A Republic analysis revealed that even if the Coyotes went to the Stanley Cup Finals for the next 20 seasons and the arena booked 30 sold-out concerts each year for the next 20 years, Glendale could still expect to lose about $9 million annually.
That figure does not include the city's annual arena debt payments, which will average about $12.6 million a year over the next 20 years.
Longtime Glendale Mayor Elaine Scruggs, who has said next year's budgeted $17 million arena management fee is too steep, said Monday she cannot support the deal.
Scruggs is also concerned that capital improvements won't be seen in the city (which has its ghost-town moments both commercially and residentially these days) for, at least, five years as Glendale itself is seeing its budget for the same thing decrease.
And this deal with Jamison would grant him something over the city's own needs...
Really...???
Another issue... TL Hocking and Associates...
Thomas L. Hocking is a former investment banker who knows his way around the idea of municipal bond financing. Hocking formed "TL Hocking and Associates, LLC" and partnered with Global Entertainment Corporation to promote the development of mid-sized event centers and arenas including one in Prescott, Arizona- home of the Central Hockey League's Arizona Sundogs in the 2000's. The Sundogs and the CHL are owned by Boston Pizza magnate James Treliving.
Treliving has been linked to the Coyotes sale, but has denied any involvement in a purchase- despite being linked by Canadian talk show host Bob McCown
As told by OSG hyah in May and hyah in April...
According to Halverstadt and Chan, Glendale Deputy City Manager Jim Colson said an analysis by TL Hocking & Associates
(and paid for by the city) projected Glendale could expect to bring in an average of $15.7 million annually over a 20-year lease with Jamison and $6.5 million without the Coyotes.From their article again...
A 2009 study the consultant completed for Glendale assumed all city sales-tax revenue the surrounding Westgate City Center and fees from the arena would halt if the team left, adding up to a $500 million loss for Glendale over 30 years.
But the team is losing ten million more than that by being around... and the city is still pouring more money over the idea that the Coyotes are the savior...
The problem... can Hocking be trusted since they were a party in a lawsuit brought forth against the city of Prescott
in September of 2009 by Wells Fargo...? Fargo felt they were duped by an artificial rating of bonds used to build the Prescott Events Center. In an 83-page brief filed in Arizona State Superior Court, Wells Fargo was looking to take all defendants to court because of what they called...
"...the negligent offering and sale of $35 million in face value of what were misrepresented to be “A-” rated, investment grade excise tax revenue bonds (“Bonds”) used to finance construction of a 5,000 seat event center in Prescott Valley, Arizona (the “Event Center”)."
((The Events Center is on the right, thanks timtoyotacenter.com))
Wells Fargo was also looking to claim sales taxes in the neighborhood of $1.2-million that were failed to be paid to them as a bonds Trustee by October 1, 2007. Wells Fargo claimed that certain information wasn't disclosed to them by a combination of the defendants saying that there was no way that the Prescott Events Center would ever generate the income it was claimed it would...
Retail Bondholders, reasonably believing that they were buying investment grade securities, purchased the Bonds in reliance upon recommendations from their brokers in many cases employed by the Defendant underwriters and/or upon review of the prospectus called a “Preliminary Official Statement”
Revenue was supposed to come from sales taxes from in and around the area of the Events Center that even included what was referred to as an "Entertainment District" adjacent to the Events Center and something called a "Secondary Credit Support Area"- which could be considered businesses not in the "Entertainment District," but close enough to be part of any revenue stream.
The HQ would like to ask if this is sounding the least bit familiar in the Glendale situation at present...
The feasibility studies, according to Wells Fargo's suit, had padded numbers for events in the venue- and the number hasn't been reached to date. Padded numbers for events led to padded numbers for return on the bonds and that would, eventually mean Prescott would not meet its financial obligations.
One of the 17 defendants, Global Entertainment Corporation, was referred to in the lawsuit as being operated by its directors- which included Treliving...
"General Allegations" in the suit included the following...
36. Global is a holding company established in April 2000 through a
reverse merger with the Western Professional Hockey League, Inc. In June 2001
Global negotiated a Joint Operating Agreement with the Central Hockey League
(“CHL”) and fielded sixteen teams using the CHL name. In November 2002
Global acquired International Coliseums Company (“ICC”) which was in the
business of designing, managing and operating multi-purpose event centers.
According to Global (Official Statements p. 27), this vertical integration provided
Global with, “the expertise to develop, design, build and manage multi-purpose
event centers.” Global also arranges the financing of event centers. At all times
pertinent to this Complaint, Global was directly and indirectly controlled by its
officers and directors, including Treliving and (Richard) Kozuback.
37. Global and Hocking seek to persuade communities that are not large
enough to attract major league professional sports franchises to build event centers
that will be anchored by a CHL hockey team or other minor league sports teams.
Global offers to develop, arrange financing, build and operate the event center.
38. Revenues from event centers are derived from the annual number of
events and the number of people who pay to attend those events. Net operating
revenues from event centers are a function of project revenues less operating
expenses. The amount of attendance at events depends primarily on the population
and number of households in the market area for the event center and disposable
income. The annual number of events an event center can attract also depends
upon the population and number of households in the market area. The amount of
sales tax revenues generated by an event center and surrounding businesses is also
dependent upon the population and number of households in the market area. The
economic feasibility of an event center that uses both operating revenues and sales
tax revenues to service the debt incurred building the event center is highly
dependent upon the surrounding population and the level of disposable income.
Once again, we'll assert that through Section 37 of the Wells Fargo suit that the Prescott situation is virtually the same as the Glendale situation- only possibly larger in scope if followed through since Hocking was directly involved in the Glendale appraisals.
Because the town of Prescott defaulted, in Wells Fargo's view, on two occasions in paying on the Events Center (delivering tax revenues and interest payments on schedule), they had no recourse but to file the lawsuit.
Fargo asserted that the defendants (including TL Hocking and Treliving) were party in artificially inflating the numbers in feasibility studies released in 2005 that reflected a (seemingly) magical 50-percent increase in activity to justify a $35-million bond to build the Events Center. A third-party was brought in to back up the appraisals and was, subsequently, not renewed when their numbers didn't mesh with the defendants supposed needs.
Leading to Section 109 of the Wells Fargo suit:
109. Global, Hocking, the Town, PVEC, PVSE and Fain Group had actual
knowledge that Global had substantially and wrongfully inflated the revenue, event
and attendance figures in the Official Statements over the projections contained in
the 2001 Feasibility Report and the 2005 Preliminary Feasibility Report because
they each received and reviewed the 2001 Feasibility Report and the 2005
Preliminary Feasibility Report.
The end claim by Wells Fargo was that the underwriters and the Events Center Authority, all acted negligently by issuing the bonds. They were also negligent since they "DRAFTED OR APPROVED DEFECTIVE BOND DOCUMENTS GIVING THE TOWN THE ABILITY
TO EVADE THE PAYMENT OF SALES TAX REVENUES." (ed. note- capitalization from header in the lawsuit wording)
Wells Fargo asserted in the suit that all defendants were in violation of the Arizona State Securities Act, were negligently misrepresented in this case, and claimed that the town of Prescott was in breach of contract.
And, if that doesn't set, another plaintiff- Allstate Life insurance Company- spun off to chase after the defendants themselves as part of a class action suit.
The second amended case was filed in 2010 in District Court in Arizona...
We're still looking for a resolution in either case...
These days, if you try and access Global Entertainment's website, you don't get anything but a dead link while the Sundogs were dead last in the CHL's Western Division.
Attendance figures have been the following since their entry into the CHL:
2006/07- 8th at 4,225 per game average
2007/08- 6th at 4,310
2008/09- 9th at 3,521
2009/10- 13th at 2,689
2010/11- 16th at 2,150
2011/12- 10th at 2,507
NB: Those are the attendance figures released by the league, so accept them as you wish...
The best we can figure, the HQ would like to equate all of this activity in the last three years to that of the duck and its walking and quacking- from Prescott all the way down Interstate-17 to Glendale...
If Greg Jamison is looking for a boondoggle or a massive tax write-off, he should take the deal with the City of Glendale. If he's a smart businessman, he runs away from the deal. It looks like there are too many shady folks out there looking for another run...
If the Goldwater Institute is watching, all of this may not get that far...
More when we know more...
Here's the video from FSArizona when the Sundogs hosted the CHL All-Star Game this season...
1600 UPDATE: According to a report from Forbes Magazine's Mike Ozanian, Jamison is having issues raising the $170-million.
Investors are coming to their senses and are having issues believing that the team could be profitable. Forbes gave the value of the Coyotes at US$134-million...
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