A Dead Team Skating
David Shoalts has several league sources who are spilling the beans about the mess in Phoenix. It isn’t surprising that the NHL is leaking this information now, when interest in hockey – rather than the business of hockey – has peaked. Who wants to talk about the probable demise of the Phoenix Coyotes right now? But it certainly does not look good for the franchise:
1) The league has been unable to find a new chump willing to lose money trying to make hockey go in Arizona.
2) The league has increased its line of credit substantially. According to the Shoalts source, the move is not specifically aimed at Phoenix. It was made because the “league are able to negotiate more favourable terms than individual teams”. That’s literally true, I guess but it really means that the league can borrow money and some teams – Tampa and Phoenix, for sure – can’t.
3) Jerry Moyes is not prepared to put in more money. While the story does not explicitly say so, apparently the league will be operating the Coyotes next year.
4) The team could be sold if the City of Glendale wasn’t being so stubborn. They won’t let the team out of the lease on the brand new $180 MM arena. Regardless, the city is going to get screwed. They either lose the team after next year if they stick to their guns, or they lose the team in two years if they amend the lease.
The only silver lining? This arena could end up being an object lesson the next time a government thinks about buying an ice palace for the benefit of a billionaire’s business.
6) The NHL plan if Glendale doesn’t bail them out:
The NHL has the absolute right to revoke a franchise at any time, which supersedes agreements such as the Coyotes’ arena lease, which calls for enormous financial penalties if the team leaves before it expires in 2033.
“Even if the league has to pump $40-million into the team, there is still no risk,” the owner said. “It would be an absolute last resort, but the NHL could get its money back by revoking the franchise, selling it and moving it to another city.”
Translation: We’ll fold the team and get our money back when we replace the Coyotes with an expansion franchise. (Note that the NHL doesn’t really get their money back in this scenario. They could sell an expansion franchise without having to pump $40 MM into the Phoenix franchise.)
It looks to me like the NHL is buying some time while the city of Glendale considers the ugly alternatives. One, the league pulls the plug, the Coyotes are bankrupt, and Glendale is left holding the bag. Two, Glendale rewrites the lease as one last desperate attempt to save hockey in the desert. The team is then sold with a new breakable lease and it is two years before Glendale is left holding the bag.
In the meantime, this is a dead team skating.