Coyotes Find New Home at ASU

Photo via: Arizona State University

On Thursday, the Arizona Coyotes announced that the club had reached a multi-year agreement with Arizona State University to play home games at the Sun Devils’ new, multi-purpose arena. Beginning next season and continuing through the 2024-25 season, the Coyotes will play all of their home games at the soon-to-be-completed Tempe venue. The club also has an additional option for the 2025-26 season.[1] This arrangement will be especially unique, as the new arena will reportedly hold somewhere between 3,200 and 5,000 fans, while the average NHL arena has a capacity of around 17,400.[2]

This agreement comes after a lengthy, contentious relationship between the Coyotes and city officials in Glendale, where the Coyotes have played since 2003. In August, the City of Glendale announced that they would not be renewing the club’s lease at Gila River Arena beyond the current 2021-22 season. The team approached ASU in December with interest in sharing the venue, and the Arizona Board of Regents finalized their decision on the proposal this past week.

Coyotes’ Financial Context

The Coyotes will pay an annual, yet undisclosed, fee to lease the space. The arena manager, Oak View Group, and the Coyotes have not yet finalized a licensing agreement; a dollar amount has not been provided for this agreement, either. ASU Chief Financial Officer Morgan Olsen told the Regents that payments would be made in advance. The lone member of the Board of Regents to oppose the deal did so because “he was reluctant to approve it until he had more information about the financial contract.”[3]

Olsen also stated that the club will be required to prepay the annual fee. This is noteworthy and purposeful risk mitigation on the university’s part. In early December, the Arizona Department of Revenue filed a tax lien notice in Maricopa County against IceArizona Hockey LLC, the company that owns the Coyotes. The notice indicated that the team had failed to pay more than $1.3 million in unpaid state and city taxes, dating back to June 2020. The Coyotes also failed to make several payments totaling approximately $930,000 to ASM Global, the company that operates Gila River Arena.[4]

Glendale built the arena for $183 million in 2003, and spends approximately $13 million each year paying this debt down; revenue from Coyotes games goes towards these payments. The city also pays ASM Global $5.6 million annually to manage the facility, and another $500,000 for maintenance. The fact that the organization has ranked in the bottom-five in average fan attendance in every full season since 2010-11 (excluding COVID-altered 2020-21 season) has naturally contributed to the tumultuous nature of this relationship between the city and the team. This culminated in Glendale threatening to lock the Coyotes out of Gila River Arena if they failed to pay their outstanding debts by December 20. The team indeed fulfilled their payments by the deadline, and attributed the delay to “human error.” Nevertheless, Glendale City Manager Kevin Phelps shared that the city has “serious concerns” that the club will be able to meet current and future financial obligations, citing the team’s history of financial struggles.[5]

Logistics of Sharing the Rink

NCAA rules prohibit college athletes from sharing certain spaces with professional sports teams. Therefore, to comply with this rule, ASU will build a two-story, 15,000-square-foot annex in the corner of the facility. This area will include NHL-quality locker rooms for both the Coyotes and visiting teams, coaches’ offices, training facilities, and a fitness room. Various in-game elements of the rink will be upgraded to NHL standards as well, such as broadcasting equipment, ice-making equipment, and analytic and game-play mechanics. The Coyotes will pay up-front for these improvements, accounting for about $20 million of the venue’s $134.7 million total cost.[6]

According to The Athletic’s Sean Shapiro, Arizona State University will take precedence on all schedules. Olsen noted that Arizona State University will retain naming rights and sponsorship revenue with respect to the venue. “They will essentially be renting or licensing the facility. The gate will be theirs. The merchandise sales will be theirs, they’ll have a share of concession revenue and the game-day sponsorships . . . so the game-day stuff will be theirs, but the things that relate to the venue and are longer term will be accruing to the university,” Olsen explained. He also mentioned that the parking revenue is university revenue, as fans will be using the university’s parking facilities. However, Olsen ensured that there will be some form of premium parking option for Coyotes fans who are paying significant prices for their in-arena experience.[7]

The club is also in negotiations with Ice Den Scottsdale to make the complex the team’s full-time practice facility. Since moving to Glendale in 2003, the Coyotes have continued to use this practice complex when events are being held at Gila River Arena. This will further simplify shared scheduling efforts at the new ASU venue. Additionally, the team will be relocating its corporate offices to the East Valley in the second quarter of 2022.

Looking Ahead

The Coyotes continue to work towards a long-term arena solution, specifically in Tempe. In September, the Coyotes filed a proposal to build a state-of-the-art, $1.7 billion multi-use facility on a 46-acre plot of land near downtown Tempe. As of January, that proposal had yet to accumulate the votes from Tempe city council necessary for approval.[8]

Both the Coyotes and Olsen have repeatedly referred to the expected in-game experience as “intimate.” While this is quite the spin on an otherwise disastrous home arena saga, there is a very real chance that this tighter, more compressed crowd brings a revitalizing energy to this franchise. This arrangement is one-of-a-kind in the modern NHL, with substantial boom or bust potential. But professional hockey growth efforts in the American southwest are a bit boom or bust inherently. This is a non-traditional market that requires creative, non-traditional solutions. If nothing else, an NHL team calling a college rink “home” certainly is not traditional.


Resources

[1] https://www.nhl.com/coyotes/news/arizona-coyotes–arizona-state-university-announce-agreement-that-will-allow-coyotes-to-play-at-asus-new-multi-purpose-arena-next-season/c-330674434

[2] https://www.reviewjournal.com/sports/goldenknights/why-are-there-empty-seats-at-t-mobile-arena-its-complicated-2468212/

[3] https://www.azcentral.com/story/news/local/tempe/2022/02/10/arizona-coyotes-play-new-asu-arena-through-2025/6726996001/

[4] https://theathletic.com/news/coyotes-fulfill-payment-to-arena-management-company-wont-be-locked-out-of-home-rink/1nrpDKQ3eW8i/

[5] https://www.azcentral.com/story/news/local/glendale/2021/12/09/arizona-coyotes-say-theyve-paid-1-3-m-after-city-threatened-lockout/6448074001/

[6] https://www.azcentral.com/story/news/local/tempe/2022/02/10/arizona-coyotes-play-new-asu-arena-through-2025/6726996001/

[7] https://www.gophnx.com/2022/02/10/arizona-board-of-regents-approves-plan-for-coyotes-to-play-games-at-asus-multi-purpose-arena/

[8] https://www.sportsnet.ca/nhl/article/coyotes-share-arena-asu-least-three-seasons-state-approves-agreement/

+ posts

3L at University at Buffalo School of Law; BSELS Co-Vice President

MBA in Marketing;

In pursuit of a career at the intersection of sports law and sports business, specifically in professional hockey.

Leave a Reply

Powered by WordPress.com.

Up ↑

%d bloggers like this: