Peter Corbett

The Republic | azcentral.com

Glendale spent %241 million more than expected in the first year of its 15-year agreement with the Arizona Coyotes after parking and concert revenue at the Gila River Arena fell short of projections

Glendale will pay %248.5 million this year on its debt for the arena

The city will get additional revenue next year due to the name change to Gila River Arena

Glendale spent $1 million more than expected in the first year of a 15-year agreement with the Arizona Coyotes after parking and concert revenue at the city's arena fell short of projections.

The city, burdened by its sports-facility deals, paid the Coyotes $13.5 million in fiscal 2014 to manage the arena and keep the team in Glendale. But hockey and other arena events generated only $5.8 million in revenue for Glendale, about $1 million less than projected.

Overall, the city spent $8.1 million on the arena management deal, including some capital improvements to the arena.

Part of the money includes proceeds from naming rights for the arena, and on Wednesday the Coyotes formally changed the name of their venue to the Gila River Arena, from Jobing.com Arena.

The change means about $600,000 for the city, but that won't be counted in the initial period of the management agreement. And, that money accounts for significantly less than the two main income sources: events and parking.

In the first year of the deal, Glendale had expected 23 concerts and other non-hockey events at the arena, but only eight were staged. The city gets ticket surcharges and parking revenue from concerts and other events.

IceArizona, the Coyotes management entity, hit its hockey attendance goals in its first year of ownership but did not fill the arena with enough events, said Anthony LeBlanc, team president and CEO.

IceArizona hired Global Spectrum to manage the arena and book entertainment.

"We need to see more events in the building," he said. "We explained that to (Global Spectrum). But it was not entirely their fault. The building has been through four years of bankruptcy and it takes a while to regain the trust of the booking companies."

Former Coyotes owner Jerry Moyes filed for bankruptcy protection for the team in 2009. The NHL acquired the franchise and managed it until last summer when LeBlanc and three others bought the team.

Glendale's controversial deal with IceArizona carries a heavy cost for the city — $225 million over 15 years. But the City Council narrowly approved it in July 2013 to keep the Coyotes from leaving and losing more than 40 home games per season for the arena.

A year after the deal was signed, Glendale is getting its first look at how it is playing out. A shortage of shows and cheaper nearby parking options cut into the arena revenue.

"Now is the time to start delivering on non-hockey events," Tom Duensing, Glendale financial services director, said as IceArizona prepares for its second season of team ownership.

Glendale also will audit the Coyotes' hockey revenue for the first year, a $45,000 outside review that it expects to start later this month and complete by the end of October. The ability to perform an audit was part of the agreement between the city and IceArizona.

"This is the first year of a complex agreement," Duensing said. "We want to make sure the revenues are accurate. I have no doubt they will be."

Duensing said that the city absorbed the $1 million shortage in its general fund with other cost savings and additional revenue it received.

City pays arena debt

In addition to a $15 million annual management fee — an amount prorated the first year — Glendale must pay $8.5 million in arena debt this fiscal year, escalating to $11 million in 2017. The arena will be paid off in 2033 when it will be 30 years old.

Glendale City Council member Norma Alvarez, who voted against the deal 14 months ago, has consistently criticized the agreement and pushed for it to be renegotiated with more revenue for Glendale.

The Coyotes have an option to end the agreement with Glendale and move the team after the 2017-18 season if its cumulative losses exceed $50 million.

LeBlanc said the team has no intention of using the so-called "out clause."

"We didn't get into this for short-term revenue," he said. "We said it would take three years to achieve profitability and we're ahead of schedule."

Wednesday's name change should help that. The new name is part of an enhanced sponsorship deal with the Gila River Casinos that is worth roughly $30 million to the Coyotes, LeBlanc said. The Glendale City Council approved the new arena name Tuesday.

Key revenue sources

Still, the Coyotes lost parking revenue to the Arizona Cardinals, who opened lesser-priced lots at the nearby University of Phoenix Stadium, and at Westgate Entertainment District, the shopping center adjacent to the arena.

In the fiscal year ending June 30, Glendale's parking revenue was $922,672, about $1.2 million short of projections.

The ticket surcharge revenue from non-hockey events came in $1.4 million short of the city's projections.

Glendale tapped into a supplemental ticket surcharge fund that generated nearly $890,000 to cut its losses on parking and the non-hockey revenue and collected higher-than-expected sales-tax revenue, Duensing said.

Last month, Jobing.com Arena hosted Justin Timberlake, Marc Anthony and Ed Sheeran in well-attended shows. Other popular concerts coming up this year include Katy Perry, the Eagles and Judas Priest.

Monty Jones Jr., Global Spectrum general manager, said he tries to book a wide range of shows with varying staging from 2,500 to 19,000 seats.

"We're trekking along to have a great year," he said, with more show announcements coming for the winter and next spring.

The Coyotes preseason starts Sept. 22 against the Los Angeles Kings and the puck drops on the regular season Oct. 9 against the Winnipeg Jets. Both are home games.

Glendale's arena deal

The city approved a 15-year agreement with the Arizona Coyotes in July 2013 that will pay the team to manage the arena. Here are some highlights of the deal's first year, which was prorated because it did not go into effect until August:

• The city paid a $13.5 million arena management fee to IceArizona, the Coyotes management entity.

• Glendale received $5.8 million in arena revenue.

• Beginning in the second year of the agreement, Glendale will receive $600,000 annually in naming-rights fees for nine years under a new sponsorship deal with Gila River Casinos.

Meet our team

Peter Corbett covers Glendale government and sports-related issues in the city for The Republic and azcentral.com. He has been with The Republic since 1992 and was involved in coverage of Super Bowl XXX in Tempe and Super Bowl XLII in Glendale.

How to reach him

peter.corbett@arizonarepublic.com.

Phone: 602-444-6912 Twitter:@PeterCorbett1







