Paul Giblin

The Republic | azcentral.com

Proposed deal calls for Glendale to pay $5.6 million a year to AEG Facilities

The fate of the Arizona Coyotes remains unresolved for now

After first $3 million in profits, Glendale and AEG would split further revenue 25/75

Glendale would spend $5.6 million per year to hire an arena-management company to run Gila River Arena, home of the Arizona Coyotes, under a contract scheduled for a vote by the City Council on Tuesday night.

The deal with Los Angeles-based AEG Facilities for operating the hockey and concert venue at Westgate Entertainment District is for five years with an optional five-year renewal.

If approved, the deal would mark the first time since the city-owned arena opened in 2003 that the National Hockey League team would not manage the facility.

City administrators published the proposed 46-page contract on the city's website Monday afternoon, giving the public slightly more than a day to review terms of the deal.

Key features include:

The city's financial commitment of $5.6 million a year is locked in for five years — perhaps as many as 10.

After splitting the first $3 million in profit from the arena, AEG Facilities will receive a 75 percent take, while Glendale will receive 25 percent.

Retaining the Coyotes beyond the 2016-17 season is left to AEG Facilities. For months, Coyotes President Anthony LeBlanc has said team officials have been in discussions concerning a new arena somewhere in metropolitan Phoenix.

The complicated set of revenue reimbursements the city had with the Coyotes for parking, naming rights and more are eliminated. All future revenue would be lumped together for the 75/25 split.

The city could install AEG Facilities as the operator starting 90 days after the contract is signed, replacing the Coyotes.

Glendale Mayor Jerry Weiers said he has questions about the contract, which he received Monday afternoon, but he was optimistic.

Vice Mayor Ian Hugh noted that the $5.6 million-a-year fee is less than the $6.5 million the city is paying the Coyotes this year and the $15 million-a-year deal the city had with the Coyotes in 2014 and 2015. "The main thing about it right now is that it will give us an opportunity to figure out what exactly our fixed costs are. And we'll know what we won't have to spend," Weiers said.

"This is the best offer that we've had for anybody to operate the arena," Hugh said. "We're trying to get the best deal that we can with the best company that's out there to operate the arena, which would give us the best chance to recoup anything."

The proposed contract is structured to incentivize AEG Facilities to attract live events to the arena that previously has featured Prince, U2, Paul McCartney, Madonna, the Red Hot Chili Peppers and Taylor Swift, among other acts. The more shows AEG Facilities books, the more it can make under the 75/25 split.

AEG Facilities is a division of AEG, an entertainment company that owns, operates and consults with more than 100 live entertainment and convention venues worldwide. AEG Facilities' parent company owns the NHL's Los Angeles Kings.

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Glendale administrators selected AEG Facilities from a field of three arena-management companies that bid for the contract. The Coyotes did not submit a bid.

"We are looking forward to working with the Coyotes at Gila River Arena for this coming season and beyond," AEG Facilities CEO Chuck Steedman said in a statement.

"Glendale is know as a premier destination for high-profile entertainment and sports events, and with the exceptional lines of sight for hockey, along with its great fans, Gila River Arena provides the perfect setting for NHL games."

LeBlanc said Monday night that he hadn’t reviewed the proposed agreement between the city and AEG.

Securing an agreement with AEG to use Gila River Arena beyond the 2016-17 season wasn’t a priority, he said in a written statement. "We remain focused on securing a long-term solution in the Valley that is based upon a true partnership,” he said.

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The deal with AEG Facilities would continue a general downward trend in city spending on management fees.

The city paid the NHL $25 million in fiscal 2011 and $20 million in 2012. The city paid nothing to the NHL in 2013, according to Assistant City Manager Tom Duensing.

Glendale paid the Coyotes' new owners, an investment group called IceArizona, $13.5 million in 2014 and $15 million in 2015.

The vote is scheduled for the City Council meeting, which begins at 6 p.m. at City Hall.

Timeline: The Arizona Coyotes in Glendale