Glendale Vote Keeps Hockey Coyotes In Bond-Financed Arena

DALLAS – A split Glendale, Ariz. City Council Tuesday approved a 20-year management agreement and lease intended to keep the Phoenix Coyotes professional hockey team as the main tenant at the city’s bond-financed Jobing.com Arena for the next two decades.

The council voted, 4-2, to pay a total of $308 million in management fees to Arizona Arena Hockey Partners LLC, which hopes to purchase the team from the National Hockey League.

The pact was approved despite projections showing the deal will result in a $12.4 million budget deficit by 2017 and a $140 million shortfall in 2032.

Glendale also pledged $12 million in capital improvements to Jobing.com Arena over the next 20 years. The arena, which was built with $180 million of city revenue bonds, opened in December 2003.

Mayor Elaine Scruggs, who will leave office next month, said she voted against the agreement because Glendale cannot afford it.

“If you have less than zero in your checking account, do you go out and sign a long-term contract?” Scruggs said.

Glendale voters earlier this month approved an 0.7% sales tax expected to generate $23 million a year to fund the arena deal.

The management agreement means Glendale will have to cut its spending by $20 million over the next five years, interim City Manager Horatio Skeete told the council. Without the team in the arena, Skeet said, the necessary budget cuts would have totaled $12 million.

The city will cut its fiscal 2013 budget by $6 million immediately, he said, including savings of $3.7 million by eliminating 37 city jobs and not filing 30 empty posts.

The arena agreement includes a deadline of Jan. 31, 2013, for the investors group to complete the purchase of the team from the league.

The head of the investor group, Greg Jamison, former CEO of the NHL’s San Jose Sharks, said the team will be purchased for $170 million within 60 days. He declined to identify the other investors, but denied that a former Glendale city manager was involved.

The NHL acquired the Coyotes for $140 million in 2009 after owner Jerry Moyes filed for team bankruptcy. Moyes said the team was losing $30 million a year.

The team has struggled at the gate for years, with the league’s lowest attendance last year despite fielding a strong team that made the Western Conference final.

The city agreed in May 2010 to pay the NHL a management fee of $25 million a year for overseeing the team and Jobing.com Arena.

Glendale will pay $11 million in management fees to Jamison’s group in the first year due to the ongoing lockout of players that has canceled much of the 2012-2013 NHL season so far, with cancellation of the entire season growing more likely as time goes on.

Management fees will range from $13 million to $18 million over the next 19 years of the agreement. The team will pay rent on the arena of $500,000 to $800,000 a year.

Glendale’s general obligation bonds are rated Aa3 by Moody’s Investors Service and A-plus by Standard & Poor’s.

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Arizona
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