City of Glendale Opts Out of Lease Agreement with Coyotes After 2021-22

[Phil]

Link:

 

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The termination notice follows several months of stalled negotiations between the city and the team on the terms of a lease extension and potential renovations to the arena, as well as multiple notices about outstanding and delinquent balances owed by the Coyotes as part of their lease agreement, public records reveal.

 

City Manager Kevin Phelps, who oversees the day-to-day operations and is responsible for the arena management contract between the team and ASM Global, the arena management company, said his decision was shared in an executive session with City Council members last week. City Council members, when given an opportunity to provide input, showed a “strong consensus” that they supported this course of action, Phelps said.

 

“We’ve reached that point of no return,” Phelps told The Athletic. “There’s no wavering.”

 

https://theathletic.com/2778340/2021/08/19/point-of-no-return-glendale-to-boot-coyotes-from-gila-river-arena-after-2021-22-season/

[siddious]

Might be good for them depending on where they go

 

 

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[Phil]

Houston looms large here, but holy shit is one year not a lot of time to find another arena to play in, operationally speaking. Especially if it requires a move out of state.

[josh]

The Arizona Coyotes of Quebec

[Blue Heaven]

Gary Bettman has been on with Craig Carton for the last 30 minutes, he thinks this is just a negotiating tactic. He doesn't think Arizona is going anywhere.

[Phil]

I mean, he's probably not wrong. They've done this a few times now. But this relationship is so fucking contentious. Imagine what Coyotes' fan feels like right now. That guy is probably so sick of this shit.

[Bugg]

Gary Bettman has been on with Craig Carton for the last 30 minutes, he thinks this is just a negotiating tactic. He doesn't think Arizona is going anywhere.

 

This idiot cost the sport a whole season to keep this franchise there. There's no point. Move them ASAP.

 

So wearying that the NHL pretends the cap solves all the disparity problems. It never will. If you root for a team in a small market, your window to have a playoff run is less than that of big market teams. The cap has never changed that and it never will.

[Pete]

The Arizona Coyotes of Quebec

 

Bingo, first thing that hopped into my head.

[Phil]

Quebec has the arena, which is fundamental to all of this. The problem is, the east-west balance suggests keeping the Coyotes' organization in the West, specifically the Central, not adding to an already out-of-balance Atlantic/East.

 

Quebec was shot down for expansion when Vegas came in, but a lot of NHL talking heads at the time said they were probably a prime target city for relocation, which this situation almost certainly calls for.

[Bugg]

Quebec has the arena, which is fundamental to all of this. The problem is, the east-west balance suggests keeping the Coyotes' organization in the West, specifically the Central, not adding to an already out-of-balance Atlantic/East.

 

Quebec was shot down for expansion when Vegas came in, but a lot of NHL talking heads at the time said they were probably a prime target city for relocation, which this situation almost certainly calls for.

 

Question then is which franchise would be moved to the west. No one is going to volunteer because having more road games in the western time zone is not ideal for midwestern franchises' TV networks.

[Phil]

Right, that's why I think Houston is the most logical play.

 

 

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[Pete]

This also highlights one of Bettman's huge failures as commissioner... Instead of having an unbalanced league with 31 teams, they really could have just moved the Coyotes to Seattle.

 

EDIT: Meant Vegas. And screw Seattle.

[Keirik]

Could just move the wings back to the Western Conference.

[Phil]

This also highlights one of Bettman's huge failures as commissioner... Instead of having an unbalanced league with 31 teams, they really could have just moved the Coyotes to Seattle.

 

EDIT: Meant Vegas. And screw Seattle.

 

The point of a commissioner is two-fold:

 

1. Grow the game through a consistently competitive league landscape.

2. Make the owners money.

 

In both respects, he's not failed at all. Relocation fees pale in comparison to expansion ones. It's ten years old, so this figure would probably increase slightly, but Winnipeg paid $170 million to acquire the Thrashers. Vegas paid $500 million and Seattle paid $650 million.

 

This is not a this or that scenario. The Coyotes should relocate. It's total sunk cost fallacy at this point. But not in place of expansion, but in addition to it.

[Pete]

The point of a commissioner is two-fold:

 

1. Grow the game through a consistently competitive league landscape.

2. Make the owners money.

 

In both respects, he's not failed at all. Relocation fees pale in comparison to expansion ones. It's ten years old, so this figure would probably increase slightly, but Winnipeg paid $170 million to acquire the Thrashers. Vegas paid $500 million and Seattle paid $650 million.

 

This is not a this or that scenario. The Coyotes should relocate. It's total sunk cost fallacy at this point. But not in place of expansion, but in addition to it.

Thanks buddy I know the role of the commissioner.

 

Did I say he was a failure overall, or did I say this was one of his failures?

[Phil]

I just don't understand how you can call it a failure, is my point. Failing to move the Coyotes is a plight. They've been operationally supported by, or subsidized by the league for far too long. Sunk cost fallacy, like I said. But your argument wasn't that failing to move them is the failure, but that failing to move them instead of taking massive expansion fees was.

[Pete]

I just don't understand how you can call it a failure, is my point. Failing to move the Coyotes is a plight. They've been operationally supported by, or subsidized by the league for far too long. Sunk cost fallacy, like I said. But your argument wasn't that failing to move them is the failure, but that failing to move them instead of taking massive expansion fees was.

It's simple, a one-time or two-time expansion fee only covers a chunk of the money that the Coyotes lose.

 

From a Forbes 2018 article: Coyotes have been averaging cash losses of around $30 million a year the past five years, and during the latest fiscal year they estimate team lost*some $50 million.

 

And that's just the Coyotes, that's not counting these other franchises that lose money, currently 12 of the franchises operate at a loss.

 

Now instead of taking a two-time expansion fee, imagine if you just cleaned up what you had, and moved it to where it works? What's that worth?

[Phil]

Or, counter, allow some of them to operate with minimal losses, which are likely a direct reflection of not being playoff teams, and move the extreme cases like the Coytes in addition to expanding to white-hot markets like Vegas and Seattle, which not only paid exorbitant fees to enter the league, but are guaranteed to be cash-positive franchises for the foreseeable future.

[Pete]

Or, counter, allow some of them to operate with minimal losses, which are likely a direct reflection of not being playoff teams, and move the extreme cases like the Coytes in addition to expanding to white-hot markets like Vegas and Seattle, which not only paid exorbitant fees to enter the league, but are guaranteed to be cash-positive franchises for the foreseeable future.

You wouldn't need those expansion fees if you plug the leaky ship. With over expansion comes dilution of talent.

 

To be clear, I'm not against expansion, I'm against expansion when three to four teams are already being propped up. Expand when your house is in order. Right now expansion is probably a net zero with fees paid versus Ottawa and Arizona.

[Phil]

It's not a matter of need, but want. Those expansion fees dramatically increase HRR, which results in a higher salary cap as a result of the share.

 

You seem to be in favor of marginal growth rather than exponential growth. Whatever dramatically increases the cap, I'm in favor of, in addition to cutting dramatic losses like the Coyotes, who should relocate — both to cut said dramatic losses and to aid HRR via another relocation fee. $250 million would be my guess based on the Winnipeg fee from a decade ago.

 

I do think they're at an operational wall at the moment, though, regarding expansion. I can't envision them doing this again, at least not for a while. If anything, the time has come to ask serious questions of relocation for not just the Coyotes, but probably the Senators, too.

[Pete]

It's not a matter of need, but want. Those expansion fees dramatically increase HRR, which results in a higher salary cap as a result of the share.

 

You seem to be in favor of marginal growth rather than exponential growth. Whatever dramatically increases the cap, I'm in favor of, in addition to cutting dramatic losses like the Coyotes, who should relocate — both to cut said dramatic losses and to aid HRR via another relocation fee. $250 million would be my guess based on the Winnipeg fee from a decade ago.

 

I do think they're at an operational wall at the moment, though, regarding expansion. I can't envision them doing this again, at least not for a while. If anything, the time has come to ask serious questions of relocation for not just the Coyotes, but probably the Senators, too.

 

They increase HRR once. And then teams like Arizona and Ottawa and the Islanders lose it over the course of many years.

 

Growth is growth and I don't care if it's incremental or exponential.

[Phil]

They increase HRR once. And then teams like Arizona and Ottawa and the Islanders lose it over the course of many years.

 

Growth is growth and I don't care if it's incremental or exponential.

 

I'm not sure we can make that distinction yet, unless you've got some financials for us to review. We know Arizona, specifically, are hemorrhaging at a rapid pace and are plagued by endless problems with both ownership and venue stability. We also know close to a third of the league "operate at a loss," but we don't know the extent to that loss. It's entirely plausible that some percentage of them are only experiencing marginal loss due to the lack of playoff revenue for not being yearly contenders.

 

I seriously doubt that each of these teams are losing at the rate of Arizona — approximately $30–50 million per season, but even if they were, we're talking about an increase in HRR of $1.15 billion between Vegas and Seattle, not to mention the impressive television rights they just sold to ESPN and TNT.

 

Growth is growth, but intentionally turning your nose up at exponential growth by rejecting massive expansion fees is a real massive failure for any commissioner.

[Albatrosss]

I'm not sure we can make that distinction yet, unless you've got some financials for us to review. We know Arizona, specifically, are hemorrhaging at a rapid pace and are plagued by endless problems with both ownership and venue stability. We also know close to a third of the league "operate at a loss," but we don't know the extent to that loss. It's entirely plausible that some percentage of them are only experiencing marginal loss due to the lack of playoff revenue for not being yearly contenders.

 

I seriously doubt that each of these teams are losing at the rate of Arizona — approximately $30–50 million per season, but even if they were, we're talking about an increase in HRR of $1.15 billion between Vegas and Seattle, not to mention the impressive television rights they just sold to ESPN and TNT.

 

Growth is growth, but intentionally turning your nose up at exponential growth by rejecting massive expansion fees is a real massive failure for any commissioner.

 

Expansion brought around $20M into each owners’ pockets this year. Pretty good

[Phil]

I also think we need to view this holistically. Losses from the last year are ultimately anomalous due to a global pandemic that prevented gate revenue for every team in the league for the vast majority of the season. As a result, losses are undoubtedly more catastrophic for clubs routinely operating in the red than they would normally be.

[Albatrosss]

Im starting to believe losses are good enough for some owners. They get to write them off of their massive incomes. Like sometimes buying real estate where it makes sense just for interest writeoff