The owners of the Arizona Coyotes may still be working out exactly what they want to do for a new arena if they leave Glendale when their lease expires in 2017, but they do seem to have at least one stopgap plan: Team officials have met with the operators of the state-run Arizona Veterans Memorial Coliseum in Phoenix about playing there on a temporary basis.
This makes total sense, since a new arena would take several years to plan and build, and anyway, meeting with the arena operators isn’t the same as actually coming to an agreement with them. Still, this would be pretty hilarious if it came to pass, as the Memorial Coliseum is the venue that the Suns left in 1992 because they deemed it too old, moving to a new arena that the Coyotes then left themselves for a still newer arena in Glendale. Apparently there’s obsolete and then there’s obsolete, at least when the alternative is the alternative is having to actually bid for the operating rights to the modern arena you had built for you at public expense.
Speaking of which, bids on operating rights for the Glendale arena are due today. [EDIT: Now pushed back to next Friday.] It’ll be very interesting, to say the least, to see what kinds of offers they get, and how much better they are than the $7-8 million a year that the city was paying the Coyotes to run the place.
I thought they were getting as much as 15mil at one time ?
They share some revenues with Glendale, so the net cost is $7-8m. (Click through the link, it explains it.)
The deadline was pushed to next week: https://www.glendaleaz.com/purchasing/bidopportunities.cfm
Aha, thanks, Aqib!
The Coyotes stated the amount to actually run the arena was $7.2M last year. The amount they actually netted from the COG was minimal. Glendale canceled the lease and will regret it once the Yotes leave. Westgate will lose 600,000 visitors to the are that most would not otherwise go there. The COG will lose the tax revenue those people generated at Westgate. The number of jobs lost will also hurt the city. Many of the bars and restaurants on the north side of Westgate will close.
I get your opinion on public financing of things like this, but in THIS case, the COG will lose a lot more than what they were paying. The COG needs the Yotes more than the Yotes need them now.
Glendale only collects $10 million a year in sales taxes from Westgate overall, so unless the mall were to totally shut down (and none of those shoppers would spend any money elsewhere in town), the city would be better off shuttering the arena than continuing to pay $7m+ a year to run it:
http://www.glendalestar.com/news/article_0fe889c2-4058-11e5-8b69-679928620737.html
Though a far better solution would probably be to take a small fraction of that money and use it to support Westgate businesses. Trying get people to shop at a mall by running a money-losing hockey arena next to it is about the most inefficient use of public funds imaginable.
Wait, there is yet ANOTHER arena/stadium in Phoenix?? And I thought Vegas had an oversupply.
James, is there any proof that these 600,000 were visiting the mall before or after the games? Furthermore, isn’t it just as likely that gameday traffic discouraged regular shoppers from coming on those days?
Adding on to James’ comments…
Arena goers might grab a bite and hang out before or after an event at the Westgate Dave & Busters, but the Arena isn’t driving any traffic to the As You Wish Pottery (unless a guy’s girlfriend forces him to go b/c she had to endure a Coyote’s blowout loss.) Same thing with the AMC theatre and Ziggy’s Custom Tees.
Arena events may indeed be scaring people away and actually keeping tenants from moving in. (No proof or academic citation, just a supposition.)
But, in case anyone is near there, don’t forget that Westgate is offering FREE Holiday Carriage Rides through the 19th. http://www.westgateaz.com/
I went looking at pictures of the Arizona Vets Memorial Coliseum and could see no luxury suites whatsoever. It would be an interesting year, with the owners having to step out of luxury suites and mix with the hoi polloi.
“Westgate will lose 600,000 visitors to the are that most would not otherwise go there.”
A) Not likely true.
B) Who cares?
The original vision for Westgate was a $2 billion development which included office space, residents which included multi-million homes, and much more retail than transpired. In the context of a $2 billion development one could argue that the city’s $180 million initial investment in the arena could be called a defensible gamble. However, this is what Westgate is now: http://westgateaz.com/ I don’t see why they would keep throwing money to save a handful of restaurants.
I’d say it would have been more defensible if a) there was a hint of the money to finance the rest of the development and b) there weren’t ample evidence to the contrary of promised development around stadiums never appearing (St. Louis, take a bow).
Sure, the property bubble bursting was bad luck, but government officials taking a step into an exposed position like that is nothing but deliberate.
Remember that when the deal to build the arena was being put together construction both nationally and in the southwest was much higher. This is the model for what Westgate was supposed to be: http://www.modelcitymodelshop.com/portfolio/Albums/Album4/Source/rainbowlit2.htm
It was another LA Live or Xfinity Live in Philly type thing. Apparently some of the penthouses were going to be over $2 million.
On its own spending $180 million to build a hockey arena in a place where not many people like hockey is a stupid idea, but when you think of it as a city chipping in $180 million towards a $2 billion development its not the worst idea ever.
I guess I’m trying to think of all the high value housing and retail locations that get built without a hockey arena anywhere in sight. Or ski jump hills. What’s the rational connection between an arena and commercial development that wouldn’t already be met by the football stadium?
Many people speak of this project like Glendale put up 10 percent and got an equivalent amount of equity in a $2B project. In reality, they put in a much higher percentage of what was spent, got no equity or “investment partners,” and have basically only an unwanted/unneeded/money pit arena to show for it. Who cares about the percentage of expected growth?
They fell for the oldest trick in the book–right out of “The Music Man” or Wimpy asking for a hamburger. If this “land of riches” rationale isn’t the worst idea governments have, there probably aren’t many worse.
Well theoretically if all $2 billion worth of stuff had gotten built Glendale would have been collecting property taxes on the high end condos, sales taxes on all the retail, income taxes on the people working in those office buildings etc.
Why the developer thought the best way to make people want to buy those high priced apartments and companies want to rent space in those office buildings was to put his hockey team in the middle of it? I have no idea.
Should Glendale have cut its losses in 2009 and taken Jim Balsillie’s offer of $50 million to let him break the lease? Heck yeah!
Was it stupid for Glendale to give the NHL $25 million in 2010? Yep!
Was it stupid to give the NHL another $25 million in 2011? Oh yeah!
Was it stupid for Glendale to agree to the deal with the current ownership group more money? Yes.
But back in 2001 without the benefit of knowing what we know now? I would need more info before I can say that. I say this not knowing what financing/occupancy agreement/pre-sales the developer had in place.
Last point of the night. This wasn’t a deal where they said “yeah we’ll build an arena and assume development will follow because everyone will see how awesome it is” which is sort of what St Louis is hoping for with their football stadium. This was a developer saying “I want to build all this stuff but I need you to kick in for the arena” of course we now know that it all went south.
Aqib:
What you say is true, however I think that even a reasonable look at Ellman’s (developer) finances would have shown that the $2bn in development wasn’t going to happen even in a raging real estate market. Glendale was and is fairly small suburban community (last I heard, some 250,000 residents).
Ellman had originally planned on an arena in Scottsdale as I recall, but that city wanted him to put equity into that one… then the Glendale council came riding in to his rescue, offering a free arena with only modest ticket and parking taxes kicked back to the city to pay for it.
There are many ways to do the math on that (Neil’s example above works as well as any), but neither the original deal or it’s successors (which were mostly worse) was never going to come close to paying the construction bond alone (nevermind upkeep and arena operation costs).
Scruggs & Co went all in on a sports district. Glendale taxpayers will be paying for that mistake for some time to come.
And the saga hasn’t ended. There are pols in Scottsdale and Phoenix who salivate at the thought of doing this all over again to their cities. Because arenas are great for economic development, it’s just those clowns in Glendale who couldn’t do it right.
I think the Scottsdale thing is overblown. Scottsdale could have had the Coyotes before they went to Glendale and passed. The economics make less sense now because:
1) there are too many arenas competing for events in the Phoenix area. If you build an arena in Scottsdale the Glendale arena would still be there bidding for concerts or whatever. If the Suns move in when their current lease expires their arena will still be there too.
2) The novelty of the Coyotes has worn off.
Aqib,
What doesn’t make sense is this and so many other cases is that a developer supposedly ready to spend a huge amount of money on a project sees a low(-percentage) cost arena be an insurmountable and unfundable obstacle. And even that depends on the absurd theory (itself with plenty of wreckage) that a hockey arena brings residents and shoppers to a neighborhood. Why would a developer need a city to “kick in” an arena otherwise?
There was little that was unknown in 2007 that we learned later, other than that NHL owners are even more broke than we expected.
There are lots of things a municipality or a business can do to protect itself in such situations–Glendale did none of them. Trying to cast this as a reasonably hedged risk doesn’t really hold up
GDub – I’m not sure what the logic was. I’m just guessing here but maybe Ellman thought that bringing a pro-team would induce Glendale to go along with everything else. I think that was part of the logic behind the Barclays Center in Brooklyn. The arena is was small part of the Atlantic Yards plan, but offering Brooklyn a major league team got them to go along with all the zoning and eminent domain approvals they needed.
Well, I’d say Glendale got the team they hoped for, eh?
Yeah they just didn’t get the $2 million penthouses and all the office buildings etc
Given all that, they could have saved the money on the arena, still not had the penthouses, and probably been financially way ahead of where they are now.
Probably a lesson embedded there somewhere.
Yeah given that all they got what was a bunch of restaurants its clearly a failure. I don’t know what sort of advance due diligence Glendale did and since it was 13 years ago I’m not going to bother digging for it. My guess is not much if any. At the very least you need to have some residential pre-sales and lease commitments in retail/office space before you start digging.