I was in Phoenix this weekend, where I was stunned to read about a fight involving the Arizona city of Glendale, the National Hockey League, and a local conservative watchdog group/think tank called the Goldwater Institute. Essentially, the debt-ridden city is using intimidation tactics to try to force the Goldwater Institute to stop asking questions about a deal that will cost taxpayers millions of dollars in the name of maintaining the city’s stadium.
The fight began two years ago when the Goldwater Institute filed a public-records request asking the City of Glendale to provide all documents, current and future, related to negotiations with any potential new owner of the Phoenix Coyotes hockey team. From what I gather, the city is desperate to keep the Coyotes franchise — so desperate that they essentially want to pay Chicago businessman Matt Hulsizer about $200 million so he can “buy” the team for about $170 million. To do this, they want to borrow $116 million in taxpayer-backed bonds.
This corporate welfare can’t be good for taxpayers — if it were profitable to keep the team in Glendale, or to buy the Coyotes, no incentives would be needed. But in addition to being a bad deal for taxpayers, the transaction might also be a violation of the Arizona constitution’s gift clause prohibiting corporate welfare.
For whatever reason — perhaps due to these concerns about the deal’s constitutionality — Glendale has been reluctant to share the documents. Now, the city is threatening to sue Goldwater for up to $500 million unless they stop asking questions about the deal.
This is quite unbelievable, I have to say, and not only because it sounds like intimidation by city officials in the name of stadium welfare for millionaires.
Here is a quote from NHL commissioner Gary Bettman, which sheds light on the real goal of this deal:
There are arrangements in place approved that would enable the Coyotes to live happily ever after in Jobing.Com Arena and that would ensure that the arena doesn’t go dark.
How long are city officials going to believe in the myth that taxpayer-supported stadiums and sport teams are good for them? If no buyer is willing to purchase the team unless taxpayers foot most of the bill, that should tell the city that any move on their part to keep the team in Glendale is a waste of taxpayers’ money.
For more on “stadium welfare,” see this interview with Reason magazine’s Matt Welch of stadium welfare, or thesetwo articles from the Reason archives.
Update: Here is an interview of Darcy Olson, the president of the Goldwater Institute, about the lawsuit:
This is even worse than stadium welfare. At least with stadium welfare the city gets an actual stadium. From the sound of it this deal isn't being used to build, re-build, or even renovate the Coyotes arena - it's a simple acquisition financing transaction. It's the same as if the government had offered to sell government bonds in order for somebody to buy UHaul on the condition that the buyer keep corporate headquarters in Phoenix.
The deal is about making sure that the arena (which the city already owns) has a tenant and doesn't sit vacant (I assume the NHL/Coyotes pay something for use of the arena - be it a flat rent or some cut of the revenue generated from home games).
This pro sports government welfare has to end. It isn't "economic development" either. Having a bunch of fans sit on their rear end for 3 hours doesn't increase GDP! Here in Seattle, pols want to extend sales tax beyond the intended financing of Safeco Field (paid for now), and use $ for other purposes. What a shocker!
The problem is that FOIA and Open Meetings laws have little teeth at the local level. Local governments routinely ignore their obligations and obstruct FOIA requests by abusing the clause allowing them to charge the costs of compliance to the requester.
If these laws forced local governments to actually comply, the exposure to sunlight would kill much of the mold of corruption - and make no mistake: the case you cite is more than mere stupidity.
reldim is correct. This is worse than stadium welfare. This entire sale has been a joke. It is so beyond obvious this franchise is a big loser. Wayne Gretzky knows. The NHL knows. Glendale offered a similar deal to Jerry Reinsdorf. After looking at the books Reinsdorf backed out. The majority owners of the Suns and the Diamondbacks also looked into it and separately told the NHL - thanks, but no thanks.
Voters in Glendale: you are idiots if you don't vote out the people supporting this garbage.
"How long are city officials going to believe in the myth that taxpayer-supported stadiums and sport teams are good for them?"
or we could ask
"How long are city officials going to believe in the myth that taxpayer-supported libraries and playgrounds are good for them?"
Don't get me wrong. I think Glendale is making a mistake. I just want to question the assumption that everything a city spends on has to somehow pay for itself. And that subsidies are magic and make the spending worse. Cities tax. Cities spend. Unfortunately they borrow too.
Taxpayer funded stadiums may not be a good deal for taxpayers. Certainly, the claims that such stadiums will lead to jobs or have an economic benefit have been proven to be bunk. But sports teams must have some intangible benefit - and that intangible benefit may be worth something to the taxpayer. A winning team can galvanize a community or it can simply give it an identity. Is it worth it? Probably not, but so long each community makes the decision, that is probably good enough. A good idea would be a referendum by the community on stadium financing. But I suspect the heyday of taxpayer financed stadium construction is over.
"If no buyer is willing to purchase the team unless taxpayers foot most of the bill, that should tell the city that any move on their part to keep the team in Glendale is a waste of taxpayers’ money."
Well, no, that doesn't follow at all. What follows is that other cities are willing to foot most of the bill in order to get a team, so the price goes up for Glendale, or wherever, in normal economics for highly desired scarce items.
I would say this is a city with a fine set of mixed-up priorities:
"Glendale, AZ - Home of NHL Coyotes, NFL Cardinals and Super Bowl 2008" - that's the title of the official municipal government website.
Isn't that an odd place for that sort of boast? The answer is: yes, it is. I went through the trouble of checking the website of every other municipality in North America that hosts a major professional sports team. Not one of them mentions their sports team(s) on the front page.
The first thing Glendale wants to say is their city's the place for major league professional sports? That explains why they want to mortgage streets and sewers to keep that money pit that calls itself a hockey team. That explains why they the First Amendment is a lesser priority to Glendale, compared to keeping that money pit that calls itself a hockey team.
When Bettman implied the loss of the Coyotes might doom the city itself, he apparently meant that sincerely.
I would say this is a city with a fine set of mixed-up priorities:
"Glendale, AZ - Home of NHL Coyotes, NFL Cardinals and Super Bowl 2008" - that's the title of the official municipal government website.
Isn't that an odd place for that sort of boast? The answer is: yes, it is. I went through the trouble of checking the website of every other municipality in North America that hosts a major professional sports team. Not one of them mentions their sports team(s) on the front page.
The first thing Glendale wants to say is their city's the place for major league professional sports? That explains why they want to mortgage streets and sewers to keep that money pit that calls itself a hockey team. That explains why they the First Amendment is a lesser priority to Glendale, compared to keeping that money pit that calls itself a hockey team.
When Bettman implied the loss of the Coyotes might doom the city itself, he apparently meant that sincerely.
I'm with SH. If a community wants to pay for a stadium, then by all means, that is their choice.
That said, in 99.9% of the cases, taxpayer-funded stadiums are a sucker's bet. It'd be one thing if the taxpayers *owned* the team-- ala the Green Bay Packers-- but this is corporate welfare at its most disgusting.
Ultimately, what's the difference between government subsidizing unprofitable and poor-performing "green" energy and subsidizing unprofitable and poor-performing privately-owned sports teams? They're both subsidized to make us feel better about ourselves, but they're both foolish wastes of money.
There are few greater sports fans than I, but this madness must end.
@reldim...... your assumption that the team pay something for the use of the arena - be it a flat rent etc. is the standard, yet in the Coyotes case, grossly incorrect.
The taxpayers of Glendale, should the deal proceed, will pay the new owner of the Coyotes 17 million per season to operate and manage the arena.
This makes this "deal" even more corrupt than many can imagine.
The Glendale mayor said the city is prepared to sue the Goldwater Institute. But I don't think the amount (possibly $500 million?) is anything but supposition at this point. External Link
The difficult thing about Stadium Welfare is that ultimately the city will only "rent" the team.
This is only an assumption, but if Hulsizer does buy the team and loses 100 million dollars in 5 years, how many more years do you think he will keep the team there before he either folds the team, tries to find a new buyer or moves the team else where. The 100 million dollar offer to Hulsizer, while a contract, doesn't mean a hill of beans. If you believe it does, what happened to the original lease agreement the coyotes' signed when they moved in? Every group that has looked at buying the coyotes have wanted the lease reworked. If Glendale gives in on that, don't think for one minute they won't agree to rework it down the road to keep the team again...
It's incredible that the people, who should be most against this insane government spending, are so doing little if anything to promote this story.
Glendale selling bonds to purchase their own parking lot so they can give the proposed owner $100 million is not only obscene and appalling but shows how brain-dead the voters and taxpayers of Glendale are when it comes to civic politics.
Where is this team going to go? There isn't a city that can support the marginal hockey team anymore and there are very few that can support many other, marginal, professional franchises anymore.
Heck, even LA doesn't much want an NFL franchise and they are one of the top population centers.
There are too many hockey teams, likely too many basketball teams and possibly too many baseball teams. There are no more NFL cities possible. What a waste in any era, these are ludicrous under current economic conditions.
This is even worse than stadium welfare. At least with stadium welfare the city gets an actual stadium. From the sound of it this deal isn't being used to build, re-build, or even renovate the Coyotes arena - it's a simple acquisition financing transaction. It's the same as if the government had offered to sell government bonds in order for somebody to buy UHaul on the condition that the buyer keep corporate headquarters in Phoenix.
The deal is about making sure that the arena (which the city already owns) has a tenant and doesn't sit vacant (I assume the NHL/Coyotes pay something for use of the arena - be it a flat rent or some cut of the revenue generated from home games).
Reply to this commentLinkReport AbuseThis pro sports government welfare has to end. It isn't "economic development" either. Having a bunch of fans sit on their rear end for 3 hours doesn't increase GDP! Here in Seattle, pols want to extend sales tax beyond the intended financing of Safeco Field (paid for now), and use $ for other purposes. What a shocker!
Reply to this commentLinkReport AbuseStadium welfare is a lot like US military base welfare: Closing it costs thousands of jobs.
Reply to this commentLinkReport AbuseThe problem is that FOIA and Open Meetings laws have little teeth at the local level. Local governments routinely ignore their obligations and obstruct FOIA requests by abusing the clause allowing them to charge the costs of compliance to the requester.
If these laws forced local governments to actually comply, the exposure to sunlight would kill much of the mold of corruption - and make no mistake: the case you cite is more than mere stupidity.
Reply to this commentLinkReport Abusereldim is correct. This is worse than stadium welfare. This entire sale has been a joke. It is so beyond obvious this franchise is a big loser. Wayne Gretzky knows. The NHL knows. Glendale offered a similar deal to Jerry Reinsdorf. After looking at the books Reinsdorf backed out. The majority owners of the Suns and the Diamondbacks also looked into it and separately told the NHL - thanks, but no thanks.
Voters in Glendale: you are idiots if you don't vote out the people supporting this garbage.
Reply to this commentLinkReport Abuse"How long are city officials going to believe in the myth that taxpayer-supported stadiums and sport teams are good for them?"
or we could ask
"How long are city officials going to believe in the myth that taxpayer-supported libraries and playgrounds are good for them?"
Don't get me wrong. I think Glendale is making a mistake. I just want to question the assumption that everything a city spends on has to somehow pay for itself. And that subsidies are magic and make the spending worse. Cities tax. Cities spend. Unfortunately they borrow too.
Reply to this commentLinkReport AbuseTaxpayer funded stadiums may not be a good deal for taxpayers. Certainly, the claims that such stadiums will lead to jobs or have an economic benefit have been proven to be bunk. But sports teams must have some intangible benefit - and that intangible benefit may be worth something to the taxpayer. A winning team can galvanize a community or it can simply give it an identity. Is it worth it? Probably not, but so long each community makes the decision, that is probably good enough. A good idea would be a referendum by the community on stadium financing. But I suspect the heyday of taxpayer financed stadium construction is over.
Reply to this commentLinkReport AbuseI'm fine with a city paying $1 to get $1.10 back in beer sales tax revenue.
It's when they pay $1 to try to hang on to 75 cents of tax revenue that I start to complain.
Reply to this commentLinkReport Abuse"If no buyer is willing to purchase the team unless taxpayers foot most of the bill, that should tell the city that any move on their part to keep the team in Glendale is a waste of taxpayers’ money."
Well, no, that doesn't follow at all. What follows is that other cities are willing to foot most of the bill in order to get a team, so the price goes up for Glendale, or wherever, in normal economics for highly desired scarce items.
Reply to this commentLinkReport AbuseI would say this is a city with a fine set of mixed-up priorities:
"Glendale, AZ - Home of NHL Coyotes, NFL Cardinals and Super Bowl 2008" - that's the title of the official municipal government website.
Isn't that an odd place for that sort of boast? The answer is: yes, it is. I went through the trouble of checking the website of every other municipality in North America that hosts a major professional sports team. Not one of them mentions their sports team(s) on the front page.
The first thing Glendale wants to say is their city's the place for major league professional sports? That explains why they want to mortgage streets and sewers to keep that money pit that calls itself a hockey team. That explains why they the First Amendment is a lesser priority to Glendale, compared to keeping that money pit that calls itself a hockey team.
When Bettman implied the loss of the Coyotes might doom the city itself, he apparently meant that sincerely.
Reply to this commentLinkReport AbuseI would say this is a city with a fine set of mixed-up priorities:
"Glendale, AZ - Home of NHL Coyotes, NFL Cardinals and Super Bowl 2008" - that's the title of the official municipal government website.
Isn't that an odd place for that sort of boast? The answer is: yes, it is. I went through the trouble of checking the website of every other municipality in North America that hosts a major professional sports team. Not one of them mentions their sports team(s) on the front page.
The first thing Glendale wants to say is their city's the place for major league professional sports? That explains why they want to mortgage streets and sewers to keep that money pit that calls itself a hockey team. That explains why they the First Amendment is a lesser priority to Glendale, compared to keeping that money pit that calls itself a hockey team.
When Bettman implied the loss of the Coyotes might doom the city itself, he apparently meant that sincerely.
Reply to this commentLinkReport AbuseI'm with SH. If a community wants to pay for a stadium, then by all means, that is their choice.
That said, in 99.9% of the cases, taxpayer-funded stadiums are a sucker's bet. It'd be one thing if the taxpayers *owned* the team-- ala the Green Bay Packers-- but this is corporate welfare at its most disgusting.
Ultimately, what's the difference between government subsidizing unprofitable and poor-performing "green" energy and subsidizing unprofitable and poor-performing privately-owned sports teams? They're both subsidized to make us feel better about ourselves, but they're both foolish wastes of money.
There are few greater sports fans than I, but this madness must end.
Reply to this commentLinkReport AbuseThey just want to stick it to Jim Balsillie.
Reply to this commentLinkReport AbuseVeronique: Looked in vain at the link for a reference to the $500M lawsuit. Is this really happening?
Reply to this commentLinkReport Abuse@reldim...... your assumption that the team pay something for the use of the arena - be it a flat rent etc. is the standard, yet in the Coyotes case, grossly incorrect.
The taxpayers of Glendale, should the deal proceed, will pay the new owner of the Coyotes 17 million per season to operate and manage the arena.
This makes this "deal" even more corrupt than many can imagine.
Reply to this commentLinkReport AbuseThis is a local story for Warren Meyer of coyoteblog.
His article in Forbes is here
External Link
Reply to this commentLinkReport Abuse@ Ronald
The Glendale mayor said the city is prepared to sue the Goldwater Institute. But I don't think the amount (possibly $500 million?) is anything but supposition at this point.
Reply to this commentLinkReport AbuseExternal Link
The difficult thing about Stadium Welfare is that ultimately the city will only "rent" the team.
This is only an assumption, but if Hulsizer does buy the team and loses 100 million dollars in 5 years, how many more years do you think he will keep the team there before he either folds the team, tries to find a new buyer or moves the team else where. The 100 million dollar offer to Hulsizer, while a contract, doesn't mean a hill of beans. If you believe it does, what happened to the original lease agreement the coyotes' signed when they moved in? Every group that has looked at buying the coyotes have wanted the lease reworked. If Glendale gives in on that, don't think for one minute they won't agree to rework it down the road to keep the team again...
Reply to this commentLinkReport AbuseIt's incredible that the people, who should be most against this insane government spending, are so doing little if anything to promote this story.
Glendale selling bonds to purchase their own parking lot so they can give the proposed owner $100 million is not only obscene and appalling but shows how brain-dead the voters and taxpayers of Glendale are when it comes to civic politics.
Reply to this commentLinkReport AbuseWhere is this team going to go? There isn't a city that can support the marginal hockey team anymore and there are very few that can support many other, marginal, professional franchises anymore.
Heck, even LA doesn't much want an NFL franchise and they are one of the top population centers.
There are too many hockey teams, likely too many basketball teams and possibly too many baseball teams. There are no more NFL cities possible. What a waste in any era, these are ludicrous under current economic conditions.
Reply to this commentLinkReport Abuse