Watch Your Six – Part Final

November 26, 2012

Here we sit on the eve of yet another momentous vote on the Coyotes sale and their future. It’s a busy day, so only a couple things to cover.

Phil Lieberman’s Seat

We figured there would be a push to seat the new council member for disappearing Phil’s Cactus district seat. Now that the votes are counted, to be ratified later today at a special 3PM meeting, it will be “official” that Ian Hugh will be the new council member. There was a weak push at the prior meeting to have him seated early, expect a more concerted effort tomorrow.

There is currently no agenda item (click here) for seating Mr. Hugh on the schedule for tomorrow, but I believe it could be added up until 7PM (24 hours before the meeting) this evening.

What does this mean for the arena lease? It’s a wash, unless I’m missing something. Yes, it’s QUITE possible I am missing something, considering my lack of background in politics and parliamentary procedure. We know Hugh would be a “no” vote against the arena lease agreement, just as Phil Lieberman would have been. If he is seated and votes “NO”, assuming the votes remain as they were the last time this was voted on, it remains a 4-3 majority FOR the agreement. If one of the votes is changed, it becomes a 4-3 majority AGAINST the agreement and “we” lose. If he is NOT seated and the votes remain the same, it is a 4-2 majority FOR. If he is not seated and one of the votes is changed, it is a 3-3 tie and “we” lose because no action would be taken.

So, it’s likely a wash for the Coyotes anyway.

Moneyball

There will also likely be a concerted attack on the annual lease management fee to be paid to Hockey Partners. The mayor alluded to a “memo” with comparative “numbers” that all of the other council members denied ever seeing. This, by the way, is entirely possible that city officials would be privy to information that was not then passed on to council members. During the bankruptcy proceedings, it became obvious that selective information “leakage” was a standard technique at City Hall.

Obviously, if the council members aren’t informed about these comparative “numbers”, there is no way for me to file ANY sort of information request other than the very generic one filed today. It’s pressure on the City Clerk’s office that we’d rather not apply, because they’ve been great for the past six months, but we need that information to finish a real analysis.

Lacking the real information, since the mayor has been recently quoting and citing the AZ Republic to make her points, I dug around for an article from some time ago where Lisa did the analysis and found it from back in June before the deal was approved for the FIRST time. The slant of the article is anti-Coyotes, and there are selectively used numbers in the article. If you read it, note that the annual payments and a few other things are out of date, they relate to the prior version of the agreement before it was renegotiated.

Let’s go.

Other Valley Teams

Lisa’s article states:

None of the other professional sports teams in the Valley — the Arizona  Cardinals, Phoenix Suns and Arizona Diamondbacks — receives a tax-funded  subsidy to run its stadium or arena, sports executives and local government  officials said.

Well that isn’t quite true, of course depending on how you would like to spin the numbers. In this case, the numbers are being spun by the AZ Republic against the Phoenix Coyotes. Imagine that. Let’s take one example from University of Phoenix (UOP) stadium that isn’t mentioned in the article. In a recent Glendale City Council meeting where cuts were being discussed, Chief Burdick admitted they lost $1.1M on the contract to cover UOP stadium. That’s a $1.1M subsidy right off the bat for UOP.

The statement above is later contradicted in the article, yet there is no mention that it IS a contradiction. The reason is that it doesn’t support the case AGAINST the Coyotes.

Maricopa County tourism taxes cover about $10 million in annual operating costs  at the University of Phoenix Stadium.

That’s a pretty clear contradiction, isn’t it? Not only that, but TEN MILLION dollars worth of contributions is truly significant in comparison to the average $15M for the Glendale deal with Hockey Partners. Why, if Lisa was fairly comparing one team’s deal to another, wouldn’t she have pointed that out? You’d have to ask her.

Forget Someone?

Lisa’s article mentions “the” group hired to manage UOP stadium, Global Spectrum. She states that Global Spectrum will be paid by the TAX-FUNDED sports authority $315k plus incentives to manage the stadium. Now we’re at an $11.4M TAX-FUNDED subsidy for UOP stadium, a far cry from the ZERO that Lisa and crew use to make the case against the Coyotes. Lisa neglects to mention the OTHER group that may be contracted to manage the stadium in concert with Global Spectrum, International Facilities Group (IFG).

I actually do not know the current relationship of IFG with UOP stadium, they were connected earlier in the Coyotes saga because one of their people, Michael Reinsdorf (yes, the son of Jerry) recommended the firm used to evaluate the viability of the Coyotes in Glendale. The UOP stadium page on their web site states that they now “advises the design and construction team on operational issues, ensuring that the stadium will operate efficiently and economically.” Should we assume they do this for free? The answer is YES if we want Lisa’s article to stand on it’s own. The answer is NO if we live in the real world. How much? I have no idea, but however much it is would come from the TAX-FUNDED sports authority.

Let’s Renegotiate

When Lisa and Craig wrote their article praising the virtues of the Diamondbacks deal with their government landlord, little did they know that the baseball club was planning to begin divorce proceedings with them Obviously, when making a case in a capitalist society that a deal is viable, one must make the assumption that the deal will benefit both sides.

In this case, it appears the Diamondbacks want to cut Maricopa County out of the deal in favor of Phoenix. The public reason for this is that the Diamondbacks want more control over the “upkeep” of the stadium and Phoenix will allow them this control. One MUST suspect that the deal is already inked in invisible ink somewhere in Phoenix.

The actual reason is that the DBacks want to “upkeep” fewer seats in the stadium to be replaced with luxury suites and boxes AKA more moolah in the DBacks pockets. That’s fine, everybody likes money. However, Maricopa County remembers the promises made when the financing agreements were going before the voters. One promise was that there would be plenty of affordable seats and they feel that the DBacks plans would mess up their promises.

So, there’s that little tidbit waiting around to completely rewrite every supposition regarding the Diamondbacks in the original article.

Build The PARTNERSHIP

There is no mention of the $2.75 (rising to $3) ticket surcharge that Glendale will receive from every ticket sold (not JUST hockey tickets) to defray the costs of the lease agreement. None of the other three Valley teams, to the best of my knowledge, have that arrangement with their arena owners.

There’s no mention of the 15% of the renegotiated naming rights for the arena that will be paid to Glendale. There is no mention of the twenty year commitment Hockey Partners wanted to make to Glendale.

What needs to be mentioned sometime in some media outlet is intangible assets. Sure, that’s a hard concept to sell to a rightfully skeptical electorate. In this case, the City of Glendale has painted themselves into a spectacularly difficult corner. With expenditures that weren’t wise, the loss of a LOT of state funds and a property valuation crash they need to come up with some intelligent solutions for difficult problems. It won’t be easy no matter what. However…

The intangible asset of having a Greg Jamison led group as the main tenant of your building is priceless. He has a history of success in the sports business, particularly in hockey, that should be a template for people to follow in building a business. He has committed to a renewable twenty year relationship with Glendale. This is an opportunity that will pay off for everybody involved, including the naysayers.

It’s impossible to foresee the future, but it’s entirely possible to PLAN for a successful long term outlook. While Horatio Skeete both admitted to the long term future of the city being notably better WITH the team, he still couldn’t recommend the deal HE negotiated because of the immediate pain of layoffs. This might be the right way to run a seasonal business, it is certainly NO WAY to run a city.

Remember the buzz LAST YEAR with the success of the Coyotes? The entire valley was electric with it and everybody was suddenly interested in hockey. How shortsighted does one have to be to NOT recognize that sort of excitement is a dream marketing environment for a committed and talented owner? It’s almost a “DUH”, right?

Greg Jamison, AKA Hockey Partners is/are that/those guy/people.

Bet on it.

Keep the faith, Coyotes brothers and sisters. See you at City Hall tomorrow.