by PuckStopsHere on 05/09/12 at 08:15 PM ET
We have seen enough numbers since the Phoenix Coyotes bankruptcy three years ago to know that hockey in Phoenix (at least in Glendale, Arizona where Jobing.com Arena the Coyotes home) is a money loser. The only way that one can make money is if somebody else pays for the losses. In the recent term somebody else has been the city of Glendale itself. They have put up $25 million a year for the past two years to cover the team’s losses. Obviously that is unsustainable. No city can afford that and it isn’t in any city’s best interests.
That makes it surprising that a potential sale to keep the Coyotes in Phoenix exists. Former San Jose Sharks CEO Greg Jamison leads an unnamed group of buyers who would buy the team in Glendale with the city paying large facilities management fees to the Jamison group.
The right wing Goldwater Institute has been involved in the potential Phoenix Coyote sales in the past and threatens to sue if the deal is a case of the local government subsidizing private investors in a way they see as being illegal.
The basic problems that killed deals with Jerry Reinsdorf and Matthew Hulsizer all still exist. The underlying problem is that hockey in Glendale has been a money losing venture and somebody must subsidize the losses. Nobody would want to do this indefinitely into the future and there seems no way around it.
The Phoenix Coyotes have had the lowest attendance in the NHL. It is not easy to build a fanbase when the franchise is in jeopardy and might depart from the city at any time. The Phoenix Coyotes are in the semifinals this year and could have a Stanley Cup finals appearance. It would be embarrassing to the league to have unsold tickets or really cheap seats in the Stanley Cup finals and the only way to prevent this is to make the fans believe that there is a future to hockey in Phoenix.
Many in the media have openly speculated that the team will be moving this summer. I predicted they will be in Quebec City in March. I still believe that is a good bet. I think it is quite reasonable to believe that this potential Phoenix sale isn’t a serious sale. It is a construct for public relations to keep fans interested in the Phoenix Coyotes playoff run. There is no way that the finances work out. How can a team that loses tens of millions of dollars each year be worth purchasing?
The NHL is motivated to keep this ruse going to maximize the amount of money they can make on the Phoenix playoff run. The city of Glendale is under strong financial pressure from the money they have spent financing Coyote losses. They are seeking to have $20 million returned that the NHL is keeping in an escrow account. Likely a financially successful playoff run will reduce losses this year and give them more money that could be returned.
It isn’t clear who if anyone is fronting the money to buy the Coyotes. Greg Jamison is the front man of an unnamed group. This is similar to the Dave Checketts group that bought the St Louis Blues in 2006 and then bowed out in 2010 leaving Checketts and the Blues in financial turmoil which is only now coming to an end with new ownership. The ownership group was interested in the investment of the appreciating value of an NHL franchise and it looks like a failed plan in St Louis. Why would it work better in Phoenix?
It isn’t clear that a real group exists with real money behind Jamison to keep the Coyotes in Phoenix. I think a rudimentary group may exist and this group may be interested in owning a hockey team. They may get their team in the future as a potential expansion. This service in a Phoenix ruse earns goodwill and may reduce the price of an expansion franchise.
Is this scenario crazy? It seems more believable than the NHL having found some saps willing to pay large sums of money indefinitely into the future to keep a money losing team in Phoenix. I would be surprised to learn that this deal doesn’t fail and the Coyotes do not stay in Glendale. That seems like the only financially workable result to this situation.
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