NHL Finally Takes Ownership of Phoenix Coyotes

By Dan Canavan

Coyotes1After obtaining approval from Bankruptcy Judge Redfield T. Baum, the NHL officially became the owner of your Phoenix Coyotes on November 2, 2009.  After a series of bankruptcy setoffs and other creditor transactions, the NHL paid approximately $140 million for the Coyotes.  The NHL and the other 29 clubs will shoulder the cost of operating the failing franchise, as well as the legal fees and costs incurred defending NHL expansion in the desert. 

Much like Major League Baseball’s purchase of the Montreal Expos, the NHL will own and operate the Coyotes for the short term while looking to unload the team.  The NHL will first attempt to find an ownership group that will keep the team in Phoenix.  But the league has made no explicit promises that it will keep the Coyotes in Arizona over the long term, and with mounting loses, fading fan interest and miserable attendance, a local ownership group may prove difficult to find.  It seems inevitable that the Coyotes will be relocated at some point over the next 5 years, regardless of who buys the club from the league.

As expected, attendance in Phoenix has been dreadful.  Over 8 games, Phoenix has drawn an average of 9,526 (54% capacity), including 5,855 (33.5% full) against Los Angeles, and 6,495 (37.1% full) against Anaheim.  For those of us that follow the NHL’s announced attendance policies, all of these numbers are open to scrutiny.  The real attendance figures are likely significantly lower.

While the Phoenix drama is not quite yet over, hockey fans in non-traditional markets must be concerned about the long term stability of their clubs. With three to four sunbelt franchises rumored to be suffering from significant financial distress, the criticism of southern U.S. expansion and the ever lingering question of relocation will likely not go away, despite the NHL’s  immediate victory in an Arizona Bankruptcy Court.

And some say that Columbus may be next.  The AP has recently reported that “Columbus may have trouble holding on to the NHL’s Blue Jackets because the club has been losing $12 million a year in central Ohio.”  The Blue Jackets, an expansion franchise that started play in 2000, qualified for playoffs the first time last year.  But unlike in Phoenix, fan support has always been reasonably strong in Central Ohio.  As Jeff Little of The Hockey Writers reported this week,

“Unlike the situation faced by the Coyotes, the Columbus market is fundamentally strong, the team is on the rise, and the club itself has sound, committed management.

The franchise and arena have been largely funded through private money, and the public may now have to step up financially to keep the team in Columbus long term. 

dan_canavan1Dan Canavan is an attorney in Hartford, Connecticut.  He has appeared as an on-air guest with regard to the NHL and the Phoenix Coyotes bankruptcy proceedings on CBC Radio’s World Report.  Dan’s analysis and commentary have also been published in various media outlets including The National Post, The Windsor Star, The Star Phoenix, The Montreal Gazette, The Edmonton Journal, The Ottawa Citizen, The Vancouver Sun, The Province, Faceoff.com, and the Sports Litigation Alert, a leading sports industry publication which is circulated throughout the United States.  Dan is also the Carolina Hurricanes correspondent for The Hockey Writers.  You can follow Dan on Twitter @DanielRCanavan, and he can be contacted directly at dcanavan@ctsportsgroup.com or at (860) 665-3276.

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