CXLIV - The Tempe era set to begin as ASU opens Mullett Arena

[Dirty Old Man]

I worked on the Boston feed from Tempe last Friday - it didn't go well.

The problem is to correct the issues you would need to eliminate another 150/200 seats.

I look at NHL Phoenix and MLB Tampa Bay and say after 25 years move on.

Jeepers creepers, arent you a mod in here too (although that would explain some things)? You're familiar with the definition of "temporary", yes?

 

[MNNumbers]

Are the amount of incentives reasonable? Are those incentives handed out for other projects willy nilly, or are they given for things like low income housing?

The simple fact is that the economics of the NHL force small market teams to have "partnerships" with local government. It isn't a viable business model to build an arena with an NHL team in it unless it's a large market. But the public opinion has turned against the idea and now these deals have to be contorted in ways that give illusory public benefits.



This line of reasoning is silly. Meruelo is not uniquely suited to cleaning up a garbage dump. In fact, his lack of experience puts this whole proposition on even more shaky ground.

Without driving this directly to the Arizona situation, you are touching on a very true piece of information. To wit....

In contrast to the NBA, and the NFL, where is North American continent-wide in the sport which is being played, and therefore there is lots of local interest wherever teams are located, and there are huge media contracts to be had because of sometimes global interest in their games....

In contrast to that, there is, and there will be for the foreseeable future, a great disparity among NHL franchises based on the lucrativeness (or lack thereof) in hockey terms, of their markets. In other words, hockey is NOT a global sport. It's not a No America wide sport. It's niche, and it always will be. Certain places have long term familiarity with this game, and therefore, the game has worked itself into the fabric of those cities. These cities primarily fall along the NE corridor.....Montreal, Toronto, Boston, the Rangers, to a lesser extent but still importantly Philadelphia, Detroit. And, a few others, seemingly, such as Chicago. Perhaps Calgary and Edmonton might fall into this as well, but I am not so sure of that.

Because that is true, and because it is also true that the NHL CBA requires a certain amount be spent on players' salaries from each team, markets which do NOT have the advantage cited above have challenges. Some are unique to the market, some are shared by all such markets. Essentially, it is true that, in order to stay afloat, ownership in such markets needs monetary income somehow affiliated with the ownership of the team, but NOT directly hockey related, so that their entire bottom line works.

Obviously, one such possibility is arena management rights. I'm not going to say much about this, but the real reason that the Coyotes are wanting a new arena is that they didn't have management rights, nor other financial avenues in Glendale. Another possibility is to do the arena with associated economic development, in which the team ownership has a stake in the development. The Islanders' arena is an example of this.

And, you are correct that the driving force behind this is, in your words, "The simple fact is that the economics of the NHL force small market teams to have "partnerships" with local government. It isn't a viable business model to build an arena with an NHL team in it unless it's a large market."

Now, to come full circle, and back to the Coyotes, the proposal they have made is an arena and development, done with private funding. Except that they are making a typical business deal with the city. "We're doing this large development on land that you would have problems using otherwise. We would like some tax relief." This is a business deal, not a sports deal, in my way of looking at it.

Anywa, that's a rambling answer...

 

[AZDesertKnight]

I worked on the Boston feed from Tempe last Friday - it didn't go well.

The problem is to correct the issues you would need to eliminate another 150/200 seats.

I look at NHL Phoenix and MLB Tampa Bay and say after 25 years move on.

What was the problem? The games look fine on TV, a little glare near the bottom of the ice but it works... and is TEMPORARY

 

[Ernie]

Now, to come full circle, and back to the Coyotes, the proposal they have made is an arena and development, done with private funding. Except that they are making a typical business deal with the city. "We're doing this large development on land that you would have problems using otherwise. We would like some tax relief." This is a business deal, not a sports deal, in my way of looking at it.

But that's JUST the problem. The driving force was not to clean up a piece of land; it was to build an arena. That was immediately obvious from the arena requirement in the RFP.

Everything else is just window dressing and attempts to mislead the public.

As you've agreed, there's no viable business model to build an arena in a small NHL market.

People may disagree. But they need proof, and the ONLY way to get that proof is to open up that piece of land to other development proposals and have a fair bidding process.

I just wish the Coyotes fans here were as honest as Powerstruck is.

They don't care if it's a good deal; they are hockey fans, this is something they want, so give it to them.

That doesn't make them terrible people or anything. I mean, that's kind of how the system works.

What I don't like is all the lies and misinformation surrounding this. And the extreme butthurtedness of Coyotes fans when you point out the basic facts.

 

[Takuto Maruki]

This line of reasoning is silly. Meruelo is not uniquely suited to cleaning up a garbage dump. In fact, his lack of experience puts this whole proposition on even more shaky ground.

What's more silly is people posting links and repeated mentions of this not being a publicly funded arena project, and you getting a gold model in mental gymnastics to avoid ever having to reason with that fact, and instead continually banging on the drum that this project's eminent demise is on its way, and that you can finally get the Arizona hockey grave pissing you've been craving.

At what point do you simply wait things out before saying anything? Moreover, at what point do you simply fold the cards and say you don't at all care about anything other then your view point being right, even when the literal facts as presented to you say otherwise?

 

[MNNumbers]

But that's JUST the problem. The driving force was not to clean up a piece of land; it was to build an arena. That was immediately obvious from the arena requirement in the RFP.

Everything else is just window dressing and attempts to mislead the public.

As you've agreed, there's no viable business model to build an arena in a small NHL market.

People may disagree. But they need proof, and the ONLY way to get that proof is to open up that piece of land to other development proposals and have a fair bidding process.

That piece of land has been sitting there for a long long time. The fact that is has been sitting is a more open opportunity than any RFP you will ever see. The RFP is actually misleading the people, because the name of it, "RFP" suggests open bidding. But no RFP is ever wide open, because the people who want to use the public land have always already been talking to the city.

The reason the arena and its development are going there is very simple.....No one else has offered Tempe to do anything with it. It's been sitting there for years with nothing happening. Now, the Yotes are wanting to use it. They are the first ones.

You need to think of the parcel of land sitting there available as the "open for bids" phase, and the RFP and all the stuff that comes after it as negotiations.

 

[Ernie]

What's more silly is people posting links and repeated mentions of this not being a publicly funded arena project, and you getting a gold model in mental gymnastics to avoid ever having to reason with that fact, and instead continually banging on the drum that this project's eminent demise is on its way, and that you can finally get the Arizona hockey grave pissing you've been craving.

At what point do you simply wait things out before saying anything? Moreover, at what point do you simply fold the cards and say you don't at all care about anything other then your view point being right, even when the literal facts as presented to you say otherwise?

This is a discussion board to talk about business things, which I am doing.

 

[MNNumbers]

But that's JUST the problem. The driving force was not to clean up a piece of land; it was to build an arena. That was immediately obvious from the arena requirement in the RFP.

Everything else is just window dressing and attempts to mislead the public.

As you've agreed, there's no viable business model to build an arena in a small NHL market.

People may disagree. But they need proof, and the ONLY way to get that proof is to open up that piece of land to other development proposals and have a fair bidding process.

I just wish the Coyotes fans here were as honest as Powerstruck is.

They don't care if it's a good deal; they are hockey fans, this is something they want, so give it to them.

That doesn't make them terrible people or anything. I mean, that's kind of how the system works.

What I don't like is all the lies and misinformation surrounding this. And the extreme butthurtedness of Coyotes fans when you point out the basic facts.

Ernie, if you had the world the way you want it, there would be no car manufacturing on-shore in the US because all such plants are built with tax abatements, and the NHL would have about 8-10 teams.

 

[Ernie]

That piece of land has been sitting there for a long long time. The fact that is has been sitting is a more open opportunity than any RFP you will ever see. The RFP is actually misleading the people, because the name of it, "RFP" suggests open bidding. But no RFP is ever wide open, because the people who want to use the public land have always already been talking to the city.

The reason the arena and its development are going there is very simple.....No one else has offered Tempe to do anything with it. It's been sitting there for years with nothing happening. Now, the Yotes are wanting to use it. They are the first ones.

You need to think of the parcel of land sitting there available as the "open for bids" phase, and the RFP and all the stuff that comes after it as negotiations.

What evidence do you have that nobody else was interested in it? The city has been using it as a public works yard, so no, it hasn't been sitting there "with nothing happening to it."

If there was nobody interested in it, then why make the RFP apply only to the Coyotes? With your argument, if they removed the arena requirement, no other bids would have surfaced. So why have it in the first place?

Ernie, if you had the world the way you want it, there would be no car manufacturing on-shore in the US because all such plants are built with tax abatements, and the NHL would have about 8-10 teams.

Dude, this is a whole different thing that I do have opinions on but is seriously off topic for this board and regardless, it's very much an apples to oranges situation.

 

[MNNumbers]

What evidence do you have that nobody else was interested in it? The city has been using it as a public works yard, so no, it hasn't been sitting there "with nothing happening to it."

If there was nobody interested in it, then why make the RFP apply only to the Coyotes? With your argument, if they removed the arena requirement, no other bids would have surfaced. So why have it in the first place?



Dude, this is a whole different thing that I do have opinions on but is seriously off topic for this board and regardless, it's very much an apples to oranges situation.

The evidence that no one was interested is simple:
No one took the time to talk to the City Council about using it. The system sets up that way. If you have an idea for the parcel of land, you talk to the city. The Yotes did this for, reportedly, as long as 2 years. Only AFTER all that preliminary discussion is an RFP put out. The RFP is ALWAYS slanted toward the party who started the discussion with the city. So, since we know there hasn't been an RFP for anything else, we know that the city hasn't had any interest coming to them which was good enough to make it worth their while to put out an RFP.

And, my statement about the auto industry and the size of the league was made because you seem to have a "no tax dollars, no tax abatements, no government candy canes for anything mentality". Under that kind of approach, nothing would be happening. Nothing.

 

[Ernie]

The evidence that no one was interested is simple:
No one took the time to talk to the City Council about using it. The system sets up that way. If you have an idea for the parcel of land, you talk to the city. The Yotes did this for, reportedly, as long as 2 years. Only AFTER all that preliminary discussion is an RFP put out. The RFP is ALWAYS slanted toward the party who started the discussion with the city. So, since we know there hasn't been an RFP for anything else, we know that the city hasn't had any interest coming to them which was good enough to make it worth their while to put out an RFP.

And, my statement about the auto industry and the size of the league was made because you seem to have a "no tax dollars, no tax abatements, no government candy canes for anything mentality". Under that kind of approach, nothing would be happening. Nothing.

No, I think that public subsidies should benefit the public good, in some concrete fashion. An arena does not (aside from the fans who are getting subsidized entertainment).

The Tempe politicians wanted a vanity project to compete with Phoenix, they found someone to work with them on that vanity project, and here we are.

 

[MNNumbers]

No, I think that public subsidies should benefit the public good, in some concrete fashion. An arena does not (aside from the fans who are getting subsidized entertainment).

The Tempe politicians wanted a vanity project to compete with Phoenix, they found someone to work with them on that vanity project, and here we are.

That's what I mean. In your opinion, and you are entitled to it, 'benefitting the public good' would be something like "nice new libraries", or a nice public park that people could use.

But tell me this.....Have you read the proposal which is going to be voted on by the citizens to know exactly what else is included besides the arena?

 

[Ernie]

That's what I mean. In your opinion, and you are entitled to it, 'benefitting the public good' would be something like "nice new libraries", or a nice public park that people could use.

But tell me this.....Have you read the proposal which is going to be voted on by the citizens to know exactly what else is included besides the arena?

There are some shiny bobbles in there, sure.

BUT let's get back to the core issue. There is no viable business model that allows an arena to be built for an NHL team in a small market without public subsidies. You've acknowledge as much.

Any public benefits that may be provided are used to justify that public subsidy but are tiny in comparison.

 

[MNNumbers]

There are some shiny bobbles in there, sure.

BUT let's get back to the core issue. There is no viable business model that allows an arena to be built for an NHL team in a small market without public subsidies. You've acknowledge as much.

Any public benefits that may be provided are used to justify that public subsidy but are tiny in comparison.

No. I said, "There is no viable means to build an arena for an NHL team in a small market if the ownership doesn't have an associated way to make more money. In other words, the sport in and of itself is not able to be viable in small markets as a hockey team only."

There is plenty of way to build an arena. You build one with an associated business development. The associated development carries the whole thing.

Public subsidy? That's a strongly emotionalized word. The city is not committing anything directly this to this project. You need to accept that. You seem to have a strong opposition to admitting that. A subsidy would be, "We'll pay half the building costs for the arena." That's not happening here.

What is happening is that the development is going to excepted from certain taxes for two different scales of years. That may be a 'subsidy' by definition. But it is definitely not the same as, for example, Glendale building an arena at the city's costs.

 

[Ernie]

No. I said, "There is no viable means to build an arena for an NHL team in a small market if the ownership doesn't have an associated way to make more money. In other words, the sport in and of itself is not able to be viable in small markets as a hockey team only."

There is plenty of way to build an arena. You build one with an associated business development. The associated development carries the whole thing.

Just think about what could be accomplished with that same business development if it didn't have to build an arena!

Public subsidy? That's a strongly emotionalized word. The city is not committing anything directly this to this project. You need to accept that. You seem to have a strong opposition to admitting that. A subsidy would be, "We'll pay half the building costs for the arena." That's not happening here.

What is happening is that the development is going to excepted from certain taxes for two different scales of years. That may be a 'subsidy' by definition. But it is definitely not the same as, for example, Glendale building an arena at the city's costs.

Dude, that's the same thing, just dressed differently.

And yes, subsidy is absolutely an emotional word, and for good reason!! Which is why we have all the ridiculous financial machinations surrounding this.

Do you think it's right for Tempe to go about this route in order to win public approval? Shouldn't they be honest about the public cost of this project?

 

[Tawnos]

Yeah, I have to agree that separating the two types of subsidies here is a distinction without a difference in this context.

At the same time, I totally disagree that they're not being honest about the cost to the public here.

 

[MNNumbers]

Just think about what could be accomplished with that same business development if it didn't have to build an arena!



Dude, that's the same thing, just dressed differently.

And yes, subsidy is absolutely an emotional word, and for good reason!! Which is why we have all the ridiculous financial machinations surrounding this.

Do you think it's right for Tempe to go about this route in order to win public approval? Shouldn't they be honest about the public cost of this project?

What's the public cost? You tell me. I don't know.

What I do know is that every development of every kind along that road has an 8-yr GPLET. That's a property tax abatement. The arena and the practice facility are going to get 30 years. How do you want to figure out the cost to the city for that?

You tell me.

 

[Ernie]

What's the public cost? You tell me. I don't know.

What I do know is that every development of every kind along that road has an 8-yr GPLET. That's a property tax abatement. The arena and the practice facility are going to get 30 years. How do you want to figure out the cost to the city for that?

You tell me.

Can anyone really know without doing a ton of forensic accounting?

That's kind of the whole point of obfuscating the financials on this.

Once again, and you can't argue with this: there is no viable business model for an NHL arena in a small market.

I remember when the subsidy was supposed to be $200m and all the Coyotes fans were like "wait and see!!"

Now it's almost twice that and Coyotes fans are like "but look at all the cool stuff we get!"

 

[MNNumbers]

Yeah, I have to agree that separating the two types of subsidies here is a distinction without a difference in this context.

At the same time, I totally disagree that they're not being honest about the cost to the public here.

A distinction without a difference? You're kidding, right?
180M to build GilaRiver Arena. Financed by bonds, so it's actually costing twice that. A direct payout of about 335M dollars.

And, you are suggesting that is the same as granting a business 22 extra years of property tax abatement. Property tax which is not currently part of the city budget, because the city currently owns the land? Property tax which would never be paid to the city without this development because, while there has been this parcel sitting there awaiting a development for long time, no one has offered to buy it and build on it.

You're saying those two things are the same?

I'm not at all wanting to be the biggest advocate for the hockey team, but this is getting a little rich.

Can anyone really know without doing a ton of forensic accounting?

That's kind of the whole point of obfuscating the financials on this.

Once again, and you can't argue with this: there is no viable business model for an NHL arena in a small market.

I remember when the subsidy was supposed to be $200m and all the Coyotes fans were like "wait and see!!"

Now it's almost twice that and Coyotes fans are like "but look at all the cool stuff we get!"

Please link me where this proposal offers the team anywhere close to 400M. I'm not aware of that.

 

[TheLegend]

You don't know that since the RFP was written so that only the Coyotes could respond unless an MLS team decided to come out of nowhere.

And this lies the problem with those who've wanted the Coyotes out of Arizona since this all started.

Are the amount of incentives reasonable? Are those incentives handed out for other projects willy nilly, or are they given for things like low income housing?

Was covered at the 11/29 meeting. Nick Wood was asked point blank about low-cost housing. They looked at it. Each housing unit after all costs (as in LAND REMEDIATION) are taken into account was coming in at just under $500,000.

No "low cost" builder could effectively build on the site and even break even.

The simple fact is that the economics of the NHL force small market teams to have "partnerships" with local government. It isn't a viable business model to build an arena with an NHL team in it unless it's a large market. But the public opinion has turned against the idea and now these deals have to be contorted in ways that give illusory public benefits.

Most of the teams in the league have such "partnerships" you speak of. It isn't a "small market" thing.

This line of reasoning is silly. Meruelo is not uniquely suited to cleaning up a garbage dump. In fact, his lack of experience puts this whole proposition on even more shaky ground.

"Shaky ground?" Decorum in BoH prevents me from laughing so hard. You really do not know who Alex Meruelo is do you?

The Meruelo Group

meruelogroup.com

 

[Tawnos]

A distinction without a difference? You're kidding, right?
180M to build GilaRiver Arena. Financed by bonds, so it's actually costing twice that. A direct payout of about 335M dollars.

And, you are suggesting that is the same as granting a business 22 extra years of property tax abatement. Property tax which is not currently part of the city budget, because the city currently owns the land? Property tax which would never be paid to the city without this development because, while there has been this parcel sitting there awaiting a development for long time, no one has offered to buy it and build on it.

You're saying those two things are the same?

I'm not at all wanting to be the biggest advocate for the hockey team, but this is getting a little rich.



Please link me where this proposal offers the team anywhere close to 400M. I'm not aware of that.

I'm saying that the city giving money to Meruelo for construction costs is no more or less of a subsidy than giving Meruelo 30 years of tax breaks. It's just a different kind. In this context, what is going on with the land in an alternate scenario doesn't actually matter. It's still a public subsidy and it would be for another developer getting a different project going. Just like the tax breaks oil companies, corn producers, and people who don't have employment-based health insurance are all public subsidies.

To be clear, I have absolutely no problem with this kind of thing. My city does it all the time to get businesses to come to Charlotte and it's largely beneficial. My hockey team (NY Rangers) is sitting on an indefinite property tax break and won't move as a result, nor do I want them to. And I believe that arenas and hockey teams provide value beyond the balance sheet to cities and markets that make the subsidies worth it.

 

[MNNumbers]

Legend,

Can you give us run down on how this would work should it pass?
For example, the land has to be remediated first, right? Then, the arena and practice facility are the first things to be built, correct? What does Tempe have to pay out for that? more than just infrastructure costs? I'm assuming Meruelo is paying for entire construction, but I also just heard a podcast with Mayor Woods on it, referencing some bonding, and I don't know what that means, how it's used, or how I feel about it.

Help me out.

And, please 1CasualFan, stop by and jump in here.

 

[Ernie]

A distinction without a difference? You're kidding, right?
180M to build GilaRiver Arena. Financed by bonds, so it's actually costing twice that. A direct payout of about 335M dollars.

And, you are suggesting that is the same as granting a business 22 extra years of property tax abatement. Property tax which is not currently part of the city budget, because the city currently owns the land? Property tax which would never be paid to the city without this development because, while there has been this parcel sitting there awaiting a development for long time, no one has offered to buy it and build on it.

You're saying those two things are the same?

I'm not at all wanting to be the biggest advocate for the hockey team, but this is getting a little rich.



Please link me where this proposal offers the team anywhere close to 400M. I'm not aware of that.

My bad, it's more like 2.5 times the original $200m. As I predicted at the time.

BUT LOOK AT ALL THE SHINY BOBBLES.

• Tempe plans to sell $220 million in bonds for land prep and infrastructure. This, according to the development agreement (section 7.5.4), would be paid off with a bunch of future tax money: 0.9% in city sales taxes on every dollar spent at the site, 3.75% in city hotel taxes, and 22.8% of future payments in lieu of property taxes collected by the city. (More on that in the next bullet point.) There could be additional bonds sold, but the total city debt is capped at $247 million.
• In place of property taxes, the Coyotes would pay government property lease excise taxes, or GPLET. This is an Arizona-specific thing where public land is leased to a private entity in exchange for those PILOTs, which are less than what they would pay if they owned the land and paid regular property taxes. The total value of the tax break over 30 years isn’t provided in the DDA, but it’s previously been estimated at $649 million over 30 years; in present value, depending on how backloaded the lost property taxes are, that’s worth about $300 million.
• The Coyotes would pay $50 million for the land, but that would actually go for cleanup costs on top of the $220 million in city bonds, so it’s debatable whether that’s actually free land or what.

There are other, smaller items covered in the DDA — for one thing, the city would get to sell naming rights for the arena, which is nice, though it’s, again, debatable whether that’s something Meruelo would be giving to the city or something the city should have anyway on a building it would own. But it definitely looks like Meruelo is seeking somewhere around $500 million in total tax breaks.

Fine print shows: Coyotes’ privately funded arena could cost taxpayers over $500m

The Tempe city council may have voted to hold a public vote next May on a $2.1 billion Arizona Coyotes arena and surrounding development, but it hasn't voted yet on what the public will vote on; that will come tomorrow, when the council votes to approve a development and disposition agreement...

www.fieldofschemes.com

 

[TheLegend]

Please link me where this proposal offers the team anywhere close to 400M. I'm not aware of that.

Everything about TED is on Tempe's website. Have already posted the link twice but here it is again.

Tempe Entertainment District | City of Tempe, AZ

A mixed-use project incorporating a professional sports franchise and entertainment district is planned for two parcels of city-owned land totaling 46 acres at the northeast corner of Priest Drive and Rio Salado Parkway.

www.tempe.gov

The full DDA and summaries are there for anyone to look at. All anyone has to do is go read it.

 

[MNNumbers]

My bad, it's more like 2.5 times the original $200m. As I predicted at the time.

BUT LOOK AT ALL THE SHINY BOBBLES.

Fine print shows: Coyotes’ privately funded arena could cost taxpayers over $500m

The Tempe city council may have voted to hold a public vote next May on a $2.1 billion Arizona Coyotes arena and surrounding development, but it hasn't voted yet on what the public will vote on; that will come tomorrow, when the council votes to approve a development and disposition agreement...

www.fieldofschemes.com

If you want to play the game....
- No developer of any kind, looking at that parcel of land, is going to pay the remediation and the infrastructure costs. So, the $220M immediately disappears. ( I like fieldofschemes, but the owner of the website has an angle which he pursues, often without thinking too deeply about the matter).

Which leaves us, again, with only the value of the GPLET. You can argue all you want about that. But given how common it is in Tempe, I think the only reasonable way to consider it is that for years 9-30, that's an exceptional clause which the Coyotes are getting which other uses of the property might not. So, I'd take something like 75% of that, and call that your subsidy. That's right back at about 200-225M.

I would much prefer that the Yotes weren't insisting on years 9-30. And, I'm not so sure I'm completely confortable with the rest. But, that's my take on the GPLET and the remediation and infrastructure.