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Volume 21 No. 34
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Desert Dilemma

Twenty years ago, the Phoenix metro used sports and new facilities to form an identity. Now, teams are seeking new facilities, but the region wonders if it still needs sports to thrive.
Photo: getty images

Arizona has become a case study for the push-pull that comes with major sports facility projects as teams search for public funding and workable sites for new or renovated venues.

In downtown Phoenix, the Arizona Diamondbacks resolved a funding fight with Maricopa County over repairs at Chase Field, but the deal lets the team start looking for a new ballpark immediately and even exit Arizona altogether if Major League Baseball deems the current ballpark unfit.

Next door, the Phoenix Suns are trying to hammer out a deal for a $450 million renovation of 26-year-old Talking Stick Resort Arena.

In suburban Glendale, the Coyotes have had five different owners since 2003 and now see a new arena in a different location as a crucial need for becoming a viable franchise.

The only major Phoenix-area team not looking for a new or completely revamped home is the Arizona Cardinals, who play at University of Phoenix Stadium in Glendale.

Like other markets throughout the United States, the projects in Arizona have faced stiff headwinds in the bid for public funding and from community and watchdog groups. Potential deals are also hindered by Arizona’s constitutional restrictions on subsidies and by it being the only state without tax increment financing.

“Arizona has one of the strongest anti-gift clauses in the country, making it more difficult for a municipality to publicly fund a stadium project,” said Jordan Rose, managing partner of Rose Law Group and a prominent land-use attorney in Scottsdale. “Having the voters pass a dedicated tax to fund a complex has become politically challenging.”

With so many projects in play in the Phoenix area, how they are resolved and where the teams land could reshape the market’s place in pro sports for decades to come.

• • • •

Maricopa County — which encompasses almost all of metro Phoenix — is the fastest-growing county in the U.S., gaining 73,650 new residents between March 2017 and March 2018, according to the U.S. Census Bureau. Metro Phoenix’s population now stands at 4.7 million, compared to 3.25 million in 2000.

Being home to all four major sports leagues and hosting big events such as the Super Bowl, Cactus League baseball and college football championships has been intertwined with Phoenix’s efforts to cast itself as a major city.

But as the desert market has grown, some views have changed over how much sports is still that linchpin.

Downtown Phoenix was a sleepy, and in some places sketchy, afterthought in the region’s growth before the Suns, under then owner Jerry Colangelo, and the city built what is now Talking Stick Resort Arena there in 1992. Colangelo and Maricopa County built Chase Field for the expansion Diamondbacks next door in 1998.

“At the time they were critically important for downtown. They’ve made a huge difference,” said Dave Krietor, CEO of the Downtown Phoenix Inc. economic development group.

Krietor said Talking Stick Resort Arena has brought more activity downtown by being the market’s top concert venue. “They’re booking well over 200 nights per year,” he said.

But Krietor also said downtown Phoenix isn’t as reliant on sports as it used to be.

When the Suns moved downtown, the metro Phoenix population was about 2 million, Krietor said. Now as the region closes in on 5 million people, downtown Phoenix has an 11,000-student Arizona State University campus, is the center of a regional light rail system, and has 180,000 workers as part of its daytime population.

“I think now we are on an even keel,” Krietor said. “I think they’re important for downtown. But downtown is also important for them.”

That sentiment also can be found in the deal reached in May between the Diamondbacks and Maricopa County to settle their fight over who should pay for $185 million in repairs to Chase Field. The deal calls for the team to cover repairs, but also lets the Diamondbacks start looking for a new ballpark site, including outside of Arizona.

Maricopa County Board of Supervisors Chairman Steve Chucri isn’t worried about the Chase Field site if and when the team pulls up the moving trucks. Chucri said the deal takes taxpayers “completely off the hook” for ballpark repairs.

He expects the Diamondbacks to play there at least another five years under the agreement. Chucri is open to a future rebuild of Chase Field but he’s not worried if the team opts to leave. The county still owns the 25 acres that includes the ballpark, and Chucri estimates the land itself is worth as much as $80 million.

Like Krietor, he points to the growth of downtown Phoenix and believes something new could replace the ballpark. “I think we will keep a very open mind about the future of Chase Field,” he said.

County Supervisor Clint Hickman, whose family owns the largest egg farm in the Southwest, was the only vote against the Chase Field deal. He doesn’t like the provision — which offers neither a timetable nor specifics — that allows the team to leave Arizona if MLB decides the ballpark is unfit.

“Ultimately, the county taxpayer expected the Diamondbacks to play at Chase Field for 30 years,” Hickman said, citing the original lease. “Now they can leave tomorrow — without penalty — if MLB deems it necessary. At some point, a contract should be a contract, especially when you’re talking about a commitment to the public.”

The Diamondbacks could redevelop the 48,500-seat stadium into a smaller downtown footprint. However, that could have design challenges such as what to do with the upper deck and how to create a more intimate setting with the structure’s retractable roof.

Diamondbacks Managing Partner Ken Kendrick said in a prepared statement that the team will be “diligent in determining the best long-term stadium option for the D-backs. Our front office will continue to focus on our team on the field, the fan experience and the key role we play in the Arizona community.”

Diamondbacks executives declined to comment further.

• • • •

Downtown Phoenix also could be reshaped based on the outcome of negotiations between the Suns and city of Phoenix on a $450 million modernization project for the arena, which is one of the oldest in the NBA and also home to the WNBA’s Phoenix Mercury. The team and city would split the cost of the renovation, but specifics are still being negotiated.

The Coyotes, who continue to sign one-year leases with the city of Glendale for Gila River Arena, have shown a desire to share a renovated or new arena with the Suns, given all the competition for public funding. However, Suns Managing Partner Robert Sarver has not revealed any interest in doing so. The Coyotes would rather be in downtown Phoenix or the east side of the region closer to Scottsdale’s wealth and where the team sees a larger concentration of hockey fans and youth players.

“For the Coyotes, achieving a long-term arena solution begins with  the priorities that currently occupy our organization’s full focus: positively impacting our community, growing the game of hockey in Arizona and continuing to improve our product on the ice,” said Coyotes COO Ahron Cohen.

The city of Glendale, meanwhile, remains open to a longer-term arrangement with the Coyotes. “We’ll keep working every day with the Coyotes,” said City Manager Kevin Phelps.

Both the Suns and the Coyotes have drawn attention from The Goldwater Institute. The watchdog group has sued the city of Phoenix over a non-disclosure agreement it has with the Suns in their arena negotiations, and the group also has opposed longer-term Coyotes deals in Glendale.

“They should be up for public scrutiny,” said Goldwater attorney Jonathan Riches, who along with attorney Alexander Kolodin hopes the case will set up more challenges nationwide to non-disclosure agreements used by sports teams and big companies such as Amazon and Apple.

“You can’t just sign away the public’s right to know,” Riches said.

Arizona has constitutional restrictions on government gifts to private businesses and is the only U.S. state without tax increment financing. That financing method allows tax revenue in a specific area, such as a stadium district, to be captured and put back into a project. It also allows for upfront financing of projects.

The Suns declined to comment on the lawsuit and arena. Adding to the intrigue is that Phoenix voters will pick a new mayor in November. Current Mayor Greg Stanton, who is stepping down to run for Congress, has backed a new or renovated arena that could house the Suns and Coyotes. Some leading candidates to be the next mayor have been more critical of the arena deal.

Mesa Mayor John Giles said “there will always be skeptics” when it comes to public financing and carving out special tax zones. He’s seen that firsthand, as Mesa voters approved $99 million in public financing in 2010 to build a 15,000-seat ballpark for the Chicago Cubs and keep the team from moving its spring training to Florida.

Giles contends that public financing of stadiums — especially in the case of the Cubs — has benefited Mesa and Arizona overall. “I’m convinced by the data there is a net gain at the end of the equation,” he said.

Giles points to a new office development next to the Cubs ballpark and the boost to travel and tourism. The Cubs drew more than 222,000 fans to Mesa for spring training this year, the most of any team in Arizona or Florida. “A lot of people know Mesa because of the Chicago Cubs,” he said.

Barrett Marson, CEO of Marson Media and a veteran political and business consultant, said future pushes for public money need to drive home the economic development and community benefit to voters. “And that these venues do more for the community than just host a hockey or basketball team,” he said.

Still, Goldwater’s Riches counters that sports venues should be privately financed. He points to the increased valuations of pro sports teams and recent sale prices of franchises.

“If you can raise that kind of private capital then, why wouldn’t you in other contexts?” Riches said.

• • • •

With all the dealmaking in play, could tribal lands in the midst of the metro area be the best solution?

The Salt River Pima-Maricopa Indian Community is already home to the Phoenix Rising USL soccer club and has been eyed by the Diamondbacks and Coyotes for potential moves.

The Native American reservation is adjacent to Scotts-dale and Tempe (home to ASU). It is already home to a spring training ballpark that the Diamondbacks share with the Colorado Rockies as well as a Topgolf location, tourist attractions and two casinos.

The tribe is increasingly pro-development, has prime land along the busy Loop 101 and 202 freeways, and has casino money. Being on tribal land not only can allow teams to leverage casino money in a stadium deal but also helps the teams avoid public financing fights.

It’s just getting the tribe to help pay for the project.

Jeff Roberts, vice president for Salt River Devco (an economic development group for the tribe) said his group is not having discussions with teams.

“That does not mean there may not be discussions with third parties that control land or the community government directly,” Roberts said.

Whether it’s the Indian community or sites in other areas of the Phoenix market, plenty of dealmaking remains between the pro teams and local governments.