The Goodyear Stadium; Taxpayers Pay Each Fan $100 Each per Game

Cactus League time again so I am re-blogging this article. Mayor GEOrgia might try to convince you that the bleeding is reduced at the GY ballpark but it’s like putting a bandaid on the Dan Akroyd Saturday Night Live Julia Child skit.
Editor’s update. I wrote the article below seven months ago in April of 2011. In their October ’11 work session meeting, GY city council finally got around to a review of stadium finances. Here it is. 2011 11 Ballpark info to Council . Go ahead, compare them.

Believe me yet?

In my next few posts, I am going to look in some detail at some of the big problems facing Goodyear today and try to break down the financial facts associated with these issues in order to put them in easy to understand terms so every Goodyear resident who reads this can have a better understanding of just how badly Goodyear has been managed in the past few years. Georgia Lord says she spends “hours and hours” trying to understand all the complicated financial stuff regarding the city so maybe this will help her understand it better.

In this post, I start with the stadium and it’s financing. The moral of all of these stories is;

Beware when politicians sell you on ‘growth’ in order to improve your city.

The AZ Republic recently published an article about the dismal attendance from both teams who inhabit Goodyear Ballpark for Spring Training. (here it is AZ Rep Gdyr attendance0001 ) Currently about 4,000 fans attend each game for 30 games during the month of March for a total attendance of about 120,000 fans per season. If the average ticket costs $25 and each fan spends another $15 that would forecast total ongoing annual operating revenue of about $5 mil. But in 2010 stadium annual operating revenues were less than $1 mil. The difference is that the Indians/Reds get 80% of ticket net revenues and 50% of nearly everything else.

I have recently studied the current agreements between the city and both MLB teams as well as the Intergovernmental Agreement that Goodyear has with the Arizona Sports and Tourist Authority to try to understand how much trouble Goodyear is in financially.

Goodyear is in pretty big trouble.

Goodyear has a $100 mil stadium that loses $ 2 mil per year on an operating basis and costs taxpayers an additional $5 mil plus in interest expense. GY is currently paying virtually NO PRINCIPAL on the debt and in a recent council meeting GY heard proposals to forestall principal payment in the future because GY won’t have the funds. At this rate, when the bonds mature Goodyear could have to refinance their investment and have a 20 plus year old stadium to show for all that debt. Goodyear should be paying down the principal by at least $5 mil per year. Add that to the $2 million in operating losses and the $5 million in interest payments, and that’s $12 million per year of assignable costs.

Divide $12 million by 120,000 fans per season and Goodyear Taxpayers are paying EACH FAN $100 per fan per game to come to Goodyear to watch spring training baseball.

Goodyear has little to no access to the training facilities year round and during the winter when it counts, the Indians/Reds get first dibs on any dates that they want to use the stadium so long as they tell us in advance.

The politicians who signed up Goodyear for the stadium deal (Cavanaugh, Antoniak, Cavalier, Holland, Lord, Osborne and Sousa) told voters that they made bond payoff provisions for half of the borrowed money by signing an agreement with the Arizona Sports and Tourism Authority (AZSTA).

That will never happen in my opinion.

First of all, the agreement with AZSTA is capped at $36 mil because the stadium was budgeted at $72 mil but ended up costing $111 mil.

Second, a look at the financials associated with the worthless piece of paper that Goodyear signed with the AZSTA and one realizes that Goodyear will probably never be paid a dime in debt principal. The AZSTA loses money each year and Goodyear is in line behind over $200 mil in other AZSTA commitments of $47.4 mil to Surprise, $4.3 mil to Phoenix, $31.7 mil to Scottsdale, $20.6 mil to Tempe and $60 mil to Glendale.

Third, any future renovations over the next 20 years that are required of any other existing valley stadiums are ahead of paying Goodyear (current Auditor General’s estimate is $67 mil). You know that there will be renovation requirements as teams continue to threaten cities with leaving if they don’t provide new facilities.

Then our elected Goodyear officials went and borrowed another $20 mil to build the Reds training facilities with the same kind of deal with the AZSTA. Here is how the AZSTA characterizes those commitments in its 2010 financial report;

“The funding source(s) that would pay for the additional commitment to the City of Goodyear, however, does not currently exist.” (page 27, notes to financial statements).

AZSTA had a $22.5 mil operating loss last year on operating revenues of $23 mil. They had a total loss of only about $17 mil after collecting their rental car, bed and other taxes.

How much revenue, you might ask, did AZSTA collect from the rental car, bed tax, hotel tax, and NFL income taxes that are supposed to be used some day to pay back Goodyear and the other nearly $200 mil ahead of Goodyear? AZSTA collected about $26 mil last year. But this barely pays for AZSTA’s interest expense on their own debt, a rate of nearly $20 mil per year. Remember, Goodyear only gets paid after AZSTA pays the other $200 mil ahead of Goodyear.

And finally, AZSTA is only in business as it is currently structured until 2031. After that it has to be re- constituted. How much chance do you think there is that voters in the rest of the valley will be kind enough to help out Goodyear when its commitments with the AZSTA expire?

AZSTA is doing so badly, in fact that the Arizona Auditor General prepared a special 60 plus page report on it in order to assure bond holders that at least AZSTA direct debt has the ability to be paid. In that report, the AG says that any payments that may ever be made to Goodyear will not occur until 2017 at the earliest.

If you care to look for yourself at any of the documents I refer to, here they are.

City of Goodyear and Cleveland Indians Use Agreement


2010 Auditor General Final Report

2010 Final Audit AZSTA


3 Responses

  1. […] ball team’s fans here in March. (See my previous article for the details.  ).  My calculations show that the stadium costs taxpayers as much as $12 million per year all […]

  2. Reblogged this on howardsgoodyearblog and commented:

    Cactus League time again. Mayor GEOrgia might try to convince you that the bleeding is reduced at the GY ballpark but it’s like putting a bandaid on the Dan Akroyd Saturday Night Live Julia Child skit.

  3. I love what you guys are up too. This sort of clever work and reporting!
    Keep up the amazing works guys I’ve added you guys to my personal blogroll.

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