Local Media Still Trying to Save the Phoenix NHL Team

No one loves local sports teams more than the local media.  I think they know, but probably won't admit, that they would lose a huge chunk of their remaining readership / viewership for their news products if they did not have local sports to report on.  So you will almost never, ever, ever see local media reporting reporting on the true cost (in terms of handouts of taxpayer money) to retaining pro teams.

My coverage of the Phoenix/Arizona Coyotes hockey team goes way back, including even to a mention in a George Will column.  I won't repeat all of that.  I just want to point to this article entitled "Glendale selects AEG to manage Gila River Arena; Arizona Coyotes' future unclear."

Glendale selected facilities-management company AEG Facilities to operate Gila River Arena, likely hastening the city's split with the Arizona Coyotes hockey team.

The telling thing about the article is that it never once explains to readers why this bid award might hasten the split with the Coyotes.  They mention that the Coyotes chose not to bid on the contract.   So why is this award a problem for them?  Do they hate AEG for some reason?  If you really were new to the issues here, you would have to scratch your head and wonder why the two issues were connected.

Oddly enough, everyone knows the reason, but the local media really wants to avoid mentioning this reason.  Here is the elephant in the room no one will recognize:  The Coyotes struggle to make money in this market, a fact made worse by the terrible location of the stadium at the far end of town from most of the potential corporate ticket buyers and wealthy people.   As a result, the team languished in bankruptcy for years, in part because the NHL (who took over the team) refused to sell it at a reasonable market price.

They finally found a buyer who agreed to buy it for an above-market price, but did so only because there was an implicit promise by the town of Glendale to subsidize them the $100 million difference between the actual and market price of the team..  The Goldwater Institute called foul on this subsidy and got it stopped.  So the town found a way around it, promising to award the team the stadium management contract for a price  $8-$10 million a year above market rates for the service.   The present value of this above-market pricing over the life of the proposed contract nearly exactly matched the earlier subsidy proposal Goldwater killed.  Various folks cried foul again, seeing through this sham, and got that stopped.

So the reason this award of the stadium management contract to AEG is so devastating to the Coyotes is that this contract represented the last hope of exacting a hidden subsidy from the city.  With this contract awarded to an arms-length third party at market rates, the last chance of making the Coyote's business viable on the taxpayer's backs seems to have escaped.

Update:  I am hearing now that another reason the Coyotes are done in Glendale is that they think the city of Phoenix or Scottsdale will build them a new stadium.  ugh.  Will it never end.

  • BobSykes

    So why is Arizona State looking for a big time hockey conference? Is the market different?

  • Dave Boz

    Some other city in the area will almost certainly buy the Coyotes a new arena. The mayor of Phoenix is on board, and lots of folks say that the basketball team "needs" a new arena. Maybe one will be built to handle both, maybe they will each get their own new palace. But it will be done, at taxpayer expense, just as all sports arenas in the Phoenix area are done. And it will unleash yuuuuge amounts of "economic impact" just like the Super Bowl (and all those other football events that somehow end up costing Glendale instead of making money)

  • Jack Mehoffer

    I love the fact that everyone thinks that "numerous city's will build an arena for the Coyotes." I think that voters have had enough of funding millionaires more money to make them billionaires. Tax payers are not going to approve money to build an arena for a hockey team that has lost money for YEARS. Phoenix's mayor has said that, while he would love to have the Coyotes downtown, the Suns are the city's priority because they are "home grown" and the Coyotes are the original Winnipeg Jets. Sorry to tell you CoyoteNazis, but this team may be stuck in Glendale.....or another state.