Poor Sister In The Desert

When the NHL moved the Winnipeg Jets to Phoenix after the 1996 season, questions were raised about whether the decision was the right one or not.

The answer may come sooner than later. After 12 seasons in the desert, the hot sun may be finally setting on the Coyotes.

Initially, the Coyotes re-located to America West Arena in the affluent city of Scottsdale, Ariz. Because the NBA’s Phoenix Suns were the primary tenant in the arena, the Coyotes were, essentially, cut out of any revenue the building earned.

They approached Scottsdale City Council in 2001 for a loan to construct a new building.

When Scottsdale City Council rejected their financing proposal, the club turned its eyes to courting the working class west-end city of Glendale, Ariz.

Glendale City Council voted in favour of a $180 million loan (all figures in U.S.) to help build a facility for the Coyotes. The hockey club found another $40 million and settled into the Jobing.com Arena, in Dec. of 2003 and began to lay the groundwork for the franchise.

Hockey in Phoenix is a marginalized venture at best. The Coyotes may have counted on northern ex-pats to support the team but when your limited fan base lives in one city you can’t assume they will follow you to another town 45 kilometres (26 miles) away.

Another fatal error was the Coyotes’ belief that corporate dollars would follow them across town.

“The big-money guys, the corporate guys don’t live in Glendale,” NHLPA executive director Paul Kelly told David Shoalts of the Globe and Mail. “If you live in Scottsdale, Glendale is not an easy place to get to. That hurts them in the area of club seats and boxes.”

Coyotes’ governor and CEO Jeff Shumway told the Arizona Republic that the team lost $30 million (all figures US) in 2006-2007.

The Globe and Mail also reported that the Coyotes may be on the verge of losing between $25 million to $35 million this season.

It hasn’t helped that owner Jerry Moyes’ has serious financial troubles of his own. Moyes, 63, owns Phoenix based Swift Transportation and according to Eiad Asbahi, managing partner of Prescience Investment Group in New York, his liabilities are reported to be worth $1 to $1.5 billion more than his company’s assets.

This seriously jeopardizes Moyes’ ability to swallow any more of the hockey club’s losses.

Inside the arena the Coyotes are averaging 14, 657 through 15 home games this season. However, the club suffers from the upper bowl phenomenon where the cheap seats in the upper bowl are full while the suites and expensive seats sit unused. It is even rumoured that the club discounts the expensive seats, driving revenues further down

The average ticket price is about $39, which ranks 29th in the league.

Whoever said that numbers don’t lie was speaking the truth.

So, what’s next?

There are three choices in play:

1) File for Bankruptcy.

2) Put the onus on NHL Commissioner Gary Bettman to find a new buyer for the team.

3) Re-negotiate their arena lease forcing the city of Glendale to cover some of their losses.

Given the financial situation of Moyes, he may have no choice but to put the team in the hands of the NHL.

Shumway doesn’t buy that.

“I am confident not only that hockey will be here in five years but that we will be doing well in five years,” Shumway told the Globe and Mail. “We run a great franchise in a great sport, a sport we love.”

With files from the Globe and Mail