Column: Arena deals for Kraken and Coyotes teach lesson in public funding and economic impact | Kraken
SEATTLE – Eight years ago this summer, I was in Glendale, Ariz., Watching city council members debate the future of the NHL regional team and whether they should risk the Coyotes being transferred. in Seattle.
At the time, New York investment banker Ray Bartoszek claimed he was set to move the Coyotes overnight, with the alleged NHL blessing, unless the board approves a new lease for the team at what is now called Gila River Arena.
Well, the board at the time, as politicians often do under pressure from sports teams and leagues, voted 4-3 to keep the Coyotes rather than calling Bartoszek’s bluff to have them temporarily play the game. KeyArena while Seattle figured out how to build a better venue later.
Still, considering what happened over the past week, we can say that Seattle has emerged as the long-term winner of this bizarre and tumultuous summer’s NHL events.
Glendale initially lost millions on what has become arguably the worst arena rental in North American sports.
Meanwhile, Seattle has not only since won its own NHL team in the Kraken, but a fully private over $ 1 billion overhaul of KeyArena in what is now the Climate Pledge Arena.
So, unlike 2013, there is no need for additional arenas here.
This is not the case in Arizona, where Glendale informed the Coyotes last week that he would end what has become a modified year-on-year lease and want them to leave his city-funded arena. by the state by June 30, 2022.
The team has long sought public funding for a new arena in the greater Phoenix area, where existing venues are not really suited to NHL play.
There is, mind you, a relatively new arena, adapted to the NHL, which also emerged as an alternative to the Coyotes in 2013, but this one is 2,700 miles away.
The Center Vidéotron de Québec was under construction at the time – also with significant public funding – and finally opened in 2015 and, unfortunately, has waited in vain for a return to the NHL since then.
Either way, that’s not our problem. While Glendale and Quebec both suffered financial blows in the name of love for the NHL, our city got the equivalent of a billion dollar arena paid for privately by developer Oak View Group (OVG ) and its partners.
The town has also secured income guarantees to avoid the annual financial losses that have plagued Glendale.
Still, in a funny twist – depending on your sense of humor – a Seattle native helped ignite Glendale’s push to finally end his relationship with the Coyotes.
Kevin Phelps, a former Seattle businessman and former assistant manager for Pierce County, was hired in November 2015 to take on the key role of city manager for Glendale.
His hiring came shortly after the Seahawks played and lost a Super Bowl at Glendale to the New England Patriots in February 2015.
Glendale, then tired of the Coyotes saga, had started playing hardball with the sports leagues and as a result nearly all Super Bowl events that year were moved by the NFL to neighboring Phoenix.
In mid-2015, Glendale, citing a conflict of interest by a former city lawyer hired by the Coyotes after the 2013 vote, terminated the massively unfavorable lease and reverted to the current annual renewal which offers no guarantees that the team will stay.
Faced with a prime tenant actively seeking to leave and knowing that even more public money will soon be needed for major arena infrastructure upgrades, Phelps commissioned an analysis from the based consulting firm Applied Economics. in Phoenix to determine exactly what the Coyotes generate in municipal tax revenue.
“My responsibility is, if they leave, what should I do with a large enough asset (arena)? Phelps told me this week. “And so we looked at this saying, ‘How can we survive without hockey? “
The study looked at the spending habits of patrons of the arena and the adjacent Westgate Entertainment District shopping, bar and restaurant complex during the Coyotes’ home games compared to an average of 17 annual concerts held there.
And the results released last week have garnered a lot of attention.
Sarah Murley, director of Applied Economics, concluded that spectator expenses were “considerably higher than for Coyotes events”: $ 58 per person versus $ 27.
Murley attributed this to the fact that concerts are a “special event” in which attendees linger longer and are more likely to stay overnight at nearby hotels.
The Coyotes’ long-standing problem is that much of the fan base that buys tickets lives in wealthy Scottsdale and other communities.
Distant Glendale has no public transit, meaning hockey fans would often drive 45 minutes or more in rush hour traffic jams to get to midweek games, grab a quick bite to eat at the arena and then returned home immediately after.
The study found that even dropping the Coyotes’ 43 seasonal hosting dates, the city could still generate just as much tax revenue by adding 20 more concerts of at least 10,000 fans each.
“It certainly became clear that not only would we be able to survive,” said Phelps, “but that we would actually be better off financially than being tied to the 43 dates a year that we tie up in the arena.”
Just booking those dates, he added, required blocking 200 nights a year until the NHL released its exact schedule.
Now, these dates being free, the city can more easily book concerts well in advance.
“The speculation in the media was that I was trying to increase our influence to get them to sign a long-term lease,” Phelps said of the severing of ties. “And that’s not the case. We’ve made a decision that what’s in our best interest is to be able to go more aggressively after more impactful types of events. “
And that’s the lesson Glendale and countless other municipalities have learned the hard way about public money for professional sports teams and infrastructure.
There are almost always things with a greater “impact” for local governments to invest in.
It’s a very different story here, where the Kraken – not the city – will be the entity that holds the proverbial sack if the NHL product isn’t a smash hit.
The owners of the Kraken and development partners of OVG have already spent $ 1.7 billion on the arena, the team and its training center.
In other words, unlike Glendale, our local politicians designed this arena deal so that our NHL team had every incentive to stick around for the long haul to recoup their vast investment.
And the city, with its guaranteed shutdown soon to start pouring in, has no incentive to let the Kraken go.