Glendale Wants Reinsdorf

Glendale finally released their Request For Proposals (RFP) for managing their city owned arena. Bids must all be submitted to Beacon Sports Capital by May 24, 2013 with everything signed, sealed and delivered by July 1, 2013. Tick tock.

If you’d like to read the RFP, it’s not too long or complex (it even has pictures for the French speaking crowd), click here.

Who Is Eligible To Bid?

John Kaites
(image from SCA site)

The RFP clearly spells out the parameters for prospective bidders. Local people such as Phoenix Monarch Group are eliminated, which means the city is at least being realistic about what it takes to run a world class arena.

i. Is a nationally or regionally recognized facility management company which manages publicly or privately-owned public assembly and/or sports and entertainment facilities;

ii. During the past three years, has successfully managed at least one NHL or National Basketball Association (“NBA”)/all-purpose arenas with a seating capacity of at least 10,000 persons; or;

iii. The Manager must have current experience in operating such a facility on behalf of a public entity, such as the City of Glendale; and,

Of the prospective Coyotes bidders we know of, only one group in contention meet the criteria to the best of my knowledge. Jerry Reinsdorf and John Kaites. While Greg Jamison has plenty of the necessary experience, it’s not within the time period. The Gosbee group doesn’t have the necessary players nor does Pastor.

I’ve been writing about this since Beacon got the invisible tap as the company to vet the bidders for the Glendale city owned arena. Read “Reruns in Glendale” and/or “Old Boys Network” if you’re interested in their history.

Since Reinsdorf, through “International Facilities Group” meets the prerequisites, he is the only traditionally mentioned bidder able to submit a bid.

Reinsdorf’s Out Clause

If It Looks Like A Duck
davidkanigan.com

Since the beginning of this fiasco, the Kaites/Reinsdorf group has wanted a short term “out clause”. So, there it is in the RFP on page 8:

The City requests that the terms be no more than 5 years, and may contain provisions for extensions. The City may, at its option, and with the approval of the Manager, extend the term of this proposed agreement an additional two (2) terms of five (5) years for each renewable term at the end of the initial contract period.

Reinsdorf received a lot of justified criticism for his insistence on a short term “out clause” to move the Coyotes. Here it is again. It’s not likely that Reinsdorf would be interested in the arena without an anchor tenant. Because the renewal of the agreement after five years would require the mutual agreement of the city and the arena manager, there would be no penalty to bailing out after five years.

Conventional thinking doesn’t see the severely damaged business that is the Phoenix Coyotes being completely repaired in five years. The City of Glendale must be aware of that, so why wouldn’t they insist on a longer term agreement? Got me, it’s their building.

Weighted Selection Process

Glendale, through Beacon, has laid out how the bidders will be compared and ultimately selected.

 i Business/Marketing/Transition Plan. Quality, detail, and reasonableness of the transition, management, marketing, sales, food & beverage, financial, and personnel plans submitted (30%);

ii. Compensation/Price. Manager that provides the City with the best economic model to generate the maximum number of events/revenue at the Arena with the least requirement for continuing new net investment by the City in the Arena. The City does factor into this analysis the benefits provided by Arena events to those businesses located in the Westgate City Center and the greater Glendale market (30%);

iii. Experience & Organizational Structure. Manager with the most depth of successful experience in managing similar facilities (15%);

iv. Personnel. Based on the quality of experience and success of potential employees, especially that of the proposed General Manager of the Arena (10%);

v. Investment. The value and amount to the City of any proposed investment including proposed Arena repairs and improvements (10%); and,

vi. References – Feedback received from other venues and clients. (5%).

Let’s put ourselves in the position of a city that owns a white elephant, in this case an arena. Let’s then assume some group was willing to take a financial loss for five years and factored that into the budget before submitting a lowball bid requiring little (or no) investment from the city. Why would they accept this loss? Perhaps a more lucrative deal awaits elsewhere and dropping $50M or so still makes economic sense. Of course, it would leave your city in a significantly worse position in five years, but we already know long term planning isn’t a “thing” for most of the Glendale elected officials.

NHL Partnership Possible

Other than Global Spectrum as a prospective bidder regardless of the existence of hockey, there’s one other bidder that meets the criteria laid out by Glendale. The NHL.

Suppose you’re a prospective Coyotes bidder. Suppose you’re sick of Glendale but still want to play in the REALLY great venue they own. Would you think about working with the NHL, with whom you have to strike a deal anyway, to continue managing the arena? Sure, it might be worth a try.

The question would then be if the NHL was interested in continuing their existing relationship with Glendale. According to recent public statements from NHL Commissioner Bettman, they plan on remaining in Glendale. Has this RFP or associated machinations emanating from Glendale have changed his stance?

I have no idea, but at least we only have to wait until May 24 to find out, assuming the City of Glendale decides to share the information with anyone with having to submit yet another public records request.