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)

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

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.

Y Lee says:

George, great job on covering this and getting the information out. A few thoughts/questions of my own on this:

Out of curiosity, do you know who Pastor has in his group? That obviously would be interesting to know. But if you don’t know that, how do you assume he doesn’t have the right players to handle the arena managment or meet the requirements of the RFP?

From what I’ve seen, heard and read, Pastor’s group is the only one that wants to keep the Coyotes in Glendale. Every other “player” you’ve mentioned – real (Gosbee) or imaginary (Reinsdorf) – have absolutely no interest in that, which should be a surprise to no one.

So if the NHL selects Pastor’s group, and I see no fact-based reason why they couldn’t, what happens with managment of the arena? If I’m the NHL, I probably don’t give a rat’s behind what the RFP criteria is. The team is clearly a big reason the arena has value. No team = lots less value. I’d bet the NHL isn’t going to award the franchise only to run the risk of some outside management group running at cross purposes with the interests of a new team owner. How would it benefit the franchise (or the NHL) to have such a situation exist? So if they did select Pastor’s group, the NHL might help Glendale understand the importance of having arena management interests align with ownership interests, especially given that Pastor wants to keep the team where it is.

I don’t know Pastor doesn’t have the right “guy” to meet the requirements of the RFP, which isn’t a legally binding document anyway. After all, if the mayor met with Pastor yesterday as he was reported to scheduled for, he violated his own RFP.

Reinsdorf is not an imaginary player in this, his cohort Kaites has been all over the place in Glendale including in the city suite at the arena during games.

You also neglected to mention Hulsizer and Jamison. We don’t know what Hulsizer is thinking, but Jamison certainly wants to keep the Coyotes in Glendale long term.

I think it’s extremely unlikely that team ownership and arena management are split, although an “arrangement” might be possible.

Bill Eikost says:

So, here’s a what if… The NHL approves Gosbee or Pastor? Why would Reinsdorf want to manage the arena? Either way, the city will not be getting an arena manager for $6M/year, and especially if they have to take on a lot of the costs while paying the city a fee.

I think I read it a little different than you George. It says that the company must meet just one the three requirements. I belive that GJ has meets this and the time frame is only one condition. I dont know who Gosbee or Pastor could associate themselves with but I didnt feel that this would elimanate them. I could be and probably am wrong but I thought I would give you my thoughts.

They still don’t meet any of the three because it’s not past tense. Only Reinsdorf’s group manages a sports facility, and why would you use “three years” as some sort of magical cutoff number?

Of course it’s up to them anyway, they would be foolish to reject any of the prospect’s bids, all of them are obviously qualified to do the job and that’s what’s important. People would scream if any possible solutions were turned away, and that would cause political damage to the city and, of course, the mayor.

John Tims says:

So the RFP seems to rule out heralded saviors Gosbee, Pastor, Leblance and Jamison because they don’t have the required experience. The last option is Reinsdorf? The guy who clearly wants to move the team in 5 years, and was asking for a huge city subsidy?

Somehow I don’t see this working out for the Coyotes, and perhaps by no coincidence Glendale aims to have this settled by June, which is when ATL was announcing their relocation.

George, is this worrying you yet? You openly question how this deal could make sense for everyone, and I think the time for hoping for miracles is over. Nothing this ugly could get settled in a month. I’m preparing for team to move.

I’ve been worried about this for four years, John.

The Reinsdorf connection has been around since the jump. He has been deeply politically connected with Glendale for a looooong time, and managed to take advantage of them saddling themselves with Camelback Ranch. Make no mistake that the new mayor is also very much politically connected, and John Kaites has been cruising the rink as well.

It could just be paranoia, just because Reinsdorf and Beacon are connected at the hip doesn’t mean there’s any back door deals being done.

I would never underestimate the NHL, either. “Nothing this ugly could get settled in a month.”? Wars are ugly and they get settled quickly once the sides decide to stop screwing around.