Coyotes to Glendale: If we can’t run arena, we’ll take our puck and go … somewhere

Arizona Coyotes owner Anthony LeBlanc had already made pretty clear that he doesn’t want to keep the team in its current arena in Glendale without its prior sweetheart management deal, but he hammered in home yesterday by sending an open letter to city manager Kevin Phelps declaring that they’re outtie as soon as they can figure out a place to be outtie to:

Simply put, the Arizona Coyotes have every intention of leaving Glendale as soon as practicable. … By unilaterally breaking a 15-year signed management agreement with the team — a contract the Coyotes would have honored for the length of its term — the Council effectively evicted us from our home. While you claim that the Council has had a change of heart, we have not. As a business responsible for hundreds of employees, and a team, that relies on the support of hundreds of thousands of fans statewide, we simply cannot afford to do business with partners who do not keep their word, or honor their contracts.

Boom! Burn those bridges, Anthony! Except, of course, that the Coyotes don’t actually have another place to go to, so unless they’re going to relocate to the Suns‘ old arena or move in with their friend Oscar, they have to stay in Glendale for the time being, hence that “as soon as practicable” line in LeBlanc’s letter.

Local news coverage had this as LeBlanc declaring that he wouldn’t engage in lease talks with AEG, the arena management giant that recently won the rights to operate the Glendale arena, but realistically he’s going to have to talk to them at some point, since right now the team doesn’t have anywhere to play starting in September 2017, and nobody’s going to build them a new arena by then. LeBlanc keeps saying that he’s going to have an arena announcement real soon now, and maybe that will include a new temporary home, for all we know. If not, he’s painting himself into a potentially ugly corner, but we’ll just have to wait and see.

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.

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.

Phoenix mayor explains grooviness of using taxes for Suns-Coyotes arena: It’s cheaper than two arenas!

Phoenix mayor Greg Stanton made his pitch for a new publicly funded arena for the Suns and Coyotes yesterday, and he didn’t provide much more specifics than when he leaked it the day before: He will use tax money, but he won’t raise taxes to pay for it, and he’s for it because he thinks it will bring more spending to downtown Phoenix.

“I as mayor will do everything I can to pursue a course that makes a new facility home to the Suns, the (Phoenix) Mercury and the Coyotes,” Stanton said, noting the WNBA franchise as well. “Building two new sports arenas in our region simply doesn’t make fiscal or common sense.”

He’s right there, as far as it goes: One arena is definitely cheaper than two, albeit a lot more expensive than zero. So does building one new sports arena make fiscal or common sense for Phoenix?

Stanton’s funding plan, based on what little he’s revealed about it, would be a bit of a Rube Goldberg scheme, avoiding new taxes by siphoning every last bit of value out of existing ones. Currently, Phoenix levies hotel and car rental taxes and uses the proceeds to pay off a bunch of past construction projects, including the Suns’ existing arena (opened in 1992), a Sheraton hotel, and other buildings. (Note: This is separate from the county hotel and car rental taxes that pay off the Arizona Cardinals stadium and which were partly ruled unconstitutional in 2014.) The current arena will be paid off in 2022, however, and the hotel plus a downtown biotech building are in the process of being sold off, which would free up those tax revenues to be used for something else.

Great, free money, right? Not exactly. First off, the “something else” could be pretty much anything — in the most extreme example, the city could just cancel the hotel and car rental taxes once the existing arena is paid off, and either leave taxes low as an inducement to visitors or levy new ones to fund other needs. And on top of that, selling the Sheraton to get out from under its debt load isn’t without a cost: The buyer is effectively getting the building for free by paying off $300 million in remaining debt, and the city will lose any future profits it would be getting from the hotel. (The Sheraton currently loses money, but that’s partly because any revenue it brings in goes right back out to help pay off its construction debt.)

In short, then, Stanton is saying that the city’s decision in 1990 to build a new arena for the Suns is an open-ended commitment to keep on building new arenas for the Suns into eternity, while selling off any city assets necessary to make that possible. That’s a legitimate political position, I suppose, but you can see why he chose not to frame it that way. Or to put a price tag on it. Because people are cranky enough about it already.

Phoenix mayor to announce again just how groovy a new Suns-Coyotes arena would be

If there was any doubt about Phoenix Mayor Greg Stanton really wanting to build a new arena for the Suns and Coyotes after the last time he said his city needed one to keep its teams (and also, weirdly, to get the Harlem Globetrotters to appear), it should be dispelled once Stanton gives a speech today about doing just that:

According to sources who have reviewed the mayor’s planned remarks, Stanton will outline his vision for building a new taxpayer-funded arena during his fifth State of the City speech. The mayor is scheduled to speak before a crowd of hundreds of business and political leaders at the Sheraton Grand Phoenix hotel in downtown about noon.

Stanton will use his most visible stage of the year to make it clear that he prefers the arena be a joint-use facility shared by the National Basketball Association and National Hockey League teams, those sources said.

The Arizona Republic’s sources didn’t specify how Stanton would begin to pay for this, though they did indicate that the mayor would promise not to raise taxes to do it. Using existing taxes, such as the hotel and car rental tax that is currently paying off the Suns’ current arena, is another story — as, presumably, would be asking for state sales tax kickbacks to pay for arena construction.

As to whether this will be Coyotes CEO Anthony LeBlanc’s promised arena announcement to come by the end of the month, that’s anybody’s guess, though it sure sounds like he’s still trying to see who’ll provide the most lucrative bid:

At the same event, LeBlanc told The Republic that the deal would have to allow for equally shared revenues, in which each team would keep the revenue they generated and that both franchises would share non-event revenues, such as naming rights and advertising. The Suns currently have control over revenue at Talking Stick Arena.

“The Coyotes have had multiple conversations with the city of Phoenix and we continue to have detailed discussions,” LeBlanc said in an earlier statement. “However, as we’ve consistently stated, we also continue to have discussions with other Valley locations. It would be premature at this point to indicate a selection has been finalized.”

LeBlanc also trotted out the standard talking points from the new-arena playbook to practice them on the assembled pols:

The trick for the Coyotes, of course, is to come up with an arena plan that isn’t just lucrative, but is more lucrative than the deal in Glendale where they were getting a mostly free arena plus more than $6 million a year in operating subsidies to boot. It’s possible, just maybe, if taxpayers handle the construction costs and there are enough new revenues to split with the Suns, that it could work out to the Coyotes’ benefit. But you can see why they’re busily playing three different sites off against each other to get the best deal — when “we need a new arena and for somebody to cover all our operating losses because nobody comes to our games because we’re a hockey team in the freaking desert” is the agenda, you need all the leverage you can get.

So I wouldn’t expect a Coyotes announcement in the next two weeks, really, not when there’s still more hardball to be played. Talking about it incessantly to get people all excited about where an arena will go instead of why the Phoenix area should be building its third arena in 25 years, though? That’ll definitely happen.

Coyotes owners seeking up to $750m in tax kickbacks from Arizona, definitely think Arizona is stupid

We finally have a dollar figure for how much money in state sales tax kickbacks the Arizona Coyotes are looking for as part of a deal for a new arena, and holy crap:

One proposal floated at the Capitol would allow from $350 million to $750 million to be generated for an arena from sales and excise taxes imposed within a new taxing district. The plan, detailed in a 49-page draft bill obtained by The Republic, also could allow public funds to be used to build a hotel or other commercial real estate within the district, according to those who have examined the proposal…

The team would contribute $100 million to $170 million toward any project, according to Anthony LeBlanc, the team’s president and chief executive. He said the franchise is looking to build on 50 to 60 acres.

Suddenly, all of LeBlanc’s “we’re gonna build a new arena somewhere that’ll make us more money than playing in our already-built arena without that sweet $8-million-a-year subsidy we’ve been getting” talk makes sense: If they’re getting as much as $750 million in state tax money to build an arena, and maybe a whole bunch of commercial and hotel development on 50 acres of surrounding property, the team owners can put it pretty much anywhere and it’ll turn a profit. Hell, it might be a good deal even if nobody goes to Coyotes games, which is probably the business model that LeBlanc is looking at anyway.

Makes sense for the team owners, I should say, not for the state, for which a giant tax-increment financing district makes absolutely zero sense. For, say, Mesa or Glendale to devote tax dollars to a new arena is at least arguable, since they can hope to steal some consumer spending from the next town over. (This figure is usually overblown, but at least it’s non-zero.) For the state of Arizona, though, the benefits are as close to zero as possible: Hardly anybody ever travels to Arizona just to see a Coyotes game, which means any sales tax money that would be siphoned off to the team’s owners would be money that otherwise would be collected somewhere else in the state — in Glendale currently, but scattered all over  the state even in the event that the Coyotes were to leave Arizona entirely and people went back to spending their Coyotes ticket money on whatever they did before the Coyotes arrived.

The tax-subsidy bill is currently stalled in the Arizona legislature as this session runs out the clock, but LeBlanc has vowed to bring it back up in 2017. There may well be an announcement by the Coyotes in coming weeks of a preferred arena site, but make no mistake, that’s going to be the sideshow: Keep your eyes on this TIF district, because when it comes to taxpayer costs, it’s likely to be the main event.

Coyotes owner predicts arena announcement “in next couple of weeks,” keeps straight face

Arizona Coyotes CEO Anthony LeBlanc now says that an announcement on a proposed new arena site, which he’d previously indicated could come in May or June, may happen as soon as later this month, maybe:

“I know people feel that I’m kind of nuts on this one,” LeBlanc said at a news conference where he announced the firing of General Manager Don Maloney. “The reality is we do anticipate there will be an announcement on this front in the next couple of weeks.”

Given that all indications are that arena discussions are hitting all sorts of snags — a Phoenix city source told KPNX-TV that the team’s unwillingness to open its books to negotiators “makes it nearly impossible to engage in serious negotiations for a new dual-purpose arena,” while proposals for a tax-increment financing district to kick back sales taxes to the team are stalled in the state legislature, at least for the moment — that timetable does seem kind of nuts, but who knows, maybe talks with one particular prospective host are going really well? We have not much to go on at this point but LeBlanc’s public statements, and since he seems to be following the time-honored approach of changing your numbers every time and giving the media something new to report on, expect a moving target for the foreseeable future.

Coyotes CEO says arena announcement due by May, or June, or sometime

More rumors of the Arizona Coyotes‘ arena plans, this time courtesy of team CEO Anthony LeBlanc while speaking to fans on Saturday:

  • He still expects to make an arena announcement in the next six weeks, but it might be June.
  • On the possibility of staying put in Glendale: “I will never say never, but it’s highly, highly unlikely.”
  • Playing temporarily at LeBlanc called the possibility of playing temporarily at Veterans Memorial Coliseum, where the Suns played until 1992, is “a long shot.”

Apparently either no fans asked LeBlanc about specific locations or whether he’ll be demanding sales-tax kickbacks, or he chose not to answer. This is all part of the standard “get people talking about where the new arena will go, not whether there should be one” campaign, so expect more of this in the next six weeks, or until June, or whenever.

Coyotes ask Arizona for sales-tax kickbacks to fund new arena, because they think Arizona is stupid

We’ve gotten a hint of how the Arizona Coyotes owners want to finance a new arena, wherever it ends up, and surprise, surprise, it’s not “with that U.S. savings bond we’ve been holding onto for the right moment,” but rather a whole buncha tax subsidies:

There could be a measure introduced at the Arizona Legislature in the coming weeks to create a special taxing district possibly to capture sales tax to finance development of a new arena…
“We have had exploratory conversations with a number of different governmental entities. However, we have not reached any agreements, even in principle, with anyone,” [Coyotes CEO Anthony] LeBlanc said in a statement. “We are also exploring some legislative options. However, nothing has yet been introduced. If anything is introduced, it will be location agnostic, and therefore not focused on any one location or jurisdiction.”

Let’s step back for a moment here to consider how incredibly insane it would be for the state of Arizona to siphon off sales tax money around a new arena and hand it over to the team: Sure, sales tax receipts would go up around an arena, especially if you built the arena in what would otherwise be the middle of the desert. And overall sales tax receipts might even go up in whatever city you built it in, since people would be spending their money there instead of in Glendale now. But state sales tax revenue wouldn’t change one bit, unless the lure of a new hockey arena suddenly got additional people pouring across the New Mexico border to watch Coyotes games, which I don’t think even LeBlanc could pretend with a straight face. And even if the district were to just siphon off local sales taxes (which aren’t that much: 2% in Phoenix, 1.75% in Mesa), the state should have no interest in encouraging cities to steal sales tax revenue from each other and then hand it over to a private sports team.

There’s absolutely no way of knowing how much money is at stake here, since any sales-tax kickback district could be drawn as small or as large as you like, and so encompass any amount of sales tax receipts. But however it works out, the Coyotes are clearly looking for someone else to bail them out of their horrible deal with Glendale where LeBlanc only got a free arena and now wouldn’t get paid to run it as well because he refused to enter into a bidding process to see how much he’d get paid. This can only end stupid.

Coyotes really want you to think they’re close to an arena deal, okay?

Okay, somebody from the Arizona Coyotes is clearly trying to spread a rumor that the Coyotes are getting close to a deal for a new arena: Following up on yesterday’s completely unsourced Arizona Republic column, we now have a report by KNXV-TV, cited to “sources inside the Coyotes,” that the team is “set to announce” arena plans in April. An arena where? Everywhere!

Coyotes ownership has gathered three viable options for an arena outside Glendale, where they currently play. The two likeliest scenarios:

1. A joint arena in Tempe with the Arizona State University hockey team, which made the jump to the NCAA Division I level in 2015-16.

The Coyotes see ASU as the future of hockey in the Valley, and the relationship between the Coyotes and the university is strong, as the Sun Devils played multiple home games at the Coyotes’ current home of Gila River Arena last season. An ESPN report in January said this scenario is probable.

2. An arena within the Salt River Pima-Maricopa Indian Community in Scottsdale. Sources say the money and space are already in place for such an arena, and construction could begin right away.

The third option is a new joint arena with the Phoenix Suns. Sources say that option is the least likely of the three, as the Suns and Coyotes have struggled to reach agreeable terms.

(Incidentally, be sure to watch the accompanying video to that report, where KNXV journalist Shane Dale makes sure to preface his hard-hitting news report on the Coyotes’ business plans by calling the team his “first love here in the Valley.”)

There really isn’t much in the way of news here, except that the Coyotes owners are still talking to three different possible arena partners — ASU, Salt River, and the Suns — and the first two are going better, maybe. Still, Dale provides zero financial details here, so intentions of wanting to announce something at the end of the NHL regular season or no, there’s still a long way to go before anything gets decided.

If I had to guess, this is most likely an attempt by the Coyotes ownership to get their prospective marks — er, partners — to up their antes: We’re going to announce a winner in April, so get your bids in now, folks, supplies are limited! Either that, or Dale saw the Republic story and decided to run his own report based on whatever he overheard the last time he chatted with the Coyotes’ assistant GM. It’s so hard to see the news for the trees sometimes.