Will the Coyotes stay in Phoenix?
The City of Glendale says it will have to pay $25 million to operate Jobing.com Arena with or without the Coyotes. (Photo by Christian Petersen/Getty Images)
Will the Coyotes stay in Phoenix?
All right, so let’s recap a few things here. The NHL owns and operates a team that is bleeding money and is unable to find a new owner. The National Basketball Association also owns and operates a team that is bleeding money and can’t find a new owner. NHL commissioner Gary Bettman and NBA czar David Stern are good friends.
Then out of the sky falls Chris Hansen, a 44-year-old hedge fund-managing gazillionaire, who has agreed to put up $290 million to build a new arena in Seattle and secure professional basketball and hockey teams for the building. The city agrees to put up another $200 million and claims that the taxpayer will not be on the hook for any of it because it will all conveniently be recouped with taxes that will be generated from…you guessed it, the new arena. It calls this “self-funding.”
And apparently the new arena has no chance of survival unless it has both an NHL and NBA team. Hansen has no interest in owning an NHL franchise, but Don Levin, who owns the Chicago Wolves of the American League, has been linked to NHL ownership in Seattle. All this works well because he apparently has no interest in building or operating an arena. “I’d probably invest in a building,” Levin recently told THN.com, “but certainly I’m not going to be able to buy a franchise and also build a building. I don’t have that kind of money.”
Well, now that particular obstacle has apparently been cleared. And with the NHL trying to figure out what to do with the Phoenix Coyotes and the NBA in the same quandary with the New Orleans Hornets, it looks like a match made in heaven and enormous headaches cured for two professional leagues. Add to the fact that influential San Jose Sharks owner Kevin Compton has been furiously beating the drum for Seattle as a resting spot for the Coyotes for the better part of a year and you have a perfect storm brewing here, don’t you?
Certainly Levin has to be intrigued by the fact there is now a real chance there will be a new building waiting for him.
“If I were involved, I don’t think I’d have the nerve to walk into the NHL offices and talk to anybody until at least there was a building that was going to be there for sure,” Levin said. “Otherwise it’s like you’re walking in there and saying, ‘If my brother was a girl, would you date her?’ You have to have something that is somewhat real.”
Wow, that was easy. With a regional population of 3.3 million, Seattle is the 15th largest metropolitan region in the United States and it has the 13th largest radio and TV market in the country. So it’s only a matter of time before the moving vans line up at the Jobing.com Arena and program their GPS units to 1,500 miles northwest, right? After all, this is all falling together so nicely.
Well, not so quick. Like almost every ownership situation in the NHL, this one is about as convoluted and confusing as it gets. First of all, if the league were to move the Coyotes to Seattle, it would have to find a place for the Seattle Coyotes to play while the new arena is being built. Right now, the only venue is the Key Arena, which only holds about 11,000 for hockey. Located in Phoenix, that would be the ideal size of a hockey arena - perhaps a little big - but not exactly a size that supports a healthy business model. Which means somebody would be swimming in red ink in the first couple of years.
And how do we know Seattle is any better of a hockey market than the other ones that are failing in the NHL right now? The fact is, we don’t. And the fact that two competing teams in two different sports owned by different people would be entering the same city at the same time chasing the same fan base and corporate dollars is one that should not be minimized.
But the one that really throws a monkey wrench into things occurred very quietly about a month ago. When Glendale council was discussing its upcoming budget, mayor Elaine Scruggs inquired as to how much it would cost to keep the arena operating without an anchor tenant. The number that came back to her was $25 million and she responded by saying that amount would have to be factored in the budget. Imagine that! That’s how much Glendale has been spending to keep the Coyotes the past two seasons.
A city that is $1.1 billion in debt says it will need to spend $25 million just to keep the lights on at the Jobing.com Arena. Really? If that’s the case, why not just give the NHL - or someone willing to buy the franchise - $25 million a year in perpetuity to operate the Coyotes? If you have to spend the $25 million anyway, isn’t it better to have an NHL team in the building than not? And if that’s how much it costs, why didn’t the city just come out and say as much two years ago when everyone was up in arms about taxpayer money going to fund a hockey team?
It sounds an awful lot like Glendale council is trying to brace the good citizens of their town for the prospect of funding the Coyotes for a long time. It also sounds as though they’ve found an innovative way to get around the Goldwater Institute, which basically said public bonds could not be used to find a private enterprise. When it comes to the City of Glendale simply stroking checks, there’s not a lot it can do.
With the Coyotes losing about $40 million a season these days, the NHL is still hoping to find someone willing to take the hit on the other $15 million. But if Glendale is willing to go this far to keep the Coyotes, there’s no telling how far they’ll go for a new owner.
So Seattle will likely have to wait, the same way Quebec City, Kansas City and Toronto will. Because, believe it or not, the NHL might just get that square peg in that round hole yet.
Ken Campbell is the senior writer for The Hockey News and a regular contributor to THN.com with his column. To read more from Ken and THN's other stable of experts, subscribe to The Hockey News magazine.