Please Save the Phoenix Coyotes: Trouble in the Desert

Jim NeveauAnalyst IDecember 24, 2008

My fellow NHL fans, I come to you today to alert you to an event occurring that has the potential to put a huge dent in the progress of our beloved game.

In most of the NHL, things are going pretty well. The Penguins have gone from having one foot out the door toward Kansas City, to being a premiere franchise again. The Blackhawks have gone from after thoughts to serious Stanley Cup contenders. Hell, even the Columbus Blue Jackets have been blessed with a huge influx of young talent that could propel them to prominence very soon.

This, however, is not the case in one of the nation’s biggest cities.

As some of you may be aware, the Phoenix Coyotes are in trouble. They have been averaging $30 million a year in losses since the lockout, and their current ownership situation has them plunging close to near extinction.

To quote an article on espn.com, “no one knows for certain if the Coyotes can finish out the season under the current financial climate, and at some point the specter of bankruptcy looms large.”

This is not welcome news to hockey fans. When the Winnipeg Jets moved to Phoenix in the mid-90s, the idea of warm weather hockey was still relatively new. A wave of teams were moving to greener pastures, with the Whalers and the North Stars being the main entities.

Also, teams like the Sharks, Lightning, Panthers, and Ducks came into existence to capitalize on the sport in untapped areas. With that in mind, the ownership decided that a move to Phoenix would be a good idea.

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Unfortunately, it does not appear that this has worked out for the best. Owner Jerry Moyes is in deep financial trouble, as his company, Swift Transportation, is on the verge of bankruptcy, with the rising of fuel costs and the tanking economy.

His handling of the team has been ill-advised at best, with Moyes paying out of pocket for substantial financial losses for the team through a deal where the company went public that netted him a loan of $560 million from his company. Unfortunately, the money seems to be running out, and the team is in its current predicament.

This loan was made using the team’s assets as collateral, and if Moyes is forced to declare bankruptcy, the team itself won’t save him. Forbes Magazine listed the Phoenix Coyotes as the lowest-worth franchise in the league, at only $142 million.

Add this on top of the fact that the team is estimated to have lost $200 million in the seven years since Moyes bought the team in 2001, and you have a recipe for disaster.

The Coyotes are also dealing with several issues more closely related to the team itself, with attendance steadily declining during the season, and also with their current lease arrangement with the city of Glendale, where Jobing.com Arena is located.

The biggest concern currently is the parking situation. Most teams receive a substantial chunk of their revenue from parking, but the Coyotes are locked into an odd contract with the city of Glendale where they actually pay the city for parking.

According to ESPN, this actually means that instead of earning about $10 million annually from parking, the team is losing two million. That $12 million would go a long way toward making up their shortfalls.

Another issue with the team is the price of tickets. In an era where ticket prices are skyrocketing, the team is being forced to keep prices low in an effort to bring more fans into their arena, putting them at a competitive and financial disadvantage to the rest of the league.

According to statistics published in the NHL Team Marketing Report, the Phoenix Coyotes have an average ticket price of $39.94, which is almost $14 above last year’s total. There are only seven other franchises in the league with average ticket prices below $40, and these are mostly in higher echelon franchises.

Teams like the Sharks, Blackhawks, and Blues are already established brands, and they can afford to charge a little less and still fill the seats and get all the revenue that goes with parking at their facilities, etc., which puts them at a huge financial advantage.

The NHL is also taking steps to help the team in the midst of their crisis. For many years now, under their revenue sharing plan, the league has been feeding the team money in an effort to help alleviate their problems. They are also aggressively seeking new ownership that can put a fresh source of capital onto the scene and save the franchise from bankruptcy, and the league from a potential black eye.

Another step they are taking is to speak to the city of Glendale about renegotiating their lease with the team, while being careful to make any changes beneficial to both the city and the team.

According to the ESPN piece and the Toronto Globe and Mail, the city will not comment on ongoing negotiations, but spokesperson Julie Frisoni did say that the city has investigated the lease and believes that the city’s investment in the team and arena are well protected in the event of bankruptcy.

The NHL is also committed to the idea of “bridge” funding, which would help cover the team’s operational costs and still maintain the independence of the team.

While all of the facts and figures presented seem to be pointing toward imminent disaster, the team is reporting an increase in overall ticket sales of 77,000 from last season, and television ratings are improving dramatically.

Scott Burnside also pointed out on espn.com that the team isn’t saddled with a lot of big contracts, and is relying on youth instead, which is another benefit to anyone seeking to buy the team.

As a hockey fan, I am advocating that we as hockey fans do our part to help save this franchise. These facts and figures may all seem like the team is already too far down the path for salvation to take place, but I can assure you that it is not.

There is still a tremendous amount of buzz in the city about the team, and while the arena isn’t full every night, the team is making strides toward making that happen.

I guess the whole point of this article was to point out the problems that are occurring in one of the biggest potential markets in the country. The team needs the help of the people of Phoenix, and also people like us. I encourage all of you to talk to relatives who live in the area, and try to convince them to catch a game at Jobing.com Arena. As I’ve always said, “once you’ve gone to a professional hockey game, you always want to go back.”

If we as fans can show that we are serious about saving hockey in the desert Southwest, the league, and potential owners, will take notice. We owe it to this league that has done so much to try to win us back over the past few years (and the memories they have provided over our lifetimes) to help it save a franchise in a huge potential market.

I feel as though once the people of this area are exposed to hockey, then they will be as hooked as we all are on this website. Please help the Coyotes, and help the fans in Arizona who love them. Thanks for reading, and have a great holiday season!

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