Indians’ Attendance Down

Back in 2011 I did the math showing that Goodyear taxpayers were paying Indians and Reds fans about $100 EACH to watch baseball in GY. Here is the article.
Forward to 2014. The new attendance figures are out. Now GY is up to only 4500 fans per game from 4000.

But Goodyear keeps increasing their operating costs, hiring people, adding a new stadium manager, having giveaways, etc. doing what GY does best, spend money.
It’s not working. Indians per game attendance was DOWN over last year.
GEOrgia, Lyin’ Joe, The Dog Ate My Homework Wally, Deer in the Headlights Osborne, and Double Dip Stipp keep doing a great job for you Taxpayers.
Stipp, Osborne, and Lauritano are up for re-election in November. But so far no info on the GY website for candidates. Maybe that’s because GY is hoping the League of Cities and others (like GY) who oppose the new November local election law are hoping they win their lawsuit to stop the law and not have to hold it.
And just keep spending your money.
You elected them.


What Goodyear Should Do

I’ve told you many times that the current GY city council and city management are doing the wrong things, that they are spending too much money, that they have still not taken the prospect of GY’s financial failure seriously.

Now I’m going to tell you a few specific things that I believe they should be doing.

What follows are ten recommendations for what I think GY should do right now.  I believe, if implemented, these recommendations would reduce GY’s spending / increase GY’s revenues by over $10.1 million per year.  Today, your city council and city management are doing none of these things.  My guess is there is a lot more that could be uncovered than what I discuss here, but I only have so much time and they are mighty uncooperative since Georgia took over.

In the first three recommendations below I encourage GY to use the prospect of Chapter 9 Bankruptcy to its best purposes now.  An entity does not have to declare bankruptcy in order to be able to take benefit from the potential threat of bankruptcy. This is what any struggling independent company does with it’s suppliers and creditors and all I am suggesting is that GY start treating the taxpayers’ money like it was their own money in a similar way.  It is not easy, it is stressful for both sides, and it takes a lot of time.  But I believe that without some significant change in GY operating procedures it is only a matter of time until GY reaches that point anyway.

What GY has to do in each of the first three cases below is convince GY’s partners and suppliers that it’s a GOOD POSSIBILITY that they might have to deal with GY after GY declares Ch 9 Bankruptcy. If that happens (and the creditors/suppliers will know this) GY can reject any existing contract of GY’s choosing if they want.

Think about that last statement.  If GY declared Chapter 9 bankruptcy, GY would be able to reject any current contract that they have with another entity and only keep the ones they like. That’s a big deal.  Think Indians, Reds, Westcor, CTCA, Sunteck, Sub Zero…..

Here are the 10 recommendations.

    1. Indians and Reds. (+ $4 million). Tell the millionaire owners of the teams that things look pretty bleak.  Have Larry Lange make a grim presentation based upon his and Terry Canada’s “long range forecasting tool” that they showed GY council on Oct 17.  FOR ONCE just assume the worst and hope for the best rather than GY’s normal opposite approach.GY taxpayers are spending $100 PER FAN TICKET to have these millionaire’s 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 in.  $ 2 mil is operating costs and another $5 mil is interest expense. But last year, @ $40 spent per paying customer, there should have been about $5 mil in revenues.  GY only got $1 mil.  The Indians and Reds got the rest because by contract they get nearly 80% of everything. The conversation would go like this.

      “Dear Team Owners. If we don’t do something right now, we believe there is a good chance that GY will have to declare Ch 9 and then we would have to reject our lopsided current agreements with you and begin anew with one that will favor taxpayers. Therefore, between now and whenever that may happen, we find it necessary to limit our stadium operating costs to one ticket taker and one gate keeper at the stadium during March and lay off everybody else.  Sorry in advance for the long lines.
      However, we do have an alternate proposal.  We propose to change the current 20/80 revenue split which is currently in your favor to 75% GY / 25% teams on everything except your merchandise, which you can keep.  We do that until year 10 of our agreement when we agree to negotiate in good faith to restore the original agreements assuming GY is still a float.”

    2. Westcor.  (+ $ 1 mil per year) Same thing.  Just change the numbers and references above. See my previous article for the details.  No more sales tax revenue to Westcor.  That money (running at more than $1 mil per year) comes to GY until the mall is up and operating.The agreement we made to allow you to extend the start up for a measly $1.3 million?  Instead, we want to use Larry Lange’s optimistic charts of many more millions of dollars per years of tax revenues as your cost to extend if you want to continue to buy your way out of the original deal.   We’ll also eliminate the special treatment and discounts you’re getting on permit fees.

      You don’t like our offer Westcor?  The alternative is that we will find it our civic duty to our taxpayers just as you answer to your shareholders, in order to save money and reduce our risk of losing essential services, to immediately lay off every GY employee who has, or may be involved in, currently or in the future, with approving, inspecting, and in any other way facilitating your start up.  We’ll farm it all out and leave one guy in charge to look over the work when he has the time because it might just be our city manager is all that’s left to turn out the lights.  It might cause significant delays to you but we really don’t have any other choice, do we?

      And by the way, Westcor.  Before you start poor mouthing us about $1 million measly bucks we noted in your parent company Macerich’s latest news release that you upped your dividend to your shareholders (which indicates you don’t have anything better to do with your money) by 10%. Since you have over 130 million shares outstanding, the dividend INCREASE is more than $25 million per year.

    3. St. Gobain, Suntech, SAS, Sub Zero, and any other resident business who recently got, or currently has corporate welfare from GY. Same plan as Westcor.  Tear up the agreements or services will be minimally available until further notice.  How much is this worth?  Who knows. Maybe a lot.  Got to be a couple million a year, though, given all the hubbub made about them.
    4. All city departments implement a 5% expenditure cut with no service reductions.   Don’t think you can make that happen Mr. Department Director?  Thanks for your service, we’re promoting from within, who was your highest rated employee last year in your department? +$3 million.
    5. Repeal the Meet and Discuss ordinance. Too many rules, too much work, we don’t have the money to pay staff to manage something like this.
    6. Repeal the 1% for the arts ordinance. We can’t afford it right now.
    7. Get a real handle on where retirement and benefit costs are going in GY with some realistic numbers and define a plan to limit their future increases to no more than annual average AZ employee income increases or some other similar measure.  Here is my article explaining how GY has ignored it.
    8. Find out how GY can un-annex Mobile and then do it.
    9. We pay 7 council people nearly $100,000 per year in salary. They should all surrender it. Wally claimed during the campaign that she didn’t even know it was a paid position so she shouldn’t miss it, should she?
    10. Don’t spend the money that GY receives in savings from the 9 programs above.  Start equally paying down debt and lowering the cost to live in and do business in GY for property owners, small businesses, and consumers.  This would include property taxes, permits, inspections, and sales taxes. Put all city directors on a significant bonus program which would allow them to add up to 25% to their salary each year if goals are achieved. In order to do this, in addition to passing a published working budget use a 15% lower budget or a budget which is no greater than the previous year’s actual spend as the target for the directors’ bonuses.  This is similar to what Litchfield Park does.

My easy to use GY council email list can be found in the upper left of all categories on this page.

Winter Is Here

St. Louis won the series in a memorable fall classic. Whoever you cheered for, it was a suitable finish to a season which also gave us more hope in the D’Backs.

But for some of us, as we slowly slip into withdrawal, we can think of nothing to cheer us for the next 5 months.

Did I say 5 months?

There IS something good about living in Goodyear. Only 4 months!!

Buying Time

Still think GY’s not in serious financial difficulty?

This week GY council passed an ordinance  PIC refi ord 2011 10  allowing GY Finance Department (GYFinD) to put in place a refinance scheme to lower GY’s debt service, specifically for the stadium.  GY Finance appears to be interested in refinancing in excess of $27 million in future debt service for the stadium.  That’s nearly 10% of GY’s total debt of about $300 million for only an “up to” $1 million in savings over many, many years.

According to GYFinD, at current rates they will save the city as much as $1 million in debt service costs starting right now as a result of this action. That means that they can spend that money right now.  Basically what they plan to do is borrow money in order to buy back their own debt and try to re-issue it at lower rates.

But it gets better.

In the meeting Oct 17 where finance presented this scheme to GYCC, they told council that these financial shenanigans would not extend the payment length of any of the new debt to achieve the savings.  GYFinD’s power point presentation 2010 10 Lange ppt  shows on page 16 that the bonds in question extend until 2032. That’s about 20 years out.

But that’s not what the ordinance says that GYCC passed last night (ord link above).  The ordinance says GYFinD may issue new bonds for “a maturity not to exceed 30 years”.

More to come.

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

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