A pair of Scottsdale, Ariz., residents have sued the city and a number of top officials, claiming the city's subsidies to TPC Scottsdale are tantamount to "crony capitalism."
Plaintiffs Mark Stuart and John Washington filed the suit on Tuesday in Maricopa County Superior Court, saying $15 million given to the home of the Waste Management Phoenix Open for improvements will provide a return to the city merely one-fifth that investment.
“The Arizona Constitution and the Scottsdale city charter flatly prohibit crony capitalism and welfare for the wealthy,"said Kory Langhofer, attorney for the plaintiffs, in a statement to AZCentral.com. " This lawsuit will enforce the law and ensure that Scottsdale residents get a fair deal from their elected officials.”
Stuart and Anderson claim that a contractually required payment under a city-approved lease agreement between the city and the PGA Tour, which owns TPC Scottsdale, violates provisions in state and local law regulating city-provided financial support to private entities. The $15 million will be used to renovate the club and its facilities, including the men's locker room at the club.
When contacted by Golf News Net, the PGA Tour declined to comment on the lawsuit.
The PGA Tour pays 10 percent of golf revenue to the city and another 2 percent in pro shop, food and beverage sales. According to PGA Tour data, that amounted to $981,422 paid to Scottsdale in 2012. As part of that 20-year agreement, the PGA Tour agreed to pay the city an additional $4 million (or $200,000 per year) in fees by increasing the city's cut of golf revenue to 12.5 percent.
In extending its lease, the PGA Tour also agreed to keep the Waste Management Phoenix Open at TPC Scottsdale for another six years, through 2022.
The Waste Management Phoenix Open generates $4.5 million in sales tax revenue to the city, part of the estimated $90 million total economic impact to the region. The Thunderbirds organization, which hosts the tournament, have donated some $69 million to local charities since the event arrived in Scottsdale.
However, a May 2012 city report indicates Scottsdale has lost nearly $26 million in its lease and operations deal with the PGA Tour since the course opened in 1986. That $26 million includes land and construction costs for the two course on the property, improvements and debt service for municipal bonds created to finance TPC Scottsdale.
TPC Scottsdale isn't the only golf course tangential to Stuart and Washington's legal crusade. The pair, who are not shy about filing civil action, sued the city in June for $1.5 million the city gave to McDowell Mountain Golf Club for improvements. That money was paid by the city using a per-round fee charged to golfers. In exchange, the club agreed to pay a higher percentage of its gross sales to the city.
A city motion to dismiss the lawsuit in September was denied despite the suit's misinterpretation of the Arizona Constitution's Gift Clause.