DALLAS — Glendale, Ariz.'s, credit will benefit from its renegotiated arena lease with the National Hockey League's Arizona Coyotes, according to Moody's Investors Service.
Moody's rates Glendale's general obligation debt at rated A3 with a positive outlook.
The term of the lease on the city's bond-funded arena was shortened significantly to June 30, 2017 from 2028, and the annual management fee payable by Glendale was reduced substantially to $6.5 million from $15 million, analysts noted.
"Net short-term savings to the city will be approximately $3.6 million annually through fiscal 2017 because the Coyotes' ownership will now collect approximately $5 million annually from ticket surcharges and parking fees from arena events that were previously paid to the city," they noted.
The City Council's actions also rescinded the full cancellation of the arena management agreement that was approved on June 10.
That cancellation was halted by a restraining order from the Maricopa County Superior Court.
"The amended agreement removes litigation risk to the city because the owners of the Coyotes, IceArizona Manager Co. LLC, a subsidiary of Renaissance Sports and Entertainment, will no longer pursue a civil suit for $200 million of damages that stemmed from the city's attempt to cancel the arena agreement," analysts added.
The arena, now known as the Gila River Arena, was financed in 2003 with $180 million of revenue bonds backed by the city's sales tax.
Built specifically for the Coyotes, the arena's future dimmed when the team's owners filed bankruptcy and tried to move the team to Canada in 2009.
To keep the team playing at the arena, the NHL bought the team and negotiated city subsidies to cover losses. The city continued to pay the team's later owners for arena management.
