PHOENIX (May 18) – With the temperature pushing 108 degrees in this desert city, it is improbable to think the action indoor Tuesday can be any hotter, but no one denies there is a sizzling hockey issue on the table. Legal proprietorship of the Phoenix Coyotes could be determined by Judge Redfield T. Baum at the United States Bankruptcy Court for the District of Arizona in a hearing scheduled to begin at 1:30 p.m. (4:30 Eastern). Judge Baum has been presented with more than 100 court documents relating to the future of the Coyotes, and he will ultimately determine whether the cash-strapped hockey club belongs to owner Jerry Moyes, or to the National Hockey League, which claims it entered into a proxy agreement with Moyes last November.
Should the judge rule in favor of the NHL, the Coyotes will remain here in Phoenix, and the league will presumably follow through on its attempt to sell the club to Jerry Reinsdorf, owner of the Chicago White Sox and Chicago Bulls. If Mr. Baum declares the club belongs to Moyes, all bets are off. Moyes will almost surely move forward in his plan to sell the team to Canadian billionaire Jim Balsillie, whose offer of $212.5 million is said to be substantially more lucrative than Reinsdorf’s. But, it is contingent on Balsillie moving the Coyotes to southern Ontario – Copps Coliseum in Hamilton, to be specific – and the NHL wants no part of that arrangement. Exactly how an appeal by the league to a ruling in favor of Moyes would disrupt plans for next season isn’t known, but a 2009-10 NHL schedule with Coyotes’ home dates at Jobing.com Arena is in the process of being finalized for release in mid-July.
In the two weeks since this issue has gone public, a couple of trends have developed… a) few people in the U.S. outside of this city are the least-bit interested in the future of the Coyotes; as with the owners’ lockout in 2004-05, it is almost exclusively of intrigue to Canadians. As such, reporters from north of the 49th have descended here for Tuesday's court session – on my flight from Toronto Monday morning were representatives from the Star, the Globe & Mail, Canadian Press, and CBC Sports. TSN has dispatched its Vancouver-based crew to cover the hearing. Rogers Sportsnet will also be on hand, with Mark Spector reporting. Beyond those directly involved, and the local media, it’s doubtful the Coyotes/NHL battle is a hot topic for any person in the United States. And, b) the age-old argument that this dispute ultimately comes down to NHL commissioner Gary Bettman vs. all of Canada is raging once again. It is the prevailing sentiment north of the border, though it doesn’t have a stack of merit.
Bettman has long been the anti-Christ to hockey fans in Canada who remember only that the Winnipeg Jets and Quebec Nordiques fled for U.S. markets on his watch in the late-‘90s. What is either not known – or conveniently forgotten – is how tirelessly the commissioner worked to maintain viable franchises in Ottawa, Edmonton and Calgary, when all three faced economic collapse and/or bankruptcy. So, to suggest, unequivocally, that Bettman doesn’t want another team in Ontario is inaccurate. To suggest he wants that team to be owned by someone other than Jim Balsillie is bang on. And, that’s why the court proceeding here tomorrow is so critical.
Balsillie, you’ll recall, was approved as an owner by the NHL Board of Governors when he ventured to buy the Pittsburgh Penguins a few years ago. But, the BlackBerry king and CEO of Research in Motion withdrew his application when the league insisted on an addendum to keep the club in Steeltown [in the days before taxpayers voted for a new facility to replace the out-dated Mellon Arena]. Balsillie’s subsequent attempt to buy the Nashville Predators and transfer that club to Hamilton met with overwhelming disdain from Bettman after the would-be owner unilaterally began to solicit season-ticket deposits for Copps Coliseum. Bettman so despised that ploy by Balsillie, he was accused of scheming with Predators’ owner Craig Leipold to block the sale, in exchange for a sweetheart deal enabling Leipold to assume control of the Minnesota Wild.
Where the Bettman administration has repeatedly failed is performing due diligence on prospective owners. An assortment of crooks and con-men has been approved to operate NHL clubs with phantom resources. Balsillie, on the other hand, is an iron-clad financial magnate, to the best of anyone’s knowledge. His marketing of the BlackBerry communications device has thrust him into exclusive territory among Canada’s wealthiest people, and his interest in the NHL is uncontested by even his staunchest adversaries. As such, you’d think the other 29 league owners would enthusiastically welcome his wherewithal at some point. The question is, when? And how?
Strongly emerging in recent days is a notion that the NHL would prefer to keep the lucrative southern-Ontario market open to expansion, and a $300-million franchise fee that would be split among the owners [but not its “partner”, the players]. That said, the league has repeatedly insisted in recent years it has no plans to expand beyond 30 clubs, preferring to strengthen incumbent markets. So, Hamilton is likely to be S.O.L. once again if Judge Baum rules in favor of the NHL in the bankruptcy case.
There was an interesting article on the front page of Monday's Arizona Republic. Headlined “Can Phoenix ever be a hockey town?” with the sub-title “Coyotes say no, but NHL still optimistic”, it outlined the myriad challenges facing the game in this region.
The story was written by reporter Craig Harris:
Their attendance has been among the lowest in the National Hockey League, although the owner last season bought about 1,000 tickets per game. Their game broadcasts draw some of the league’s lowest local ratings. Even with legend Wayne Gretzky as coach, the team’s on-ice performance has been poor enough to keep it out of the playoffs. Off the ice, the team, during its entire time in Arizona, never has posted a profit.Team and league officials, despite their schism over the franchise, agree a subsidy is needed to keep the Phoenix Coyotes financially afloat.As the two sides prepare to fight for control of the Coyotes in U.S. Bankruptcy court on Tuesday, all the data raises an obvious question: Can hockey survive in the desert?The NHL, which is fighting to block owner Jerry Moyes from selling the team and having it moved to Canada, says hockey can succeed here despite the team’s history of financial problems. The Coyotes, citing a litany of uphill battles, said hockey in a non-traditional market just doesn’t work. Despite being in Arizona a dozen years, the team has failed to develop a large following. The result for owner Jerry Moyes, who began investing in 2001, is annual losses ranging from $20 million to $30 million. The Coyotes contend the NHL has no right to block a sale to Canadian billionaire Jim Balsillie, whose $212.5 million bid would pay off creditors, including Moyes. Moyes and others associated with the Coyotes asserted in bankruptcy filings late Friday that Moyes was always in control of the team, despite claims to the contrary from the NHL in its filings. The league contends that Moyes didn’t have the right to seek Chapter 11 protection and is asking Judge Redfield Baum to dismiss the case.
Weak teams
The team’s problems can be directly tied to its lackluster performance, said Bill Daly, NHL deputy commissioner.The team, which has been to the playoffs just once during Moyes’ tenure, needs some “competitive success” to jump-start interest from fans and attract corporate sponsors, he said.Daly also said he believed the Coyotes, who have embraced a youth movement, are poised to make a “competitive breakthrough.”“With the right conditions, we can see adequate support in this marketplace,” Daly said. Longtime hockey fan Paul Nicholson of Tempe agreed, saying “winning would cure an awful lot of ills.“I think this market would be good if the Coyotes would ever win. “I remember the original Roadrunners when they played in the old Western Hockey League in the late ’60s and early ’70s. They won back-to-back championships in the early ’70s and packed the (Veterans Memorial) Coliseum, especially for weekend games. The fans were absolutely nuts.”
Troubled finances
However strong the product on the ice, both Coyotes and NHL executives say the team needs a financial bailout, at least in the short term. Both have asked Glendale for payment concessions on the team’s lease of Jobing.com Arena.In addition, questions remain whether enough fans will travel to the games to allow the team to turn a profit.Ray Artigue, executive director of the MBA sports-business program at Arizona State University, said being a non-playoff team and playing in Glendale makes it difficult to regularly attract fans throughout metro Phoenix, especially those on the other side of the Valley.Moyes, through a spokesman, declined to comment. But Jeff Shumway, the team’s former chief executive, said the Coyotes mounted numerous efforts to stimulate interest, were competitive much of last season, but still couldn’t attract fans and lost millions.”At this point in time, hockey isn’t financially viable here,” said Shumway, who ran the team from April 2006 to January 2009.He said an NHL official told him a team needs to make the playoffs four out of five years to generate a loyal following.
Fan apathy
League attendance and TV ratings show the desert has not been kind to the Coyotes.
• This past season, the Coyotes had a 0.4 TV rating. That translates to about 7,210 homes. Hockey ratings generally are lower than those for other sports in a market. But ratings for the Suns and Diamondbacks are 10 times that, while the NFC champion Cardinals in 2008 had a 16.9 rating, or viewership in nearly 305,000 homes.
• The Coyotes are among the lowest-rated teams for TV viewership across the NHL, with just a handful of teams such as Anaheim, Atlanta, Florida, Los Angeles and the New York Islanders having worse ratings, according to records compiled by Sports Business Daily.
• Since Moyes began investing in the team, the Coyotes finished in the bottom one-third in attendance in the NHL every season except 2003-04, when the team moved to Jobing.com Arena from downtown Phoenix. This past season the team drew 14,875 fans, or 84 percent capacity of the 17,799-seat arena - the second-worst showing in the NHL.
Revenue-sharing woes
In its bankruptcy filings, the team also said it struggled to even meet minimum standards to qualify for full shares of the NHL’s revenue-sharing program, which takes money from rich teams and distributes cash to poorer teams.Unable to meet minimum paid attendance and revenue-growth figures in 2007-08, the NHL docked the team at least $3.6 million, or 25 percent of a full revenue share. This past season, the Coyotes again failed to meet those standards and received a 40 percent cut, or more than a $6 million reduction, according to Shumway.The NHL last year told the Coyotes to “do whatever they needed to do” to hit the minimum requirements and receive a full share, Shumway said. The team, through an accounting move, then sold Moyes about 1,000 tickets a game and deducted the cost from the millions of dollars in loans he provided the team.Daly said the NHL, which has contended it has been in control of the team since November, became aware of the situation in January and told the Coyotes to stop. (END OF STORY)
Not exactly a glowing endorsement by the region’s biggest newspaper. The concept that ties winning to the success of non-traditional markets was raised in a blog I wrote two weeks ago. There’s no question that hockey fans in this area would support the Coyotes through a long playoff run; what NHL city wouldn’t? When the Coyotes played in the America West Arena [now USAirways Center] in downtown Phoenix, there was an enormous hockey buzz during the 1997 Stanley Cup tournament. In fact, the trend toward fans dressing in one color began with the Coyotes’ franchise when it still called Winnipeg home. The Jets’ drew capacity audiences to old Winnipeg Arena, and playoff games in the late-‘80s and early-‘90s became the “White Out”, as fans dressed, almost exclusively, in plain-colored t-shirts. The movement continued here, when the Coyotes – led by veterans Jeremy Roenick and Keith Tkachuk — captured the city by appearing in the club’s first playoff series against Anaheim.
The problem, however, is obvious. No one can guarantee that teams in non-traditional hockey markets will be successful on the ice. If that’s the criterion for financial viability, the NHL has several enormous obstacles on the horizon. And, it’s all the more reason to strive for re-location, once a market has proven to be lukewarm over a period of years.
Jim Balsillie wants to re-locate the Phoenix Coyotes to Hamilton.
Will the law enable him to do it?
We may begin to find out on Tuesday.
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