Needless to say, the Arizona Coyotes financial issues have been in the news as much as hiring a new general manager, or speculative trade rumours. Craig Morgan from azcoyotesinsider.substack.com (subscription required) had some input on the financial disclosures of the team not paying due lease payments to ASM Global who manages the Gila River Arena.
The annual payment made to Glendale from ASM Global, the arena manager, includes use of the arena for games, staffing & other costs. It amounts to somewhere around $1.6 million. The payment is generally made once a year, after the fiscal year has ended.
— Craig Morgan (@CraigSMorgan) September 17, 2020
Per both sources, ASM sent a letter to the team notifying it that its payment hasn’t been received. When reached for comment, ASM issued a statement: “The team has been a long-standing partner of the arena & we are working closely with them, as is our normal course of business.”
— Craig Morgan (@CraigSMorgan) September 17, 2020
To clarify, the fee that the Coyotes pay ASM Global is more than $3 million. Glendale gets about $1.6 million of that in their revenue sharing agreement.
— Craig Morgan (@CraigSMorgan) September 17, 2020
Arizona Coyotes Financial Issues Raise Questions
Besides the arena late lease payments, there were other bills not paid. Vendors such as Paradigm Aviation which is the charter company the team uses for all of their air travel to road games wasn’t paid on time. They furloughed and laid off plenty of employees. But, so did many other franchises due to the pandemic caused lack of ticket revenue. They were even late paying per diems while they were in the Edmonton bubble. The Coyotes won their qualifying round series advancing to the first round of the playoffs before being eliminated by the Colorado Avalanche. In addition, they failed to give signing bonuses to some players as contracted to do so.
So, what’s going on?
The franchise had new billionaire owner Alex Meruelo take over about a year ago. Every fan who had worries about the team folding or moving due to financial issues were thought to be in the past. Then, the COVID-19 pandemic hit and it seems the worries or at least rumours are back again. The fan base here is very aware of when the NHL had to take over operations of the team due to financial instability.
Xavier Gutierrez Tries to Clear the Air
The current situation was addressed by newly appointed CEO/President Xavier Gutierrez.
“Clearly, there is a pandemic that has impacted everybody in this country and every business. We’re not immune to it, but we are managing it and we are moving forward. Anybody who tells you, ‘We’re fine, we’re good,’ that’s not true. There is no crystal ball. You’re not eliminating this. All you can do is try to manage it and try to mitigate it. Alex, for sure has had a number of businesses impacted when you think of the casino businesses, when you think of the media business and when you think of the sports business. It has been a challenge.”
“One of the secret sauces of the Meruelo Group has been diversification. You know which businesses haven’t been challenged? His food business hasn’t been challenged. His construction businesses haven’t been challenged because it’s infrastructure, so diversification in his portfolio has always been something he has to withstand the cycles of business.”
“From the first day I got here, I made it very clear that there is a difference between instability and change. There is no instability because of this ownership. It’s an ownership group that is committed, that has a track record of success and that has the resources to execute on its vision. Having said that, there is going to be change because we want to improve, we want to iterate and we want to truly build a model sports franchise and model business enterprise and we’re not going to stop until we get there.”
All of These Issues Were Not Hidden From New GM Bill Armstrong
Gutierrez mentioned that they didn’t try to hide the concerns of the franchise’s situation from newly hired general manager Bill Armstrong. “We were very candid and transparent, without a doubt,” Gutierrez said. “He was fully apprised, but he has a plan. I like to say that in business, you can be a problem identifier or a problem solver. Bill Armstrong is a problem solver.”
That’s a good thing. For Armstrong to have been blindsided without knowing the details would have created a lack of trust on his end. How could he ensure to a future free agent that the franchise is stable without knowing the details? Armstrong still took the job and he has definite hurdles to overcome.
He can handle the trade rumours, the reorganization of the scouting department, and putting a better team together. Just don’t hire the guy and then he finds out things he wasn’t aware of at the time.
New Arena Talk Has Suddenly Disappeared
Earlier this year, the ownership/management of the team mentioned that they would be making a statement by the end of the year concerning a new arena. That discussion is suddenly gone by the wayside with all of the above-mentioned challenges. If the franchise is late making lease payments for the current building they use to play games, how can a new facility even be envisioned? That is not good news. Of course, nobody predicted the pandemic causing numerous businesses to be hit so hard financially. It has affected the entire country/world economy.
For now, the Arizona Coyotes financial issues are still a concern. It was a good thing to come out and explain what was happening. With both Meruelo and Gutierrez being new to hockey, there were some errors committed. Now they must, along with Armstrong’s help, attempt to right the ship and gain the confidence back from fans and season ticket holders. After all they are the ones supporting the team… without them, there is no team.
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