Pollack - City of Glendale

Jobing.com Arena Confidential Negotiations
MEMORANDUM
To:
From:
Ed Beasley
City Manager, City of Glendale
Elliott Pollack
Chief Executive Officer, Elliott D. Pollack & Company
Date: May 31, 2012
Re:
Analysis and Comparison of the Phoenix Coyotes and Jobing.com Arena
Confidential Negotiations
Elliott D. Pollack & Company was asked by the City of Glendale to analyze two proposals related to the
operations and sale of Jobing.com Arena. The two proposals will be referred to in this memo as “Arizona
Hockey” and “No Team”.
Total Costs
• Regardless of the discount rate and assumptions used, the Arizona Hockey proposal produced
lower costs for the City of Glendale than if the Coyotes moved from Glendale and left the arena
without a hockey team. The Arizona Hockey proposal is also more advantageous to the City than
other proposals considered over the past year. The reasons for this conclusion are:
o The cost to operate the arena without a team is estimated to total between $12 and $19
million per year for the next 20 years with an average of $15.3 million each year. The
cost to operate the arena without a team for the next 20 years is estimated to total $315.2
million. With a 6.5% discount rate, the present value of the 20 year net cost is $176.6
million.
o In the Arizona Hockey proposal, rent payable to the City begins immediately and at
higher levels than previous proposals.
o In the Arizona Hockey proposal, arena management fees are substantially lower than the
previous proposals.
o The Arizona Hockey proposal includes annual revenues for the City from arena naming
rights that are not included in competing proposals.
• On a net present value basis and a 6.5% discount rate, the Arizona Hockey proposal costs the City
approximately $17.8 million less over 20 years than if the team vacates the arena and moves from
Glendale. The net payment made by the City of Glendale is estimated to total $324 million.
With a present value and 6.5% discount rate, payments by the City should be $203.7 million. The
City’s estimated revenues over the 20 year period total $79.5 million. With present value and a
6.5% discount rate, the revenues compute to $44.9 million for the duration of the 20 year deal.
• Arizona Hockey’s average annual cost to the City using a 6.5% discount rate is $7.9 million.
The average annual cost to the City if the team vacates the arena is $8.8 million.
The worst of all possible scenarios for Glendale would be for the hockey team to leave. The
viability of Westgate rests on the use of the Arena for hockey events, which represent 59% of
total events at the facility today. The loss of the team would have harmful effects on the retail
and restaurant uses which depend on game day revenues to sustain their operations during nonevent
times. The Renaissance Glendale Hotel & Spa and the smaller Hampton Inn would suffer
as well. The ten NFL games held at the University of Phoenix Stadium are not enough to sustain

Jobing.com Arena Confidential Negotiations
the entertainment venues. Ultimately, the loss of the team could lead to significant retail and
restaurant vacancies in the Entertainment Center. These effects would spill over to the office
uses and potentially the residential portion of the project as well. If the team leaves, it is unlikely
that other events could completely fill the void.
At the present time, the Arena is used 76 days of the year. The Arena already has excess
capacity. Adding to that excess capacity would not help generate demand to the area. Thus, if
the team leaves, retail revenues produced by the project would decline, as would property values
and taxes. The City would still be obligated for the existing bond costs. The net effect on the
City would be significantly negative.
Jobing.com Arena Event Days
Distribution by Type of Event
2009-2011
Non-Hockey Events Hockey Events Total Event
Year Number Percent Number Percent Days
2009 60 56% 48 44% 108
2010 28 39% 44 61% 72
2011 31 41% 45 59% 76
Average 40 46% 46 54% 85
*Source: City of Glendale
Finally, there is a certain status associated with an arena that is home to a professional sports
team. This noteworthy standing in the community and sports world would be lost and would be
difficult, if not impossible, to recapture at a later time.

Jobing.com Arena Analysis
Arizona Hockey Deal v. No Team Present
Gross Amount
Present Value Amount
Net Payments Made By City of Glendale $324,000,000 $203,708,341
Net Payments Made To City of Glendale $79,452,352 $44,911,739
Difference ($244,547,648) ($158,796,601)
Net Loss of City if NO TEAM Present ($315,171,271) ($176,561,515)

CURRENT DEAL::ARIZONA HOCKEY
City Payments to Team Team Payments to City Differences
Year
Fiscal Year
Arena
Management
Fees
Capital Repair/
Enhancement
Total City
Payments
Ticket Surcharge - All Events
Net Present
Value Rent Rate
Total
Attendance Amount
Arena
Naming
Rights
Total Team
Payments
Net Present
Value Annual Amount
Net Present
Value
6.50% 15.0% 6.50% 6.50%
1 2013 $17,000,000 $1,000,000 $18,000,000 $18,000,000 $500,000 $2.75 886,460 $2,437,765 $375,000 $3,312,765 $3,312,765 ($14,687,235) ($14,687,235)
2 2014 20,000,000 1,000,000 21,000,000 19,718,310 500,000 $2.75 895,325 2,462,143 375,000 3,337,143 3,133,467 ($17,662,857) (16,584,843)
3 2015 20,000,000 1,000,000 21,000,000 18,514,845 500,000 $2.75 904,278 2,486,764 375,000 3,361,764 2,963,931 ($17,638,236) (15,550,914)
4 2016 20,000,000 2,000,000 22,000,000 18,212,680 500,000 $2.75 913,321 2,511,632 375,000 3,386,632 2,803,620 ($18,613,368) (15,409,060)
5 2017 18,000,000 1,000,000 19,000,000 14,769,139 500,000 $2.75 922,454 2,536,748 412,500 3,449,248 2,681,180 ($15,550,752) (12,087,959)
6 2018 18,000,000 1,000,000 19,000,000 13,867,736 500,000 $3.00 931,678 2,795,035 412,500 3,707,535 2,706,059 ($15,292,465) (11,161,677)
7 2019 18,000,000 2,000,000 20,000,000 13,706,682 650,000 $3.00 940,995 2,822,985 412,500 3,885,485 2,662,856 ($16,114,515) (11,043,827)
8 2020 16,000,000 1,000,000 17,000,000 10,939,606 650,000 $3.00 950,405 2,851,215 412,500 3,913,715 2,518,500 ($13,086,285) (8,421,106)
9 2021 16,000,000 1,000,000 17,000,000 10,271,930 650,000 $3.00 959,909 2,879,727 412,500 3,942,227 2,382,017 ($13,057,773) (7,889,913)
10 2022 16,000,000 1,000,000 17,000,000 9,645,005 650,000 $3.00 969,508 2,908,525 453,750 4,012,275 2,276,377 ($12,987,725) (7,368,628)
11 2023 16,000,000 2,000,000 18,000,000 9,589,069 650,000 $3.00 979,203 2,937,610 453,750 4,041,360 2,152,938 ($13,958,640) (7,436,131)
12 2024 15,000,000 1,000,000 16,000,000 8,003,396 650,000 $3.00 988,995 2,966,986 453,750 4,070,736 2,036,232 ($11,929,264) (5,967,164)
13 2025 15,000,000 1,000,000 16,000,000 7,514,926 650,000 $3.00 998,885 2,996,656 453,750 4,100,406 1,925,890 ($11,899,594) (5,589,035)
14 2026 15,000,000 1,000,000 16,000,000 7,056,268 800,000 $3.00 1,008,874 3,026,623 453,750 4,280,373 1,887,716 ($11,719,627) (5,168,552)
15 2027 10,000,000 2,000,000 12,000,000 4,969,203 800,000 $3.00 1,018,963 3,056,889 499,125 4,356,014 1,803,826 ($7,643,986) (3,165,377)
16 2028 10,000,000 1,000,000 11,000,000 4,277,092 800,000 $3.00 1,029,153 3,087,458 499,125 4,386,583 1,705,620 ($6,613,417) (2,571,472)
17 2029 10,000,000 1,000,000 11,000,000 4,016,049 800,000 $3.00 1,039,444 3,118,332 499,125 4,417,457 1,612,793 ($6,582,543) (2,403,256)
18 2030 10,000,000 1,000,000 11,000,000 3,770,938 800,000 $3.00 1,049,839 3,149,516 499,125 4,448,641 1,525,050 ($6,551,359) (2,245,888)
19 2031 10,000,000 1,000,000 11,000,000 3,540,787 800,000 $3.00 1,060,337 3,181,011 499,125 4,480,136 1,442,109 ($6,519,864) (2,098,677)
20 2032 10,000,000 1,000,000 11,000,000 3,324,682 800,000 $3.00 1,070,940 3,212,821 549,038 4,561,858 1,378,794 ($6,438,142) (1,945,889)
21 2033 0 0 0 0 0 $0.00 0 0 0 0 0 $0 0
Totals $300,000,000 $24,000,000 $324,000,000 $203,708,341 $13,150,000 $19,518,966 $57,426,440 $8,875,913 $79,452,352 $44,911,739 ($244,547,648) ($158,796,601)
Averages $15,000,000 $1,200,000 $16,200,000 $10,185,417 $657,500 $975,948 $2,871,322 $443,796 $3,972,618 $2,245,587 ($12,227,382) ($7,939,830)

OPERATING COSTS FOR CITY OF GLENDALE WITH NO TEAM PRESENT
NET EXPENSES
NET REVENUES
Average Estimated Costs Annual Repair Expenses Major Capital Expenses Net Expenses
Surcharge Revenues
Difference
Fiscal
Year
Arena
Management
Fees
Net Present
Value
Repair &
Replacement
Expenses
Net Present
Value
Capital
Expenses
Net Present
Value
Gross
Amount
Net Present
Value
Revenues on
Non Hockey
Events
Net Present
Value
Net Present
Value
Year
Gross Amount
6.5% 6.5% 6.5% 6.5% 6.5%
1 2013 $12,000,000 $12,000,000 $500,000 $500,000 $1,000,000 $1,000,000 $13,500,000 $13,500,000 $1,089,880 $1,089,880 ($12,410,120) ($12,410,120)
2 2014 12,300,000 11,549,296 512,500 481,221 1,000,000 938,967 13,812,500 12,969,484 1,120,091 1,051,728 (12,692,409) (11,917,755)
3 2015 12,607,500 11,115,519 525,313 463,147 1,000,000 881,659 14,132,813 12,460,325 1,150,797 1,014,610 (12,982,016) (11,445,715)
4 2016 12,922,688 10,698,035 538,445 445,751 2,000,000 1,655,698 15,461,133 12,799,485 1,182,005 978,521 (14,279,128) (11,820,963)
5 2017 13,245,755 10,296,231 551,906 429,010 1,000,000 777,323 14,797,661 11,502,564 1,213,722 943,454 (13,583,939) (10,559,110)
6 2018 13,576,899 9,909,518 565,704 412,897 1,000,000 729,881 15,142,603 11,052,295 1,245,955 909,399 (13,896,648) (10,142,897)
7 2019 13,916,321 9,537,330 579,847 397,389 2,000,000 1,370,668 16,496,168 11,305,387 1,278,712 876,345 (15,217,456) (10,429,042)
8 2020 14,264,229 9,179,120 594,343 382,463 1,000,000 643,506 15,858,572 10,205,090 1,311,999 844,279 (14,546,573) (9,360,810)
9 2021 14,620,835 8,834,364 609,201 368,099 1,000,000 604,231 16,230,036 9,806,694 1,345,824 813,189 (14,884,213) (8,993,505)
10 2022 14,986,356 8,502,557 624,431 354,273 1,000,000 567,353 16,610,787 9,424,184 1,380,194 783,057 (15,230,593) (8,641,126)
11 2023 15,361,015 8,183,212 640,042 340,967 2,000,000 1,065,452 18,001,057 9,589,632 1,415,117 753,870 (16,585,940) (8,835,762)
12 2024 15,745,040 7,875,862 656,043 328,161 1,000,000 500,212 17,401,083 8,704,235 1,450,600 725,608 (15,950,483) (7,978,627)
13 2025 16,138,666 7,580,055 672,444 315,836 1,000,000 469,683 17,811,110 8,365,573 1,486,652 698,255 (16,324,458) (7,667,318)
14 2026 16,542,133 7,295,358 689,256 303,973 1,000,000 441,017 18,231,388 8,040,348 1,523,280 671,792 (16,708,108) (7,368,556)
15 2027 16,955,686 7,021,354 706,487 292,556 2,000,000 828,200 19,662,173 8,142,111 1,560,491 646,200 (18,101,681) (7,495,911)
16 2028 17,379,578 6,757,641 724,149 281,568 1,000,000 388,827 19,103,727 7,428,036 1,598,295 621,459 (17,505,432) (6,806,576)
17 2029 17,814,067 6,503,833 742,253 270,993 1,000,000 365,095 19,556,320 7,139,921 1,636,698 597,551 (17,919,622) (6,542,370)
18 2030 18,259,419 6,259,557 760,809 260,815 1,000,000 342,813 20,020,228 6,863,185 1,675,710 574,454 (18,344,518) (6,288,730)
19 2031 18,715,905 6,024,457 779,829 251,019 1,000,000 321,890 20,495,734 6,597,365 1,715,338 552,150 (18,780,396) (6,045,216)
20 2032 19,183,802 5,798,186 799,325 241,591 1,000,000 302,244 20,983,127 6,342,021 1,755,592 530,617 (19,227,536) (5,811,404)
21 2033 0 0 0 0 0 0 0 0 0 0 0 0
Totals $306,535,891 170,921,485 $12,772,329 $7,121,729 $24,000,000 $14,194,720 $343,308,220 $192,237,933 $28,136,950 $15,676,418 ($315,171,271) ($176,561,515)
Averages $15,326,795 $8,546,074 $638,616 $356,086 $1,200,000 $709,736 $17,165,411 $9,611,897 $1,406,847 $783,821 ($15,758,564) ($8,828,076)