Glendale in tough over major concessions
by James Mirtle on Jun 11, 2009 11:59 AM CDT
27 comments
In U.S. Bankruptcy Court this week, attorney Susan Freeman painted a dismal picture for the Coyotes in Glendale without city concessions.
She cited a survey conducted by the team that said 72 percent of Glendale residents would rather see the Coyotes leave than have the city make such concessions.
The request for concessions put the city in a tough spot, politically and financially.
Glendale may be in the least desirable position of anyone in this whole business, as the city of 250,000 has to choose between having a white elephant of a building and pouring more taxpayer money — up to $20-million annually — into an NHL franchise many of its constituents aren't hellbent on saving.
No one will bid on this team without major concessions from taxpayers and, so far, the city has been reluctant to sign those dollars away. Based on reports on their finances, I'm not sure they even have them to offer.
The Coyotes are also creating other potential legal headaches for one top official:
A former Phoenix Coyotes executive has accused Glendale City Manager Ed Beasley of trying to destroy a sensitive document to keep it out of the public eye ... Destroying the letter would have been illegal under Arizona public-records law. It's not clear what Glendale officials did with the document after the meeting.
More intrigue for a fiasco that really didn't need it.
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As an aside, James, this site has been far and away the best around as far as keeping track of the various viewpoints and news on this saga. Thanks.
by ChicoMaki on Jun 11, 2009 12:13 PM CDT reply actions 4 recs
Thirded.
Everything from the commenting to the blogging has been, on the whole, very even-handed. Thanks for at least giving a fair shake to those of us who aren’t overwhelmingly in favor of the Coyotes relocating.
You are validating my inherent mistrust of strangers.
by zyllyx on Jun 12, 2009 12:27 PM CDT up reply actions 0 recs
I visited Glendale in March for a game and it is definitely an area hurting right now. The arena and complex is awesome with a huge plaza extending into a semi-open air mall with a bunch of hotels within walking distance. Awesome place to roadtrip for a game but the rest of the town is bad: Huge undeveloped land all around then as you get into town, it’s a bunch of new cookie-cutter residential areas then a commercial area half abandoned and the other half feels like a ghetto. Glendale revenues were most certainly depending strongly on home property taxes and constantly expanding residential areas.
That city has trouble and pouring money into a hockey team few care about seems undoable politically.
by AwkwardMoment on Jun 11, 2009 12:37 PM CDT reply actions 0 recs
http://www.thestar.com/sports/article/647616
The city of Glendale – its tax base decimated due to the recession – worries it could be left holding the bag, unable to carry the debt on an arena with no tenant. Court documents say it had offered $14.6 million in subsidies, but that hasn’t been approved by city council.
I have just started to pour through the documents on the Toronto Star website, but I have not heard of any other reference to concessions by Glendale before. A week before the proceedings the city council said it was firm that none would be made.
Pretty amazing that the judge dissmissed almost out of hand the 4 “expressions of interest”. The NHL may be in an untenable situation, but history shows that they will make it as difficult as possible on the league, difficult on the fans, and difficult on the local community in the process.
by pj48 on Jun 11, 2009 12:49 PM CDT reply actions 0 recs
When it is known that Moyes has spent a long time trying to find someone to buy into the team with no interest, and the NHL magically finds four groups with “expressions of interest” after Balsillie pulls this stunt, the legitimacy of the league’s claim is very much in question. I think Baum had it right to disregard those claims. If there is legitimate interest in the Coyotes in Phoenix, let those groups step forward and be counted.
by Resolute on Jun 11, 2009 12:56 PM CDT up reply actions 0 recs
Actually, Res, Moyes himself confirmed in his own court documents that he had received at least two offers in addition to the ones mentioned by the NHL. So, “no interest” is quite inaccurate.
The NHL also did not “find” Reinsdorf after the JB stunt. It was delivering an offer from him as Moyes was filing.
Given that there will be an auction before the team is sold, why on earth would anyone “step forward”? in what circumstance is that appropriate or effective bidding strategy?
by Gerald on Jun 11, 2009 1:08 PM CDT up reply actions 0 recs
Considering what happened with the Nashville situation Gerald, I remain suspect on any of these investors that the NHL has assembled.
The population of Pominville keeps rising!
by Blackcapricorn on Jun 11, 2009 1:10 PM CDT up reply actions 0 recs
Haven’t read the value of the offers, but I suppose if I offered him $1 for the team, it would still count. There is also a question of what the offers might contain… what share of ownership, what level of liability, value of the offer, etc. Receiving an offer, and receiving a good offer are quite different.
Your final statement rather supports my point: The NHL can make up as many “expressions of interest” it wants. Baum has no reason to care at this point. If the team goes to auction, we will see how many legitimate offers exist, and until that point, there is no need to waste time on hot air.
by Resolute on Jun 11, 2009 1:14 PM CDT up reply actions 0 recs
It is in the pdf of the NHL constitution that is posted in several places. It is a separate exhibit to the Moyes brief.
the two offers are $140 from someone or something called “Max Chambers” and a “net” offer (whatever that means) of $90 million from “Garvin Profit”. For the latter offer, it is unclear what the offer is “net” of.
I agree that not all offers are created equally.
The “expressions of interest” that the judge referred to (they are not so called in the NHL’s documents) refer to the four parties who have filed ownership applications (which is done before the parties negotiate with the vendor).
I also agree that we will learn of the offers at the auction once and for all. My main point, as usual, is simply to correct the record. It is often the case that people read materially incorrect information on the net and then repeat it elsewhere as fact. You questioned the legitimacy of the offers, and i provided some factual counterpoint.
by Gerald on Jun 11, 2009 2:08 PM CDT up reply actions 0 recs
Financially, might Glendale be better off rejecting any concessions, and collecting damages when the lease is breached?
by J. Michael Neal on Jun 11, 2009 12:51 PM CDT reply actions 0 recs
Not if the penalties for breaching the lease are eliminated by the bankruptcy judge.
by Resolute on Jun 11, 2009 12:57 PM CDT up reply actions 0 recs
He seems to have signalled pretty definitively that the damages specified by the lease are not subject to the 3-yr rent limitations. Of course, anything is possible.
by Gerald on Jun 11, 2009 1:09 PM CDT up reply actions 0 recs
Agreed, but if the $700 million (iirc) penalty is sustained, then Balsillie almost certainly walks away, as does anyone with an interest in moving the team. Does any penalty assessed reach that figure? Maybe not. And if not, the city does have to ask itself at what point making these concessions becomes more economically viable than waiting for team to finally die, and collecting some sort of penalty from the lease being broken.
Especially since it is probably fairly obvious at this point that barring a massive turnaround, this franchise is either dead now, dead a year from now ,or dead two years from now.
by Resolute on Jun 11, 2009 1:18 PM CDT up reply actions 0 recs
does anyone have a link to a good summary of how that facility was built – like how much money the city put into it and how much the developers put into it? Im just wondering if there’s every been any studies done on how often these “public/private arena partnerships” actually do pay off for the public side.
Glen Sather is a Hockey Genius.
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http://twitter.com/ThGeneralissimo
by poploser on Jun 11, 2009 1:21 PM CDT reply actions 0 recs
The studies I’m familiar with, in particular by Andrew Zimbalist and Roger Noles, indicate that there is little to no, or even negative, value to the metropolitan area as a whole by building a new stadium. It is possible that a localized portion within the metro area benefits, but this is largely due to collecting money that would have been spent on entertainment somewhere else, so it is balanced by a loss elsewhere.
One thing to keep in mind is that the perception of major league sports as a big business is, for most of the teams at least, a fiction. Given the Coyotes revenues, they are, at best, a medium sized business. I spent seven years helping run a parking operation in downtown Minneapolis, including doing all of the revenue side accounting. We had three ramps and one surface lot. This season, the Coyotes had revenues about five times what that small parking company generated in 2002, in nominal dollars.
The idea that sports teams are large enough to in any way justify the kinds of subsidies they receive doesn’t withstand any scrutiny. That’s why you get all of the noise about generating new businesses and entire entertainment districts.
by J. Michael Neal on Jun 11, 2009 1:52 PM CDT up reply actions 0 recs
If you are the city of Glendale competing with the City of Phoenix for tax dollars and revenue, then what does that do to the analyses of those esteemed gentlemen?
by Gerald on Jun 11, 2009 2:12 PM CDT up reply actions 0 recs
?
it sure as hell doesn’t make them any less factual.
why should a goddamn suburb compete with its hub city for tax dollars? i’m as big a fan of capitalism and “bigger richer better” as anybody, but at some point there has to be a bit of role recognition on a local politician’s part. you’re a municipal government; you make sure roads are driveable, water’s drinkable and schools are decent. anything else is just an ego trip.
let’s go back 10 years. if you were asked to write an honest, realistic report on that an arena+entertainment district would be worth to the city of glendale, how much do you think you would come up with? sure an arena would draw people for 41 hockey games and some concerts (altho most concerts would probably go to the already-established downtown arena anyway), but how much money would they spend? most of them would have already dropped at least $50/person on the game…would lots of them be in the mood to buy other shit after the game? i’m skeptical.
as for locals using the shopping area…i’m sure they would. but i’m also sure that most of the money they spent in stores in the new entertainment district would just cannibalize money being spent in other stores already in glendale.
and furthermore, even if you were successful in getting money to flow out of PHX, the eastern part of the valley, and neighboring cities into Glendale, how long do you think politicians in those towns would wait to push for their own shopping/entertainment districts?
by passive_voice on Jun 11, 2009 3:48 PM CDT up reply actions 0 recs
Your view of municipal government is one point of view. Surely you must realize that it is only your view, and there are others.
How in the hell would I knwo what anything would be worht to the City of Glendale now, 10 years ago or in the year 3000? I am not from there. I don’t know the dynamics. Have you mistaken me for a local?
As for people not wanting to shop after dropping $50, who do you think goes to NHL games for the most part? It isn’t people worried about dropping $50. Most attendees of NHL games didn’t exactly have to sell their own blood to afford it.
by Gerald on Jun 11, 2009 6:55 PM CDT up reply actions 0 recs
Gerald, from my comment you were responding to:
“It is possible that a localized portion within the metro area benefits, but this is largely due to collecting money that would have been spent on entertainment somewhere else, so it is balanced by a loss elsewhere.”
For someone who loudly criticizes others for not actually reading the lengthy legal documents before commenting, you have a frequent problem actually reading two paragraph comments.
by J. Michael Neal on Jun 11, 2009 8:07 PM CDT up reply actions 1 recs
I was quite aware of the content of your post, Michael. I would assume that you could read a rhetorical question when you see one.
Surely you recognize that Zimbalist and Noles are not the final word on the subject of the benefits of sports teams. I would assume that you probably know that, in municipal government affairs, nothing gets done without a slew of studies performed by respected experts and submitted to council to cover their butts. I would assume that you response would be that those studies performed for municipalities are biased, in which case one must ask oneself whether Zimbalist and Noles are biased. I don’t know either gentleman on a personal level, but I do know from baseball that each of them have displayed significant anti-owner proclivities. To assume that they have no bias in this matter is a mistake, IMO.
I don’t have a particular position on the topic, since the experts seem to be a little split, but I have intuited from the posts above and below that you have made your mind up.
What I would say is this: I want my municipality to conduct themselves on commercial affairs with a commercial mindset. If even the anti-sports-as-stimulus experts say that our municipality can take market share for tax dollars away from other municipalities without compromising the other items on their agenda (paying for the other stuff that they do), that seems to be the essence of commercial decision-making.
by Gerald on Jun 15, 2009 7:03 AM CDT up reply actions 0 recs
Interestingly as well, the politicians of my city would appear to disagree with you to the tune of ~ $130-150 million, as well as the disposition of the remaining life span of our arena to Captain Canada.
by Gerald on Jun 11, 2009 2:15 PM CDT up reply actions 0 recs
Local politicians are consistently wrong on this issue. The authors I mentioned also spend time discussing how the interests of a politician diverge from the interests of their constituents on this issue. For them a new arena is a good thing. They frequently have close connections with developers. The benefits are obvious and concentrated, while the costs are diffuse and not always very obvious; this is a classic condition for regulatory capture. Hell, I suspect that a lot of them believe that they are making the right decision, because serious analysis is dry, technical, and far less attention grabbing than the claims made by the teams and developers. In most instances where I’ve read the details of what is happening, the studies the pro-stadium side are relying upon are both shoddy and conducted by people with a financial interest in seeing the stadium built.
Do not ever make your decision on the value of a new stadium based upon the utterances of a city councilman or state representative.
by J. Michael Neal on Jun 11, 2009 8:14 PM CDT up reply actions 0 recs
If there’s one positive to come out of all this, it’s that it should serve as an enormous warning for shithole suburbs everywhere offering millions in an effort to become a WORLD-CLASS ENTERTAINMENT AND SHOPPING HUB!
Municipal politicians and officials are the dumbest people in the world.
by passive_voice on Jun 11, 2009 1:56 PM CDT reply actions 0 recs
Completely unrelated, but the Calgary suburb of Airdrie briefly launched a bid to host the Calgary Olympic Coliseum in 1980 when the Saddledome was being planned. Imagine a town of 3000 (now a city of 36,000) hosting an NHL team. The Flames in the mid 1990s would have ended up in exactly the situation the Coyotes are now: Untenable because the arena is nowhere near the fan base.
by Resolute on Jun 11, 2009 2:07 PM CDT up reply actions 0 recs
Welcome to the former city of Kanata, Ontario.
by dzuunmod on Jun 12, 2009 10:16 AM CDT up reply actions 0 recs
Much like a league economic system relying on every team being a winner, a development plan that relies on every suburb becoming an entertainment hub is unworkable.
by J. Michael Neal on Jun 11, 2009 8:18 PM CDT up reply actions 0 recs
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