NCPA - National Center for Policy Analysis

Glendale's Public Hockey Project

May 11, 2012

A monument to the National Hockey League's (NHL) expansion to cities in the Southern and Western United States, the Phoenix Coyotes have failed to captivate Arizonans, a problem that culminated three years ago in the franchise filing for bankruptcy.  Among NHL clubs this season, the Coyotes ranked last in attendance, says the Wall Street Journal.

However, the burden that they place upon the suburban community of Glendale, where the team is located, is not limited to supplying a sport of little interest.  Instead, because of a burdensome financial agreement with the NHL, the city of Glendale could be stuck paying out the nose for the team for years to come.

  • The city is obligated to make debt payments on the arena that average $12.6 million a year.
  • Furthermore, the city has been paying a so-called "arena management fee" of nearly $25 million a year to the NHL, which three years ago bought the Coyotes out of bankruptcy.
  • Looking forward, the NHL has announced a probable sale of the team to a private owner, but the resulting financial contract would put Glendale on the line for $14.5 million annually until 2033.

The financial burden hits a local government that is already reeling in the down economy.

  • The $14.5 million would be combined with the $12.6 million in annual debt service for the stadium to create a yearly burden of $27.1 million.
  • Meanwhile, city analysts estimate that the team's presence will bring about an additional $14.2 million in revenue.
  • This creates a net loss of $12.9 million annually.
  • Aggregating this fact over the life of the contract, Glendale will have paid $271 million -- nearly $1,200 for each of its 226,721 citizens -- to keep the team by 2033.

It remains to be seen, however, if the city council of Glendale will swallow the steep terms of the agreement.  The six-person body will vote to sign or reject the offered provisions within the next few weeks.

Source: Brad Parks, "Glendale's Public Hockey Project," Wall Street Journal, May 8, 2012.

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