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June 07, 2012
New Glendale subsidies to Coyotes could top $224 million
More details on the scale of the proposed Phoenix Coyotes subsidy, courtesy of the Arizona Republic. According to the latest report:
- The city of Glendale will pay owner-to-be Greg Jamison anywhere from $10 million to $20 million a year in "operating subsidies" (wink, wink) for the life of a 20-year lease. The Republic counts this as $300 million in payments; in present value it's probably closer to $200 million.
- "Glendale will also foot the bill for $24 million in capital improvements to the 9-year-old arena." Presumably that's $24 million now, not over time.
- Rent payments, ticket surcharges, sales taxes, and other fees from the arena will amount to a whopping $2.2 million a year. Even if that rises over time, Glendale is still looking at upwards of $12 million a year in net payments, plus the capital fund. This on top of the $12.6 million a year in arena debt the city is already responsible for.
How far will $15 million a year in payments go toward paying operating expenses? Well, current arena costs have never gone above $13 million, though obviously that could rise over the next 20 years. (And that's gross costs; the arena also has brought in at least $6.5 million a year in revenues.) One local team executive told the Republic that, in the paper's words, "the city's arena-management payment to Jamison likely would also be used to offset operating losses in running the Coyotes." And the Phoenix Suns, by comparison, get nothing to pay operating costs on US Airways Arena, after Phoenix helped pay for the building's construction.
In summation, then, Glendale is preparing to hand over upwards of $15 million a year to pay all of the Coyotes' arena expenses, and then some, after already having built the team an arena, in exchange for $2.2 million a year in rent payments (plus whatever tax money trickles in from fans spending money at, say, nearby stores). That's still not the worst arena deal ever — the Indiana Pacers, who are getting $10 million a year in operating subsidies plus got their arena for free plus pay no rent, still take the prize there. But it's getting up there.