Prospective Phoenix Coyotes owner Greg Jamison will collect $94-million (all currency U.S.) from the city of Glendale in the first five years of a 20-year lease for Jobing.com Arena.
The payments are called a “management fee” and in return Glendale will get, by its own estimate, between $77-million and $83-million in rent, ticket surcharges and arena naming rights over the 20 years of the lease, which is between $3.8-million and $4.1-million a year. However, the bulk of that money, an estimated $60-million, is to come through a surcharge in tickets for Coyotes games and other events at Jobing.com Arena, a number that depends on healthy sales, something the NHL club has yet to manage since moving to Glendale in 2002.
Glendale council will be presented with the proposed lease agreement on Thursday. If it approves the deal, Jamison will be able to try to close the $170-million purchase of the Coyotes from the NHL.
The terms of the lease were posted on Glendale’s web site Monday: http://www.ci.glendale.az.us/documents/ArenaLeaseandManagementAgreement--SubstantialFinalDraft.pdf The city issued a statement that said the lease guarantees the Coyotes will stay in Glendale for 20 years and that it complies with Arizona’s gift laws, a reference to the Goldwater Institute, a conservative watchdog group that scuttled a previous sale because it threatened legal action in the belief Glendale’s payments violated laws against excessive public subsidies of private businesses.
While the city said the management fee Jamison, the former president of the San Jose Sharks, and his partners will collect works out to an average of $15-million per year, the payments will not be that amount or less until the last eight years of the lease. In the first two years, Glendale taxpayers will fork over $17-million a year with the fee rising to $20-million annually in the next three years and then dropping to $18-million for years five through eight.
Previous bidders for the Coyotes have always demanded a lot of money up front from the city of 250,000 people because the Coyotes’ annual losses are between $20-million and $40-million.
The lease also states the city is not responsible for parking operations, which indicates the Coyotes will collect any parking revenue. Chicago businessman Matthew Hulsizer’s bid ran into opposition from the Goldwater Institute when it called for an up-front payment of $100-million from Glendale in exchange for the parking rights.
Glendale’s statement also said the city will incur no “new debt” with the lease but this is questionable. City council had to take the $25-million it agreed to pay the NHL in each of the past two years from its sewer and water fund and is obligated to pay that money back to the fund. It is doing so by borrowing the money and paying it back over 40 years, which the city plans to do again for the $17-million it will owe Jamison for the 2012-13 fiscal year, which begins July 1.