Coyotes PAC is aware that one of the “talking points” of the people circulating the petition to negate the arena lease deal between the City of Glendale (CoG) and the Jamison group for the Coyotes hockey club is that CoG will have to pay Jamison $500,000 for each game played at Jobing.com. This isn’t true, here are the real numbers and the explanation for the erroneous math (we believe).
The City of Glendale owes about $260 million on the arena. With or without an anchor tenant, that has to be paid or the arena will be in foreclosure.
The entire period of the lease agreement is 20 years. Over that period of time, the arena management fee paid to the Jamison group to manage Jobing.com arena changes. The math that the people circulating the petitions is, to the best of our knowledge, based on 40 hockey games per year with the City of Glendale paying Jamison $20M for the arena management fee. That math, $20M divided by 40 games WOULD equal $500,000 per game. However, their premise and their math is flawed, and deliberately so to inflate the cost and inflame the ire of potential petitioners long enough to exract their signatures.
We will only change the incorrect 40 game count and use the more correct 41 games., although the Coyotes are extremely likely to play MORE than the scheduled 41 games per year with pre and post season games. For now, we will leave out of our totals ALL the other events already scheduled at the arena (below) this coming year which will obviously be attended and producing revenue. We could safely assume that a well schooled, professional arena management team such as Jamison’s would be able to schedule even more events, but for now let’s give “them” the benefit of the doubt and just talk the bare minimum number of hockey games.
- Two nights of skateboard competition
- American Idol Live Tour
- Gymnastics Champions Tour (after the Olympics)
- Red Hot Chili Peppers
- Justin Beiber
- Carrie Underwood
- Eric Church
We will also assume in our calculations, to continue the WORST CASE scenario, that the Coyotes will have the worst attendance record in the NHL, soon to be very unlikely because of their continued success on the ice. Please understand that the Coyotes performance will nearly guarantee sold out playoff games over the course of the 20 year agreement. What we will do is account for the entire length of the agreement because of the sliding scale payment amounts to provide more accurate numbers. There is a table below with the breakdown by year of the arena management fees paid to the Jamison group minus the rent paid BY the Jamison group for using the city owned arena. The net total is $286.2M. The total number of regular season games over 20 years is 820 (41 games x 20 years).
Now we add in a $24M capital improvement fund that Glendale is contracted to provide over the twenty year agreement. This number could logically be excluded from the total because it would have to be spent whether there was an anchor tenant or not since the building has to be maintained. But, let’s add it in anyway to bring the total net cost to Glendale of the Jamison/Coyotes 20 year arena lease deal to 310.2M for an average of $15.5M per year without the contracted additional revenue. Calculating the cost per game at this point, we arrive at $378,292.68 (310.2M / 820 games), a LOT of money but significantly ($121,707.32) less than is claimed by the petitioners, even before we have subtracted the other streams of revenue that will be paid to Glendale. So, we now have proved the opposition is using deceptive, in fact completely erroneous, numbers.
Let’s continue with the exercise and back out the ticket fees paid to Glendale by the Coyotes. The first five years of the agreement Jamison pays Glendale $2.75, after that $3 per ticket for an average per ticket fee of $2.94 over twenty years. Please keep in mind that fee is paid for all of the other events at the arena too, the ones we have elected to leave out of our calculations to give our opposition a distinct advantage to justify their numbers. Let’s continue by multiplying 41 games per year by a horrible 13,000 people per game (at least 533,000 people visiting Westgate and the arena per year) to arrive at 10,660,000 people total over 20 years. Consider that number, a bare minimum 10.6 MILLION people will come to Glendale with the Coyotes at Jobing.com, ZERO if they leave. So, the total paid to Glendale for tickets over 20 years would be at least $31.34M. Of course an optimist would hope that those 10.6 MILLION PEOPLE would spend a buck or two at local businesses along the way once in awhile. Let’s reduce the net amount paid by Glendale ($310.2M) by the ticket fees to arrive at $278.86M expense for Glendale. Now we’re down to $340,073.17 per game.
Glendale’s cut of the naming rights to the arena will be about $8.8M, this is an estimate and depends on the market value negotiated when the current arena naming rights expire. If we subtract that we’re down to $269.96M or $329,219.51 per game. We’ll stop here, there are other amounts (sales tax, etc.) that will reduce Glendale’s liability and thus taxpayer liability.
The best study on arena costs and options has stated that Glendale will lose money on the arena with or without the Coyotes, yet it concluded that the loss is significantly reduced with the Coyotes as the anchor tenant. (click here for study) Is this an ideal situation? No, Coyotes PAC does not believe it is. We do, however, unequivocally state that the oppostion is using deceptive numbers in their talking points AND that the currently approved arena lease deal is unequivocally the best deal presented to the city and it should be embraced.
Now, consider this, please. We are convinced that a core concept within the Jamison group business plan is the eventual ownership of the arena. Is it guaranteed? Of course not. However, assuming some success with building the Coyotes and the arena business, we believe that the arena will be sold to the Jamison group per the terms already agreed upon in he current agreement within six years. Once that transaction is complete, all of the above Glendale EXPENSE numbers disappear, yet the Glendale INCOME numbers remain.
Thus, the current arena lease deal is a big win for the City of Glendale and it’s taxpayers.
Thank you for your time reading this.