It took a while longer than I had anticipated, but we have more news regarding the continued troubles of the Phoenix Coyotes, arguably the most beleaguered franchise in major North American sports.  As I already covered previously, the Yotes have been experiencing setback after setback during their brief history in the Arizona desert.  Recently though, things appeared to finally be going in the right direction for the team, as they finally returned to the playoffs again last year, the franchise had reached an important refinancing deal that saw the city of Glendale assume a significant portion of the team’s debt, and the NHL was finally beginning to make a move on selling the team to an attractive ownership group headed up by Matthew Hulsizer, the head of a Chicago-based securities firm that has had a long interest in hockey.  The combination of Hulsizer’s deep pockets and Glendale’s willingness to not only adopt a $100 million bond issue to absorb most of the team’s debts, but also pay any potential buyer $197 million over six years to keep the team in Glendale, seemed to be a major turning point in keeping the Coyotes in Arizona.  For the first time, it would actually be financially possible for the team to turn a profit.

Could the Jets be coming back?

However, the Glendale bond issue proved to be immediately controversial amongst a significant segment of the local conservative population, as many area residents were opposed to using public funds to finance the team, especially as so many of them had been unwilling to even support the team at all during their years in the desert.  In response, the Arizona-based Goldwater Institute, an organization that has long derided the use of any public monies to fund private sports teams, has threatened to file suit against the bond issue by claiming that it actually broke state law.  This threat has effectively paralyzed the NHL’s negotiations with Hulsizer to the point where it is now actively feared that the continued opposition to the bond issue could cause him to pull out of the negotiations in the same fashion that Jerry Reinsdorf (owner of the Chicago White Sox and Chicago Bulls) did the previous year.  The mayor of Glendale, Elaine Scruggs, recently held a press conference in which she called for the Goldwater Institute to stop their legal threats and that their continued opposition could cause the entire deal to fall apart (which is exactly what the Goldwater Institute wants).

Or the Nordiques?

Or how about the Scouts?

Should the Goldwater Institute stick to its guns and keep up their opposition to the bond issue, the Coyotes troubles could very well continue to pile up.  Additionally, as the league has assumed ownership of the team, they are the ones hemorrhaging money.  The other 29 team owners are none-too-pleased at their continued flushing of money down the toilet in funding an unwanted team (especially an unwanted team that appears likely to reach the playoffs again), and their patience with the NHL’s actions have to be running thin at this point.  Canadian sports fans are undoubtedly giddy at the whole prospect of the Coyotes potentially moving out of Arizona, as several major Canadian offers have been publicly put forward to try to land an NHL team in Winnipeg, Hamilton, Quebec City, and even a second team in Toronto.  Despite the fact that the Maple Leafs would very likely block any attempt to add as second Toronto-based team, and the Leafs and the Sabres would unite to block a Hamilton-based team, the offers from Winnipeg and Quebec City would have to be viewed as extremely attractive alternatives to the NHL, especially by owners seeking to rid themselves of their shared burden in the desert.  Other American cities have likewise been lobbying for new teams, most notably Kansas City, meaning that there is plenty of interest in moving the Coyotes elsewhere from from even within the United States.

More on this undoubtedly at a later date.

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Comments
  1. Steve says:

    RE: “For the first time, it would actually be financially possible for the team to turn a profit.”

    Of course, this depends on your definition of the word “profit.” What actually seems possible is that the mounting losses of the Coyotes could be underwritten by the Glendale taxpayers.

    Seriously, you can buy the franchise for $170 milion.
    The franchise is worth at least $250 million should you choose to move it elsewhere.
    City gives you $100 M from these bonds.
    Over the next 6 years, city gives you another $197 M.

    So in essence, He’s making $550 Million from a $170 M investment, totally guaranteed by the city of Glendale.

    And nobody sees a problem with this???

    Seriously, if the deal wasn’t illegal under Arizona law, they would just go ahead with it. Someone can threaten to sue me all day long, but if I’m in the right, I don’t care about idle threats. The problem here is, that the deal IS illegal.

    • SportVotes says:

      Good points, which is why the Goldwater Institute is threatening to sue and why Glendale and the NHL are so concerned. The NHL just wants to sell the franchise and recoup their already substantial operating losses, and Glendale doesn’t want the embarrassment of losing a professional sports team, believes (perhaps incorrectly) that the long-term financial benefits of keeping the team outweighs the immediate risk from a revenue standpoint, and doesn’t want to get stuck with a worthless, empty venue.

      And when I said that it would be possible for the team to turn a profit, I fully meant that it was only possible with taxpayers underwriting their past debt. That’s the only way that a prospective owner would be willing to buy the team unless they’re allowed to relocate to another city. If there is no provision for someone else to take over the team’s debt, there’s no way that the Coyotes can continue to exist in Arizona, plain and simple.

  2. Ace_Italia says:

    My problem with Bettman’s decision to bring hockey to the southern half of the U.S. is that they entered markets that show little to no interest in the sport. I’m sure the NHL has a vetting process to screen potential franchise sites. However, it doesn’t seem like they have done a good job figuring out how the local populations of cities like Phoenix or Atlanta would respond once the “fad” of pro hockey in its first few seasons fades. You have to know your audience. The NHL hasn’t done a good job of that in regards to some of its franchise locations.

    If the Coyotes move back to Winnipeg they’ll have to rely on an immensely smaller population with a smaller income to fund the team. I don’t doubt the fan-base’s loyalty, I’m just not sure ticket and merchandise sales will be enough. Corporate sponsorships are crucial. If and when the deal falls through, Winnipeg will probably start elaborating on their financial game plan.

    As far as other markets for the Coyotes or Thrashers, I’m a bit down on the NHL’s chance at success in a new American city without a large TV deal with ESPN. Like it or not, If your sport doesn’t air on ESPN it doesn’t succeed. The strike not only hurt the image of the league in its fans eyes, but (in my opinion, more importantly) it destroyed the relationship it had with ESPN. “National Hockey Night” and “NHL2Nite” were big keys in the NHL’s 90’s success. Versus, NBC and NHL Network are small potatoes in comparison to attention the league would receive with an ESPN homecoming.

    • SportVotes says:

      I agree and disagree with you in regards to Southern expansion. I agree that the idea of expanding so much so quickly into an untested market was likely a big mistake. The NHL added (thorough expansion or relocation) seven teams to the Southern United States in just seven years. While these teams have had some success on the ice, as the Stars, Bolts, and Canes have all won the Stanley Cup, almost every team that was added has experienced significant problems during their existence, with the Stars probably the only consistently stable team (though I would say that the Preds and Canes are both stable franchises now). So, while the Southern U.S. has shown itself capable of holding a few successful NHL franchises, the facts clearly show that the NHL expansion was too large and too fast, and as a result the Bolts, Panthers, Yotes, and Thrashers are among the most troubled franchises in professional sports, as evident by the fact that three of those four teams are the lowest valued major franchises in North America:

      https://sportvotes.wordpress.com/2011/02/15/2010team-valuations/

      When it comes to the Canadian market, a lot of the factors that caused the Jets and Nordiques to leave have been mostly rectified. The Canadian dollar is no longer weaker than the American dollar, Winnipeg and Quebec City both have active corporate interest in sponsorships, and Winnipeg has a modern (albeit somewhat small) arena and Quebec City has approved municipal funds for the construction of a new arena which is currently being designed. I think that either of those cities could make a very strong case for being NHL-caliber locations.

      However, adding Canadian teams, while a very popular idea up north obviously, doesn’t add anything to the NHL’s wishes to gain a major American TV contract, which would bring in the megabucks to the league. The NHL wants badly to get a deal with ESPN, not only for the exposure they would receive from a larger audience being able to watch games regularly, but likely due to the fact that ESPN would pretty much be forced to hype their own product like they have hyped the NBA, which they currently have rights to. If they can get a big contract from ESPN, the NHL could very well rake in enough dough to save troubled franchises in large American markets like Phoenix and Atlanta that they would very likely need in order to actually gain leverage to get a major American TV contract. It’s almost a catch-22 of sorts… the NHL can’t sustain troubled American franchises without a major contract, but the NHL likely can’t gain a major TV contract without teams in large, questionable markets.

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