Glendale's sports dream sours amid Coyotes deal conflict

At the dawn of the millennium, Glendale had a dream of using sports to spark economic development that city leaders believed would transform the sometimes disparaged suburb into a big-league city.

The Phoenix Coyotes moved west to an arena in a farm field in 2003, and three years later, the Arizona Cardinals landed in a futuristic stadium south of the Westgate Entertainment District.

The city's sense of pride swelled as it hosted championship games for college and the NFL and packed the arena, now known as Gila River Arena, for Coyotes playoff runs.

The good feelings did not last.

The hockey team filed for bankruptcy in 2009. The Westgate developer lost the property two years later, and the recession dashed grand development schemes for the area that Glendale hoped would follow its roughly $500 million in sports-related costs. The city's losses on its investments mounted.

And while the big games are played in Glendale, the parties that come with them have moved elsewhere, draining off revenue planned to help pay public-safety costs.

Glendale's relationship with professional football and hockey leaders blossomed during the honeymoon years that marked the city as a sports destination, but it withered with new political leadership that says the city needs to expand beyond being a sports mecca.

There's been tension between the city and the Coyotes (now known as the Arizona Coyotes) since the council approved the deal in 2013, and Glendale and the Cardinals have also clashed over parking around the stadium.

Cardinals President Michael Bidwill, who was friendly with Glendale Mayor Elaine Scruggs when the city hosted its first Super Bowl in 2008, criticized Glendale as a poor partner in the run-up to this year's Super Bowl. The city complained about costs associated with hosting the game.

"They got themselves in a financial dilemma with other sports facilities," Bidwill said last summer. "They just didn't do a good job of planning these things."

Bidwill declined to comment on the latest dustup.

Glendale was left out of the accompanying festivities for this year's Super Bowl and was stuck with a $2 million bill for public-safety expenses.

The latest reality check hit hard this past week, when Glendale voted to kill the agreement with the Coyotes it had negotiated just two years ago.

Die-hard Coyotes fans, already jaded by fears of losing their team to another city, gathered at the Wednesday meeting at City Hall to protest.

On Friday, a judge put the City Council's decision on hold, and Glendale officials scheduled a closed-door meeting for Tuesday, possibly to revisit the issue.

SAGA OF COYOTES ARENA DEAL WITH GLENDALE

Meanwhile, the Coyotes filed legal claims to recover damages that the team estimated at $200 million.

The public backlash against Glendale — on the airwaves and social media — has been harsh, but city leaders seem to be focusing more on the city's financial bottom line than the big-city dreams of their predecessors.

"I don't know why people are shocked about this," Glendale Mayor Jerry Weiers said, explaining that three new City Council members who took office in December joined him and Vice Mayor Ian Hugh in pushing for a better arena deal.

Glendale pays the Coyotes $15 million annually to manage the arena, and its combined losses for the past two years on that deal will be more than $16 million.

Now, the stakes are even higher in the ongoing legal and political showdown. Unless a settlement can be reached, the financial fallout could be devastating for Glendale, the Coyotes and the city's businesses.

Taxpayers, workers and fans would also pay a heavy price.

"The longer this goes on, the more it contaminates the fan base," said David Carter, executive director of the Sports Business Institute at the University of Southern California. "When there is a crisis with ownership and the local municipality ... it weighs down the fans and leads to this downward spiral."

Support for the Coyotes already is challenged after a third consecutive season of missing the playoffs.

Since the team moved to Glendale, it has finished last or next-to-last in NHL attendance six times. In that span, only the New York Islanders have averaged fewer fans.

That has translated into financial losses for the city as it receives some of the proceeds from ticket sales and parking.

While overall revenue is up, because of non-hockey events such as concerts and proceeds from naming rights, it's not enough to offset expenses.

But the team does attract people — and their money — to restaurants and shops around the Gila River Arena in the Westgate Entertainment District.

Local business owners worry

If the Coyotes leave, that would mean the center loses 46 or more event nights that draw customers, said Adam Kariotoglou, one of the owners of Opa Life Greek Cafe, which opened in December.

"All of us tenants rely on those games," Kariotoglou said. "It's a question of making it or breaking it. Will we survive? That's a big question mark.

"We signed a lease here because the Coyotes were here."

The restaurant owner equated the amount of revenue generated from hockey-game customers to an additional two or three months of revenue.

Not only would a move affect sales, but it also would affect employees working at Westgate.

"It will impact our business significantly," said Peter Greene, owner of Which Wich sandwich shop. "We won't lose employees ... but people will lose hours."

On a week that typically would have two games, they could lose as many as 10 or 12 of work, he said.

The loss would have a domino effect, he said. It would mean he orders less food from vendors, which would affect their bottom line, too.

Udo Wirtz, general manager of Yard House, said the bar and grill, part of a national chain, fills up before every game and gets a small crowd afterward.

"Nobody wants to lose business," he said. "Some of the businesses here, it would affect their ability to stay open. It won't us. But we don't want to lose them (the team), either."

Dispute hurts team rebuilding

The timing of the disagreement with Glendale could be particularly harmful to the Coyotes.

The team is in the midst of rebuilding its roster, a decision made in March when management traded away a few veterans and opened up space for some of their younger players.

"We know we can make this work," General Manager Don Maloney said. "We just have to hang around long enough to make some better decisions than maybe we have in the last couple of years."

Maloney's budget for off-season spending is unchanged despite potential legal fees, said Anthony LeBlanc, team president and CEO.

But the team is affected in other areas. Arizona's appeal as a destination for free agents has likely diminished.

"We would be naive to think it doesn't affect our ability to attract free agents," Maloney said. "That does have a direct impact."

The team also has had to cancel its bid to host the 2018 World Junior Championship, a tournament in December and January that features under-20 men's teams from around the world.

The effect on selling season tickets is unclear. New sales for season tickets are up more than 10 percent from this time last year, while renewals have increased 5 percent, LeBlanc said, though he expects a change.

"That is definitely going to slow down, if not stop," he said.

The lease agreement is perhaps the most attractive reason for the team to stay in Glendale. It's not likely the team would be able to secure as advantageous of a deal elsewhere, and no clear alternative has emerged.

Some have speculated that the Coyotes could explore teaming up with the Phoenix Suns to coexist in the same building, but that's an option LeBlanc said the team has yet to consider.

Phoenix Mayor Greg Stanton said he spoke with Coyotes management last week to send the message that Phoenix will fight to keep them in the area, pending the outcome of the team's court battle.

"This is a regional asset," he said. "I don't want the Arizona Coyotes leaving this community. I don't want them going to Las Vegas. I don't want them going to Canada."

The Coyotes said they have no interest in leaving Glendale.

"It's premature for us right now," LeBlanc said.

The schedule for the upcoming season will be released later this month, NHL Deputy Commissioner Bill Daly confirmed in an e-mail, and no contingencies have been made.

The Glendale mayor sees the situation as an opportunity to restructure the Coyotes agreement to benefit everyone involved.

"It will all come out in the wash," Weiers said without disclosing any details.

Weiers says he has no chip on his shoulder over downtown Phoenix getting the Super Bowl and College Football Championship parties. In fact, he doesn't see those things as a natural fit for Glendale.

"Until we have more hotel rooms and light rail, it makes total business sense" to have the related events in Phoenix, he said, saying Glendale needs to broaden its horizons. "We have to diversify to become more than a sports mecca."

Republic reporters Ronald J. Hansen and Sue Doerfler contributed to this article.