DALLAS — Glendale, Ariz., would set aside $24 million for improvements to its $220 million Jobing.com arena under a lease to the proposed buyer of the National Hockey League’s Phoenix Coyotes.
The deal, approved Friday at a special meeting of the City Council, requires Glendale to pay the new owner of the team $325 million over 20 years to manage the arena. While routine maintenance and emergency repairs would be the responsibility of the team owner, the city would be required to cover major remodeling. The deal does not require Glendale to issue any new debt for the arena.
Keeping the team playing in the city-owned arena over 20 years would save the city $17.8 million compared to losses if the team left the arena, economist and attorney Jill Welch told the City Council at a work session on Thursday.
Selling the Coyotes to Greg Jamison, former executive with the NHL’s San Jose Sharks, would cost the city an average $7.9 million annually, said Welch, whose firm, Elliott D. Pollack & Co., was hired by Glendale to study the proposal.
Friday’s council meeting on the proposed lease came after the conservative Goldwater Institute failed to block city approval of the sale in court.
Maricopa County Superior Court Judge Katherine Cooper on Friday sided with Glendale, ruling that the court lacked the authority to prevent a vote, even though she cited violations of a 2009 court order that Glendale provide all documents to Goldwater in a timely manner regarding the team’s sale.
Last year, Goldwater blocked a Glendale bond issue designed to finance the sale of the team to another bidder. With that deal scuttled, Glendale and the NHL sought to make a deal with Jamison. The team is currently owned by the NHL, which expects to sell the Coyotes for $170 million. The NHL bought the team out of bankruptcy court in 2009 to prevent a move to Canada. A lease deal with the city would be a requirement to complete the sale of the team.
Glendale issued $180 million of revenue bonds to build the arena for the Coyotes in 2003. Jerry Moyes, who owned the team in 2009, put the Coyotes in bankruptcy with plans to sell to a Canadian buyer.
For the city, keeping the team means sacrificing other capital improvement projects for several years as it funnels money to the Coyotes buyer and the arena.
Goldwater indicated in a letter to Mayor Elaine Scruggs and the council that the agreement could violate the state constitution’s ban on government gifts to private companies.
The lease provides $17 million per year from the city to Jamison for two years, rising to $20 million for the third through fourth years, then $18 million until the eighth year. The fee would drop to $16 million for four years, $15 million for the next three and $10 million for the remainder of the contract. Jamison would also acquire parking rights to the arena under the deal.
In a study for the city by the consulting firm T.L. Hocking Associates, the cost of managing the Jobing.com arena based on a survey of comparable venues was estimated at $15 million to $18 million per year.
