With the outbreak of a COVID-19 pandemic, the Arizona Coyotes are about to lose 19.5 percent of their gate revenue. They had eight of their last 12 games scheduled at home. The fact that the NHL relies on game ticket revenue hurts their balance sheet.
Arizona Coyotes Still Have No New Arena Plans
While the new owner, Alex Meruelo who is worth $2 billion, has high aspirations to get a new arena built in the eastern valley, the current world events may change that plan. Mr. Meruelo is a successful businessman with interests in entertainment, gaming and hospitality, construction, real estate, banking, and food services. Many of those ventures are now closed down due to the Coronavirus lock-downs. It remains unclear how much revenue he will lose or be reimbursed for to offset losses.
According to an article in Sports Illustrated, several sources – including former Thrashers President Dr. Harvey Schiller covered what may have been promised Meruelo. He told JohnWallStreet that they believe Bettman has promised Meruelo that the “owners will do whatever is necessary to help him turn the franchise around and make some money.” ; including allowing him to move the team sooner if he’s unable to get a new building in the Phoenix market. Schiller said, “no one would buy that franchise unless they were assured there was a way it would stop losing money.”
Of course, this was all before the NHL was hit with a pandemic the likes of which could cost the league close to $1 billion. That’s a whole new ballgame.
With nothing being heard about any discussion (at least publicly) of a new facility being planned for the future, it appears that this new world crisis has set that back quite a bit. Mr. Meruelo bought a franchise that was losing $50 million a year for about $300 million. Add in a debt obligation of about $300 million and it’s easy to see how even a rich person can get freaked out.
The Pandemic’s Effect on Weak NHL Teams
Another article by Damien Cox of The Star in Toronto even goes so far as to predict that some of the weaker NHL teams may be forced to move or sell. He listed the Ottawa Senators, Arizona Coyotes, and Florida Panthers as prime candidates. While owners in Florida and Arizona are billionaires, Ottawa’s owner Eugene Melnyk scoffs at the idea that his team may be in trouble. They have been attempting to get a new arena too. To make matters worse, eight members of the team, including two players have tested positive for the COVID-19 virus.
When you look at attendance figures, the above three teams are not doing well at the gate. Missing games for the currently suspended season will only cause financial nightmares to mount even worse.
What This Could Mean Going Forward for the Arizona Coyotes Arena Situation
The Arizona franchise has had its share of setbacks. From being run by the NHL after ownership filed bankruptcy, to attendance issues due to the location of Gila River Arena, the team has had more instability than the current Trump administration.
As if the organization can have anything else detrimental happen to them, they are still in a fix with the possibility of up to $5 million in fines due to prospect training violations. Adding that to the already mounting financial challenges, may not be too attractive for the team remaining here.
The team has not appeared in the playoffs since 2012. They recently made a couple of trades to enhance their chances. Acquiring both Phil Kessel and Taylor Hall were intended to right the sinking ship. So far, that also hasn’t worked out. If it weren’t for bad luck, this team would have no luck at all. Kessel has been a bust scoring just 38 points through 70 games this season. That is a significant drop from 92 and 82 points over his last two seasons in Pittsburgh. He will be 33 years-old in October. He still has two years remaining on his contract worth $6.8 million a year.
Taylor Hall has done all expected of him by tallying 27 points in 35 games in Arizona. The unfortunate (bad luck again) thing was goalie Darcy Kuemper going down for two months with an injury. The team gave up a lot to acquire him and without the prospect of finishing the season or even being in the playoffs, Hall’s wish to be with a winner may not happen in Arizona.
Dollars and Sense
All of this just seems to indicate that Mr. Meruelo will be evaluating the financial investment he made when he purchased the team about a year ago. He wants to win. He has displayed his intention by paying players. So much so, that the team was close to the salary cap limit. His patience level will be tested to see if he intends to go all the way with getting this team to succeed. He’s an astute businessman and will know what to do.
Included in his plans will not be to financially injure his collection of businesses including the hockey team he purchased. His intentions are honourable and yet will keeping the team be a financially realistic decision?
Relocate From Arizona as a Possibility
With the lack of success of even getting to the playoffs confronting the decision to possibly move the franchise to say… Houston for example, the possibilities are there. It is the fourth largest city in the country and would have an instant rival in the Dallas Stars.
Tilman Fertitta purchased the Houston Rockets for an astounding $2.3 billion, a record for an NBA team at the time. With this purchase also came the ownership of the Toyota Center. It wasn’t long before he stated he was interested in having more than just the Rockets play in his newly acquired arena. He is heavily pursuing an NHL franchise and the Toyota Center can hold 17,800 fans. That capacity is similar to Gila River Arena, yet they only average about 14.400 fans per NHL contest.
There are multiple reasons why the NHL would be interested in moving the Arizona franchise. The team is scheduled to move to the Central Division at the start of the 2021-22 season. It makes geographical sense to have Houston which is more centrally located than Phoenix in that division for travel reasons if nothing else.
The other option is for Meruelo to sell the team to Fertitta since the latter wants to own the team that plays in his arena. Whoever owns the team having them in Houston just makes so much more sense than going year-to-year in Gila River Arena in Glendale, AZ.
The team may have a shot at attracting more fans and keeping them in Arizona if it only performed up to expectations.
That just hasn’t happened.