The Coyotes arena-subsidy saga is even more pathetic when you lay it all out in one place

Here’s a fun headline to start your week with:

Arizona’s Terrible Hockey Team Wants a Third Taxpayer Funded Stadium Since 1996

The article, in the libertarian magazine Reason, doesn’t break a lot of new ground, but it is a great overview of the Arizona Coyotes situation, in which the team relocated from Winnipeg to Phoenix in 1996, then across town to Glendale in 2002, and now is trying to move to Tempe or anyplace else in the Phoenix area that will build them a new arena. The team owners are not just looking to play off cities against each other, though, but get state funding, which is extra-stupid because:

Since the team is already in the area, building a new stadium would not create a new source of tax revenue for Arizona, says Victor Matheson, a sports economist at the College of the Holy Cross. Moving from Glendale to Tempe, Matheson says, merely would shift the economic benefits from one municipality to another.

And also:

Building more stadiums in a single metropolitan area will only create more competition for a limited number of major events.

“Lady Gaga isn’t going to play both Phoenix and Glendale,” is how Matheson puts it.

And then there’s:

The Coyotes are unlikely to leave for greener pastures, though, because NHL executives care much more about having a team in the Phoenix area than anyone in the Phoenix area cares about having a hockey team. The Phoenix metropolitan area is the sixth largest media market in the United States, which means an NHL benefits from having a presence there—even if the team is terrible and the fans are apathetic—for marketing purposes and television advertising revenue.

That’s more debatable: The NHL’s national U.S. TV revenue is pretty piddly as these things go, and I really doubt NBC said during negotiations, “Well, since you have that all-important Phoenix hockey viewership market, we’ll tack on an extra $25 million a year.” More likely is that NHL commissioner Gary Bettman is fixated on his “Sunbelt strategy” to to seed NHL franchises across the U.S. South and West, and doesn’t want to back down — though since that’s a strategy predicated on filling U.S. markets to get bigger U.S. TV deals, I suppose Reason is at least half-right. You’d kind of think by now that some of the other NHL owners would be saying, “Gary, this whole Arizona thing isn’t working out, let the team move somewhere that it can actually sell a ticket or two,” but I suppose where there’s arena-subsidy life, there’s hope.


36 comments on “The Coyotes arena-subsidy saga is even more pathetic when you lay it all out in one place

  1. With player’s salaries tied to league wide revenue, I’d say it’s a safe bet that other league owners are more than happy to have a couple of teams operating in the red.

    • The problem with that is that player salaries are set at approx 50% of hockey related revenue. So, in order to reduce the players share by $1, the league has to lose $2 in revenue, more or less.

    • Per http://www.nielsen.com/content/dam/corporate/us/en/docs/solutions/measurement/television/2016-2017-nielsen-local-dma-ranks.pdf , Phoenix ranks 12th.

        • They tried Atlanta twice.And both teams booked.For the longest time Houston had the Aeros in the IHL and then up until recently in the AHL.I don’t think Houston could support an NHL franchise.AHL maybe.The Aeros were popular when they were there.

  2. Work them, Screw them, Have them, Make us

    Harder, Richer, Faster, Bolder

    Use our, Own, Money, Never

    Ever, After, Bills are, Yours

    Work them, Screw them, Have them, Make us

    Harder, Richer, Faster, Bolder

    Work them harder, Make us richer, Build it faster, Make us bolder

    More than ever, Hour after, (H)our work is, Never over

    Work them harder, Make us richer, Build it faster, Make us bolder

    More than ever, Hour after, (H)our work is, Never over

  3. Really doesn’t matter what size media market Phoenix maybe , 40% of that market is Hispanic. So unless the NHL can put Fernando Venezuela on skates , they are screwed.

  4. Coyotes ownership made one mistake: taking Glendale’s arena offer.

    The NHL has acquitted itself just fine in this whole thing. The one move they might need to make is some kind of G-4 type arena financing plan. The league could apply it to Calgary, too.

    • I would never say that about the NHL. The league inked a highly lucrative deal a couple of years ago with Rogers which far exceeds in value any national TV network deal in America. It seems to me that if Bettman wasn’t so wedded to a sunbelt strategy they could earn far more money by allowing additional Canadian teams (Quebec, second team in Toronto, etc). Bettman’s personal value-add to the NHL owners 24 years ago when he was hired from the NBA was that he knew how to build a league’s American TV revenues. He was a one-trick pony who never fully succeeded and has a history of blunders in labor-management relations.

      • At some point that will come up in negotiations with NHLPA. If the owners are passing up revenue in Quebec City, and Southern Ottawa, that’s holding down player salaries, which makes agents very sad.

        • Except with the Canadian dollar as weak as it is, there is some sense to being a player in Phoenix versus a player in Quebec and watching your salary decline do to the exchange rate.

      • Rogers is taking a bath on that deal. Ratings in Canada are down 16% each of the last two years. Rogers are the ESPN of Canada and are cutting everywhere to save face. But Content is king and the NHL provides that.

        • That is the dirty little secret of the new tv deals, Steven. Rogers vastly overpaid and is losing money on theirs. The hoped for “mobile” and digital media revenues associated have not reached anywhere near the level they hoped for. As a result they’ve been axing staff and cutting costs everywhere they can. It’s a harsh lesson in “winning” broadcast rights at any cost.

          RE: US tv deal, it’s nothing but cheap content for NBC. Cheaper than another season of the West Wing and soaks up more air time.

          The two TV deals combined produce about $21m/team annually in revenue. Nowhere close to the media deals the other major sports have.

    • “The NHL has acquitted itself just fine in this whole thing.”
      ____________

      What does that mean exactly? They’re near the bottom of the league in attendance, haven’t seen the playoffs in years and Forbes has them in the bottom 3 in team revenue and value of the franchise. How much worse could they be before it wouldn’t be “fine” for the NHL?

  5. “Coyotes ownership made one mistake: taking Glendale’s arena offer.”
    The then-owner, Steve Ellman, didn’t make a mistake. He wanted a free arena (got it) and rights to develop the surrounding land (got that too). He wanted to build a shopping center and other commercial stuff, and unload the team. He did all those things. The Great Recession plunked the shopping mall, but he made his money and got out of the hockey business.

    “The NHL has acquitted itself just fine in this whole thing.”
    If by “acquitted” you mean, sucked huge amounts of money out of the taxpayers of Glendale and then told them to go screw themselves, why yes, they’ve done that. When your business is a racket, “getting away with it” is a positive good. Why anyone on earth thinks they won’t do the same to the chumps in Tempe or Scottsdale or wherever is beyond me.

  6. This is “Sold” to Bettman and the rest of the league.Face it there are some warm weather cities where the teams attendance wise have done well.Nashville,San Jose,Anaheim come to mind.There are others which have not.Carolina,Atlanta,Phoenix/Glendale. There’s a city and a brand new arena in Quebec city Begging for a team.But as a previous poster;’jmauro’ pointed out there is the Canadian dollar exchange rate and how that might factor in.Let’s face it.The NHL is Greedy and wants those Larger US TV markets even though a smaller Canadian TV market might hold its own.

    • Actually Nashville is being subsidized. San Jose & Anaheim claim to be breaking even. You forgot Columbus & Florida that are also tanking.

    • True. But I don’t think anyone is clear on why they want the larger US tv markets…

      It’s not like those markets have helped to create a lucrative national US tv deal ($200m/yr over 10 years, with all digital revenues to NBC also – chump change by major sports league standards). Put it this way, if Phoenix, Carolina, Columbus, Nashville and Florida all had their franchises fail or move, would NBC demand that the deal be renegotiated? Not likely. Their tv deal might be national, but if you’ve watched from around the country the games are often regional.

      Even if NBC did want to cut their deal by 25%, it would mean the loss of $1.5m a year per team… man, how we going to afford that #7 defenseman on the depth chart now?

      • “Their tv deal might be national, but if you’ve watched from around the country the games are often regional.”

        Exactly. Rarely do I see anything outside of Detroit/Chicago/NY/Pitt on the national games. NBCSN can vary from time to time, though.

        And, in regards to the Ducks keep in mind they are broadcast in San Diego, Hawaii and Las Vegas Valley thanks to FSW being carried in all of those locations, so they have a bit larger of a potential audience, though I don’t know what the figures are.

  7. I went to the Final Four in Glendale this year. Between getting to/from the airport and my accommodations in Scottsdale , I (literally) circumvented the greater Phoenix area. Even if the Coyotes were good, I couldn’t see the incentive for anyone to want to troop those miles across (actually around based on the shape/location of the freeway) that suburban sprawl for 41 home games a year.

    Maybe I’m spoiled in San Jose, where things are more compact (and I can personally walk to see the Sharks), but, Lordy, I felt like I was in the car more than the stadium.

    Anecdotally for economists doing the math, I believe I contributed approximately $400 to the local economy between beer and meals during my visit (shacked up with college friends for free). I would have spent more at the stadium’s Fan Fest, but Wendy’s was giving away free hamburgers and sample Frosty’s. I went back for thirds both days, because nothing beats a Wendy’s Triple. Although the BBQ turkey legs looked really good.

      • I am sure my assessment is probably not wholly accurate–would need to get out a density map, but man it seemed like it took forever to get from point A to point B. Guess I haven’t spent much time in the desert.

  8. Arizona Senate Bill 1149 has a status of ‘Adjourned Sine Die’ which means no new arena for the Coyotes.

    https://legiscan.com/AZ/bill/SB1149/2017

  9. Bickley: Valley can’t lose the Coyotes now

    http://www.azcentral.com/story/sports/nhl/coyotes/2017/04/11/bickley-valley-cant-lose-coyotes-now/100353230/

  10. Coyotes arena bill appears to be dead in Legislature

    Arizona Senate Bill 1149, a proposed bill to assist the National Hockey League’s Arizona Coyotes with a new arena in the state, appears dead as the 2017 legislative session has been extended, but the bill is currently listed as adjourned on the legislative website.

    Senate President Steve Yarbrough added that a slim way the bill could pass is if it was included in the state budget, which he said was “extremely unlikely.” Gov. Doug Ducey has said he would not sign an amendment to the budget that included a version of this bill.

    http://www.glendalestar.com/news/article_51bf7d9e-2448-11e7-ab2c-27e7bcc54a35.html

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