The City of Glendale released details of a Jobing.com Arena lease proposal with Renaissance Sports and Entertainment on Thursday. You canview it here.
In the deal, Glendale would pay RSE, the prospective Phoenix Coyotes ownership group headed by George Gosbee and Anthony LeBlanc, $15 million a year over 15 years to manage Jobing.com Arena, while the proposed owners would reimburse the city $6.7 million through surcharges on tickets and parking, naming rights and other sources. Glendale already has $6 million budgeted to manage the arena.
It should be noted that the $6.7 million figure is based on the worst year the Coyotes have ever had, attendance-wise. If attendance is better than that year, city revenue will improve.
In addition, RSE has created a limited guarantee fund that the city can draw upon annually, once it has audited the revenue it receives from the team (including sales tax revenue), to help meet revenue projections if they fall short. That fund was created through a ticket surcharge. Based on last year’s numbers, the fund would have had $1.3 million in it this year.
The arena-lease deal includes a five-year out clause that would allow RSE to move the team without penalty if financial losses total more than $50 million over that time frame.
Vice Mayor Yvonne Knaack and council members Gary Sherwood and Sam Chavira have called for a vote on July 2, but Mayor Jerry Weiers still has concerns and said the vote would not be scheduled until after the City Council’s executive session Friday. He has also called for a public workshop at 1:30 p.m. Friday.
“My concern, quite honestly, is the fact that we’re trying to rush to get something done, and I don’t think we’re being responsible in taking our time to go through the details,” Weiers said. “Three council members have forced my hand to have a voting meeting on July 2. I still don’t think negotiations are finished. But if we have to cease negotiations, by God, I want this to be public.”
Weiers addressed concerns that he is attempting to block the deal at all costs, and that his connections to longtime suitor John Kaites, who has deep business ties with Glendale, are influencing his decision.
“I want to be very clear on that bit. They are completely and totally wrong — not even close to being correct,” he said. “I have gone on the side of caution to make sure we don’t violate any attorney-client privilege, but it is what it is. I’m the biggest target, so people take their shots.”
To illustrate its issues with the deal, the city posted an “update” listing key points of the proposal and “unresolved concerns from the City of Glendale” — specifically the city’s financial risks, revenue streams and the timeframe for approving the deal.
RSE maintains that the city has never had a deal in the past with all of the revenue streams guaranteed, and no deal would occur if such a stipulation were placed on it, due to the Coyotes’ past financial troubles. RSE believes both sides are assuming some of the risk.
FOX Sports Arizona obtained a letter from RSE attorney Nick Woods to acting city manager Dick Bowers requesting a July 2 or 3 hearing on the agreement, and an RSE memorandum addressing Glendale’s concerns.
Meanwhile the NHL’s Board of Governors met Thursday in New York. While some had raised concerns that no resolution on the RSE deal might lead the NHL to break off negotiations and move the team, commissioner Gary Bettman quickly put those fears to bed when he noted to reporters in New York that “there was no board action required. At this stage, we are awaiting a determination by the City of Glendale as to whether or not they’re going to have new arrangements for the building for new ownership for the Coyotes.”
However, Bettman did appear to deliver a firm deadline for a resolution on July 2.
“If the council doesn’t approve it so that this transaction can close, I don’t think the Coyotes will be playing there anymore,” he said. “I find it difficult to conceive of why, if the council turns this down, we would want to keep the team in Glendale any longer. We will then — if they turn it down — have to deal with the possibilities and the options that will be available to us, and they are numerous.”
Weiers acknowledged that concern.
“I understand that. It does constitute an emergency on my part because it affects my city,” he said. “I’m just not willing to step out and make bad decisions.”
Former Arizona attorney general Grant Woods, who represents RSE, believes approving the deal is the right decision.
“There’s no ideal situation here,” he said. “Everybody is at risk. Glendale took the risk when they decided to build a huge arena and complex, but the idea that they’d be able to be successful without an anchor tenant for 41 nights is not too practical.
“I have lived here my whole life, so I have some perspective. I think that arena will be closed in the next five years without the Coyotes as an anchor tenant. I really don’t understand why some people don’t get it. You’ve got a big problem with a potentially empty arena.
“You can’t go back to the beginning. We’re not starting from scratch here. Glendale has a huge commitment that they’ve made out there, and the ramifications of it folding are going to be around for decades. There’s no reason to let that happen.”
At the end of the business day, LeBlanc released this statement:
“Today is an important milestone in this process, but it will not be the last one. We look forward to the City of Glendale setting a vote, then passing this very reasonable agreement.
“We feel the agreement posted today is in the best interests of the community and the Glendale taxpayers as it provides substantial revenue streams to the city that would otherwise not be available to the city. Also, this is the only agreement that can guarantee anything, which is 41 hockey games per season in the Glendale arena.
“Hopefully, this will lead toward the most important milestone of all and the ultimate reason we want to be a part of this franchise: so we can some day gather together and celebrate a Coyotes Stanley Cup victory.”