners to consider “tax rebates” as different from straight-up cash, but this is nonsense: Money is money, and if I’m running a business, it doesn’t matter to me whether I get it in the form of a check to the construction company or as a check from the state tax agency that I can then use to pay the construction company. (There’s a reason the term “tax expenditures” exists.)

While “sales tax and other tax revenue generated by the arena” is a bit vague, it seems clear that what LeBlanc is talking about here is tax increment financing, or a TIF; or, really, a STIF in this case, since it would kick back sales taxes from money spent at the arena (and maybe team employee income taxes, too?) instead of the more typical property taxes. I’ve gone on about TIFs before and how they cannibalize money that would otherwise go to the public treasury — Good Jobs First has an excellent primer on them as well — but suffice to say that when you’re talking about state money, they’re especially ludicrous, since there’s no way that the state of Arizona will bring in significantly more sales tax revenue just because the Coyotes move from Glendale to Tempe.

Anyway, this appears to be the opening salvo in LeBlanc reopening the TIF discussion that he started last spring. There’s no reason to assume that this will be the final subsidy figure he arrives at — there’s still the matter of operating and maintenance costs to be decided on, and remember Judith Grant Long‘s figure that the average stadium costs taxpayers 40% more than the announced subsidy figure. But at least we know his initial ransom demands, even if we don’t know what he’s willing to settle for.


29 comments on “Coyotes owner demands $200m in tax kickbacks for arena, says this isn’t asking for government money

  1. Can you even build an arena for $400 million? Detroit and Edmonton’s new arenas cost nearly double that. Unless they’re building it out of local materials, an adobe arena?

    • Honestly, you SHOULD be able to build one for that but that does sound cheap compared to some other recent arenas. Their current home is only about 15 years old and cost $220 million. But given some of the issues they’ve had with that one you know they’re not going to be looking to cut any corners this time around.

      • Exactly what issues? My understanding is that the Gila River, or whatever it’s called, Arena is among the best in the country; the only issue is that the Coyotes aren’t getting the subsidy that was promised by the city’s previous administration. Add to that the fact that the ‘yotes are no longer managing the arena for the city, collecting extra revenue even when the team isn’t playing there, and it sounds for all the world like they’re just fishing for a better deal.

        • That’s what I understand too, Paul. Even at 13 years old, it’s still one of the better arenas in the league. It’s only problem is the location and that there aren’t enough people in it on game nights.

    • Quebec city Vidéotron Center was build with a budget of $400M CAD and a final price tag of $375M CAD (~$278M USD using conversion rate of 1.35). So yes, it’s possible.

    • Union workers (or, lack thereof). That’s the difference between $400 million and $650 million.

    • It’s been a few years, but Hansen had talked about $490 million for a NBA+NHL arena in center-ish Seattle and that included up to $100 million in land. I think he also had a labor-peace agreement in there, so it would have been union construction.

      • My guess has always been that part of the reason that the Longshoremen and others have opposed the Seattle arena is because it did not include a labor agreement.

  2. Neil, you need to add this one.

    http://nhl.nbcsports.com/2016/11/15/coyotes-looking-for-some-form-of-public-private-partnership-to-get-arena-built/

    The Coyotes’ current home was built for them by the city of Glendale. As we all know, that relationship deteriorated badly.

    So no matter how the Coyotes spin this latest project, there will be skepticism. And until shovels are in the ground, that skepticism will remain.

    “I think how we can alleviate that is, this is not the same ownership group,” said LeBlanc. “No disrespect to the previous ownership group, in particular the ownership group that was the National Hockey League. But the reality is we have what we feel — and again, I say this as humbly as possible — a group of people that can get this done.”

    And if the politicians don’t sign off on it?

    “If it doesn’t happen, we will have conversations,” said LeBlanc.

    About?

    “Things.”

  3. It does sound low… but then this will be a 16,000 seat arena (closer to Winnipeg sized than Detroit or Pittsburgh, and not including some $150-$200m in surrounding development like Edmonton’s taxpayer funded palace, which is also funded in Canadian – read $0.75 – dollars).

    If the ASU arena will be their practice facility and they don’t add a bunch of things that modern arenas tend to include (massive shopping and commercial areas within the arena development itself), I think there’s no problem building a modern arena for $400m. Pittsburgh’s, which was completed in 2010 I believe, cost about $325m.

    While costs have certainly gone up since then, we should also keep in mind that CEC including some shocking examples of overkill of it’s own, and that it seats roughly 18,000.

    That said, I doubt that the ownership will actually put their full $200m in. While attendance in the “new” district will probably be significantly better than in Glendale, I’m still not sold that Arizona hockey fans will pay true NHL prices to watch NHL hockey. The one thing we’ve learned over 20 years of NHL hockey in the Phoenix area is that there aren’t enough fans willing to pay $60-100 per ticket to make an NHL team viable. There are certainly 12-13k who support the team regularly and will pay up to $25 on average.

    This is not the NHL’s business model at present.
    It’s possible that a move to this area will change that, but far from certain IMO.

    • Maybe he believes he can up that 12-13K to 16K per game and create a feeling of scarcity, then get that ticket price moving up, but it seems like a long, long climb. Especially in a crowded sports market. Would make more sense to reduce capacity in Glendale.

      • It does, Mark.
        I’m sure the proposed new location will be an improvement and I’d say there is no argument that “that’s where the money is”.

        But that doesn’t mean fans will flock to see the team there, or pay $85/ticket.

        I would say at best it will be better, but still not enough of an improvement to make the club viable in the district.

        • I would think if there were as many fans on that side of town wouldn’t that be reflected in TV ratings?

  4. Can you build an arena in Arizona for only $400 million. Yes , but the hypocrites need to build it before Trump puts up his wall. Then those same workers will build and pay for the wall from Mexican side of the wall.

  5. It would be somewhat mean to point out that the Coyotes’ future won’t be determined so much by the number of seats in the arena as the number of people sitting in them and how much they pay for tickets. Watching some games on TV would be helpful too.

    Yes, I know that the Coyotes’ #1 pick grew up in Arizona playing youth hockey.

  6. A couple of things were missing from the press conference:

    1) someone from ASU

    2) someone from the City of Tempe

    Apparently the mayor of Tempe didn’t even know about this “deal” until the press conference was announced. Now even if someone was coming with $400 million in cash to build an arena themselves you would probably have to touch base with the city. Something along the lines of “will you give me zoning approval to build an arena in your city”

  7. Hey Neil, sounds like Mr. Leblanc reads your stuff.

    http://arizonasports.com/story/902840/coyotes/

    • Too bad he didn’t read as far as the part where I noted that that argument is a load a crap.

  8. I don’t think ASU or the Citizens of Tempe are that foolish to get into bed with the Coyotes after seeing what they did to Glendale. How long before the current owner pulls a Jerry Moyes & files for bankruptcy & leaves ASU/Tempe holding the bag? The Coyotes are a classic example of biting the hand that has been feeding you. If it wasn’t for Glendale, where would the Coyotes wound up?…nobody wanted them. Glendale has been financially supporting them from day 1. Coyotes LOSE money.

  9. Plus per this article:

    http://www.azcentral.com/story/sports/nhl/coyotes/2016/11/14/arizona-coyotes-asu-agree-2-facility-deal-tempe/93784410/?hootPostID=246255cb7607e5aec1622e39f2e6b9ad

    The Wells Fargo Arena (home of ASU hoops and other sports) will still be renovated. If the new Coyotes arena will only seat 16K, surely they could just use that for basketball too. WFA seats about 14K without the curtains they use to lower capacity to 10K and change.