Nerd Rage: The Arizona Coyotes’ Descent into Madness

On December 8, the financial issues that have plagued the Arizona Coyotes reached a brand new low. A letter was sent stating that the Arizona Department of Tax Revenue had filed a Notice of State Tax Lien on IceArizona, the ownership group of the Coyotes. IceArizona owed $1.3 million in unpaid taxes: $250,000 to the city of Glendale, and the rest to the state of Arizona. If the taxes were not paid by December 20, the Coyotes’ final season in Glendale would be ended prematurely and they would be locked out of Gila River Arena. They would pay said taxes the day after the news broke, but this incident speaks volumes about the health of the organization.

There have been stories about sports teams going through financial woes, but an organization not paying their taxes and being threatened with eviction is, at least to my knowledge, an unprecedented occurrence. The Coyotes made a statement claiming that the unpaid taxes were “the result of an unfortunate human error,” but is anyone seriously buying that story? With the Coyotes struggling economically and their recent history of late payments, the organization doesn’t exactly hold the benefit of the doubt at the moment. The question seems to no longer be “how could things get this bad?”; it’s become “can things get any worse?”

I won’t make too much light of the Coyotes’ on-ice struggles, even in the present day. They just provide mere context to the organizational issues. There has only been one time the Coyotes really stood out; a magical 2011-12 season that saw them claim first place in the then five-team Pacific Division and make a run to the Western Conference Finals. It was their last playoff appearance until 2019-20…and the only reason they made it was the playoff format going haywire due to COVID-19. They did get an upset series win over the Nashville Predators in the Qualifying Round, but those problems spoke more about the Predators’ Cup window closing than the Coyotes becoming a legitimate contender. When faced with one such team in the Colorado Avalanche, the Coyotes folded like origami. That’s all that I think needs to be said on that front.

Then we reach the off-ice issues…and going through them is the NHL’s equivalent of the Odyssey. Initially, then-owner Steve Ellman had an idea to build the Coyotes a home in Scottsdale, but costs became too much of a hassle and the deal was off. With that, Ellman looked towards Glendale and, while the entire mixed-use complex centered by the Coyotes’ new arena finished behind schedule, the team had a new long-term home. Here’s the issue: the location quickly turned out to be a mistake.

Much of the growth in Arizona at the time took place in the eastern part of the state, with Phoenix suburbs like Scottsdale, Mesa, and Tempe turning into thriving cities and being homes to several of the demographics that the NHL appeals to. On an average day, taking the I-10 West to Glendale from downtown Phoenix would be a 20 minute drive. From any of the suburbs listed, you would be looking at a 30-to-40 minute drive, once again on major highways with usual traffic. Granted, the Arizona Cardinals also play in Glendale, but to compare them with the Coyotes would be a false equivalency. The Cardinals primarily play on Sundays, so local fans would be more willing to make the drive, not to mention most NFL fanbases are incredibly loyal and travel well with their team. The Coyotes play half of their regular-season schedule at home, but most of those games occur on weeknights, when fans will be less enthusiastic about the long drive and poor location. Add to that the Coyotes’ on-ice issues, and there’s even less incentive to watch, even now.

Compared to other issues, however, the Coyotes’ arena issues come across as small potatoes. Since the Coyotes’ move to Glendale, they have been plagued by severe ownership issues. They haven’t had just one, not two, but three owners in the last fifteen years or so, with rumors of a fourth starting to swirl. Shortly after the Coyotes moved to Glendale, trucking magnate Jerry Moyes became the owner of the team. It would turn out to be a bad investment for Moyes; the team would lose over $30 million in his three seasons as owner and he would eventually declare bankruptcy, leading to a long-winded legal battle between Moyes and the NHL. Moyes wanted to sell the team to BlackBerry founder and Canadian billionaire Jim Balsille for $212.5 million, who would have moved the team to Hamilton, Ontario, Canada; the NHL and Commissioner Gary Bettman would accuse Moyes of sabotaging an offer from a group spearheaded by Jerry Reinsdorf that would keep the team in Glendale. The team would eventually come under the temporary stewardship of the NHL itself until a new long-term owner could be found. With multiple ownership bids falling through and the Coyotes undergoing relocation rumors to Winnipeg, Quebec City, and Seattle, the team was sold to IceArizona in 2013, a group of business leaders across North America.

There was a brief period of time with hedge-fund manager Andrew Barroway at the helm, but that did little to stop the hemorrhaging of money that the Coyotes were causing. It’s a nice segue to the present day as, in 2019, Alex Meruelo became the first-ever Latin American NHL owner and bought the majority stake of the Coyotes from Barroway. Meruelo made a commitment to keeping the team in Glendale, but current events would do their best to derail such plans. Much of Meruelo’s portfolio came from casinos; cue a worldwide pandemic where casinos and the gaming industry are one of the most affected parts of America’s private sector. Through no fault of Meruelo’s own, the Coyotes suddenly found themselves right back in the unknown waters they thought they escaped from. A shaky financial situation might explain why the Coyotes had to furlough half of their team staff due to the pandemic, but that’s primarily speculation.

To be fair, the reasoning behind such speculation is sound. Remember at the beginning how I mentioned that the Coyotes had a recent history of late payments beyond just the tax incident? Well, there’s a couple of incidents that served as precursors. First, after the 2019-20 season concluded, multiple sources reported that the team was late on paying out signing bonuses to several players. If that wasn’t bad enough, the Coyotes were also late on a $1.6 million payment to ASM Global, the company that manages Gila River Arena. Were those the results of human error as well, or does it paint a disturbing picture of a team that’s been bleeding money since they moved to Arizona? How many incidents like these can happen before the organization stops dismissing the real issues?

If the Coyotes and NHL won’t admit it, others will. It’s exactly what Forbes did in its most recent Business of Hockey List. Not only are the Coyotes the least valuable team in the NHL with an approximate valuation of $400 million ($50 million lower than the next-lowest team), but they lost an astounding $33 million in 2021. Unsurprisingly, this isn’t just a recent occurrence for the Coyotes; in the ten-year span that Forbes provides data for, they have lost an approximate total of $141.6 million. How can anyone, much less the NHL, look at this and think it’s okay for any part of their business to struggle this badly for this long?

What makes all of this worse is the fact that the Coyotes’ proposal to the city of Tempe for a new arena and entertainment complex has yet to be accepted. The Coyotes’ $1.7 billion proposal has seen some opposition from Phoenix’s Sky Harbor Airport. Sky Harbor has expressed multiple concerns about incompatible use of the land, the heights of the buildings in the complex, and the complex being in very close proximity to the airport’s two busiest runways. While the Coyotes are saying that the project wouldn’t cause any issues with the airport’s operations, the city of Tempe obviously can’t overlook such concerns. According to Sky Harbor’s website, the airport makes $106 million daily for the Phoenix area, as well as a total of $38.7 billion annually. I’m not exactly knowledgeable on how cities conduct their business, but I think that kind of economic impact nets a business at least some clout when said business directly concerns them.

What happens if Tempe decides that Sky Harbor’s concerns are valid and the Coyotes need to make sweeping changes to the proposal if they want to keep it alive? If Tempe, assuming it’s legal to do so, decided to run their own investigation on Meruelo, IceArizona, and the Coyotes organization as a whole, what would they find? Could the Coyotes commit as much money as they’ve promised and be able to financially commit after that? There’s a lot of variables that still need to be accounted for, and incidents such as the Coyotes’ tax problems suddenly put things in a less flattering light.

Even though everything looks bleak for the Coyotes’ future in Arizona, they do have one massive supporter: Gary Bettman. There may be no one more committed to Arizona hockey right now than Bettman is, including Meruelo. The NHL Commissioner has played a key role in keeping the Coyotes in the desert, denying relocation rumors (including the most recent ones coming from the tax incident) and insisting that the Coyotes have a viable future. That said, it’s hard to justify him attacking the city of Glendale like he has. Despite Glendale having every reason to be weary of the Coyotes financially, Bettman has gone on record to claim that the city has an agenda against the team and hasn’t negotiated in good faith. At this point, can you blame Glendale and City Manager Kevin Phelps for being exasperated about this situation? They’re playing the role of landlords to a derelict tenant; the excuses have worn thin, and it is long past time to tell the Coyotes that the late payments won’t be tolerated anymore.

Let’s say that the Tempe deal falls through, however. At that point, it may be time for Bettman to admit defeat and open the Coyotes up to outside markets. It’s unlikely that the NHL will relocate an American team to Quebec, but talks have opened between the NHL and the province regarding further expansion. There would be a lot of things going for Quebec City as a home to an NHL team; the VideoTron Centre that is home to the QMJHL’s Quebec Remparts would be a viable NHL arena, a passionate fanbase, and an established cross-province rivalry with the Montreal Canadiens. As far as American markets are concerned, the clear leader to land the Coyotes is Houston. Not only has current Houston Rockets owner Tilman Fertitta openly inquired about an NHL team, but Toyota Center would be a viable NHL arena and a Houston team would get an in-state rival in the Dallas Stars. Houston has also become the fourth-largest city in the US by population, and one of only two of the top ten media markets that are not represented in the NHL (the other one is Atlanta, which has had two failed attempts at an NHL team.) Even if a Houston idea falls through, the Coyotes would have plenty of suitors; Kansas City, Austin, and San Diego would all be great homes for any NHL franchise, much less the Coyotes.

Now, before I end this, I want to say that this is not an indictment on hockey in Arizona as a whole. Arizona State University and the University of Arizona have started to build decent programs. Some of the NHL’s top stars like Auston Matthews and the Tkachuk brothers call Arizona home. There is a fanbase here and, if the Coyotes do make the move to Tempe, perhaps the NHL fanbase at large will be pleasantly surprised. They’ve just grown tired and impatient with the mediocre play on the ice and the poor mismanagement off of it. This recent episode with unpaid taxes has just been the latest setback in the Coyotes establishing themselves in Arizona, and an uncertain future could mean that they won’t get another opportunity to do so.