As expected, the Tempe city council voted unanimously last night to approve the development agreement for a new $700 million Arizona Coyotes arena and surrounding $1.4 billion development district and send it to a public vote. It will now be up to Tempe voters next May to decide whether to go ahead with around half a billion dollars in tax breaks for the project.
What’s the next six months expected to look like? Any other electoral campaign, most likely, with big-money ad spending to coerce voters into casting “yes” or “no” ballots. The “yes” side got in some early licks last night, as the arena project got the moniker “Landfill to Landmark” while Coyotes CEO Xavier Gutierrez called it “a huge win for this community” that will provide “a wonderful home for the Coyotes” and “a vibrant town square for Tempe, generating thousands of sustainable jobs and millions of dollars in tax revenue for the city.” NHL commissioner Gary Bettman chimed in that “it’s a private-funded project,” which isn’t really true at all when you count that $500 million in tax kickbacks, but saying factually questionable things in the service of NHL owners is pretty much Bettman’s job.
There’s likely to be plenty of ads arguing the other side as well — both the conservative Goldwater Institute and the progressive Central Arizonans for a Sustainable Economy are opposed to the arena plan, as is nearby Phoenix Sky Harbor Airport — but Coyotes owner Alex Meruelo has a net worth of $2 billion and owns a Spanish island, so he should be able to handily win any spending war. And that may be important: University of Colorado Denver public affairs professor Geoffrey Propheter has found that public votes on sports projects are pretty much 50/50 affairs, meaning who backs up the most truckloads of campaign cash can be a determining factor.
It will also be important to see how the council words the actual ballot measure. As Propheter noted about sports votes when we spoke on the subject back in April, asking “Should the city enter into a long-term lease agreement with the team?” plays very differently than “Should the city approve sales tax rebates and property tax breaks for the team?”, so phrasing very much counts. If $500 million in tax subsidies goes on the ballot with the short title “Allows landfill to be converted into landmark,” this could be over before it starts.
Hey, guess what? If I go to the site to a game and but something. I’ll be paying a tax for the project existing and enjoying my night. Your schtick is old on this one. This is a model project that all cities need to Follow
Yep, and if you go to a game and buy (or butt, no judging) something, you won’t be going somewhere else and buying something else. That’s a plus for Tempe if it means stealing spending from a neighboring city, but still zero-sum for the state as a whole. (And zero-sum for Tempe if you would be, say, eating dinner out in town otherwise.)
Does it follow that *all* retail is essentially zero sum?
By that logic, any non-locally owned retail or entertainment is *bad* for the local economy. I kinda see that logic, but if every municipality followed that idea, there’d be very little brick-and-mortar retail left. Just a few small businesses and everything else coming from Amazon because it’s cheaper.*
And somehow, that seems wrong too, but I can’t quite sort out the math.
*That might be where we’re headed anyway.
Not quite all — if all retail in the world closed down, there would obviously be less retail sales. And offering more things to buy can get people to increase their spending a little bit. But it’s a very little bit.
Not sure I understand your question about “non-locally owned retail or entertainment” — do you mean retail that is in your city but owned by someone from elsewhere, or something else?
I mean that if a store – say a Target or a Lowes – is not owned locally, presumably, a big chunk of its revenue doesn’t end up back in the local economy the way it might if the owners lived there. At least, that’s the argument that’s always made by small business people and those economically or sentimentally attached to small businesses.
This occured to me because, where I live, it looks like a “mini-casino” is going to be built in our 60s-built, under-occupied mall. I think it will fail and its stupid to try to “save” a mall at this point – especially with a casino – but one of the arguments against it is that, because Ballys and the other investors don’t live here that it will be a *massive* net drain on the local economy.
But by that logic, any business that doesn’t but all of its revenue back into the local economy could be considered bad for the economy. For example, movie theaters ship money to Hollywood that might, I suppose, otherwise go to local theater productions or some such.
But that just seems absurd somehow and I’m not aware of any economists that recommend that cities or states adopt a protectionist approach to development. So I guess it’s not that simple, but I’m not able to quite articulate *why* it’s not that simple.
Oh yeah, that’s the principle of leakage, which is related to but different from the substitution effect discussed above.
I haven’t read enough of the economic literature to say whether economists would actually say that movie theaters are bad for the local economy, because so much of their ticket price goes to Hollywood. But they’re definitely not going to be as much of a positive as a local theater company, if a local theater company could put on a production of Wakanda Forever that would sell out five shows a day at $15 a ticket.
Except if the money he would be spending at a game in Tempe would otherwise be spent going to a game in another state because AZ doesn’t have hockey. I live in Toronto, if the NFL expanded here I would go to those games. Since we don’t have an NFL team here I go to the states for NFL games and spend that money there.
Are other people like me who currently travel for NFL games that will go to Toronto NFL games? Sure. Are there a lot? Who knows?
Of course most people who would be buying NFL tickets in Toronto (aside from the extremely wealthy who just have tons of disposable income) would be reallocating spending from other things for Toronto NFL tickets, but not ALL of that spending would have otherwise occurred in Ontario or even Canada.
Don’t get me wrong, I think this deal is stupid mainly because there doesn’t seem to be a lot of hockey fans in Arizona and once the novelty of the new arena wears off you will have a half empty arena taking up space where something else could have gone.
You can make a slightly better argument there for the NFL, which has a limited number of games that are mostly on Sundays, so a larger share of fans would be expected to travel for them. For other sports, you’re not going to get many tourists aside from people who happen to be in town anyway.
I’m not aware of any studies of how many fans make the trip just to see games — teams make occasional claims, but their numbers are all garbage — but the number of studies that look for an increase in local spending when a team moves to town and find absolutely nothing are a pretty good sign that it’s not many.
But if there were no hockey team in Arizona, most of that potential ticket revenue wouldn’t go to an NHL team in another state. For most of the potential audience – especially the people sitting in the corporate seats – hockey is far from irreplaceable. If those customers can’t take their clients to the NHL locally, they’ll just find another way to entertain them locally.
Maybe some hockey fans in Phoenix would adopt the Golden Knights or one of the LA teams because those are too far away. But it is not too close either.
And they certainly wouldn’t go to as many games there as they would in Tempe. Location matters a lot more for the NHL than it does for the NFL. Fans don’t mind making a whole day out of attending a football game, because there aren’t that many of them and they’re usually on the weekend. That’s not true for the NHL and NBA and certainly not MLB.
Do you work for the Coyotes?
And Mesa, Scottsdale and Phoenix will just sit back and watch the Coyotes steal their sales tax revenue to pay for a hockey arena? Why would someone coming from the East Valley pass up Mesa Riverview or Tempe Marketplace to go to a difficult to access and park in Entertainment District? Then there’s also the Salt River Tribe, owner of Talking Stick that owns thousands of acres that could be developed nearby.
“Model project”.
Give a half-billion dollars to a deadbeat rich guy who only pays his bills under threat of eviction. Oh, yeah. Model project, run by Top Men.
Top…Men.
Well.. at least they’re allowing the voters to decide on this one. Can’t fault them for that.
What happens if the project fails to generate enough sales tax revenue? Tempe already has a town square called Mill Avenue. There is already tons of parking near Mill Avenue, thousands of apartments and hotel rooms and thousands of employees and even more ASU students. The area around the proposed Tempe Entertainment District is mostly office/industrial and attracting lunch businesses will be difficult given the limited access and parking. Westgate succeeded because there is little competition in the West Valley, taking business away from Old Town Scottsdale only 4 miles away will be tough. With all the development in the pipeline in Tempe, it is really foolish to take on this extremely high risk project.
Unfortunately, it seems that the “this is all privately funded” lie is getting some traction.
They’ve learned their Goebbels well.
“Westgate….succeeded?”
Westgate is currently almost 100% leased and expanding, with the Coyotes gone.
This new arena could also be a home for ASU basketball. That would free up the space of the current campus arena to be re-developed by ASU. It is an interesting dynamic to watch and could change the value proposition on this.
The 12,000 seat Desert Financial Arena is a perfectly fine Arena FOR ASU basketball and is in the middle of campus, not 2 miles west. There is no value to ASU, which already owns Sun Devil Stadium, Desert Financial Arena, Mullet Arena and the historic landmark 3,500 seat Frank Lloyd Wright designed Gammage Auditorium.
The current arena isn’t perfectly fine. A substantial remodel/overhaul/renovation of the arena has been talked about for a long time. In fact, I think that when Bobby Hurley was hired as MBB coach they expected it to be done by now or at least have had substantial progress made. While having their arena off campus will be a heated topic amongst the Sun Devil faithful it is definitely going to be a part of the value proposition for the new arena.
If ASU basketball wants to us an off campus arena loaded with bells, whistles and updated skyboxes, the Footprint Center has door to door light rail service from ASU. The Footprint Center also has great sightlines for Basketball, a hockey arena is too big for close up Basketball seating.
If the Coyotes were willing to share this with ASU basketball, they probably would have mentioned that, because it would be one more thing that might get local voters interested. Recall that the Coyotes previously tried to gin-up interest in a deal to share something with ASU and it didn’t happen.
Aside from the proximity and sightline issues mentioned above, it’s just not the right size. According to what I could find, ASU basketball is drawing about 7-8,000 a game. That’s fine, but the Coyotes are shooting for 16k. It still be the second or third smallest arena in the NHL, but that would be a lousy atmosphere for college basketball.
To maximize their chances of success in a skeptical market, they need to make the overall experience of their games really unique and compelling. To do that they’ll to optimize this for hockey. Arenas designed to do lots of different things don’t do any of them especially well.
That shouldn’t be the taxpayers problem, of course, but I suspect the Coyotes (and ASU) are thinking that way.
Wouldn’t they struggle to get dates there, though?
(FWIW, ASU Baseball plays off-campus, though it has primary tenant status at Muni, and it hasn’t seemed to be a problem.)
As an ASU basketball season ticketholder, what exactly is wrong with the basketball arena? Is it too intimate since there aren’t 3 decks of suites? It was built in the 70s and is a perfect example of why sports teams don’t need a new place built for them every 20 years.
It’s on a different scale, but in Albuquerque the recent ballot initiative to subsidize a USL stadium lost 65-35% despite virtually all the campaign spending coming from team ownership. I think the Rio Grande Foundation (New Mexico’s equivalent to the Goldwater Institute in Arizona) did a bit of social advertising and there were local community groups activated against it but am not aware of much more than that in opposition.
I’ll be interested to see what polling, if any, says about where the voters are on this. The Maricopa County region and the Coyotes have such a long and unusual history in terms of stadium proposals, arena contracts and other controversies that I think it’s hard to extrapolate from what’s happened elsewhere around the country.
This will likely be one of the rare times I will actually root for the Goldwater Institute.
I don’t live in Tempe (though I have family there), so I am not going to have to pony up, and I am not anti-hockey or anti-Coyotes or anti-townsfolk getting to vote on what they want their tax dollars to go to. I just really want this game to stop at some point, or at least get slowed down. Pay for your own arena.
The Coyotes are just so freaking banal and non-descript, that it’s hard to get interested at all. They have no one worth paying to see, they’re never worth paying attention to. All I’ve heard for years is that if only they would win, they would draw (they didn’t), and then if only they would win AND had a committed local owner they would draw (not likely).
Literally the only decent thing about Coyotes games is that when you walk outside afterwards, it’s nice and you don’t have to scrape ice off your windshield. They’re just this vapid, beige, white noise kind of sports team that is like airline food in that you’re never going to be excited about having it, but you gotta eat something up there.
They’re stockpiling draft picks right now so they could turn it around in a few years.
It’s not unheard of. There are other recent examples of NHL teams turning around their attendance and interest problems by improving the on-ice product and/or a better building and/or much better marketing. The Pens, Caps, Blackhawks and, apparently, the Islanders are all examples.
At least, I can see why the other owners are willing to give it one more shot. From a pure economics standpoint, it’s better than their other options.
But none of that should really matter to the voters – at least the ones who aren’t die-hard hockey fans – because, as far as I can tell, even if this all *is* a big success and the team draws 16k a night and wins a Stanley Cup, it’s still not going to be a great deal for the city economically and it’s certainly not money maker for the region overall.
Careful; the Coyotes fans think you’re a phony and a shyster for addressing the problems of this venue.
They’ll have to get in line behind the Howard Terminal stans.
I get it: If you’re one of the few long-suffering fans of a team whose owners have kept saying they need a new home, and there’s finally a plan to build one, anyone who raises objections has got to seem like the enemy, or at best a party pooper. And there’s nothing wrong with either the A’s or the Coyotes owners building new buildings, in the abstract. There’s nothing wrong, even, with them getting hundreds of millions of dollars in public money, if you consider that an acceptable price to pay. Giving the team owner hundreds of millions of dollars in public money and pretending it’s zero dollars, though, is the point where it’s kind of this site’s journalistic obligation to say something.
Thumbs up, Neil!