So, your Arizona Coyotes announced today plans to build a new arena in a place where their fan base apparently is actually located and isn’t that just a wonderful thing? It really is because it finally puts to bed two very large issues. First, it solidifies the future of the Coyotes in the desert. Second, it will finally end one of the biggest boondoggles in the history of public funding of arenas.
Not to mention the fact that it should (but probably won’t) provide a cautionary tale to cities when faced with a professional sports team with its hand stuck out, asking for public money to help it pay for its monument to the rich. Cities, such as, say, Tempe. The Coyotes said in their release today that they, “will now focus on finalizing a partnership with other public sector constituents including the State and the City of Tempe.” Here’s a hint to the state of Arizona and the city of Tempe. Look at what happened in Glendale, then check your wallet from all its contents and run very, very quickly in the opposite direction.
The Coyotes in Glendale have been a disaster since the day in 2001 the good people of that place decided to “borrow” $180 million to build the Jobing.com Arena (the name should have been a dead giveaway), while Steve Ellman, who just happened to own the Coyotes at the time, pledged to build Westgate, a retail development that was based on a Ponzi scheme that would see the revenues from the retail development pay off the arena debts.
Well, you all know the story. Westgate opened two years late, Ellman ran out of money and sold the Coyotes to Jerry Moyes, the lenders foreclosed on Westgate and Moyes declared bankruptcy and basically threw the keys to the kingdom on the NHL’s desk. The good people of Glendale had been taken for suckers.
Wait, it gets better. In 2013, Glendale then decided to strike a 15-year, $225 million deal with the Coyotes which would see it pay the Coyotes $15 million a year in management fees, in exchange once again, for the ubiquitous return on surcharges and fees. Only one problem. There were no surcharges or fees because nobody was watching the Coyotes play. “That has not been particularly successful,” said Dick Bowers, acting city manager in 2015 when the deal was reworked.
Two years into the deal, the City of Glendale tried to extract itself from a terrible decision, voiding the deal based on conflict-of-interest laws that say any deal can be voided if a person who was significantly involved in the deal from the city’s side later becomes an employee of the other side of the contract. That person was city attorney Craig Tindall, who left the City of Glendale in April, 2013, but was still being paid by the city and acting as a consultant. Tindall joined the Coyotes about seven weeks after the deal with the Coyotes.
The Coyotes threatened to sue and the two sides settled on a two-year deal that would reduce the city’s commitment from $15 million to $6.5 million. The surcharges and fees the city would have received amounted to about $6 million a year, which means the city is saving about $2.5 million a year on the new deal and, more importantly, doesn’t have that terrible deal as a millstone around its neck.
It also has a white elephant in the form of the arena, which will now be empty. When the messy legal battle was averted and the sides agreed on the short-term deal, both talked about repairing the relationship and trust between one another. “The Coyotes are committed to Glendale and to the state of Arizona,” Coyotes’ president and CEO Anthony LeBlanc said at the time. “We did not agree to a two-year deal so we could relocate in the future. We believe in this market. We have never changed our opinion on that simple fact. Anyone who has said otherwise simply has no idea what he or she is talking about.”
But here we are, two years later, and the Coyotes have all but made the move. Have there been substantive negotiations with Glendale to extend the contract? If there have been, they’ve been very secret. It was interesting to note that the deadline for a budget, design and operational plan to the Coyotes is June 30, 2017. That’s the same day the Coyotes’ deal with Glendale runs out. It will also likely be the day the two decide to end their relationship and the Coyotes go to another bunch of legislators looking for money to build a rink and an additional facility that "continue to help grow the sport at the grassroots level." Yeah, grassroots, that’s it. But here’s the thing. The Coyotes' new home, if it’s built on schedule, won’t be ready for them until the 2019-20 season. That means the Coyotes will have to extend their deal with Glendale for two years. And guess who has all the leverage now? The city of Glendale, which colossally bungled this file from the start by giving in to the Coyotes demands, should squeeze the Coyotes for every nickel it can get. It should use its position of leverage to at least recoup some of the millions of dollars it has frittered away on the Coyotes at the expense of serving its taxpayers.
They’ll never get it all back, but at least they can strike a blow for the good people of their city who have watched their tax dollars get thrown into a money pit, never to return.