Arizona City Lays Off Workers While Handing Millions To Its Professional Ice Hockey Team

Our guest blogger is Brian Frederick, Executive Director of the Sports Fans Coalition, the country’s largest nonprofit fan advocacy organization, which fights to give fans a voice on public policy issues.

In May, the city of Glendale, Arizona, home to Arena, where the National Hockey League’s Phoenix Coyotes play, faced a $35 million budget shortfall. Why? For the past two seasons, the city has paid the NHL $25 million per season to manage the Coyotes — a team that the NHL owns — in order to keep the team from moving. The league has owned the team since 2009, when owner Jerry Moyes declared bankruptcy, and has prevented any sale of the team that would have resulted in relocation.

In order to close its enormous budget gap, Glendale laid off 49 employees — two percent of the workforce — and, last night, the City Council passed a final budget that includes cutting social services and raising the city sales tax and secondary property taxes. The Tucson Citizen reported that the layoffs included:

— Community Development, six employees.

— Parks, recreation and library, 15 employees.

— Management and budget, one employee.

— Field operations, 20 employees.

— Police, 5 (non-sworn) employees.

— Transportation, one employee.

— Human resources, one employee.

There’s still the matter of the future of the Coyotes, however, and Glendale is doubling down on its “investment” in the franchise. Last Friday, the City Council voted for a lease agreement that would give any future Coyotes owner an average of $15 million per year for 20 years. It also agreed to pay $24 million in capital improvements to Arena, which is only nine years old. And keep in mind that the city still has to pay over $12 million in annual debt payment for construction of the arena.

So what’s the payoff? “$2.2 million in annual rent payments, ticket surcharges, sales taxes and other fees,” according to the Arizona Republic. Glendale officials also point to the usual intangibles such as jobs provided by the arena and increased tourism. But still, the price seems steep, particularly when the city is laying off workers and cutting social services. As The Arizona Republic’s editorial board wrote:

An analysis revealed that even if the Coyotes went to the Stanley Cup Finals for years, Glendale could still expect to lose about $9 million annually. It also is obligated to make debt payments on the arena, which will average about $12.6 million a year over the next 20 years.

Of course, money being spent on the Coyotes is money not being spent on other things, like capital improvements elsewhere in the city. According to the Arizona Republic, there are no new capital improvements funded in the next budget; plans to finish the city’s courthouse and build a new library are being pushed back until 2017.

The city of Glendale did, though, set up a “transition center” to help out the laid off employees. No word if it simply referred them to