With Glendale city council almost certain to vote Tuesday night in favor of putting another $25 million down the black hole known as the Phoenix Coyotes, the move will carry enormous reverberations both in Arizona and beyond.
First to Glendale, where the city council will once again be pressured by the threat of relocation into funding the majority of losses for the Coyotes for at least one more season. That much has been well documented. But what hasn’t come to light is the near certainty the $25 million this time around will come directly out of the city’s operating budget. The last $25 million came from a utilities-repair account, but the difference this time is the same money the city would have used to repair roads, build infrastructure, hire policemen and keep libraries open later will go instead to funding a hockey team that everyone outside the NHL’s brain trust sees as ultimately doomed for failure.
The city is expected to stroke another check Tuesday night in an effort to have the Coyotes stay there this season. That, in turn, will presumably buy the NHL time to either complete a deal with Chicago businessman Matthew Hulsizer or another party. It’s expected that Glendale mayor Elaine Scruggs will trot out a figure of $60 million, the approximate annual revenues businesses around the Jobing.com Arena would lose if the money the Coyotes 41 home dates brings in per season were to evaporate.
When it’s framed that way, a $25 million investment by the city seems like a good deal, no? The questions remain, though: How much of that is actually new money brought in from outside the existing tax base? How much of it simply goes into the coffers of the corporations that run the hotels and restaurants? And how much goes to maintaining and creating local jobs and to the city in the form of taxes?
(And that doesn’t even take into account the debt service on the building, which is $12.1 million per year, only $5.1 million of which is recouped through ticket surcharges and taxes.)
The city is apparently hoping to have to sign a check of only $20 million up front, with the hope being that by the time the other $5 million is due to come, the team will either be sold or the economy will improve. Quite frankly, the prospects of either of those happening look slimmer than Ryan Miller after a long playoff run.
On the first front, the team has been for sale for the better part of two years and no buyer has been found who is willing to absorb the massive losses without the kind of deal that will either be illegal as interpreted by the Goldwater Institute or lopsided in favor of the buyer. With respect to the economy, despite the addition of 244,000 jobs last month, unemployment in the U.S. rose to nine percent because of an influx of people who resumed looking for work.
The picture is pretty much the same in Arizona, where the tax base is shrinking rapidly. The property valuation went in 2009 from $2.2 billion to an expected $1.1 billion in 2012. A 50 percent drop in property values will hit the city hard when it calculates tax bills for its residents. Local councillor Phil Lieberman, who has been critical of the Coyotes sale, said his own home was valued at $326,000 two years ago and when he ran a rating the other day, it was down to $122,000.
Still, Lieberman, said he will likely support the $25 million motion to keep the Coyotes afloat for another season, but he will have to swallow hard and hold his nose as he does it.
“I’m a fence sitter,” Lieberman said. “I see both sides of this issue. I hate to spend $25 million, but I would hate for Westgate (the development around the arena) to go broke. That would not be good.”
The impact will be felt around the league because now the prime candidate to move becomes the Atlanta Thrashers. It’s believed the Thrashers will be much easier to move and will be far less onerous for the NHL to part with than the Coyotes are. There are those who run in ownership circles who are convinced that with the Coyotes out of the picture, at least temporarily, the Thrashers will now move to Winnipeg this off-season.
A team moving from the Eastern Conference to the Western Conference will, in turn, pave the way for the Detroit Red Wings to move to the East where they belong. That will not only be a boon for them in terms of start times for their televised road games and travel costs and logistics, but it will also move an aging roster into a conference where it will have a much greater chance for success. It’s hard for these eyes to believe that there’s a single team left in the playoffs in the East that is better than the Red Wings.
Who knows? It might even be the tipping point in defenseman Nicklas Lidstrom coming back to Detroit. If the Red Wings can offer him reduced travel and an enhanced chance to get to the Stanley Cup final, that could be enough of a carrot to have the Norris Trophy finalist come back for another season.
And the dominoes will begin to fall starting with the vote by Glendale council Tuesday night.
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