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Bloomberg News reports this week on more woes of Glendale, Arizona, a city of 230,500 west of Phoenix. The city agreed to pay $308 million over the next 20 years to keep the National Hockey League's Phoenix Coyotes, which had the worst attendance in the league last year, despite having a good team. (The league is locked in a labor dispute this year.) Standard & Poor's and Moody's, citing the hockey payments, downgraded the city's debt; investors demanded a 7.5% higher penalty on city debt compared with 11 months ago, says Bloomberg. Now Glendale is slashing budgets and planning layoffs. All told, operating costs have been whacked by 25% while layoffs have leapt to 300. Last June, voters rejected a sales tax increase that the council had passed, further complicating financing.
Glendale wooed the team from Phoenix in 1996 with the promise of the new arena. But the team went into bankruptcy in 2009 and was purchased by the league, with Glendale agreeing to cover losses that have amounted to $50 million over the past two years. Tax receipts from the promised surrounding development, now unfinished, was to service debt payments. But the development never got off the ground and was seized by the lender.
Glendale also issued debt to finance a $200 million baseball park that Major League Baseball teams would use in spring training. Taxes from adjacent development were to pay off the bonds, but the development quickly ran into economic woes.
Bloomberg News reports this week on more woes of Glendale, Arizona, a city of 230,500 west of Phoenix. The city agreed to pay $308 million over the next 20 years to keep the National Hockey League's Phoenix Coyotes, which had the worst attendance in the league last year, despite having a good team. (The league is locked in a labor dispute this year.) Standard & Poor's and Moody's, citing the hockey payments, downgraded the city's debt; investors demanded a 7.5% higher penalty on city debt compared with 11 months ago, says Bloomberg. Now Glendale is slashing budgets and planning layoffs. All told, operating costs have been whacked by 25% while layoffs have leapt to 300. Last June, voters rejected a sales tax increase that the council had passed, further complicating financing.
Glendale wooed the team from Phoenix in 1996 with the promise of the new arena. But the team went into bankruptcy in 2009 and was purchased by the league, with Glendale agreeing to cover losses that have amounted to $50 million over the past two years. Tax receipts from the promised surrounding development, now unfinished, was to service debt payments. But the development never got off the ground and was seized by the lender.
Glendale also issued debt to finance a $200 million baseball park that Major League Baseball teams would use in spring training. Taxes from adjacent development were to pay off the bonds, but the development quickly ran into economic woes.