My highlights from City of Glendale Arena Management Deal

Definitely not a lawyer, but for my prep I pulled the following highlights from the agreement – just a rough cut and paste, more for myself then to be published, so please excuse the format and typos

The document is 86 pages: Arena Management Agreement

In addition, I recommend checking this full breakdown from George Faller as well as the latest story from Craig Morgan at Fox Sports Arizona: Morgan

1.1.1 Subject to an early termination right exercisable after five (5) years (and on specified terms and conditions) and only upon the occurrence of substantial post-Closing Date operating losses (see Section 3.3) the Phoenix Coyotes NHL Team shall play all of its Home Games in the Arena Facility (see Section 8.3.1(a)).

1.1.2 With respect to the Arena Facility and Arena Parking, professional management and consulting services shall be provided by the Arena Manager (see Section 8.1 and 8.2).

1.1.3 Except for capital expenditures to maintain and improve the Arena (see Section 11.3), all perating Expenses shall be the responsibility of, and shall be paid by the Arena Manager (see ection 8.1).

1.1.4 The City shall pay the Management Fee to the Arena Manager during the Term

10. ARENA MANAGEMENT FEE; TAXATION.

10.1 Management Fee. During the Term, in consideration of the Arena Manager’s agreement to perform the management and other services set forth in this Agreement and to pay all operating and maintained costs associated with the Arena (other than capital costs as provided herein), provided there is no breach by the Team Owner of the obligations under the Noncompetition/Non-Relocation Agreement or a material breach by the Arena Manager of its obligations under this Agreement, the City shall pay to the Arena Manager, by wire transfer of immediately available funds to an account specified by the Arena Manager, a Management Fee, paid in quarterly (on a three calendar month basis) installments in arrears on or before each October 1st, January 1st, April 1st and July 1st during the Term the following amounts or a pro-rata portion of such amounts based upon the number of days in such quarter:

10.1.1 For the period beginning on the Closing Date and ending on the last day of the calendar quarter in which the Closing Date occurs, an amount equal to $15,000,000.00 multiplied by a factor equal to the number of days from the Closing Date to the end of such quarter divided by 365, which for the purposes of clarity shall be calculated as follows: $15,000,000 X (Number of Days from Closing Date to June 30, 2013) 365

10.1.2 In no event shall the Management Fee exceed $15,000,000.00 per year.

10.1.3 The City may, by written notice to Arena Manager, require that any revenues owed to the City, and/or any amount in the Surcharge Account, be applied to the City’s obligation to pay The Management Fee.

1.1.5 The City shall receive (or, where noted, share in) certain anticipated revenues. The revenues to be received by the City include revenues derived from the following sources and activities:

(a) A City Surcharge of not less than $3.00 on each Qualified Ticket for a Hockey Event at the Arena Facility, with increases in the City Surcharge based upon attendance (see Section 9.1.2(a)(i));

(b) A City Surcharge of $5.00 on each qualified Ticket for a non-Hockey event (see Section 9.1.2(b));

(c) A Supplemental Surcharge of $1.50 per Qualified Ticket throughout the Term applicable to all Events to be placed in an escrow account which may be drawn upon by City to fund certain revenue deficits on a Fiscal Year basis (see Section 9.1.3);

(d) Parking revenues of $10 per car for each Hockey Event (above a $20,000 per-Event base payable to the Arena Manager) (see Section 8.2.1(e)); (e) Seventy five percent (75%) of parking revenues of $15 per car for each non-Hockey Event ) (see Section 8.2.1(e));

(f) Rent-free use of the Arena for certain City Sponsored Events and Community Events (see Sections 8.9.2 and 8.9.3);

(g) All revenues (net only of Event-specific operating expenses) for City Sponsored Events and Community Events (see Sections 8.9.2(e) and 8.9.3(c));

Commencing with the 2013/2014 NHL hockey season, minimum parking rates shall be $10.00 per vehicle for Hockey Events and $15.00 per vehicle for Non-Hockey Events, with the rates for all Events to be established by Arena Manager in its reasonable discretion. Within fifteen (15) days following each quarter during the Term, Arena Manager shall remit to City and Team Owner their respective shares of the “Arena Parking Area Revenue” as provided in this Section 8.2.1(e). Team Owner shall be paid the first $20,000.00 of Parking Profits generated from each NHL Regular Season Home Hockey Game and City shall be paid the balance of Parking Profits generated from each such game. City shall be paid seventy five percent (75%) of the Parking Profits generated from any Pre-season Game, Play-off Game, All-Star Game and Non-Hockey Events. City shall be paid 100% of the Parking revenues associated with any City Event. Other than as provided in this Section 8.2.1(e), the Arena Manager shall not be obligated to remit any revenue from the Arena Parking Areas to the City (subject to remittance of all applicable taxes, and further provided that this Section 8.2.1(e) sh

(h) Twenty percent (20%) of all income received by Arena Manager from the sale of Arena Facility Naming Rights (see Section 8.6.4(b)(i));

(i) All income received from the sale of naming rights for a new, smaller Stage/theatre venue that may be constructed and used within the bowl (main seating area) of the Arena Facility (see Section 8.6.4(b)(ii)); and8.6.4

Arena Facility Naming Rights. (a) The Arena Manager, in consultation with the Team Owner, shall have the sole and exclusive rights to sell and license all Naming Rights to be effective during the Term; provided, however, that the sale or license of Naming Rights to the Arena (or any portion of the Arena Facility) shall be subject to the approval of the City, which shall not be unreasonably withheld; provided however, the City’s rejection of (i) any entity with which the City is currently in litigation or litigation is overtly threatened, or (ii) any name incorporating the name of any other municipality in the State of Arizona, shall be deemed reasonable. The Arena Manager shall use commercially reasonable efforts to cause the name “Glendale” (for example: “XXXXXX ARENA in Glendale, Arizona”) to be included in the use of name of the Arena Facility or a major component thereof; provided however, Arena Manager shall not be required to incur additional costs as a result of the inclusion of “Glendale” in the use of the Arena’s Name.

 (j) Annual fixed rent to be paid to the City in connection with the use by the Arena Manager and/or Team Owner of the use of the Arena Facility and Arena Parking in an initial amount of $500,000 per year (see Section 6.6.1).

Base Rent. As part of the consideration for the leasehold interests granted to the Arena Manager under this Agreement, during the Term the Arena Manager shall pay to the City rent in the following amounts, which shall be paid in equal quarterly installments, the first installment due and payable on the commencing on the Closing Date and thereafter each installment due and payable on or before each quarterly (on a three calendar month basis) anniversary of the Closing Date during the Term:

6.6.1 For the five years following the Closing Date, $500,000 per year; provided however, the Base Rent for the first Fiscal Year shall be $500,000 prorated (based on a 365-day year) if the period from the Closing Date to the end of the Fiscal Year on which the Closing occurs is less than 365 days.

6.6.2 Beginning of the sixth anniversary of the Closing Date and continuing until the day before the thirteenth anniversary of the Closing Date, $650,000 per year (prorated for partial years as set forth in Section 6.6.1); and

6.6.3 Beginning of the thirteenth anniversary of the Closing Date and continuing until the day before the fifteenth anniversary of the Closing Date, $800,000 per year

(ii) The Team Owner shall use commercially reasonable efforts to have the name of the Team changed to the “Arizona Coyotes” as soon as is commercially feasible.

City Suite. The City shall have the right to continue to use the existing Suite used by the City (Suite Nos. 1238 and 1239), including Tickets (for seating and standing room in such Suite) to all Events, all at no cost to the City. Food and beverage service for such Suite shall be provided at the same cost and manner as food and beverage service provided to the “Owner’s Suite” or any suite licensed to or used by the Arena Manager, the Team Owner, or their respective Affiliates, whichever is lowest.

CHARGES AND FEES. 9.1 City Surcharge.

9.1.1 The Arena Manager shall take the following actions to collect and hold in trust for the City for the purposes of depositing into the City Surcharge Account, and which shall not be Operating Revenue, a surcharge in the amount described in this Section 9.1 for each Qualified Ticket (the “City Surcharge”) and an additional surcharge in the amount described in Section 9.13 of this Agreement for each Qualified Ticket (the “Supplemental Surcharge”): 9.1.2 Amount of the City Surcharge. The City Surcharges shall be in the following amounts:

(a) For all Hockey Events that are Fee Activities during the 2013-2014 Season, $3.00 per Qualified Ticket with respect to each Fee Activity (for which the City has not waived the City Surcharge), subject to increase for subsequent seasons during the Term as follows: (i) If per game attendance averages less than 15,000 in any one season, the City Surcharge during the immediately succeeding season will be $3.00 per Qualified Ticket;

(ii) If per game attendance averages between 15,000 and 15,999 in any one season, the City Surcharge will $3.25 per Qualified Ticket for the immediately succeeding season;

(iii) If per game attendance averages 16,000 and 17,000 in any one season, the City Surcharge will be $3.50 per Qualified Ticket for the immediately succeeding season; and

(iv) If per game attendance averages more than 17,000 in any one season, the City Surcharge will be $3.75 per Qualified Ticket for the immediately succeeding season.

(b) For non-Hockey Events during the Term, $5.00 per Qualified Ticket with respect to each Fee Activity (for which the City has not waived the City Surcharge).

9.1.3 Supplemental Surcharge. In addition, throughout the Term, a Supplemental Surcharge of $1.50 per Qualified Ticket shall be imposed by the Arena Manager for all Hockey and nonHockey Events. The Supplemental Surcharge shall be deposited by Arena Manager in an escrow account in the name of Arena Manager (the “Supplemental Surcharge Escrow Account”) in accordance with and subject to audit pursuant to the procedures described on Exhibit “N” attached hereto (the “Supplemental Surcharge Procedures”). City shall have the right to draw upon the Supplemental Escrow Account within 60 days following the last day of each Fiscal Year, to the extent City received less than $8,500,000 in total revenue from operations at the Arena pursuant to this Agreement during the immediately preceding Fiscal Year (the “Deficit Amount”), as further described in the Supplemental Surcharge Procedures and in an amount not to exceed the total funds available in the Supplemental Surcharge Escrow Account at the end of such Fiscal Year. The funds remaining in the Supplemental Surcharge Escrow Account following payment of the Deficit Amount, if any, to City shall belong to Arena Manager free and clear of all claims of City and shall be disbursed to Arena Manager such that said escrow account is reset to a zero balance following the reconciliation pursuant to the Supplemental Surcharge Procedures at the beginning of each Fiscal Year. The Supplemental Surcharge amounts imposed by the Arena Manager are for all purposes monies owned by the Arena Manager subject to the perfected security interest granted to City in the Supplemental Surcharge Escrow Agreement.