Gila River Arena, Glendale, Ariz.
Coldplay, promoted by Live Nation, is booked for Aug. 23 at Gila River Arena, a venue to be managed by AEG Facilities beginning July 1 per a deal that was finalized last night by the Glendale (Ariz.) City Council. It’s hopefully a sign of good things to come for the venue, which is facing another major negotiation, re-signing the Arizona Coyotes National Hockey League team as the major tenant.
A new general manager will be named in the next few weeks, replacing Monty Jones Jr., who opted to stay with Spectra Venue Management, the incumbent.
City Council approved the private management contract with AEG Facilities, negotiated over the last two months, at its Aug. 26 meeting. Chuck Steedman, COO of AEG Facilities, said it is a deal in which “we are truly partners with the city. They are making a contribution into revenue.”
The terms require the city to put $5.6 million into the revenue account. AEG Facilities deposits revenues they generate, and at the end of the fiscal year, the arena manager will disperse EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization). AEG Facilities gets the first $500,000, the city gets the next $500,000 and, of the remainder, 50 percent goes to AEG and 50% to the city until each has received $1 million. Thereafter, 75% is distributed to AEG and 25% to the city.
The contract further reads: “For the avoidance of doubt, if EBITDA is negative for any Fiscal Year, Arena Manager shall not have any right to any disbursement or fee as compensation for its Operation of the Arena for such Fiscal Year and the City shall not have any additional obligation to fund the Operation of the Arena other than as set forth in Section 4.1(a).”
Section 4.1 Funding of Arena Operation reads that the city shall deposit $2,800,000 into the operating account July 1; $2,800,000 no later than Oct.1 and $1,400,000 no laster than Jan.1, through the five-year term and five year renewal term of the contract.
This also adds all rent and other amounts due to the City from the Coyotes under the Coyotes Lease or from the naming rights partner into the operating account.
The entire contract is viewable using this link: Glendaleaz.com.
The city will also contribute $500,000 a year to capital improvements.
Jones. who has been Gila River Arena manager for Spectra Venue Management for the last three years and with Spectra for 12 years, said he is not staying on when AEG Facilities takes over July 1.
Steedman said an announcement about a new general manager would be made in the next few weeks. Generally speaking, per AEG Facilities track record, most of the staff will likely not move out when they move in, Steedman said. “It’s a good staff,”
Jones noted that a majority of the staff has been there since Gila River Arena opened in 2003, a ride that has included original ownership, bankruptcy, a National Hockey League takeover, then new owners, then Spectra and now AEG. This is “Lucky 13,” the arena’s 13th year in operation. Jones said “morale is not bad, it’s just another change for them.”
During the new management negotiation phase, day-to-day managing an arena can get interesting. Besides Coldplay, AEG has booked Duran Duran, also a Live Nation promotion, for Aug. 4, and USA Gymnastics, which is currently on presale and is an AEG production, for Sept. 22.
As business came in over the transom, Jones would take the hold and relay information to AEG’s Steedman, Eric Bresler or Dale Adams to finalize. If the date fell before July 1, he would book it. Fiscal 2016, which ends June 30, has been a good one, with 14 major concerts for Spectra, Jones said. “We’re not going to throw our hands up,” he said of the transition.
Steedman said the next phase is for AEG to generate an operating budget for city approval prior to July 1.
They have already begun working with the Coyotes in hopes of extending their lease. It helps that AEG owns an NHL franchise (L.A. Kings) and manages other buildings with hockey teams. "We understand their needs," Steedman said.
In an earlier story in VT Pulse (Feb. 2016), Glendale’s Tom Duensing, assistant city manager, said one of the appealing aspects of AEG’s bid is their tendency to look at the entire area and development possibilities, as well as their ties with the NHL. The city is hopeful the deal with AEG will result in further development around the Gila River Arena, he said then, adding that might help entice the Coyotes to stay. Their lease expires June 30, 2017.
Going into negotiations, Duensing said the city was looking for cost certainty. It is also very important to keep the Coyotes, he said. Both the city and AEG have had some productive discussions with team owners, he added.
Interviewed for this story: Chuck Steedman, (213) 763-5446; Monty Jones Jr., (623) 772-3200