The Corner

In Arizona, Defenders of ‘Stadium Welfare’ Use Intimidation Tactics

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 these two articles from the Reason archives.

Update: Here is an interview of Darcy Olson, the president of the Goldwater Institute, about the lawsuit:


Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.

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