DALLAS - The $144 million of outstanding bonds for Glendale, Ariz.'s National Hockey League arena should withstand the loss of the Phoenix Coyotes in the short term, but the vacancy will add pressure to the city's finances, Moody's Investors Service analysts said.
The arena, which carries the name of sponsor Jobing.com, was financed with the 2003 issuance of approximately $155 million of excise tax revenue bonds that Moody's rates Aa3 with a stable outlook, and approximately $25 million of general obligation bonds, rated Aa2 with a stable outlook.
Standard & Poor's rates the debt AA with a stable outlook. The agency has made no comment on the bankruptcy filing.
Trade data provided by the Municipal Securities Rulemaking Board showed that a dealer last Thursday paid a customer 97.515, or $43,881.75 for $45,000 par value of the excise tax revenue bonds with a 5% coupon maturing July 1, 2033, for a yield of 5.181%.
A week ago, the Coyotes filed for Chapter 11 bankruptcy and the owner is seeking to sell the team to a potential buyer who would move the NHL team to Canada. The team signed a 30-year agreement to lease the arena, but that could be broken in bankruptcy court, lawyers say.
"Moody's notes that none of these bonds are secured directly by team- or facility-related revenues and, as such, they remain well-secured by pledged city-wide excise tax and property tax collections," analyst Patrick Ford wrote in the wake of the filing. "Nevertheless, the loss of the team and its related revenue-generating activities in the retail development surrounding the arena would put unwelcome pressure on the city's financial operations, which are already experiencing revenue declines due to the recession."
The retail development at the arena site is known as Westgate and includes shops, restaurants, and other commercial development. Westgate depends on events at the arena for traffic because the site is fairly isolated from residential areas.
While the proposed purchaser of the team plans to move the Coyotes to Hamilton, Ontario, Glendale is hopeful that a team of investors led by Phoenix attorney John Kaites and believed to include Chicago White Sox and Chicago Bulls owner Jerry Reinsdorf might trump the offer.
Glendale officials and the NHL oppose the bankruptcy filing and the proposed purchase of the team by Canadian billionaire Jim Balsillie, co-owner of Research in Motion, the company that makes the BlackBerry, as they try to broker a deal to keep the team in Glendale.
"Moody's is closely monitoring developments relating to both the team's potential departure and the city's financial position and will comment further as warranted," Ford wrote.
