Back in February, while millions of football fans watched the New England Patriots defeated the Seattle Seahawks in Super Bowl XLIX at the University of Phoenix Stadium, few fans were probably aware that the nine-year-old stadium has a secret: money troubles. The facility, which first opened in August of 2006, is a multipurpose football stadium located in Glendale, Arizona, west of Phoenix. It’s the home of the Arizona Cardinals of the NFL and the annual Fiesta Bowl. The stadium will host the Pro Bowl and CONCACAF Gold Cup matches this year, and the NCAA Final Four in 2017. So while it’s having no trouble booking events, its ability to meet its financial obligations is far more uncertain.
The authority that oversees the stadium has made its debt payments on the building over the past four years, but was nearly $48 million short in meeting its voter-approved obligations for tourism promotion, Cactus League ballparks, youth sports and its own operations, according to the Arizona Republic.
The shortfall was recently uncovered by an audit of the stadium’s finances by Arizona’s Auditor General, Debra Davenport, and released on September 1st. By its own projections, the authority is facing a $34 million shortfall for those categories over the next five years. The shortfall would be exacerbated by the elimination of a 3.25 percent rental car tax in Arizona that is facing court challenges (and that currently provides the authority with about $12 million annually). Without the rental-car tax revenue, the authority would have been unable to pay its monthly bond debt from October to December 2011, according to the report.
“The audit also underscores the severe financial consequences for the authority's funding if a lower-court rental-car tax ruling is upheld,” wrote the Republic’s Peter Corbett. “That rental-car surcharge, which a Maricopa County Superior Court judge ruled unconstitutional in June 2014, has generated $122 million for the authority from 2001-14.”
Should the August Superior Court ruling stand, Arizona would be required to pay back the entire amount of rental car taxes collected since 2009 when the suit challenging the tax was filed. Even if the tax is upheld in a final court decision, that money may not flow to the stadium. In June of 2014, another Superior Court ruling found that an excise tax on automobiles – and the rental-car tax falls into this category -- must be used for highway-related projects according to the state constitution. In the meantime, Fitch Ratings, a credit-rating agency, has given the authority's bonds a "negative watch rating," which will ultimately make it harder to sell the bonds to repay the stadium debt.
Jeff Gove, Auditor General performance audit manager, told the Republic that money for the authority to pay for the stadium obligations has not been as plentiful as was projected 15 years ago when the state legislature created the stadium-funding referendum.
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