The motivation: Simple...
We got curious after we saw Glendale practically throwing themselves at any potential new owner for the Phoenix Coyotes. As many of you know, the Coyotes have all but gone out of business and have been run the past three years by the National Hockey League. All the while, Glendale has been paying the league $25 million a year to keep them where they are.
We wondered: Why are they paying so much to keep the team? Why did they offer to pay first Matthew Hulsizer and then others to take the team and keep them in Glendale.
The answer we found: A horrible arena deal that the city is on the hook for- and still is. And one other component became clear- someone with a track record of bad or failed stadium deals is associated with one of Glendale's current financial consultants.
For more reference, we suggest you read the first two stories in this series...
Part 1 In The Series On Global Entertainment
Part 2 In The Series On Global Entertainment
The following is Part 3:
By February of 2011, Global Entertainment was, for all intents and purposes put of the arena management and construction business. There was one building that was left for them to complete under a difficult economic climate.
The United Wireless Arena opened that month with a US$40-milion construction cost and a capacity of 4,500 permanent seats with another 2,000 possible attendees for concerts or any other event that could bring people to the floor of the arena.
The plans to bring the arena online were planned by the city of Dodge City as far back as 1997 when the "Why Not Dodge...? Sales Tax" was approved on a ballot that included construction of a race track and a youth complex that has softball and soccer fields.
Global Entertainment contacted the city when the idea of the Arena and Events Center was being established in the design, construction, and management phase. Global was appointed the Project Manager and was there during the design phase, according to Dodge City Manager Ken Strobel.
Dodge City city officials did their due diligence through visits to the Broomfield, Colorado and Independence, Missouri facilities that Global helped create and decided on an arena/10,000 square foot Convention Center model that could work for banquets and general meetings.
Global's normal model of vertical integration was discussed where all prospective employees would be all Global's and the commission and fees structure would have been relatively the same as the other nine arenas. But before the arena came online in February of 2011
"When it got to the construction and the opening," Strobel admitted, "Global said they were not going to continue in arena management and they would just concentrate on design and construction. We started with two separate contracts with them in construction and management and we just terminated the contract."
Here's a story from KSN-TV in Wichita when the building opened- with ice...
"They did a good job for us," Strobel said. "But we had a seamless transition to VenueWorks out of Iowa who runs 25 to 30 buildings in the central United States."
Global went on to report their financials after the first quarter of its fiscal year 2011, which ended on August 31st. The company reported a net loss of $600,000 during the period compared to a net loss of $200,000 for the same three-month period two years earlier.
The company had declining revenues in the same period- which would make sense considering that the Dodge City facility was the last in this category that Global was involved in. They had only $1.8-million in revenue compared to $2.4-million in the same time period with three facilities in play- Wenatchee, Washington, Independence, and Allen, Texas- with Dodge City in the wings. Global said in a news release at the time that lower revenues in management and licensing fees caused the dollar drop.
Strobel will be the first to admit that the Dodge City situation is more unique than the others. A perpetual sales tax, "sizable" cash in their bank accounts, and the combining of the bonds from the race track and new bonds in the $40-million Events Center gave the building more solid footing than most other buildings in Global's dossier. According to the Wenatchee World (WA) newspaper, the city also expects to spend $500,000 in subsidies to keep things moving.
Another unique aspect of the Dodge City arena is the ice surface. Knowing that they're the only game in town for 30-40 miles, the rare commodity is leading to very popular recreational skating and the idea of starting a youth league. No minor-league franchise, per the Global model when they enter a relationship, is on the books at present.
"We don't have to have the ice surface," Strobel says. "But it adds an amenity to it that's unique to west Kansas. That was our attitude toward it."
The building hosts 6 to 8 concerts a year currently, and there is a lot of Convention Center activity ranging from Rotary meetings to conventions and weddings to state government sessions.
The lesson from Strobel: "Measure your market and look at your community needs and see what the support will be there for. Know your services in a challenging marketplace.
"You have to make the decision that 'You're only going to do this once,' so don't scrimp and pinch pennies. Do it right. The Events Center has been well received and it does have that 'wow' factor with the ribbon boards. We're working with VenueWorks to get more events scheduled."
The bonds issued on the building were 20-years when the building was born two years ago. Strobel says that paying off the facility will depend on how the sales tax holds as to whether or not the building can be paid off early.
So, with Dodge City on line, Global claimed to be out of the arena management aspects of their business- focusing on design and construction.
Next Up: Another of the ten arenas Global put on the landscape that is struggling financially... there are only eight others to talk about...
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