A recent article in The Athletic written by Katie Strang (subscription required) has caused some Arizona Coyotes controversy. Strang has detailed the inner workings of the franchise’s organization and she didn’t hold any punches in her reporting.
Arizona Coyotes Controversy Hits Fans
Let’s face it, the Arizona Coyotes’ hockey team is sort of accustomed to controversy. From owners filing for bankruptcy, to the team’s futile efforts to make the playoffs for eight years, this team has faced much diversity.
Through all of that, it was thought that new ownership would alleviate most of those issues. Unfortunately, for fans of the team that doesn’t seem to have solved the problem.
Alex Meruelo’s Financial Responsibility in Question
New owner Alex Meruelo purchased the desert city hockey team in July 2019. At the time, it was a relief that the team finally found an owner who is worth $2 billion.
After all, Merullo had an excellent reputation in business. He also was adept at making money. That is evidenced by pulling in $5,000 a month working at a tuxedo business when he was just 16 years old. He has built an empire in restaurants, casinos, and even owns some radio stations. He started out in college where he bought a failing pizza business and turned it around into a very profitable venture.
The Strang article tends to look at Meruelo in an entirely different light. On the financial front, the article depicts a man who doesn’t pay his bills in a timely manner. That in turn, reflects poorly on the entire organization. Coyotes’ fans are quite familiar with that scenario and must be thinking, “not this again.” Having your NHL team run by the league is not exactly an exhilarating experience. Nor is constant rumours that your team is re-locating.
Strang’s article states that she had “interviews with more than 50 people, including current and former employees that span multiple departments as well as people who have business relationships with the club. Those interviews revealed a wide range of concerns that have surfaced since Meruelo took control of the team 18 months ago, including what many have described as a “toxic” workplace environment and financial troubles that far exceed what has previously been disclosed.
COVID-19 Concerns Have Intensified Financial Concerns
Every NHL team has suffered financially during this historic pandemic. The Coyotes don’t need any more additional bad news affecting their balance sheet. They were one of a shortlist of teams who are allowing a maximum of 3,490 fans to attend games. That small of a crowd even at inflated ticket prices, won’t exactly help them financially. Meruelo’s other businesses are getting hit hard as well. We’re not saying he will go bankrupt, but continuous losses won’t help. It has been estimated that the average loss each NHL team is incurring amounts to $1 million per game.
While hopes of a COVID-19 vaccine remains a possibility to get fans back in the stands, it remains to be seen when that reality comes to fruition. In the meantime, bills continue to come due and player’s salaries must be paid. What may help the team’s finances will be when every NHL team receives a cut from the new Seattle Kraken’s expansion fees. But, that won’t come until April. Last winter in a staff meeting Meruelo called a projected revenue loss of $53 million as “unacceptable.” He has cut staff and recently terminated the contract of assistant general manager Steve Sullivan, who had just signed a four-year renewal contract. Add to Meruelo’s long list of possible debts the possibility of paying Sullivan’s contract. It seems he has contracted an attorney and wasn’t given a reason for his contract being cancelled.
If This is a New Era, Things Look Awfully Shaky
With the emergence of a new rich owner, the fans were certainly expecting that a new arena would be in the plans. In fact, President and CEO Xavier Guterriez commented that Mr. Meruelo (as he prefers to be called instead of Alex) made it his top priority. More was to be released on the arena plans was promised by the end of last year. Well, that hasn’t happened. Even Arizona Coyotes’ insider (and former Athletic writer) Craig Morgan has not had an interview with Meruelo. It’s no wonder with all the controversy.
One striking comment in Strang’s article was from one of the 50 people she interviewed for the story. Their comment was, “If I was talking to a future employer, I’d say it’s been a learning experience. “If I was being frank with you, I’d say it’s a shitshow.” Another former employee stated that “they basically took how they managed radio stations, pizza chains, and casinos and used that same playbook for a hockey team.”
For The Fans, This Couldn’t be Worse
Having a new owner certainly had the fanbase charged up. It meant that the team could afford to sign free agents and attract them to the lifestyle in Phoenix. And, to Meruelo’s credit he did increase the salary expenditures to the point that they were near the cap limit… and that was a first. Now, just as he had to cut arena and front office staff after stating they would paid during the pandemic, player salaries are said to be adjusted downward. New general manager Bill Armstrong signed players with lesser salary demands and thus far the team seems to be responding. Still, the claim that a new arena was down the road seems like a distant mirage in the desert.
In the Long Run, Staying in Glendale May Hurt the Team’s Attendance
Where will the Coyotes be playing then? It very well could remain at Gila River arena even though the NHL and Commissioner Gary Bettman stated otherwise. So, we don’t know Meruelo’s dedication to building a new arena. In fact, the team is talking to the city of Glendale who wants them to sign a long-term lease. Another letdown for the fanbase most of whom live in the east valley where a new arena was rumoured to be constructed
If Meruelo can survive all the issues in his trouble hat, he still has the concern of reduced attendance in a building which is difficult to commute to for weekday games. If he wants to turn around the financial losses of the franchise, staying in Glendale will not get him there. At this point, even with all the “we’re not going anywhere” statements, this team may be ripe (AGAIN) for re-location. If the NHL trusted Meruelo to run the team and pay his debtors, they may start to rethink that decision. One vendor noted in the Strang article, “this is a group of people not acting honorably on the basis of business, not treating people and their partners with respect.”
If Meruelo is as rich as he states, then why does he not pay Paradigm Ventures Southwest who was the team’s private airline charter, the $257,406.25 (plus $19,305.47 in taxes) they owe them? Good question. It’s not certain how much longer this behaviour will be condoned by the NHL. It is certain that Meruelo is a shrewd businessman. Making honest business practices may not be in his wheelhouse, but he needs to evaluate his stance on such things if he intends to remain an NHL owner.
Good luck Coyotes’ fans, you now have another owner who doesn’t live up to his obligations. Hopefully, when the smoke clears, you’ll still have a hockey team. And, the Arizona Coyotes controversy still drags on.