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Coyotes Seek NHL Bailout

NHL Commissioner Gary Bettman's grand Sun Belt expansion strategy has been troubled for several years now, as attendance at the Southern US franchises has been, well, less than one would hope in a league where a team's financial success is driven by ticket sales. Nowhere has that been more evident than in Phoenix.

The Coyotes financial problems have gotten so bad, the team has turned to the NHL for help in meeting its payroll. According to a story in the Toronto Globe and Mail, the NHL is advancing the Coyotes' share of shared revenue to ensure that the team is able to meet its payroll and other obligations timely. The Coyotes have no other lending source as the team's entire assets and all revenue have been pledged to secure a loan from a hedge fund controlled by Dell Computer founder Michael Dell. The team is expected to lose $30 million this year following losses totalling as much as $200 million since the current owners bought the team in 2001.

The principal owner, Jerry Moyes, is actively seeking a buyer for the club. One difficulty is the team's lease of its current home in Glendale. The arena is new and the club has a 30 year lease which is only breakable in bankruptcy. The team and the city are currently renegotiating the terms of the lease, but most revenue streams from the arena now go to the club, so there is precious little room for improvement. That also means, short of pitching the team into bankruptcy and the new owners then buying the club out of bankruptcy in order to move it, there is little chance the club can move.

Without relocation, there is little likelihood the club will survive. Phoenix is not a particularly good hockey town town - who thought sticking a team in the desert was a good idea anyway - and the location of the arena in Glendale away from everything makes success more difficult. The club should be moved back to either its former home in Calgary or to Hamilton, Ontario which desperately wants a club and would be able to support one in the manner in which a NHL club is deserving. Maybe then, The Great One will be able to get a club with players and fan support worthy of his nickname and we'll all learn whether he can really coach.

Full post as published by Sports Biz on December 25, 2008 (boomark / email).