After five years, the lease agreement allows RSE to relocate the Coyotes if they have accrued losses in excess of $50 million. The city wanted its own out clause to mirror that, but RSE would not agree to those terms. Instead, the company will pay the city for excess losses if revenue from naming rights and other efforts don’t cover the cost. Global Spectrum, another national sports entertainment company, agreed to help RSE manage the arena, which could help bring more non-hockey events to the city. Still, the $15 million annual cost is more than double the $6 million the city had budgeted for arena management, one council member said at the meeting Tuesday.
Further losses for the city seem inevitable. The Arizona Republic reported last year that even under the best-case scenario — multiple Stanley Cup finals appearances in a row — the city expects to lose $9 million a year on the arena. The Coyotes ranked 29th of 30 teams in attendance in 2013, drawing just 13,923 fans per game. They finished in fourth place in the NHL’s Pacific Divison.
Glendale has already laid off public sector workers and has, on multiple occasions, considered offering public buildings like City Hall and police stations as collateral on its debt payments. “It’s like doubling up in gambling to get your money back,” sports economist Stefan Szymanski told me and Pat Garofalo about Glendale’s arena shambles last year. “At some point, you have to say stop.” For at least the next five years, though, Glendale will remain the best example of what can go wrong when cities and states flush money into arenas and stadiums at the expense of taxpayers who would benefit more from spending it on almost anything else.