Feb. 28, 2017
Follow Up: The Uncertain Future Of The Arizona Coyotes
The Arizona Coyotes have yet again been in the news with a similar theme: uncertainty about their future in the Valley of the Sun. The team and their owners have been beset by problems with trying to secure an agreement on a new arena to play in somewhere in the greater Phoenix area.
The most recent proposed plan for a new arena which this past week has now met its untimely demise was a joint project with Arizona State University. This plan proposed a new arena in Tempe that would have been used by both the Coyotes and the university. The deal has now fallen through and the two sides say that it is not able to be revived, so the team is again back to the drawing board on a new arena concept.
The prior proposal was from Scottsdale where a parcel of land for a potential arena site was proposed to the Coyotes ownership group. It is unclear if that site will now be reconsidered, or if the Coyotes brass will go in another direction.
It should also be noted that the team has been approached by Native American tribes about the potential for building a new arena facility on tribal land in a few different areas in the area including a site in Scottsdale. The benefits and negatives present unique challenges and opportunities to this type of development.
The new arena, according to local reports, will most likely be located either in downtown Phoenix or the East Valley. This is due to the market research that the Coyotes ownership has commissioned to determine where the majority of their fans reside.
This same data was used to present the case that their current arena location in Glendale is not conducive for their fans, and that a more centralized location for an arena is needed. The previous owners of the Coyotes made the choice to move to Glendale and the arena is now 13 years old and the team struggles in the bottom few teams in overall attendance out of the 30 teams in the NHL.
The financing for a new facility for the Coyotes is taking shape in the state Senate where a committee has voted for a bill which, if approved by the full voting body, would provide up to $225 million in public funds for a new arena. The proposed bill would designate different plots of land into “community engagement zones” and within those areas the sales tax would increase by two percent.
The funds generated by that tax increase would go toward the public financing allocation for the new arena. The individual city would have a portion they would fund and the Coyotes are set to pay $170 million according to The Arizona Republic toward the total arena cost of $395 million in this proposal.
The legislation, if approved, is gaining momentum because Arizona clearly wants to keep the team from relocating elsewhere. The sports business news reported a few weeks ago that Coyotes team officials had toured arenas in both Portland and Seattle, reports which were immediately refuted by the Coyotes owners. It was deemed later that these reports were not credible, but both of those Pacific Northwest cities have been linked to the NHL as possibilities for expansion or relocated franchises.
The politicians in Arizona see the potential for the Coyotes to leave, and they are trying to offset that concern by providing state funds for a new arena. The new proposal that just was voted through the committee level has said to have reportedly upset the local politicians in Glendale, who obviously would like to keep the team there rather than lose the main tenant of the arena as well as the revenues driven by over forty dates of hockey on their arena operations calendar.
The owners of the Coyotes reportedly have told the committee that they plan to construct the new arena in downtown Phoenix or the East Valley area. The new arena will have around 16,000 seats and most of them will be in the lower bowl to generate better revenue streams from game related sales. The team would have a practice facility built next to the new arena, as is the trend with many NHL teams currently with new arena construction.
The possibility of a joint facility shared with the NBA’s Phoenix Suns has been discussed in the past, and it could become the eventual recommendation from both the state and local levels of government. The shared facility would be in downtown Phoenix and some sites have already been reviewed for that type of project.
However, the new facility would have to be designed in a way that was conducive to both sports as far as sight lines, support of an arena floorplan with an NHL ice sheet, and other considerations that would enable a shared facility to be successful. The recent example of the problems the NHL has had with the New York Islanders sharing Barclays Center with the Brooklyn Nets serve as a cautionary tale for both leagues as far as sharing facilities in the future.
The Arizona Coyotes have been a case study in franchise instability for a number of years now. The NHL is bullishly committed to maintaining a presence there because they do not want to lose the potential of that marketplace from a population and television market size perspective. The league especially does not want to lose their foothold in the Phoenix market to a relocation where the Coyotes end up in a smaller marketplace, i.e. Quebec City or Portland, Oregon.
However, the reality is that the demographics of the Phoenix area market are not conducive to supporting an NHL team for the long term. The market is saturated with other sports and outdoor recreational options that can be challenging to promoting the sales of tickets for hockey within those demographic conditions.
The ownership of the team is blaming the current arena setup in Glendale as the main issue to their struggles with filling the arena, and they are banking on a change in venue location being the elixir which cures all the ills with this franchise. In my view, I am not so sure that the solution is that simple.
The owners have remained, at least publicly, pretty steadfast in their commitment to remain in Phoenix. That resilient response could appear a bit puzzling on the surface, but the fact remains that the NHL would only possibly approve their relocation to Seattle, which is not an option at this point until they get a suitably sized arena built in that city.
The other factor which is a major point of influence for the team owners and the league to stay in Phoenix is the government support on multiple levels to providing a taxpayer subsidized new facility for them to play within. The bill that is currently pending which was detailed earlier creates a scenario where the owners will get a sweetheart deal on a new arena and the enhanced revenues which will flow along with that development.
The current ownership group, judging by their announced plans for the potential new arena, hope to attract a core base of passionate fans and cultivate that niche group over a period of years. The franchise has been marred by uncertainty and the hockey world will wait and see if the months ahead provide any clarity and stability to this moribund organization.