We're In A Warner Bros. Cartoon

Lost amongst all the recent happy-smiley-shiny stories about the Coyotes embracing the weirdness of their current situation or how they're relying on a cheap-seat student area to bring the noise and energy needed at a hockey game, Craig Morgan of PHNX Sports is reporting that the proposed Tempe arena that the Coyotes are hoping to build may end up in front of the people of Tempe in a referendum. The billion-dollar investment in the city will go to a City Council vote on November 29 with the Council reportedly shifting the vote to the people via a referendum vote in 2023.

As per Morgan, "While the vote on Nov. 29 will provide clarity on council's opinion of the Coyotes' proposal — on the entitlements and on the general plan amendment — a referendum would be the ultimate vote in determining whether the project begins. That vote would be held in 2023 at a date yet to be determined."

That sounds that you hear? That's the sound of a falling boulder crashing down on the Coyotes' heads thanks to the citizens of Tempe having a say in how the land is used and how city revenue may be used in the building of this project. What may save the Coyotes, though, is that "two separate polls have been conducted of Tempe citizens" with more than 60 percent of them approving of the arena project. Beyond that, "sources said that the proposal has actually improved significantly for the City of Tempe, based on more concessions from the Coyotes. With that in mind, there appears to be majority support within the council for the proposal."

Maybe Tempe is Coyotes country after all?

Where we should pump the brakes once again is the myth that arenas and stadiums being built creates jobs and pumps money into local economies. It seems that this is something that Tempe Chamber of Commerce president and CEO Colin Diaz believes as he told Morgan, "As of Tuesday of [last] week, we heard that recommendation and took a formal vote. As a board, we are in support of the Coyotes in this process, as well as the city's due diligence to the process. We know that there's still work to be done and there's community meetings, but as a whole, looking at the economic impact and looking at what it will mean for the city as a whole, from a tax perspective, from job creation to a lot of the programming that they're going to be supporting, it checks a lot of boxes for us and makes a lot of sense."

I cannot believe that I am writing this again, but, as the Berkeley Economic Review wrote in 2019, "building sports stadiums has served as a profitable undertaking for large sports teams, at the expense of the general public. While there are some short-term benefits, the inescapable truth is that the economic impact of these projects on their communities is minimal, while they can be an obstacle to real development in local neighborhoods."

Mark Scheer of the Investigative Post echoed those sentiments in 2021, writing, "From a return-on-investment standpoint, economists and researchers almost universally agree that stadiums are unlikely to generate anywhere near the level of tax revenue needed to offset the public subsidies tied to their construction."

Still don't believe me? John Oliver on HBO's Last Week Tonight illustrates this with a great example from Miami where the Marlins built a new ballpark while promising revitalization for the surrounding area through increased tax revenue and job creation.

In short, privately-funded arenas that receive tax breaks and other concessions benefit only the arena owner. The return-on-investment for the city and its citizens is never realized while billionaires, whose hockey teams play in those arenas, simply get richer.

Diaz continued talking up his mythical scenario of what this arena project will bring, stating, "If you look at Tempe Town Lake, it's the second largest attraction in the state behind the Grand Canyon, with about two and a half million visitors per year. This project is predicting three million a year. Obviously, some of those will be overlapped, but a long time ago, there were talks about whether it made sense to extend the lake west. I think a project like this means it would make sense over time, and then when you have bookend activity on the east and west ends of the lake, you'd start to see more of an emphasis on activating that space, which helps in a lot of ways. It helps with keeping people and dollars in the region longer, it helps with having something for everybody, and it helps with the vibrancy of the region."

The problem is that of some of those 2.5 million people over lap with the three million people this project is predicting will show up, you're not actually realizing three million new visitors with the probability of seeing that many people being highly unrealistic. In fact, Andrew Zimbalist and Roger G. Noll wrote in a 1997 Brookings article, "Sports facilities attract neither tourists nor new industry. Probably the most successful export facility is Oriole Park, where about a third of the crowd at every game comes from outside the Baltimore area" which resulted in a net gain to Baltimore's economy in terms of new jobs and incremental tax revenues of "about $3 million a year — not much of a return on a $200 million investment."

If the city of Tempe hasn't been paying attention, the city of Glendale "commissioned an analysis by Phoenix-based consulting firm Applied Economics to determine exactly what the Coyotes generate in city tax revenue" as per a Seattle Times column by Geoff Baker. That analysis "examined four years of spending patterns by patrons at the arena and the adjacent Westgate Entertainment District complex of shops, bars and restaurants during Coyotes home games vs. an average of 17 annual concerts held there."

Sound familiar? With the new complex being built in Tempe that will feature "hotels, about 1,600 apartments, retail stores, restaurants and a sports book," the same analysis should be done on this proposed Coyotes arena project. If you're asking why, the analysis done by Sarah Murley, a principal at Applied Economics, "concluded that spending by concertgoers was 'significantly greater than for Coyotes events' — $58 per person compared with $27. Murley attributed this to concerts being a 'special event' for which attendees linger longer and are more likely to stay overnight at nearby hotels."

In short, hockey isn't the attraction that CEO Colin Diaz believes it is nor will it come close to generating the revenue that the city will desperately need when it comes to paying out the returns on the municipal bonds it's planning on issuing to cover the costs of land remediation, electric lines, water lines, sewer lines, roads and a parking garage at the northeast corner of the property. In saying that, municipal bonds are a boring topic on their own that would require me to write many paragraphs here, so I'm using John Oliver's explanation instead because it's easier to understand.
What you need to remember is that municipal bonds, like a loan, will mature, and those people holding the rights to those municipal bonds receive interest on top of their bond payout once the bonds mature. Interest paid on municipal bonds is often tax-free, so it's a good investment to make if, say, you're a billionaire like Alex Meruelo who owns the Arizona Coyotes.

Let me be clear: I am not suggesting that will happen. There's a chance it could, but I'm just illustrating the example of how a billionaire - someone who can afford to invest in a ten-year municipal bond and forget about it - can score a major windfall from the very project he's asking the city to help him build with nothing more than a financial investment. Like the sly coyote to the left's attempts to catch a roadrunner, though, this plan could come to fruition despite how far-fetched it may sound on the surface. If Meruelo has enough money to finance this project publicly, he can certainly afford to buy some municipal bonds to make a little money back.

The too-long and didn't-read of this whole article is that if Alex Meruelo wants to finance a $2.1-billion arena project that has "hotels, about 1,600 apartments, retail stores, restaurants and a sports book", Alex Meruelo should be paying for all of it as a developer. The cost of having any of the infrastructure built for an arena and surrounding area that will only make him richer should be paid for exclusively by the only person benefitting financially from this deal. The people of Tempe should know this and understand this before going to vote in 2023 in the expected referendum that will be cast upon them.

Let's not forget that "THE TEAM says that the project could generate $154 million in new taxes for the city over a 30-year period, with $5.9 billion in direct spending in the city and 6,900 permanent jobs created" with the bolded words emphasized by me. The city doesn't have those figures because they're just taking the team's word for it, yet there are piles of research and studies that says the team's figures simply are not true.

I know we live in an era where it's trendy not to believe facts over bald-faced lies, but the mountains of data and research is hard to ignore. Taking the word of a team whose only interests are its own over the word of scientists, economoists, and researchers would be a new level of insanity for a city to display, and the people of Tempe should run from this Coyotes project like they're the Roadrunner. Or, more appropriately, turn the tables on the Coyotes and let them figure out how to pay for their little project.

Until next time...