Tuesday, April 27, 2010

Goldwater Institute: Glendale needs to protect taxpayers when considering Coyotes' future

Glendale City Council members could use a cold splash of water - perhaps with the hockey ice from Jobing.com Arena - if they finalize a deal with potential new Phoenix Coyotes team owner Jerry Reinsdorf. Council members signed a non-binding agreement earlier this month to allow Reinsdorf to sell the team in five years if it doesn't turn a profit. Why does that matter? Because the deal also potentially requires city taxpayers to pony up $165 million for the private sports franchise. It's a lose-lose for taxpayers and hockey fans alike.

arenaSurprisingly, the City rejected another deal proposed by Ice Edge Holdings, which would have asked fans to pay more of the Coyotes' operating expenses through a ticket surcharge and parking fees. Ice Edge owners also committed to making Jobing.com Arena the team's permanent home. The City could have signed agreements with both groups and continued negotiating, but it inexplicably gave Reinsdorf the nod and sent Ice Edge packing.

Reinsdorf insists the City guarantee up to $100 million to cover his losses and demands the right to abandon the arena lease after five years with no penalties. The other $65 million might come from taxpayer-backed bonds whose proceeds would be paid to the National Hockey League on Reinsdorf's behalf. It's the kind of one-sided deal Reinsdorf has been known to drive. In 1983, when he threatened to move the Chicago White Sox from Illinois to Florida if taxpayers didn't build him a new stadium, Reinsdorf explained, "a savvy negotiator creates leverage."

But Glendale has the leverage here, and it is time for council members to start exercising it. The City owns Jobing.com Arena where the Coyotes currently play. Although the NHL could make Reinsdorf the new team owner, the City can choose not to lease the arena to him if his demands are out of line, as they appear to be now. In fact, the City cannot lease to him if he requires a subsidy because that violates Arizona's Constitution. Glendale officials need to let this savvy negotiator know that the interest of taxpayers, not billionaire sports team owners, is all the leverage they need.

Carrie Ann Sitren is an attorney with the Goldwater Institute Scharf-Norton Center for Constitutional Litigation.

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