Goldwater offers solutions to Coyotes quandary

by Nick Dranias
Goldwater Institute

The Goldwater Institute has repeatedly met and talked with Glendale officials, including Mayor Elaine Scruggs, to try to resolve the constitutional conundrum raised by the city’s effort to subsidize the sale of the Phoenix Coyotes. But the Goldwater Institute will not turn a blind eye to Glendale’s plan to spend hundreds of millions of taxpayer dollars to prop up the Coyotes in violation of the state constitution.

The deal hinges on two main components. First is that the city proposes borrowing up to $100 million to purchase arena parking rights from the future team owner. This is a charade meant to hide a $100 million handout to the new owner because the city already owns the parking rights. The second component is the $97 million arena management fee. That fee would directly subsidize the Coyotes by reimbursing its future owner for operating expenses that only benefit the team. However laudable the goal of keeping the Coyotes in Glendale, it does not merit back-room negotiations, abuse of taxpayer money, and violation of the law.

It is not too late for Glendale to keep the Coyotes in town legally. The city should pursue more private investment in the deal by having the NHL reduce its upfront sales price for the team and spread any balance out over the 30 year arena lease term. It should also demand that the NHL promise not to relocate the Coyotes over the term of the lease. The city should reduce the management fee so that it does not reimburse the future owner of the Coyotes for operating expenses that only benefit the team. And if the future owner of the Coyotes really believes he can turn the bankrupt team around, Glendale should demand a 100% asset-backed guarantee of all revenues that have been promised to the city.

There are legal ways to keep the Coyotes in town and protect taxpayers; Glendale should choose one.

Nick Dranias holds the Clarence J. and Katherine P. Duncan Chair for Constitutional Government and is director of the Joseph and Dorothy Donnelly Moller Center for Constitutional Government at the Goldwater Institute.

Learn More:

Goldwater Institute: Frequently Asked Questions about Glendale/Phoenix Coyotes deal

Maricopa County Recorder’s Office: Glendale Parking Agreement (Jan. 25, 2011)

Forbes: A Critical Battle Over The Sports Economic Model

Washington Post: George Will: An Arizona city’s sports mania encounters a hard check


Comments

  1. Steve Calabrese says

    I understand the Goldwater Institute has done a great deal of work on this issue, but I am a bit confused by the last sentence:

    Glendale should demand a 100% asset-backed guarantee of all revenues that have been promised to the city.

    Does GI really, really think that the Coyotes truly have sufficent assets to back any sort of guarantee? And even if they had the assets, would it be possible to make that guarantee bankruptcy-prooff?

    I think it’s long past time for Glendale to stop throwing good money after bad and accept that concerts and special events are going to be the likely occupants of the arena, and let the smoking crater that is the Glendale Balance Sheet serve as a warning to other government officials who hang their hats on favoring one business over another when disbursing taxpayer dollars.

    • Well that’s funny because just about every major corporation that would move to Arizona demands some sort of government tax subsidy, otherwise they will take their business elsewhere.

      The problem I have with the GWI is they are doing nothing to “protect” anyone, their arrogance in their press releases and interviews is amazing and speaks volumes about themselves. I think if you look at the Coyotes deal you have an owner that feels he can things work and I completely disagree with the “throwing good money after bad” notion. Several studies have shown the city will turn a profit with it’s plan, but curiously Goldwater has their own “studies” done (that they won’t release) by “consultants’ (they won’t name). So much for “transparency”.

      The Goldwater Institute is in this for one reason and one reason only – media exposure. They don’t have a case, they know they don’t have a case, but they want YOU to think they have a case and they especially want YOU to think they are protecting taxpayers so you’ll send them some money.

      The Goldwater Institute is a group of extremists coupled with a few less than average/newbie attorneys who are so full of themselves it’s almost ridiculous, almost as ridiculous as the donors who fill their coffers so Darcy and Clint can pay themselves one third of Goldwater’s total proceeds in salary.

      I think the Goldwater Institute is best served protecting skin eating fish and tattoo parlor’s, it’s more their speed.

      • Matt Hopwood says

        If they didn’t have a case why has it been put all the blame on them for scarring away potential buyers of the bonds? If its so clear that there isn’t a case why haven’t those bonds sold, because according to you clearly the Goldwater Institute doesn’t have a case and so these big companies who would have all these lawyers, wouldn’t they be able to clearly see that Goldwater Institute has no case? So I think I’ll take these big companies who have all these lawyers who would have read the constitution and understand the law over you.

        Now wait before you say maybe these companies don’t want to take the risk of having their investment held up in court. If this investment would make money and would be successful and is legal, wouldn’t a little court case that supposedly is just a sham to get attention and media coverage for money, wouldn’t these companies realize that and go ah this is such a good investment, and will turn a profit for me, and this little court case that has no grounds may effect my investment for a couple months but that won’t effect my investment.

        Take your pick, either the the Goldwater Institute has a case and what they are trying to do is illegal, or the Phoenix Coyotes will not be successful and will continue to loose money like it has for the past 15 years. I believe it is both but I’ll let you take you pick so you can feel better and say that well the Goldwater Institute is still a sham.

        PS: The only reason Hulsizer wants this deal because he makes a profit on this for a short period of time from the city of Glendale, which in turn the looses he takes for a short period of time before selling the team will help his taxes because he lost money so he will be taxed less and stand to make a profit.

  2. Horst Kraus says

    Mike,
    Whom ever Mike.
    Any Hundred Million Dollar business coming to Arizona that would only come if they get a hundred million dollars from their neighbors (the tax payers) up front isn’t worth having coming in the first place.
    An enterprise that can only survive if it is subsidized is not viable and needs continuous socialistic inspired subsidies; i.e tax payers assistance.
    I understand you do have difficulties comprehending this because you were educated in this here school system.
    I feel for you and hope against hope you will eventually become educated.
    While I am waiting for this event to take place, I am with the Gold Water Institute. They do have some extra ordinary talent on board.
    Your inappropriate quip about flesh eating fish tells me you are a little bit short in getting the message that was within that message; as it was addressing entrepreneur-ism at the most elementary level.
    Something that is direly needed to put the good old U.S.of A. back onto its feet, economically.
    You must not have taken “Reasoning and Logic” in High School. Perhaps it was not offered to you by your counselor. Or he/she felt it would have been a waste of time and slowed the whole class down. Or did you skip High School altogether?
    Anyway, if you are happy with yourself, I am happy for you.Just don’t waste any band width with your nonsense.
    Take Care

  3. Ryan from Winnipeg says

    Mike you are a complete moron!!! Read or listen to the transcripts from the public meeting between Goldwater and the City. One side asks direct questions, and one side evades those questions. There is clear intent to place obstacles in the way of gaining access to documents necessary for the public to gain a clear understanding of what kind of ‘real’ business transaction is taking place. Furthermore, there is also clear evidence that the City of Glendale already owns the parking rights. The entire deal is a shell game. And are you really some kind of proponent of corporate welfare. You appear to be. Your logic being simply that all cities and states practice this kind of behaviour in order to lure business. So if your friend jumps of a cliff Mike what to YOU do? I hope you jump quite frankly. Its best for the gene pool really.

    When the City ends up cutting a deal to keep the Coyotes and they find their liability to be tens of millions of dollars less they better be the first to make a public apology to the Goldwater Institute and throw them a parade! The taxpayers of Arizona should be next in line with their collective praise. Mike, I’m sure your pride will prevent you from seeing the larger picture and realizing just what happened. You will sit in the corner and look the complete and utter fool. If they didn’t have a case Mike, then why did the deal not go through as originally planned? Because the lawyers from all sides know that there is a VERY strong case to be made that the deal is legal. Why else would they be redoing it? You’ve got far too much sand in your eyes dude.

  4. Meanwhile, no one from Goldwater objected when its board members husband who owns the baseball team got a massive handout on the baseball stadium.

    Goldwater…protecting their own, and only their own.

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