DALLAS — The Phoenix suburb of Glendale, Ariz., faces another potential hit to its professional sports fortunes as the Arizona Cardinals and the Arizona Sports Tourism Authority are demanding $66.7 million to compensate for stadium parking spaces lost to an outlet mall.
The National Football League’s Cardinals and ASTA, which built and financed the Cardinals’ University of Phoenix stadium, are threatening a lawsuit if Glendale does not pay for the lost parking spaces.
A claim filed with the city, a preliminary to a suit, seeks $66.7 million as compensation for the spots lost to the 38-acre factory outlet mall. A 2002 agreement required Glendale to provide 6,000 parking spots for the stadium that opened in 2006.
ASTA, a state agency created in 2000, built the $455 million stadium with bonds backed by Maricopa County tourism taxes. Next week, it plans a $177 million refunding of its senior-lien debt, including a $9 million swap termination fee and conversion of variable-rate bonds to a fixed rate.
Glendale denied that it violated a pact with the NFL, calling the claim premature. The Maricopa County city is providing subsidies of $25 million to keep the National Hockey League’s Phoenix Coyotes playing in the city-owned Jobing.com arena adjacent to the Cardinals’ stadium.
To help provide sales tax revenue, the city authorized a retail development called Westgate City Center adjoining the hockey arena. The $180 million of Glendale revenue bonds used to build the arena are backed by city sales taxes. However, the six-year-old Westgate complex fell into foreclosure last year.
In 2009, Coyotes owner Jerry Moyes put the team into bankruptcy. The NHL, which bought the team out of bankruptcy with the assurance of city subsidies, has been looking for a permanent buyer since then. A pair of deals have fallen through, and the league is now negotiating with the former president of the NHL’s San Jose Sharks. City subsidies for a new owner, in the form of arena management fees, could run as high as $17 million, according to a report in the Arizona Republic.
On Jan. 20, Moody’s Investors Service downgraded Glendale’s general obligation rating to Aa3 from Aa2 with a negative the outlook. Three days later, Standard & Poor’s dropped the city to A-plus from AA and also attached a negative outlook.
Moody’s attributed the action to the city’s “strained financial position following a significant payment to the NHL for operating losses of the Phoenix Coyotes that led to a significant decline in general fund reserves in fiscal 2011.”
Meanwhile, Glendale faces a $35 million deficit in next year’s budget.
