Arizona Coyotes fans boost Glendale tax revenue

Whether West Valley residents side with the Arizona Coyotes or Glendale in their dustup over the team's arena contract, there is no disputing that the team attracts more people — and their money — to businesses around the arena.

The city's monthly reports on the arena show that the city easily pulls in more sales taxes during hockey season.

During the 2013-14 season, the city took in $951,000 in sales taxes inside the arena during the eight months with hockey games. This season, it collected $1.1 million. Those figures for two seasons include 86 hockey games and 20 non-hockey events.

By contrast, the months without hockey brought in $259,000, records show.

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Anthony LeBlanc, the team's president and co-owner, said sales taxes collected from others in the Westgate complex during hockey-game days totaled $9 million.

Some say LeBlanc's figure is wildly off the mark. Jan Bracamonte, a spokeswoman for Westgate, estimated that Westgate and the Tanger Outlets pull in a combined $6 million in sales tax revenue for Glendale throughout the year, not just hockey game days. That estimate is based on a Westgate survey of its businesses, she said.

"The impact on Westgate alone would be devastating," said LeBlanc, referring to the city's recent decision to kill its arena deal with the NHL team. "To the city alone, it's buffering up on $10 million a year. I mean, this is real money."

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That doesn't count the impact of out-of-town fans who travel with teams such as Chicago, Detroit, Calgary and Edmonton.

"They come down here specifically to go to games," LeBlanc said. "We understand we're an economy ticket compared to their home markets, so they can come down and have a great game, stay in a hotel and eat in a restaurant."

Some businesses in the entertainment district have said they would be shuttered without support from the team's fans, he said.

The latest lease dispute has already scuttled the planned bid to host a junior hockey tournament next year, LeBlanc said.

"Why be laughed out of the room?" he told reporters of the canceled bid. But hotels in the Glendale area had begun blocking off rooms for the event, suggesting they may not be smiling at the turn of events.

It also hampers the team's efforts to sell tickets for next season and ads from prospective sponsors. And it comes as the team is preparing for the player draft and free agency.

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"This whole action has been resoundingly bad for the business of the Arizona Coyotes, which, by the way, is resoundingly bad for the city of Glendale because they make money off of revenue streams that we generate," LeBlanc said.

Glendale this week held a closed-door meeting to discuss the termination of the contract. Council members decided to go forward with the plan to kill the contract in hopes of negotiating a better deal.

On June 12, the Coyotes were granted a temporary restraining order by a Maricopa County Superior Court judge. The next hearing in the case is June 29.

Westgate reaction

Three owners of businesses at Westgate Entertainment District, which is adjacent to Gila River Arena, said it is a shame that the vote occurred. They say the hockey games draw not only West Valley residents but also residents from other parts of the region, winter visitors and tourists.

Peter Greene, owner of Which Wich sandwich shop, said he finds that metro Phoenix Coyotes fans who discover his Westgate restaurant on other occasions have gone to the Which Wich in their neighborhoods.

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Losing the team would be a lost opportunity, he said.

Adam Kariotoglou, an owner of Opa Life Greek Cafe, said he and his partners signed a lease at Westgate because of the Coyotes' presence.

"All of us tenants rely on those games," he said.

Udo Wirtz, general manager of the Yard House, said that while his bar and grill would be unlikely to close if the team left, it would affect the ability of other businesses to stay open.

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Jeff Teetsel, development manager for Westgate Entertainment District, commented in a statement last week: "The City should recognize the positive contribution the Coyotes have made in the context of economic development, including the development of the Tanger Outlets Westgate in 2012, the addition of the Tanger Phase 2 in 2014, the Dave and Buster's now under construction as part of the Westgate Entertainment District and the application pending for the construction of a new hotel at Westgate.

"The combination of all this activity has produced well over 1,000 new permanent jobs, in excess of $200 million a year in annual sales for which the city now receives millions of dollars a year in annual recurring sales tax revenue, and millions of dollars in building permit fees to the City of Glendale. It is a shame that a majority of Glendale councilmembers fail to appreciate and consider the economic activity around the arena and direct financial benefit to the City."

Dubious impact

Sports economists tend to view the value of teams and stadiums more skeptically.

They weigh the costs of construction and other subsidies against alternative investments that might yield better returns. They also look for the ripple effects of the sports-induced spending brought about by fans, known as multipliers.

"Most new economic injections simply cancel out spending somewhere else in the local economy," said John Vrooman, an economics professor at Vanderbilt University who specializes in sports. "The multiplier effect derives from the magnitude of the initial direct spending and the number of times that spending is recirculated in the local economy. Both factors are playing against the Coyotes in Glendale. The initial direct impact of Coyotes spending is minimal and spending rapidly leaks out of the suburban Glendale economy like a sieve and any resultant indirect spending is lost in the desert to Greater metro Phoenix."

"These sports teams don't make that big of a deal in terms of economic impact," said Phillip Miller, an economics professor at Minnesota State University-Mankato. "I see a lot of empty fields close to that (arena) area. Like so many cities, Glendale brought the Coyotes and the Cardinals to town saying they're going to generate all this economic impact. I'm not seeing it on the map."

He also doesn't see it in the arena's listed events. On Tuesday, the arena hosts a housekeeping job fair. There were no events shown for July.

"We're talking about an empty arena most of the year," Miller said. "The same thing for the football stadium."

Looking for solutions

Caught in the middle of the standoff between Glendale and the Coyotes is the Gila River Indian Community, which owns three casinos that last year agreed to pay $600,000 annually for naming rights to the arena.

"Gila River Casinos has been a long-term partner with the Arizona Coyotes," said Melody Hudson, a spokeswoman for the casino group. "We felt that it was a good opportunity to show our support for the Arizona Coyotes and the city of Glendale at that time. We hope the city of Glendale and the Arizona Coyotes quickly and amicably resolve all of the current things that are in place."

Losing the gate

By NHL standards, the Coyotes have been dreadful at the gate.

In the 11 seasons since the team moved to Glendale, the Coyotes have finished last or next-to-last in attendance six times.

In that span, only the New York Islanders have averaged fewer fans. That team is moving from Long Island to Brooklyn next season in an effort to reach a new fan base.

Undoubtedly, the Coyotes' lackluster play most of those seasons accounts for much of the poor fan support. The team has made the playoffs only three times since the 2004 season.

But other luckless cities have turned out more often for their teams.

This year, for example, the Buffalo Sabres finished with 54 points compared with Arizona's 56. Still, Buffalo drew nearly 215,000 more fans for the season, though its metro area is about a quarter as populous as Phoenix.

Since 2010, the Coyotes have amassed 499 points, putting it in the bottom third of franchises for winning. Three other teams in non-traditional hockey markets have similarly struggled on the ice in those years: Dallas, Carolina and Florida.

But each of those teams has outdrawn the Coyotes by more than 400,000 people in that time.