Drama in the Desert 5 – How the heck is this still going on?!? Edition

Very long time, no post.

In the months since the last SportVotes post… pretty much nothing has happened in Glendale.  I mean, sure… they had a solid playoff run and there was a controversial public financing plan and a threatened public referendum and a new potential owner is trying to gather the funds to finally buy the Coyotes, but really?  It’s just been long and dragged out beyond belief.

It’s honestly more depressing than anything, really.  That being said, it is somewhat amusing to go back and read through some of my own posts that more or less prognosticated the impending doom of the Yotes, only for it to get dragged on for another year (soon to be a second year) while the almost entirely ignored Thrashers up and moved to Winnipeg.

Is this the beginning of a new start at SportVotes?  Maybe.

2011 Forbes Franchise Valuations

Click to enlarge.

 

Drama in the Desert 3 – Glendale/Goldwater Lawsuit

Past articles on the Phoenix Coyotes and their “Drama in the Desert” can be found HERE.

Potentially as early as tomorrow, the city of Glendale will be filing suit against the Goldwater Institute for its repeated attempts to block the sale of municipal bonds meant to finance a deal that would keep the Phoenix Coyotes in Arizona.  Claiming that losing the franchise would result in a potential net loss of a half billion dollars in future revenue sources for the city, the Glendale City Council has instructed the city attorney to file suit against Goldwater Institute.  While it should come as no surprise that Glendale would bear its teeth at the conservative watchdog after their repeated questioning over the legality of the city’s attempts to push through the controversial bond issue, what should be viewed as a shocker is the potential scope of the lawsuit.  If Goldwater continues its opposition and subsequently forces the NHL to halt efforts to keep the team in Arizona, Glendale could be seeking damages in the hundreds of millions of dollars.  On top of that, Glendale will not only be suing  the Goldwater Institute for damages, but also individual members of its board of directors and even the wife of the owner of the Arizona Diamondbacks due to allegations that the baseball team has been supporting Goldwater so as to remove a major sports competitor from their market.

In my personal opinion, this is an absolute, last-ditch effort by Glendale to keep the franchise.  Grumblings from the NHL have been growing ever fiercer for months over their continued financial hardship in administering the deeply unprofitable franchise, and the other teams’ owners have all-but lost patience for continuing to fund the Coyotes while attempts to keep the team in Arizona under new ownership have floundered.  Additionally, prospective buyers have already popped up in Winnipeg that are willing to buy the franchise and pay off the debt in order to move the team and bring back the Jets.  While the NHL has obviously been interested in keeping the team in the Southern United States in the hopes of gaining a major American television contract, the prospect of the situation in Glendale dragging on has inexorably been pushing the league’s higher-ups for cutting ties in the desert and recouping their losses by selling off the franchise back to its original Manitoban roots even at the risk of losing a major media market in Arizona.

As a result of this, Glendale is firing directly at the bow of not only the Goldwater Institute, but at its directors and supporters in a single, vicious stroke.  They are going to try to scare Goldwater to withdraw their threat to block the bond issue with a lawsuit of their own and hit them in the pocketbook should Glendale lose the Coyotes.  And to my nose, this reeks of a desperation bully move.  Even if it is shown that Glendale did not break state law with the proposed massive bond issue, the prospect of facing a lawsuit could very likely delay the NHL’s sale of the franchise long enough that they simply give up on attempts to keep the team in Arizona and allow prospective owners from elsewhere to buy the team with the intention of immediately relocating as quickly as possible.

It will all come down to a blinking game.  If Glendale’s threat forces Goldwater down in the near-immediate future, the NHL’s sale of the franchise to an owner committed to keeping the team in Arizona will go through.  If Goldwater doesn’t back down and either keeps up their legal threats or even outright files a lawsuit against the city, then the NHL will blink and allow the team to be purchased by outside ownership groups, effectively killing the Coyotes.  This is going to be a battle that messily intertwines the sports world, the political world, and the business world before all is said and done.

3/9 UPDATE: Rather than making a new entry, I figured that I’d just add on some news here.

As of right now, despite Glendale’s initial intention to file suit as early as Monday, the city and the NHL are mostly stuck in a staring contest with the Goldwater Institute to see which one blinks first.  Both sides are threatening legal action and Commissioner Gary Bettman of the NHL is sounding exasperated over the continued speedbumps that have been thrown up at every step of the process in his attempts to sell the Coyotes.  Canadian media is getting positively giddy at the notion that the league’s patience could be on the verge of running out and that a return to Winnipeg could be coming sooner rather than later.  As soon as new information about the continued drama in the desert becomes  available, I will report on it here.  Until then, the Arizona standoff continues.

Phoenix Coyotes – Drama in the Desert 2

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.

Relocation Rumors – Sacramento Kings and Atlanta Thrashers

STORY UPDATE – The situation regarding the Sacramento Kings has since changed.  For more information on the Sacramento Kings request for a deadline extension, please go HERE.

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I was expecting to just sit back, relax, and enjoy a nice, long day of watching hockey today, but pretty much as soon as I woke up I noticed not one, but two relocation rumors circulating the web.  When it comes to any sports relocation rumors, you need to obviously take them with a grain of salt.  However, these are surrounding two teams that are oft-discussed as potential relocation candidates and the stories have been picked up by various major media outlets, including the New York Times, USA Today, and ESPN, so I think that the discussion of both teams is obviously worthwhile here on SportVotes.

The first rumor is surrounding the Sacramento Kings of the National Basketball Association.  According to ESPN reporter Marc Stein, and seemingly confirmed by NBA commissioner David Stern, the Kings are in close negotiations with the city of Anaheim over the possibility of moving from the state capital to the Orange County for next season.  Any such relocation proposal would need to be submitted to the NBA by March 1st, so the Kings are really on the clock if they are actually considering this move.

Purple basketballs are in vogue in Sacramento.

For those that don’t know, the Kings are a team that have already relocated three times over the course of their long history, having existed previously as the Rochester Royals (1945–57), Cincinnati Royals (1957–72), and the Kansas City/Omaha Kings (1972–85) prior to finally moving to Sacramento.  No matter where they go however, the franchise just never seems to be able to find sustainable success and are currently experiencing what will soon become a six-decade championship drought.  In the quarter century they’ve spent in their current home, the Kings have appeared in the playoffs ten times (including an impressive eight-year streak from 1999-2006), but have only won their division twice.  They’ve been stuck out of the playoffs for the past four seasons and have been suffering from declining attendance during that time.  Couple that drop in attendance with the team’s belief that they play in an outdated facility, the ARCO Arena (set to be renamed to the Power Balance Pavillion on March 1st, oddly enough the exact same day as the already mentioned deadline to give notice to the NBA for a possible relocation for next season), and you have a classic recipe for relocation.

The Kings have been pushing for years for the construction of a new, state-of-the-art arena in downtown Sacramento.  They had planned on eliciting partial public support for the proposed-$600 million arena, but in 2006 voters overwhelmingly rejected a pair of ballot measures which would have created a 15-year quarter cent sales tax increase for the funding of the new arena.  With this avenue for revenue blocked, the Kings and the NBA approached the California state fairgrounds with a plan that would include a potential landswap and various other measures to allow for a new facility to be built on their grounds.  In 2010 though, this too was shot down, leaving the Kings with the firm belief that they had to consider the possibility of relocation.  Ever since then, the Kings have been in highly publicized and speculative meetings with various municipalities, including Las Vegas, San Jose, and Louisville, Kentucky on the possibility of moving the team.

On February 19th however, during the All-Star Game festivities in Los Angeles, the relocation discussions appeared to have gone from speculative to probable, as NBA commissioner David Stern admitted that the Kings were currently in discussion with the city of Anaheim and that the team had inquired the NBA about the potential to relocate.  While the threat of moving a franchise has long been used as leverage to successfully gain public funding for new arena construction projects, these appear to be actual serious discussions.  Couple that with the short timetable between when the discussions became publicized with the notice deadline for any potential relocation, which stands at just a little over a week from now, and from all perspectives this appears to be a serious threat over a mere bargaining ploy.

If the discussions actually move to fruition, the Kings would likely play in the Honda Arena, home of the NHL’s Anaheim Ducks.  An interesting name discussion might also arise if the relocation goes through, as the Los Angeles metropolitan area already has another franchised named the Kings, the Los Angeles-based NHL team, which plays a mere 30 miles to the northwest of their prospective home in Anaheim.  While there have been past examples of teams in the same area having the same name (such as the former examples of the St. Louis football and baseball Cardinals and the New York football and baseball Giants), it would be a unique rarity in sports today.  In fact, the Sacramento Kings also have a history of changing their name in acquiescence of another team, as the franchise became the Kings so as to not have the same name as the Kansas City Royals of the MLB when they relocated, despite the fact that the basketball team had existed in other cities long before baseball team had even been founded.

But, that would be a discussion for another day.

The next team that has been rumored recently is the long-troubled Atlanta Thrashers of the NHL.  While the rumors circulating around the Kings appear to be at least relatively substantive, the rumors about the Thrashers are much more speculative, albeit still significant.  The Thrashers have existed in Georgia since they were founded as an expansion franchise in 1999.  Since their foundation though, the Thrashers have been a troubled franchise, having only made it into the playoffs once in their time in the league.  Combined with attendance figures that have been near the bottom of the league for years with their very low franchise value, which has been ranked 121st out of 122 major professional sports teams in North American in both 2009 and 2010, and you can see why the Thrashers have long been rumored on the league’s chopping block for potential relocation.

Despite their on- and off-ice troubles, I've always liked the Thrashers logo.

Despite recent high profile moves by the team in adding to their roster to try to make it to the postseason this year, including signing assistant captain Dustin Byfuglien to a five-year, $26 million contract, recent news has also spread the flames of rumors surrounding the potential for relocation.  Court documents released in January have shown that the current ownership group has been hunting for potential investors and part-owners unsuccessfully for the past six years.  And, as recently reported on the NHL Network, the league is apparently getting involved in actively trying to get a new majority owner to buy the team in the next 6-8 weeks, indicating that, if a new ownership group is not found in that time frame, they might be willing to open the door for relocation talks to other cities.

While the NHL obviously does not want to give up on the ninth largest market in the United States, they also appear to not want to repeat the mistakes they’ve made (and are currently making) in Phoenix with the Coyotes.  The Thrashers are already hemorrhaging money and facing a distinct disinterest from local sports fans, almost a mirror image of what has already been happening in Arizona, and the league apparently does not want to be stuck holding the tab for yet another southern white elephant.

This, of course, has fed the flames of one of Canada’s favorite pastimes over the past decade, speculating over potentially adding another team up north.  Centered mostly around Winnipeg and Quebec City, both of which lost NHL franchises in the 1990’s, hopes for new Canadian teams have been fiercely stoked over the past couple years.  Most recently, hundreds of Quebec City residents traveled south to Long Island to attend a game between two of the most oft-discussed relocation candidates, the New York Islanders and the Thrashers.  Former-Nordiques fans rallied throughout the game to get their support for relocation heard by both teams, much to the resentment of Islanders fans in the arena.  Additionally, a primary reason for both Winnipeg and Quebec City losing their franchises in the first place, not having available up-to-date arenas, has mostly been solved in both municipalities, as Winnipeg already has the ultra-modern, though smallish, MTS Centre, and Quebec City recently approved partial municipal funding for an NHL-caliber arena, which is currently in the process of being designed.

Given the very short time table for both teams, we can definitely expect to hear much more on this in the coming days and weeks.  If you asked me to rank which one was more likely, I would have to go and say that the Kings relocating is definitely the more probable option, given the NBA’s already shown willingness to allow teams to relocate over stadium issues versus the NHL’s fierce defense of unprofitable teams.  However, if the rumors about the NHL not wanting to face another Phoenix situation are true, then the impetus to search for an ownership group to move the team elsewhere could very have have legs of its own as well.

Phoenix Coyotes – Drama in the Desert

Had I begun this blog a mere year ago, I undoubtedly would have already created dozens of individual posts about the continuing drama surrounding this team.  For those that don’t know the history of this NHL franchise, I’ll give a “brief” history below:

The Coyotes began their existence far away from the sun-baked deserts of Glendale in the frozen tundra of Winnipeg, Canada.  Founded in 1972 as the Winnipeg Jets of the World Hockey Association (WHA), the future-Coyotes entered the world of professional hockey at a crucial crossroads of the sport’s history.  The NHL had only just recently expanded for the first time in decades, literally doubling almost overnight from six franchises to twelve in 1967. While this expansion allowed the league to bargain for lucrative American television contracts and brought professional hockey to markets that were starving for a chance to host NHL teams, namely Philadelphia, Pittsburgh, Minneapolis-St. Paul, St. Louis, Los Angeles, and the San Francisco Bay Area, it was also a highly controversial decision. By doubling in size immediately, rather than instigating gradual growths as Major League Baseball was slowly implementing, the overall talent pool of professional hockey was watered down significantly.  Questions over the legitimacy of the St. Louis franchise, seemingly only founded so as to allow the very powerful owner of the Chicago Blackhawks to sell off an arena that he owned in St. Louis (the St. Louis Arena, home of the Blues for the first quarter century of the team’s existence), were raised by many hockey observers.  And, most importantly, the NHL did not add any more teams in Canada, meaning that despite the fact that the vast majority of the players were Canadian and Canadians as a whole were much more rabid followers of hockey than Americans, the 1967-68 season would feature only two Canadian teams and ten American teams.  To potential fans across Canada, and especially in Vancouver (which many assumed was a shoe-in to receive an expansion franchise in 1967), this was a complete travesty.

As a result, over the span of the next decade, the NHL began to undertake a series of haphazard expansions that instigated a phase of intense growing pains that would haunt the league for years to come.  Over the next decade, the NHL would add franchises in Vancouver, Buffalo, Atlanta, a second team in New York, Kansas City, and Washington D.C.  With the floodgates open and the expansions continuing, a rising discontent grew in municipalities angered over the fact that they were not receiving franchises from the NHL.  In response, a second professional league, the Western Hockey Association (WHA) was formed to challenge the monopoly that the NHL held on professional hockey in North America, founding franchises across Canada and the United States.  While this league proved to be nowhere near as stable as the elder NHL, the war between these two leagues lead to rapidly escalating player salaries, increased cost overhead, and decreased profits and available talent. By 1979, both leagues were at their breaking point.  The WHA was nearing fiscal insolvency and several NHL franchises were either on the verge of outright collapse and/or strongly considering relocation to other cities in hopes of a brighter future.

After prolonged and intense negotiations, the WHA agreed to merge with the NHL, bringing the Winnipeg Jets and three other franchises into the NHL. While the now 21-team league stood as the sole major professional hockey league in North America, it had been incredibly bloodied by its feud with the WHA. The California Golden Seals had been forced to relocate to Cleveland before eventually merging with the Minnesota North Stars in 1978 in order to keep that team alive.  The Kansas City Scouts barely lasted two years before moving to Denver in 1976 to become the Colorado Rockies (the later MLB team would take their name from this hockey team) before being forced to relocate again to New Jersey to become the Devils in 1982.  The Atlanta Flames, the league’s first real attempt to expand into the American South, failed miserably and moved to Calgary in 1980.  And to make matters even worse, in a vindictive fashion the NHL stripped most of the talent from the four former-WHA franchises in order to placate the hardline owners of teams already in the NHL.

Despite this, the former teams of the WHA, the Jets, Quebec Nordiques, Hartford Whalers, and Edmonton Oilers, initially thrived in their new surroundings. The Oilers would go on to put together one of the most impressive dynasties in all of professional sports history, winning the Stanley Cup an astonishing five times in the span of seven years from 1984 to 1990.  The Nordiqes built a strong and passionate rivalry with their fellow French-speaking Canadian rivals, the Montreal Canadiens, and the Whalers built a loyal fanbase in Connecticut while competing strongly with more established rivals in nearby New York and Boston.  Finally, the Jets became the pride and joy of the city of Winnipeg and the province of Manitoba throughout the 1970s and 1980s.

As the 1990s approached though, the situation for these (and other) franchises worsened considerably.  The economy across North America grew weak as both Canada and the United States sunk into recession, and the Canadian dollar fell to all-time lows, drastically hurting teams across the league, especially the newer franchises in Quebec City, Hartford, and Winnipeg.  All three teams would seek greener pastures to the south in response to fiscal uncertainty.  The Whalers would abandon Connecticut for the Carolinas in 1997 to become the Hurricanes.  The Nordiques left for Denver to become the Avalanche in 1995, where they proceeded to win two Stanley Cups in their first six years in their new city.  And the Jets, in a move viewed as most peculiar of all, moved to the deserts of Arizona to become the Coyotes in 1996.

The story of this franchise could easily have ended there, but drama would continue to follow the Coyotes in their new environs.  Despite starting out strong, making the playoffs in five of their first six years in Arizona, the Coyotes continued to be marred by difficulties. The first arena they played in, the American West Arena, was completely inadequate for hockey purposes.  Almost immediately, the team attempted to gain local support in the construction of a new arena, only to face challenges at every step of the way.  Over the next several years, the Coyotes changed ownership twice and began to suffer on the ice despite bringing in all-time great hockey player Wayne Gretzky to coach the team, proving the old standard that great players don’t always make for great coaches.

But, after long legal wranglings and attempts to woo popular support for the construction of a new arena, the Coyotes were finally successful in building the Jobing.com Arena.  Despite its very odd name (which I personally believe to be the worst named arena in all of professional sports, and the second worst named facility after only the 1-800-ASK-GARY Amphitheatre, an outdoor concert facility in Tampa, Florida), the team finally got a venue that they could be proud of…. at a very high cost.  As a result of the years of demands and requests for public funding for the new arena from the team, the construction of the Jobing.com Arena left the Coyotes tens of millions of dollars in debt and had alienated a large portion of their fanbase.  During the first decade of the 21st Century, the team slid into deeper and deeper mediocrity and debt.  The team’s average attendance sunk to the near bottom of the league and they failed to reach the playoffs for six straight seasons.

This all came to a head in 2009, when the Coyotes filed for bankruptcy after they had lost over $50 million in 2008 alone, forcing the league to step in and take over ownership of the team.  In that same year, Forbes magazine released their annual valuations of every single NFL, MLB, NBA, and NHL franchise.  Out of 122 teams, the Phoenix Coyotes were ranked dead last, 122nd place, as the lowest valued major sports franchise in North America.

Despite oddly making it into the playoffs that season, thanks in large part to the league’s willingness to spend money on the team’s payroll and to hire competent coaching in order to raise the potential selling price of the team to prospective buyers, the Coyotes continued to muddle around.  Despite attracting several potential high profile buyers, notably Jerry Reinsdorf, owner of the Chicago White Sox and Chicago Bulls, every major potential investor balked at the league’s demands that they promise to keep the team in Arizona.  What’s more, whenever the team’s record books were made available to potential investors, the sight of all the red ink seemed to have scare off everybody that the league was willing to sell the team to.  Only Jim Balsillie, an eccentric Canadian billionaire who has repeatedly attempted to purchase NHL teams with the expressed intention of moving them to Hamilton, Ontario, Canada, remained willing to buy the franchise from the NHL, much to the NHL’s increasingly costly chagrin.

In 2010, the NHL seemed to finally score a major victory by getting the Glendale city council to agree to a $100 million bond issue on Jobing.com Arena, thereby seemingly eliminating a great deal of the team’s debt and opening the door to for a potential sale to people other than Balsillie.  While the NHL quickly trumpeted this achievement and began moving ahead with plans to sell the franchise to another group of prospective investors, it proved to be very controversial, as many Glendale residents were unwilling to financially support a professional sports team with public funding, especially one that many seemingly had no interest in supporting even as fans.

And all that brings up to the current situation, with the conservative Goldwater Institute seemingly on the verge of filing a lawsuit to block the bond issue, and subsequently any potential sale that the NHL is planning.  A lot is expected to happen regarding the Coyotes saga in the next week or two, so a lengthy background was needed before I could potentially go into any additional news on the franchise.  Drastically different outcomes could arise in the next several days, ranging from the NHL using the safeguard established by Glendale’s bond issue to finally sell the team to the Goldwater Institute blocking the bond issue and, by extension, preventing any potential sale of the team.  Depending on what happens, the Coyotes could just as easily be able to stay in the Arizona desert for years to come or be forced to pack up and leave the Grand Canyon State for another city, potentially even back to their original home of Winnipeg.

More news to come soon, in all likelihood. Hopefully there will be light at the end of the tunnel for this team sooner rather than latter and they they can find success wherever they end up.