In February of 2022, and discussed at length in “Coyotes Find New Home at ASU,” the Arizona Coyotes are set to play home games at a new arena on the campus of Arizona State University (“ASU”), starting with this season and continuing through the 2024-25 season, with an option for the 2025-26 season. The Coyotes entered into an agreement with ASU and the school’s multipurpose arena manager, OVG Facilities. In August of 2022, ASU announced the new arena will be called Mullett Arena in recognition of Donald “Donze” and Barbara Mullett’s commitment to ASU and Sun Devil Athletics.
Naming rights deals for stadiums and arenas are one of the safest and steadiest forms of long-term revenue for professional sports teams. It appears the Coyotes do not have the ability to sell the naming rights to its shared arena on the campus of ASU, likely because the Coyotes agreement with ASU is relatively short and the arena is owned by ASU. ASU will receive the revenue from naming rights for the arena. How will the Coyotes inability to sell naming rights to the arena affect its overall revenue? There remains a question as to whether the inability to sell naming rights will have a negative impact on the revenue of the Coyotes.
At the new arena, both the ASU logo and the Coyotes logo will be displayed on the ice. In addition to not being able to sell naming rights, the Coyotes are prohibited from including any of their other normal in-ice branding as was seen at Gila River Arena, their former home, and in-ice advertising will be a revenue source for ASU. The Coyotes are also prohibited from digitally covering up the ASU logo on their broadcasts. Therefore, the ASU logo will always be visible to the public during Coyotes games, and the Coyotes’ ability to advertise is limited to sponsors that are approved by the University and OVG Facilities.
The agreement with ASU and the Coyotes also contains an “Adverse Reputational Events; Non-Disparagement” clause. The clause stipulates that if during the three-year agreement between ASU and the Coyotes majority owner Alex Meruelo becomes the subject of bad publicity, contempt, scandal, or ridicule (via information from reputable media outlets) for “violating widely held principles of public morality, failing to conduct its business affairs with a high degree of integrity and honesty and/or failing to act as a good corporate citizen,” ASU and OVG Facilities can terminate the agreement.
According to the agreement, the Coyotes are also prohibited from conducting any gaming business at any facility or on any part of the ASU campus. The prohibition on gaming also extends to a half-mile zone around campus. Since the NHL has officially allowed sports gambling sponsors, and gambling has become legalized in more states, NHL teams are counting on sports gambling to be a major revenue source in the future. Meruelo owns a casino in Las Vegas and the Coyotes already own one of the state’s licenses to run wagering operations. It will be interesting to see how the Coyotes and Meruelo handle the prohibition on gambling, given that it was expected to be a major source of income for the team. The Coyotes could potentially make a request for an event wagering facility within that zone. Will the Coyotes revenue suffer as a result of this prohibition on gambling?
In addition to the potential revenue discussed above, Mullett Arena is significantly smaller than the arenas for other NHL teams. The average NHL arena seats about 18,230 people. Gila River Arena, the Coyotes’ former home, has a seating capacity of 17,125. In comparison, Mullett Arena lists an official capacity of 5,025. This significant decrease in capacity has made the average ticket price for a Coyotes game much more expensive. The average price for a Coyotes game at Mullett Arena is about $170, which is nearly double the average price of a ticket at Gila River Arena, which was $90.
Chris Hartweg of TeamMarketing.com analyzes a system called Fan Cost Index (“FCI”). FCI is comprised of prices of four average-priced tickets, parking for one car, and the least expensive stadium-available pricing for: two draft beers, four soft drinks, four hot dogs, and two adjustable caps. For the 2021-22 FCI analysis, the Coyotes came in dead last with an FCI index of $314.70. However, it is projected the Coyotes will rise from last in FCI in 2022 to top 10 in the NHL for 2023.
Coyotes President and CEO Xavier A. Gutierrez stated he expects to sell out every home game at ASU, with revenue increasing by 50%. While this may be wishful thinking, selling out every home game may be more difficult than originally anticipated. The decrease in capacity has exponentially raised ticket prices, which may lead to fans deciding that attending a Coyotes game is not worth the cost. In addition, the Coyotes are not predicted to be a very competitive team in the near future, which raises the question of how many people will be willing pay a large sum to watch a team that is not very competitive.
A decline in revenue for the Coyotes could have negative consequences on both the NHL and the players. As described in depth in “Why NHL Players Hate Escrow,” the amount players pay in escrow depends on how much the NHL teams make in total. Escrow was set to decrease to 10% for the upcoming season, however, the NHLPA believes the Coyotes move to a smaller arena could cause ticket revenues to drop, thereby jeopardizing the decrease in escrow. How would players respond if escrow remained the same or increases as a result of the Coyotes playing in Mullett Arena? Also, what effects will the prohibition on gambling, increase in ticket prices, and limitation on advertisement have on the Coyotes revenue? Will the Coyotes be able to generate revenue comparable to the other teams in the league, or will the move to Mullett Arena have a negative impact on the NHL’s total revenue, thus harming players? Once the season begins, it will be interesting to see if any of the concerns discussed above materialize and how the Coyotes attempt to cure these issues.
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