I have never really liked to wallow much in the accusation and counter-accusations of media bias. But I am coming around to the hypothesis that the media is neither liberal or conservative but has a big government bias. Recently, as in this article, the Arizona Republic (our daily paper) has been going after the Goldwater Institute for opposing what amounts to a $200 million subsidy to a buyer of our hockey team.
The short story is that after the city of Glendale blew a bunch of money for a hockey stadium in the desert, it turns out hockey is not very popular here (surprise). So the team went bankrupt, and threatened to move. To keep it from moving, the city of Glendale wants to throw more good money after bad and subsidize the new buyer. Goldwater is challenging the subsidy as illegal under AZ law.
As I noted in the previous article, third parties value the Coyotes at $117 million. So with this new bond issue, they will have run up $380 million in debt to keep a $117 million asset in town. Further, they will have basically paid the entire purchase price of the team (and more) without getting a drop of equity in return. All they get is the right to charge for parking around the arena, which is currently free. This at first makes some sense (though the value of the concession is never mentioned) but in fact it is ludicrous as well. The entire reason for the subsidy, supposedly, is to protect the mall/apartment/office complex around the stadium that the city cut sweetheart deals with developers to make happen. So now they are going to charge for parking -- what is going to happen to all those businesses they supposedly are doing this for when their customer's parking is not longer free?
Anyway, the Republic editorialized against Goldwater on Sunday (in an editorial titled "Back off, Goldwater Institute") saying that they were hurting taxpayers because if the new bond issue and team sale fails, then there won't be any revenue to pay the old bond issue. Its hard to figure how this is any different from doubling down at the roulette table in hopes of making back one's past losses. And, Goldwater opposed the first bond issue too.
Now, the Republic has editorialized again, this time in a nominally news article. They argue that by pointing out the potential illegality of the subsidy, Goldwater is messing up their bond interest rates. I kid you not:
As Glendale prepares to sell bonds to finance its Phoenix Coyotes deal, the interest rates the city obtains make a big difference in how much debt Glendale would take on.
Team buyer Matthew Hulsizer says investors are demanding high interest rates due to nervousness among bond buyers about a potential Goldwater Institute lawsuit over whether the city is illegally subsidizing a private business. Glendale maintains it's on firm legal ground.
This is exactly the line the paper took in its Sunday editorial. Now they are giving an interested party the ability repeat it in a supposed news article. The author deliberately puts Goldwater on the spot and in the center of blame
Late Monday, Hulsizer questioned whether the Goldwater Institute wanted the team to stay.
"If they do indeed want the team to stay, then wouldn't they want the city to be able to complete financing at the best possible rate?" he said in a statement to The Arizona Republic.
He asked, if the Coyotes left Glendale, what Goldwater's plan was for the city to pay off its construction debt on the arena and for businesses nearby to survive without hockey customers. The city spent $180 million to open the arena in 2003.
Why in heaven's name is it Goldwater's problem that an earlier bond issue they actively opposed as a bad idea might turn out to, you know, have been a bad idea? The article goes on and on this way, quoting other people of the same point of view. Goldwater doesn't get a quote until paragraph 24 or so, where Darcey Olson who heads the Institute says
She said Glendale has "unlimited options" to avoid a Goldwater lawsuit. "For instance, Hulsizer could get a private loan to buy this team like most businesses do," she said. "They finance their investments not on the backs of taxpayers but take the risk privately where it belongs."
The evidence of the article that Goldwater is shaking the very pillars of Wall Street is that the city expected one set of interest rates, but the market was giving them higher rates
Glendale officials in December hoped for a roughly 6 percent interest rate.
Todd Curtis, portfolio manager for Aquila Tax-Free Trust of Arizona, said he expected to see a 5 to 5.5 percent interest rate after Moody's Investors Service in mid-February gave the Coyotes bond sale a fairly high rating.
More than a week ago, Curtis was hearing of proposed rates around 7 percent.
Of course, they present no evidence as to why this might be. We are left to assume it is because Goldwater is somehow creating unfair bad vibes. Except then we get this oh-by-the-way near the end of the article:
Moody's and Standard & Poor's raised worries in February about the city's debt levels. As a result, Moody's downgraded several city bond ratings and Standard put the city on a watch list, though the city's ratings remain high.
Also, Glendale pledged to cover the Coyotes bonds with sales taxes, a revenue stream hurt during the recession. The city in its preliminary bond statement points out its sales-tax base is strong.
OK, lets check the reporter's decision-making here. We have five facts
- The major bond ratings agencies recently put the city on a credit watch list
- Sales tax revenues that pay for the bonds are way down
- The city is investing $200 million in a $116 million dollar asset without getting any equity
- The city has a history of failed bond issues, as evidenced by the previous $180 bond issue they are trying to bail out with this one
- A local think tank has raised legal questions about the deal -- legal questions that turned out to be correct in a parallel case.
So our lede is that it is all about the fifth one, just because millionaire Matthew Hulsizer, who is set to feed at the public trough to the tune of $200 million, says its so?
Ask yourself, what is the first section of the paper many folks look at? The sports page? An extra professional sports team adds a hard to quantify but definite amount to the paper's bottom line. The AZ Republic clearly recognizes this and is all-in for any taxpayer subsidy that is required to keep this important part of their business running.