Wednesday, February 25, 2009

Has Glendale been paying the Phoenix Coyotes' arena lease?

After we heard National Hockey League commissioner Gary Bettman's express optimism for the Phoenix Coyotes' future during a January 31st interview on FOX Sports Arizona, we have an interesting development that might have been uncovered as to how dire the financial situation has gotten for the franchise.

KPNX-TV in Phoenix reported yesterday that the neighboring city of Glendale has allowed the team to play in Arena rent free since last July.

Given the team's struggles and now the current economic downturn locally, statewide and across the country, it is the last thing belt-tightened taxpayers want to hear. That would be a local government bailing out a professional sports franchise with their money.

But Glendale mayor Elaine Scruggs told KPNX-TV reporter Brahm Resnik that is not the case.

"I know who is going to pay the Coyotes' rent," Scruggs said. "The taxpayers will not lose any money."

According to KPNX-TV's research staff, Glendale's city records of past payments show the bailout may be worth as much as $4 million. As been reported by the media over the past two months, the NHL has taken over the financial responsibilities of the team's operations.

Scruggs also would not publicly state whether the bailout money has been deposited in her city's coffers. KPNX-TV reports it has not been made.

But what may already upset Glendale residents, members of the city council were taken by surprise with the television station informing them of this development.

"Absolutely I should have been told," said 17-year veteran city councilman Phil Lieberman. "They're using that money for their operating money when it should've been paid to the city of Glendale."

Lieberman's legitimate questions come as Glendale made a 10% cut to close a multi-million budget gap.

Scruggs pointed out in this news report it was up to city manager Ed Beasley as to whether or not the city council were to be told about the lease payments. Beasley was not available to comment on this story.

The Coyotes' lease payments amounted to $4.3 million in 2007, the last full year in which team made them for all 12 months of a calendar year. City documents show payments were up-to-date through July 2008.

The arena rent is a major part of Glendale's $9 million in annual debt payments on money they borrowed to build Arena. Since the NHL has the intentions to rescue the Coyotes from any possible bankruptcy with financial assistance, restructuring the arena lease is viewed as vital to luring new investors into buying the professional sports franchise. The team said last week that several investors have expressed interest.

Another part of what has hurt the team financially has been the fact the team pays the city of Glendale for the use of parking lots around the arena for its patrons. Therefore, the Coyotes don't make money from the parking fees. When Arena opened in December 2003, such parking fees were expected to generate about $18.7 million in revenue. But to date, only about $7.75 million has been earned by this arrangement.

The Phoenix Coyotes have reportedly lost at least $200 million since moving to Glendale in December 2003. While Lieberman is not happy with these bailout funds, he express his desire to help the franchise stay in the Valley of the Sun. Arena is located 13 miles northwest of downtown Phoenix.

"We have to help them in some way make sure they stay there," Lieberman said.

Resnik stated in his report that the Glendale City Council will end up voting on a final agreement the Coyotes make with the city if and when that happens in the weeks to months ahead.

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