Monday, June 15, 2015

Hockey Doesn't Work In Glendale, Arizona - Take 6005

So, uh, hockey in the desert. A bad idea unless you're in Las Vegas, right? A worse idea in a suburb that doesn't care about it, right?

You'd think.

First things first, here's a recap of the story so far:

The Winnipeg Jets left Canada in 1996 to become the Phoenix Coyotes. It didn't work out so great because the arena the team shared with the NBA's Phoenix Suns wasn't adapted to hockey, so they looked at other options, including another downtown Phoenix location, and some suburbs, including Scottsdale, which has more expats from the East and North who are familiar with hockey.

Through backroom deals and the pipe dream of building ''another Las Vegas'' in the desert complete with facilities for all four major team sports, golf courses, upscale malls and hyper-expensive condo towers, the owners decided to settle on Glendale, a not-so-rich suburb full of college football fans. It didn't exactly pan out, and the neighbourhood-building never really occurred.

The team went through tough times on the ice, people stopped coming to games, one ownership group declared bankruptcy, many people tried to buy the team but were rejected by the league (including Canadian billionaire Jim Balsillie who wanted to move it to Hamilton, Ontario), and the team was operated and self-owned by the NHL for a few years, until four guys came in (Anthony Leblanc being the most vocal) a couple of years ago and bought it for $150M. Last summer, they sold 51% of their share of the team to Andrew Barroway for... $150M, meaning the original bunch kept half the team without paying a penny for it. There are now talks of Barroway selling some of his shares.

The team was said to lose $25M per year and complained they weren't making enough money from arena revenue, so they forced the city of  Glendale, which technically owns the arena, to hand them a contract to ''manage'' the building, in exchange for $15M per year and basically a free lease; in return, they were to fill it on non-hockey nights with concerts, sporting events, trade shows and the like to ring in enough tax revenue for Glendale to recoup most of the money they gave the team.

Which they didn't. There were only 15 non-Coyotes events at the arena last year, raking in less than $6M in revenue (taxes and concession stands included). Ironically, that alone IS NOT grounds for termination of contract. Indeed, Glendale is instead insisting on one anti-corruption clause of the lease contract which forbids a City employee who worked on the deal to start working for the team. And one of them, an attorney who supported the deal, no less, was indeed getting paid on both sides of the fence at one moment in 2013.

This, of course, was to be expected. I could have booked that arena 100 times and would have done it for less than $5M myself, including cab expenses (I don't drive). Anything more is a scam and a sham - and not being able to achieve it in a year where  both Madonna and the Rolling Stones were touring, let alone circuses, mid-level rock acts and current-day chart toppers touring almost non-stop.

Then again, I could also probably manage the Coyotes to better than 29th place with a coach like Dave Tippett behind the bench. Don Maloney at least got some kind of return for the likes of Keith Yandle (Anthony Duclair!) and Antoine Vermette (a first-rounder and defensive prospect Klas Dahlbeck), but he got rid of his best goalie (Devan Dubnyk) because he was hindering starter Mike Smith's confidence, and has done nothing in any off-season to make players feel welcome, buying out veterans after throwing them under the bus (Mike Ribeiro) and letting his best players walk as free agents (Radim Vrbata).

But I digress.

I know fans are passionate, and that's cool. But the harsh economic reality is this: basing the reason to exist of an entire franchise which is below average in attendance and revenue and therefore receiving help from the richer franchises just to meet payroll over one local-boy-getting-drafted success story or even 20,000 season-ticket owning fans (which there aren’t) is not a good reason enough to keep a team in a place where it will cost the other owners some of their own profits to operate.

People need to look past their own passion and look at the raw numbers and facts, in their proper context. It sucked when the Québec Nordiques and Jets moved, and it was sad to see the Atlanta Thrashers get sold when you think that it involved a family of owners who lost a lot of money in trying to make it work. There are human dramas there. but the math didn’t work.

Even if the arena was filled every night, you'd still need more. You need millions of passionate fans to keep a franchise afloat, buying products (directly team-related or advertiser-related, and player-sponsor-related) and watching games and traveling with the team and creating a secondary market and building homes near the arena and attending concerts at one arena instead of another to support the ownership group.

The Florida Panthers have the excuse that their side ventures are doing great – among the best in hockey. There’s always something happening at their arena. The Coyotes are just sucking up public funds.

Or were.

The Glendale city council voted to terminate the team's lease last night, and the team threatened to sue for $200M. But first: an injunction (court order to temporarily put the termination on hold while awaiting further proceedings), of course.

At the council session, Mayor Jerry Weiers got blasted by season-ticket holder Ronda Pearson, which she - and the internet - seems to think she demolished, except as I pointed out below, sure, she's forking over $4K per season towards the team, but that's far from their $70M payroll and there aren't 20,000 folks like her. No matter how passionate she is, she is part of too small a minority for hockey to work in Glendale. Maybe Tempe, maybe Scottsdale, maybe Phoenix itself - but it just doesn't work in Glendale. Here's her passionate speech:

In a predictable-yet-odd turn of events, the mayor agreed to get tasered for charity just a few days later, and she was the one holding the gun. Notice her still-angry face:

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