General Ongoing Coyotes saga thread

[Resolute 14]

Originally Posted by Daradon

Ok, so while it's not the same situation as the Yotes, it's still not very pleasant for the league and the collective ownership groups. I still gotta think this is affecting the BoG (if I am using the term correctly?) in some ways. Especially since Atlanta was just moved and as you mentioned Dallas was just in the same trouble. It doesn't fill one with a bunch of confidence.

No, but that has little to do with the owners overall, or Bettman's stewartship of the league. There has been no shortage of owners in several leagues who used deficit financing to build empires only to see their house of cards come crashing down when the recession hit. New Jersey, Buffalo and Dallas all ran into financial difficulty because their owners buried themselves in a mountain of debt they could not escape. The teams themselves, however, would be self-sufficient without that debt. Forbes estimated the Devils as 11th in the league in revenue in 2010-11 ($100 million), the Stars 17th ($90 million) and the Sabres 18th ($87 million). By comparison, Calgary was 10th at $105 million, and Phoenix was 29th at $70 million.

This is an issue that hit other leagues as well. Tom Hicks, for instance, had to put both the Stars and Texas Rangers into bankruptcy, and iirc, he used to own an English soccer team he had to give up.

If I was an owner I would be wondering about the stance of staying at all costs. Course they have info and strategies we aren't privy to. But still, I'd be wondering about the current strategies of the league.

There are numerous theories one could use, any or all of which might apply:
1. Southern expansion was a league mandate, and many of the older ownership groups that supported it (including Calgary) may still be willing to see it through overall.
2. With the possible exception of Karmanos, all of these guys are committed to their markets, and likely expect the league to be so as well. I think they would all prefer the league fight for a market as long as feasible - and with Glendale paying a large chunk of the losses the last two years, feasibility remained high in Phoenix.
3. The threat of relocation is a time honoured method teams and leagues have used to get what they want from municipalities. The NHL has Quebec City and Markham jumping when Bettman tells them to, while Kansas City and Seattle have shown interest. Teasing these cities with the Coyotes greases the wheels (and in Quebec, the bribes) to improve the league's overall bottom line.
3a. Said markets are not quite ready to take on a team, so may as well stay.
3b. When a couple of these inevitably lose out on the relocation, the efforts they put into landing the team could easily slide into expansion. The NHL has been floating the idea of a 32 team league since at least 2009.
4. Ironically, the Coyotes low revenues is a GOOD thing for the other low revenue teams. A relocation that jumps revenues causes player costs to rise with them. A few teams are already struggling to reach the floor. Leaving Phoenix where it is makes it a little cheaper to do business for everyone.

Unless this is just all a plan to keep the Yotes in Phoenix as long as possible because other teams (ala Altanta) will have to be moved too.

Probably not. As I note above, there are plenty of markets showing interest. But I think Jamison's bid is Phoenix's last chance. It is a sad reality of the market that without the City of Glendale paying the AMF, nobody is likely to take a long-term interest in operating a team there. If Goldwater succeeds at having the lease squashed, I think you can pretty much guarantee that 2012-13 is the last season of NHL hockey in the desert.

[greyshep]

Originally Posted by Resolute 14

If insert name succeeds at having the insert issue squashed, I think you can pretty much guarantee that insert year is the last season of NHL hockey in the desert.

Do I hear an echo in the room?

I would like to agree with you but we have seen this same statement on paper for the last 3 years. If there is one thing that is certain, its that the NHL will languish in Arizona as long as it possibly can.

I will believe it when I see it. (moving that is)

[Resolute 14]

A flippant remark is easy, but it doesn't actually look at the state of affairs.

Consider that the league and city have no agreement on covering the Coyotes' losses this year, and consider that it seems decidedly unlikely that one will be signed. With Gendale covering that $25 million, each other team's share of the remaining loss is offset by the money they save by having the Coyotes act as a drag on league revenues, thus lowering the cap and floor for all. If they are eating that extra $25 million, suddenly it makes more sense to sell the team quickly. That won't happen in Phoenix without some incentive for an owner to operate the team there.

This is, and always has been, a business deal no matter how badly some want to personalize it. Business is very likely to become untenable if this lease gets quashed.

[Northendzone]

seems interesting that jamison has come this far along in the purchase process and the names of his partners still seem to be unknown.

[Notorious Honey Badger]

Originally Posted by Resolute 14

the remaining loss is offset by the money they save by having the Coyotes act as a drag on league revenues, thus lowering the cap and floor for all.

This is akin to someone getting a paycut at work and losing 10k a year in salary but saving a couple thousand on taxes and being thrilled.

[FlamesAddiction]

Originally Posted by Notorious Honey Badger

This is akin to someone getting a paycut at work and losing 10k a year in salary but saving a couple thousand on taxes and being thrilled.

It basically make the Coyotes the "Greece" of the NHL. Similar to how wealthy German industrialists like having Greece drag down the Euro, hence they support bailing them out and keeping them alive.

If I was the NHLPA, I would be pissed though.

[valo403]

Originally Posted by Notorious Honey Badger

This is akin to someone getting a paycut at work and losing 10k a year in salary but saving a couple thousand on taxes and being thrilled.

It only looks that way if you've decided to not actually look at what is happening.

The vast majority of the Coyotes losses are being carried by the CoG, not the NHL. The spillover is minimal and is spread thinly across 29 teams. At the same time the Coyotes act as a loss leader pulling down the cap and the floor, thereby reducing mandated expenses for floor teams and locking cap teams to a lower number, which in turn is going to pull salaries back across the board.

[Resolute 14]

Originally Posted by Notorious Honey Badger

This is akin to someone getting a paycut at work and losing 10k a year in salary but saving a couple thousand on taxes and being thrilled.

Not quite. The Coyotes lost $37 million in 2010-11. The City paid $25 million, leaving the other 29 owners to cover about $413k each. An overall increase in revenue of about $22.5 million is all it would take to cause the salary midpoint to rise by $413k. If the Coyotes are making $70 million a year in revenue (according to Forbes), do you think Quebec City would be able to make $92.5 million?

Now, at $413k per team, we are not exactly talking about a large burden to begin with, but it is also completely offset by the drag on the cap. Thus, there is no great incentive for the owners to rush out of the market. But with nobody subsidizing the losses, each team's bottom line will be hit for over three times that amount. Still chump change to a billionaire, but passing the point where it is more prudent financially to deal with the increase in the salary cap that a relocation would cause.

[Jordan!]

Originally Posted by Northendzone

seems interesting that jamison has come this far along in the purchase process and the names of his partners still seem to be unknown.

I'd say for good reason no?

[Northendzone]

Originally Posted by Bouw N Arrow

I'd say for good reason no?

time to trot out jerry riensdorf's name again, at least he seems to have some actual money - although at this point i am sure that any buyer is going to want some concessions from the CoG as that genie is out of the bottle.

i wonder what the longest period of time a professional sports team has been in limbo for.

[Vulcan]

Originally Posted by Resolute 14

Not quite. The Coyotes lost $37 million in 2010-11. The City paid $25 million, leaving the other 29 owners to cover about $413k each. An overall increase in revenue of about $22.5 million is all it would take to cause the salary midpoint to rise by $413k. If the Coyotes are making $70 million a year in revenue (according to Forbes), do you think Quebec City would be able to make $92.5 million?

Now, at $413k per team, we are not exactly talking about a large burden to begin with, but it is also completely offset by the drag on the cap. Thus, there is no great incentive for the owners to rush out of the market. But with nobody subsidizing the losses, each team's bottom line will be hit for over three times that amount. Still chump change to a billionaire, but passing the point where it is more prudent financially to deal with the increase in the salary cap that a relocation would cause.

Thanks for breaking it down but it's a poor state of affairs where losing money is preferable to making money and it's a situation that is only temporary, until the CoG comes to it's senses.

Right now Phoenix is the poster boy for the NHL not implementing revenue sharing but this is what they are doing.

[valo403]

Originally Posted by Vulcan

Thanks for breaking it down but it's a poor state of affairs where losing money is preferable to making money and it's a situation that is only temporary, until the CoG comes to it's senses.

Right now Phoenix is the poster boy for the NHL not implementing revenue sharing but this is what they are doing.

I don't think you're understanding how a loss leader works. The losses actually enable the owners in general to make more money. I don't think it's an intentional strategy here, but it's something that is employed by pretty much every major corporation.

[Puppet Guy]

Originally Posted by Northendzone

i wonder what the longest period of time a professional sports team has been in limbo for.

weren't the Montreal Expos twisting in the wind for five years or so?

[Resolute 14]

Originally Posted by Puppet Guy

weren't the Montreal Expos twisting in the wind for five years or so?

Yes, and the period is only that short if you restrict yourself to MLB's ownership. It gets longer if you include the ownership of the carpetbagger Jeffrey Loria.

[calumniate]

Originally Posted by valo403

I don't think you're understanding how a loss leader works. The losses actually enable the owners in general to make more money. I don't think it's an intentional strategy here, but it's something that is employed by pretty much every major corporation.

Yikes!! For a loss leader to work, you need something else to be working for you. This is a hockey club and nothing else. Do you mean to say that losing money at hockey will help them develop a new ipad or something?

[Resolute 14]

Originally Posted by Vulcan

Thanks for breaking it down but it's a poor state of affairs where losing money is preferable to making money and it's a situation that is only temporary, until the CoG comes to it's senses.

Right now Phoenix is the poster boy for the NHL not implementing revenue sharing but this is what they are doing.

Oh, there is no doubt at all that this is a sad state of affairs at present. The question is whether the situation can be improved upon in the future. I suspect you and I agree on the answer to that one.

But, given the overall challenges facing the league, using the Coyotes as a loss leader, as Valo suggests, has been a viable short-term option. It is not sustainable in the long term, and it appears to me that the usefulness of keeping the Coyotes in Phoenix is rapidly diminishing.

As far as revenue sharing goes, if the union is smart, they will hammer hard on that front, especially if the NHL comes in demanding a cut of the players' share to 50%.

[Vulcan]

Originally Posted by valo403

i don't think you're understanding how a loss leader works. The losses actually enable the owners in general to make more money. I don't think it's an intentional strategy here, but it's something that is employed by pretty much every major corporation.

lol.

[troutman]

Originally Posted by valo403

It only looks that way if you've decided to not actually look at what is happening.

The vast majority of the Coyotes losses are being carried by the CoG, not the NHL. The spillover is minimal and is spread thinly across 29 teams. At the same time the Coyotes act as a loss leader pulling down the cap and the floor, thereby reducing mandated expenses for floor teams and locking cap teams to a lower number, which in turn is going to pull salaries back across the board.

This is a good point. At the same time though, does a poor franchise drive down the value of all the other franchises?

[Vulcan]

As far as revenue sharing goes, if the union is smart, they will hammer hard on that front, especially if the NHL comes in demanding a cut of the players' share to 50%.

Yeah the NHLPA has been trying to get revenue sharing for a while and it should be at the top of their list for this go round.

[valo403]

Originally Posted by calumniate

Yikes!! For a loss leader to work, you need something else to be working for you. This is a hockey club and nothing else. Do you mean to say that losing money at hockey will help them develop a new ipad or something?

This isn't that complicated. Look at Resolute's post. The losses/low revenues of the Coyotes decrease costs on average for the other teams. As he also pointed out this isn't a long term thing, but for the short term it hasn't had the negative financial impacts on the NHL or its constituent owners that people pretend it has.

And I'm not sure where you get the idea that a loss leader has to be some sort of R&D or like type thing, it could be done strictly for tax purposes.