After spending a reported $180 million in taxpayer funds building an arena for a hockey team, will Glendale throw good money after bad to keep the bankrupt Phoenix Coyotes afloat? Team CEO Jerry Moyes, who announced the bankruptcy Tuesday, apparently thinks so.
Arizona's founders envisioned a system where only investors would lose out from a private enterprise gone sour. Yet Glendale officials unfairly spread the financial risk to all City residents, and it seems likely the bailout will continue.
The City has leased the Jobing.com Arena to the team since 2003. As the Coyotes fell on tough times with poor attendance and low revenues this season, the Coyotes ducked at least eight months' rent, amounting to hundreds of thousands of missing City funds.
PSE Sports & Entertainment has offered to buy the team and move it back to Canada, which would leave Glendale stranded along with 40 other creditors who will be owed nearly $97.5 million--even after the team's sale.
Alternatively, the Coyotes could sell to a buyer who would keep the team in Glendale, but Glendale residents might still be asked to foot the bill. Moyes confidently has pledged that he "will be able to provide potential buyers assurances of the City's willingness to offer incentives to keep the team as a tenant in the Jobing.com arena."
Arizona's framers had different ideas when they drafted the state constitution. The Gift Clause prohibits public subsidies for private enterprises, and the Goldwater Institute recently scored a victory in the Court of Appeals against a similar subsidy by Phoenix to support a private developer's luxury mall.
Maybe hockey teams were meant to play in the desert. But gambles like these should be made with private money, not tax dollars.
Glendale must resist the glittery promises of professional sports and return instead to constitutional principles of spending public dollars only on public goods. Should Glendale need a stronger reminder, the Goldwater Institute's legal team will deliver.
Carrie Ann Sitren is an attorney with the Goldwater Institute.
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Arizona Republic: Now bankrupt, Coyotes could end up in Canada