The Glendale city council was happy to approve more than $200 million worth of subsidies for the Phoenix Coyotes back in June, when it looked like they’d have a sales-tax hike to help pay for it; now that the sales tax could be overturned in a November referendum, though, they’re apparently having second thoughts:
Glendale spokeswoman Julie Frisoni said the council has instructed city staff to come up with some new arena options.
Those options could be presented to Jamison tonight.
Glendale could look to pay Jamison less money to run Jobing.com Arena, change the annual payment structure or looking for more revenue in the deal.
The council can do this, it turns out, because neither they nor Jamison ever signed the new lease deal that was approved in June. On Monday, according to the Arizona Republic, the council directed city administrators not to sign anything until Jamison completes his purchase of the team, and “amendments” to the deal are worked out
It’s still pretty unlikely that the council will blow up the whole deal and start over, as good an idea as that might be; one amendment reportedly being considered is to pro-rate payments to the number of games played at the arena, given that the NHL looks like it’s going to take a season off every eight or so to lock out its players. Still, for a franchise that seems to operate under Murphy’s Law, it’s never a good idea to bet heavily against things falling apart, one way or another.
Quebec City awaits the demise of the Coyotes. Sunbelt hockey is not working and NHL players who used to enjoy salary increases moving from Canadian team to American because of the higher US dollar now look to a future that the reverse is often true.
Unfortunately Paul, that’s not quite true.
Since the league takes monies from richer market teams and gives it to smaller market franchises (usually sunbelt teams) and as long as there is a salary cap that keeps the competitive balance somewhat level in the league I don’t think sunbelt teams are done yet.
And until they are many players have made it clear they’d rather play in the States in no pressure markets like Carolina and Tampa.
So they have the competitive advantage in tax breaks, weather and amenities and many Canadian fans unknowingly pay for it all.
I wish what you were saying was true.
I’ll say it before and I’ll say it again, Jamison is waiting for the new CBA to materialize. That will dictate the salary cap (and salary floor where the Coyotes will likely dwell) and revenue sharing, two key areas that will ultimately spell out the fiscal operation of the franchise for years to come.
Dave;
The Coyotes are losing $30-40m a year on operations. They have been for ages.
I’m sure Jamison (and potential/current owners in other markets) are looking hard at the CBA negs and hoping something materializes that can help/save them, as you suggest. The problem in Glendale is this: There is no combination of increased revenue sharing and lower salary floor that will add up to profitability, and probably not a break even point. The arena mgmt deal (which is really nothing but a subsidy dressed up as fee for service) might cover half that amount – if it’s ever actually signed. A salary floor at 50% of the cap (instead of approx 65% where it now sits) would free up another $8-10m or so (only if the franchise is a perennial floor hugger, as you’ve suggested).
That leaves a solid $10-12m that has to appear from thin air. The Coyotes already receive a full revenue sharing allotment (even though they haven’t qualified for same under the terms of the NHL’s own regulations…) from the league… and even the league admits that there isn’t a great deal of room to expand revenue sharing significantly (IE: how much more will the 10 teams that actually make money agree to funnel to basketcases they could do without?). Maybe they can move a full share from $14m to $16/17m, but not $20-25m – which is what the Coyotes would need. As an aside, under the present RS agreement, the league is already paying more in Rev Sharing to keep the team afloat than ticket buyers in Arizona are. Really, then, it’s a case of superhuman effort being required just to break even.
Increased attendance seems unlikely, and given that the price point for tickets is around AHL level, there isn’t much room for increased revenues via the gate (or parking. People won’t pay $15 for a ticket to the game but will pay $20 to park at the arena? don’t think so…). this is doubly true if the club dumps salary and becomes a floor dweller.
Unless this franchise can be made portable, there just is no upside to owning or investing in it. Jamison may be a patient guy, but unless his fellow governors will agree pay him to buy the club as well as pay him to operate it (as the city of Glendale also helps do) via revenue sharing, I doubt this deal ever gets done…
Unfortunately, the NHL — who are the current stakeholders with this team — would not blink an eye to throw the franchise under the bus ie. dissolve just to squeeze the union. Bettman’s bargain with the owners is that any lost revenues realized this lockout will be recouped expediantly, and that most likely means expansion before franchise relocation. Places like Quebec, Seattle, Markham don’t stand a chance against the commish’s hobby glue horses of Phoenix, Florida, Nashville and Tampa.
@John Bladen
I somewhat agree with you but why does it work in areas like Tampa Bay, Dallas & Buffalo? All three have comparable ticket prices to Phoenix. TB draws very well compared to the Phoenix but I wonder how they do it.
Nashville is to me the showcase on how a small market team can thrive. Phoenix is not a small market and should do better than a lot of teams if you just took Demographic into account.