DALLAS -- Glendale, Ariz., has approved an agreement that is supposed keep the Phoenix Coyotes playing hockey at a city-owned, bond-financed arena through 2028.
The city agreed pay IceArizona, the National Hockey League team’s potential new owners, $15 million a year for 15 years to manage Jobing.com Arena.
Glendale funded the arena, opened in 2003, with $180 million of sales tax bonds and has issued debt for roads and other infrastructure around it.
The deal was approved 4-3 by the City Council late Tuesday night.
The council gave IceArizona investors a deadline of Aug. 9 to buy the team from the National Hockey League, which has held it since a previous owner filed for bankruptcy in 2009.
The agreement between the city and the investors will provide tranquility for a franchise that NHL Commissioner Gary Bettman said would probably be relocated otherwise.
“For the people of Arizona and for Coyotes fans, we’re finally in a position to begin focusing on life without all the uncertainty,” said Bettman, who was at Tuesday’s council meeting.
“It’s been a long road, but I think people can feel good about the great progress that’s been made,” he said. The team will be renamed Arizona Coyotes.
The investors can move the Coyotes after five years if total losses reach $50 million.
Other groups offered to manage the arena for the city at $6 million a year, but none could guarantee a hockey team as the major tenant. The agreement with the hockey group is expected to put the city $12.9 million in the red for fiscal 2014.
Glendale will pay a total of $23.9 million a year. In addition to the $15 million management fee, it will pay $8.4 million in debt service on the sales tax-backed revenue bonds that financed the arena, which would remain on the books no matter what happened to the Coyotes, and pledged $500,000 of capital improvements at the arena every year.
In turn, Glendale will receive a total of $6.7 million from the team, including $500,000 in rent, $3.2 million in ticket surcharges, and $2.2 million in parking fees. Naming rights to the arena and a new music venue is expected to generate almost $1 million a year.
A provisional ticket surcharge would be levied if total revenues don’t add up to $6.7 million.
IceArizona announced before the council session that it would partner with arena management firm Global Spectrum to attract non-hockey events to Jobing.com Arena. Global Spectrum also oversees University of Phoenix Stadium in Glendale, the home field of the Arizona Cardinals of the National Football League.
Glendale Mayor Jerry Weiers, who voted against the agreement, said the city needed a similar opt-out agreement for protection if the team moves after five years.
“If things go south, we don’t have a way out of this,” he said.
The investors agreed that if the team exercises its option to move, it would reimburse the city for losses of more than $6 million.
Both Moody’s Investors Service and Standard & Poor’s have in recent years dropped Glendale’s ratings to single-A levels from double-A levels, largely because of financial strains created by its subsidies for the Coyotes since 2009.
