Tag / Arizona Coyotes

by Frank Maduri

Follow Up: NHL Awards Expansion Team To Seattle

The National Hockey League (NHL) approved the expansion of the league to Seattle on Tuesday, ending months of speculation over the future of the 32nd franchise in the world’s premier hockey circuit.

The decision comes as no surprise, the Seattle bid had an aura of eventuality to it because of their record setting season ticket commitment drive. The city showed their commitment and determination for a major professional hockey team, and it was rewarded yesterday.

The Seattle bid had all the elements needed to succeed: a stable and committed ownership group, favorable market demographics, robust corporate sponsorship potential, large media presence, and a dynamic, ambitious arena plan. The team name has not been decided yet, those details in the marketing of the franchise will be forthcoming. That is a crucial decision that must be carefully weighed.

What is known from the announcement yesterday is that the team and the NHL pushed the inaugural season start date a year to the 2021-22 hockey season. This will provide some much-needed extra time for the arena renovation project to be not rushed to completion as well as allow for the proper marketing and branding of the team in the community.

The Seattle team will play in the Pacific Division, which makes geographic sense and to balance the divisions out, the Arizona Coyotes will move from the Pacific to the Central Division for the 2021-22 season. This part of the announcement has gained significant attention and it is in this portion of the news from the NHL meetings in Georgia that could get interesting.

The realignment of the league to put the Coyotes into the Central either could be just a sensible logistical decision, or the harbinger of things to come for that franchise. The league office was quick to their defense of moving the Coyotes, citing that because most of Arizona (besides the Navajo nation tribal lands) does not recognize Daylight Savings Time – the team spends most of the time of the hockey season in the Mountain Time Zone.

However, the current teams in the Central Division such as Minnesota, Chicago, Nashville, and St. Louis all play in the Central time zone. This will translate into earlier starting times for games on the road for the Coyotes as well as longer travel times for the team and a shift away from their geographic rivals in Las Vegas and Los Angeles respectively.

This shift in divisional alignment has caused rampant speculation about the Coyotes being relocated to another Central time zone city that is angling for an NHL team, Houston, with a billionaire who controls the world class arena in the nation’s fourth largest city.

The move to Houston may be a bit premature even though in my earlier coverage on the failed attempts that the Arizona Coyotes have made to gain an arena in a better location in the Phoenix metro area. The Coyotes ownership has an agreement with the arena management company that allows them to go to a year-to-year lease on their current home, Gila River Arena, for five years until they determine a plan for a future facility.

The Coyotes have no plan or site on the board currently, which only fuels the fire that the team will relocate to Houston. The Houston bid for expansion definitely took a setback because after Seattle enters as the 32nd team, and finally balances out the league from a geographic and conference balance perspective, the league would not expand and add just one team.

The NHL has been clear of their interest in Houston especially to grow TV ratings and reach a more diversified demographic. The owner of the arena in Houston, Tillman Fertitta, also owns the NBA’s Houston Rockets and has been vocal about his desire to bring the NHL to the city. He met with NHL Commissioner, Gary Bettman, earlier this year to discuss very generally, the vision for hockey in Houston.

Some feel that the league does not want to lose the Phoenix market and that the Coyotes will find a way to stay in the desert, where they do have a loyal fan base. The speculation about a move to Houston will continue until the Coyotes find a long-term home for an arena in the East Valley or downtown.

It should also be noted that the Calgary Flames have an issue with plans for a new arena there now looking very dismal. The ownership there has threatened to relocate the team or sell the team to a party in another city. The door for Houston remains open in that relocation scenario as well.

The option to expand to Houston would require the league to expand by two franchises to 34 teams total. The logical other bid would be from Quebec, which has a new arena built and ready, but the expansion fee would be enormous in Canadian dollar figures. The Quebecor group would have to be willing to shell out a huge front-end cost to make that work.

In my view, I do not see the NHL ownership being willing to cut the revenue pie into 34 slices. I think the addition of Seattle is a home run for the league and makes some much sense from so many perspectives to add that city to the hockey landscape.

In addition, I am in the minority of people I have talked to in recent days on this subject that thinks that Houston would be an excellent destination for hockey as well. The city is much more diverse than many Americans realize and they have passionate sports fans and many transplanted people from around the entire country that now call Houston home that would fuel the appetite for the game.

It remains to be seen what happens with the Coyotes, the Houston bid for a hockey team, and if Quebec will finally get a seat back at the league table. However, what we do know is that Seattle will be joining the league to play in a state-of-the-art renovated Key Arena in the center of that great American city. The league took a bold step forward with Seattle and hockey in North America will be the beneficiary of those efforts.

(some background courtesy of ESPN, NBC Sports)

by Frank Maduri

The Desert Drama: The Battle Between The Arizona Coyotes and Glendale

The Arizona Coyotes hockey franchise and the City of Glendale agreed recently to a new 2 year arena maintenance deal following another round of acrimony in what has been a saga surrounding the team and the city for years. The City of Glendale voted recently to terminate the team’s lease on the Gila River Arena in order to renegotiate the terms of the agreement with the team.

 

I have covered this debacle for a few years now, and if you strip away all of the other minutia to the situation it comes down to money, like any other negotiation. Under the terms of the new agreement, the amount that Glendale will pay to the Coyotes is trimmed from $15 million per year to $6.5 million annually. The team gains $6 million in revenue from parking, ticket sales, and naming rights that originally had gone to Glendale in the prior deal. The team is staying put for now, but the length of the new lease is shorter and raises speculation about the future of the team. Both sides are saying they are committed to making hockey work in Glendale.

 

However, it does raise the distinct possibility that the franchise could be relocated to another city in the near future. The new agreement provides the Coyotes ownership with an out-clause in June 2017, which is a full year earlier than the mechanism that would have triggered that clause in the original lease.

 

The NHL recently opened the process for expansion and groups from Las Vegas and Quebec City submitted formal bids. The now infamous exclusion of the expected Seattle bid from the process made headlines. The NHL has strong interest in the Seattle market and it would help balance the league which has two less franchises in the Western Conference. The main issue though is a lack of an arena suitable to host an NHL team for 41 games a season.

The three groups potentially interested in bringing hockey to Seattle have different plans for getting an arena built in that marketplace. Since none of the proposals were progressed far enough it is the reason given for their absence from the expansion process this past week.

 

I could see a scenario where the Coyotes are potentially relocated in a couple of years to the Seattle market once they have the financing and approval as well as begin construction on a new arena.

 

Valley of the Sun

 

In recent weeks, another potential option has emerged which could resolve this issue between the current ownership group of the team and the City of Glendale while allowing the team to remain in Arizona.

 

That resolution revolves around a proposal which was introduced recently in the state legislature regarding the construction of a new arena in downtown Phoenix. The proposal originally was targeting the use of the arena as an upgraded facility for the NBA’s Phoenix Suns, but now some politicians have floated the idea of including the Coyotes as a co-anchor tenant for the new arena.

 

In the event that this proposal is acceptable to all sides involved and the respective league officials involved this could be a win-win situation for the Valley of the Sun. The State of Arizona would keep both their NBA and NHL franchises, the teams would get a new building to call home, the fans would keep their teams, and the leagues -in particular the NHL- would not lose a top TV market.

 

Phoenix also could solve the attendance problems which have plagued the Coyotes because any area resident will tell you that rush hour traffic issues getting to Glendale coupled with the fact that the area around the arena in Glendale never properly developed, are two main reasons behind the difficulties with drawing fans to NHL games in that market.

 

The downtown arena in Phoenix would solve the issue because it would be far more accessible to fans travelling in from the suburbs or coming from work, especially for weeknight games. The NHL would probably support this move because they have been dogged in their determination to keep the Coyotes in the Phoenix market for years.

 

Alternate Plans

 

The situation surrounding the Coyotes future in Arizona gets far more uncertain if the public funding for a new downtown arena in Phoenix fails to gain passage in the state legislature. The current arena in Phoenix which houses the Suns is not a viable option for hockey because it requires an odd configuration to fit the ice sheet which causes many seats to have obstructed views, it is the reason why the Coyotes moved out to Glendale in the first place.

 

The alternative plan some have suggested of relocating the Coyotes to Las Vegas in two years certainly makes some degree of sense especially given the geography of the move. The team could stay in the same division and play within driving distance of their former home territory which could translate into a crossover fan base.

 

Conversely, the NHL would not be too keen on this idea because they would stand to gain a lot less revenue from this maneuver. The difference between a current team relocating and the addition of an expansion team is that the NHL can charge a new expansion team with an entrance fee. The entrance fee if the NHL expands into Las Vegas with a new franchise is said to be around $500 million which would then be split between the league and the owners.

 

A relocation of the Coyotes to Las Vegas would translate into a forfeiture of the entrance fee, and therefore, would probably not receive league approval. The same could be said for a relocation to Quebec City, which the NHL plans to ask for a potentially larger expansion fee based on the popularity of the sport in Canada.

 

I know someone who recently mentioned to me that the relocation of the Coyotes could be to a second team in the Toronto market. The issue with that move though is the outlandish fee that the NHL will make that team pay to the Maple Leafs to be able to share the market with them. That has been cost prohibitive to other efforts to add a second team to hockey’s largest market in the past. That scenario could work if they were to share the arena because the owners would save on that cost, but I think the NHL would prefer to have a team expand into that market for the same reasons I outlined earlier: the expansion fee would be much larger than a relocation of an existing team.

 

Therefore, if the Phoenix plan falters, the remaining move on the board, at least at this point is for the Coyotes to move their operation to the Seattle market. I think it will take two to three years for the Coyotes to make a determination on whether a move to downtown Phoenix is enough to save hockey in the desert. In that same vein, it will take Seattle two or three years to get their arena situation squared away.

 

The more information that comes out about the Seattle groups and the arena plans they have, it seems more improbable that it will get done unless something changes along the way. The Tukwila proposal would cost $500 million total financed privately by the business community and the potential ownership group. The Coleman group bid is connected to the downtown arena proposed to be built for an NBA team that may not ever happen (see my article on the new Bucks arena which was the best chance for Seattle to get a relocated NBA team and now is vanquished) because any change to make the arena project for a hockey team would require a change in the MOU between the city and the investors who own the land which is not happening.

 

The third ownership group has a plan for an arena in Bellevue but the issue is quite simple, they do not own the land to build it. The land in that suburb is not readily available and is not cheap. It could take four or five years to get the project done. The NHL is said through sources to prefer the downtown arena option over the suburban plans, but they all have issues on one level or another.

 

In the end analysis, as I wrote in the beginning this is all about money. The future of the Coyotes franchise will be wherever they can maximize revenues, if that is in Arizona they will stay. The more likely scenario is that in a few years this team and hockey in the American desert will be gone, and I feel terribly for their fans, it will be reduced to nothing but memories.