The Glendale City Council has decided to negotiate exclusively with Jerry Reinsdorf over a Jobing.com Arena lease proposal, clearing the way for the sports mogul to land the NHL’s Phoenix Coyotes.
The council was choosing between two competing offers from Reinsdorf, the owner of the Chicago White Sox and the Chicago Bulls, and Ice Edge Holdings. Both groups were seeking to keep the Coyotes in Phoenix but said this was predicated on working out a new lease that would satisfy Glendale’s debt service while also covering some of the team’s operating losses. According to former owner Jerry Mayes the team never turned a profit and is slated to lose $20 million this season.
Both proposals were similar in that they sought money from Glendale to cover the purchase and operating of the team. But Reinsdorf’s proposal was deemed to be better because it would set up a community facility district to raise funds for Reinsdorf to buy and run the team. This district would sell bonds to cover $165 million for Reinsdorf: $65 million to buy the team and $100 million to operating the team. Now, you could argue it makes no economic sense for the city to do this: if it has the wherewithal to raise that sort of money it should use the proceeds to pay down the $180 million borrowed to build the facility.
Commercial landowners in the Jobing.com Arena area would be asked to be part of the community facility district, which normally covers things like public-infrastructure needs and not existing facilities. The hope is that many would in an attempt to financially prop up the arena; local businesses rely on Coyotes fans to a great extent, and losing the team would also ruin their investment in the area as well. Still, asking business owners during rough times to commit to an unproven financing mechanism is by no means a sure thing.
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