Glendale’s Public Hockey Project

Posted on May 9, 2012

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The Cash-Strapped Arizona City Loses $12.9 Million a Year Supporting the NHL’s Coyotes

By BRAD PARKS, Wall Street Journal

On Monday, the Phoenix Coyotes advanced to the NHL’s Western Conference finals for the first time since moving to the desert in 1996.

But here in Glendale, the Phoenix suburb where the Coyotes play, not everyone is cheering. “If you need a poster boy for how to pour your whole budget down the drain of professional sports, Glendale is the place,” says Glendale resident Ken Jones, a retired construction superintendent, who calls the team a financial albatross.

By any measure, professional hockey in the valley of the sun has been an expensive proposition and the cost is falling heavily upon Glendale. The Coyotes play at Arena, a monument to the NHL’s expansion to cities in the Southern and Western U.S. As in Atlanta and South Florida, hockey has failed to captivate Arizonans, a problem that culminated three years ago in the franchise filing for bankruptcy. Among NHL clubs this season, the Coyotes ranked last in attendance.

The city built Arena in 2003 as part of a package that included an upscale mall, and that in turn helped attract an enormous coup for Glendale: University of Phoenix Stadium, home to the NFL’s Cardinals, the 2008 and 2015 Super Bowls and the Fiesta Bowl. Currently, an outlet mall is under construction nearby.

Yet unlike other Arizonans, Glendale taxpayers can’t ignore the Coyotes. The city is obligated to make debt payments on the arena that average $12.6 million a year. To keep the team afloat, moreover, the city has been paying a so-called “arena management fee” of nearly $25 million a year to the NHL, which three years ago bought the Coyotes out of bankruptcy.

The NHL has announced a tentative sale to a group headed by former San Jose Sharks executive Greg Jamison, under terms that would essentially institutionalize Glendale’s commitments. Under the proposal that the NHL has laid out for city council members, the city would continue paying an arena-management fee that would average about $14.5 million a year.

On top of the city’s average $12.6 million in debt service, that amounts to annual expenses of about $27.1 million—to be offset by anticipated Coyotes-related revenue of $14.2 million, according to projections by Glendale’s city management department. That adds up to a projected annual loss for Glendale of $12.9 million.

Continue reading: Glendale’s Public Hockey Project

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