Report suggests Glendale getting raw deal with Coyotes

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From the Arizona Republic:

The true cost to operate Jobing.com Arena ranges from $5.1 million to $5.5 million a year, which is about $10 million to $20 million a year less than the Glendale City Council has agreed to pay hockey-related interests to manage the facility in recent years.

The net management costs, included in documents recently published on the city’s website, are bundled in the city’s solicitation for a new company to operate the city-owned arena.

Given Glendale paid the NHL — which owns the Coyotes — $25 million a year to operate the arena in 2011 and 2012, it’s not surprising the documents have left some flabbergasted.

“It looks like we’re paying them $25 million,” said councilman Gary Sherwood. “Added on to their $5 million in expenses, that’s $20 million. I mean, that’s a surprising number to me. Who wouldn’t jump on that deal?”

The news may also make keeping the Coyotes more of a challenge than it’s already been. How can the city justify giving a prospective owner around $15 million a year — believed to be the going rate — to manage an arena when it only costs in the neighborhood of $5 million?

Granted, Glendale mayor Jerry Weiers thinks the NHL has been doing some serious penny-pinching.

“I know damn good and well that the way it’s been run, they’re not putting anything extra into it whatsoever,” he told the paper.

So maybe $5 million isn’t a sustainable annual cost.

And, obviously, there are advantages to keeping the Coyotes in town.

From the report:

The city collects revenue associated with the team and arena through leases, parking fees and tax collections for food and merchandise sales in the nearby Westgate Entertainment District. Those figures have been on the upswing, particularly since an outlet mall opened last fall.

Total collections were $4.7 million in fiscal 2011, and reached $6.4 million through just the first eight months of the 2013 fiscal year, according to the city. That money helps pay, but doesn’t fully cover, the city’s debt to build the arena.

The team also lends a certain amount of panache to the city, making it more attractive for business relocations, interim City Manager Dick Bowers said.

But tax revenue wouldn’t fall to zero without the Coyotes. The arena could still hold events, and not everyone that goes to the Westgate Entertainment District is going there because of the hockey team.

Related: Glendale a ‘big question mark,’ says Daly