Current Situation

Since the 1996 relocation of the original Winnipeg Jets, the NHL has maintained ice in the Arizona desert. That ice may now be wearing thin.  On May 16, 2023, Tempe, Arizona residents voted against a proposal to transform a vacant lot and former landfill into an entertainment district anchored by a new 16,000 seat arena.  The estimated $2.1 billion project would have been almost entirely privately funded; however, some residents opposed large property tax breaks that were included in the proposition. 

Additionally, the city of Phoenix had filed a lawsuit attempting to block the project due to the proximity of proposed residential units to Sky Harbor International Airport.  The city was concerned that the noise level resulting from flight paths would be unacceptable for residential zoning. 

The failed arena plans hit the Coyotes franchise especially hard, as the team was already nearing the completion of its first season without an NHL capacity rink.  Two years prior the city of Glendale had terminated the Coyotes lease to Gila River Arena following the conclusion of the 2021-2022 season.  A statement released by the city read in part that the decision was made, “With an increased focus on larger, more impactful events and uses of the city-owned arena.”  Forced to pivot, the team played their home games for 2022-2023 season at Arizona State University’s 5,000 seat Mullett Arena and plans to do so again in the upcoming season. 

NHL Commissioner, Gary Bettman, expressed his disappoint in the aftermath of the Tempe vote.  He had previously spoke with optimism about the proposal, seemingly expecting it to pass, stating that the new arena plans would result in the Coyotes never leaving Arizona. 

More recently, speaking at the Stanley Cup Final between the Vegas Golden Knights and Florida Panthers, Bettman said, “The Coyotes are exploring their options in the greater Phoenix area, and our hope is that one of those options being explored will come to fruition.”  He also went on to say that he is hopeful the league can avoid relocation noting, “We're in a better position to resist leaving than maybe we were 20 or 30 years ago.”  From the outside, the NHL’s commitment to the region may seem odd.  In order to understand the league’s position, we need to look back on both the history of the NHL and the franchise in Arizona.

History

The Phoenix Coyotes were formed at a time when the NHL was quickly expanding across the Sun Belt.  Over the course of three seasons from 1992 to 1994, the league welcomed four expansion teams in non-traditional hockey markets: San Jose Sharks (’92), Tampa Bay Lightning (’93), Florida Panthers (’94), and Mighty Ducks of Anaheim (’94).  Additionally, 1994 saw the Minnesota North Stars relocate to Texas as the Dallas Stars and the Hartford Whalers would become the Carolina Hurricanes just four years later. 

A quick look at a map of the US will reveal to anyone that the Dallas and Phoenix markets are key to establishing the NHL’s presence throughout much of the Sun Belt, connecting South Florida to Southern California.  The only glaring missing link being Atlanta (I’ll save that one for another time!).  All these Sun Belt teams have found enough success to establish these locations as viable NHL markets…So, what’s been going on in the Arizona desert?

Over the course of 27 years in the Phoenix metropolitan area, the now Arizona Coyotes, have not given residents much to cheer about.  In 26 seasons the team has qualified for the NHL Playoffs only nine times and lost in the first round in eight of those appearances.  The only post-season success the club has seen came during the 2012 playoffs. During that campaign the Coyotes defeated the Chicago Blackhawks and Nashville Predators before being eliminated by the eventual Stanley Cup Champion Los Angeles Kings in the Western Conference Final.  

The last 23 years have been even bleaker, as four of the teams nine playoff appearances came during the club’s first four seasons in Phoenix.   While you can hardly call them glory days, the days of Jeremy Roenick, Keith Tkachuk, and Rick Tocchet are long gone.  Those early years were filled with excitement in the region, and solid attendance gave an indication of the promise the Valley of the Sun held for the NHL. 

Unfortunately, for both fans of the team and the league, the franchise has been plagued by financial and ownership instability throughout much of its existence.  The team’s current owner, Alex Meruelo, purchased the team in 2019 marking the SEVENTH ownership regime change in the relatively short franchise history.  With constant change at the top, the team has never been able to sustain a direction and build a consistent winner. 

As a result, the losses have piled up, both on the ice sheet and within the finance department’s spreadsheets.  Rock bottom hit in 2009 when the team went into bankruptcy and had to be bailed out by the NHL.  The league assumed and maintained control of the team until it was able to find a buyer in 2013, that was willing to keep the team in Arizona.  One more ownership change followed in 2014 before Meruelo’s eventual acquisition. 

A New Direction

In recent years, under Meruelo’s watch, the Coyotes have seemingly found a path towards long term success.  The franchise hired Bill Armstrong as General Manager in September of 2020 and committed to rebuilding the team’s prospect pool and adding draft capital.  Over the next three entry drafts, the Coyotes have each of their first round picks, ten second round picks, and seven third round picks.  The team has also seen significant development from some promising young players over the last couple of seasons, headlined by forwards Clayton Keller, Lawson Crouse, and Matias Maccelli. 

In addition to finding direction on the ice, Meruelo had a clear direction he was pursuing off the ice as well.  In response to the Gila River Arena lease termination, he struck the agreement with ASU to temporarily host the team and invested somewhere between $20 million to $30 million to build out necessary facilities to support the move.  The team’s agreement with ASU is for three seasons and includes a team option for the 2025-2026 season.  With the team’s temporary home secured, Meruelo and Bettman campaigned to garner support for the Tempe Entertainment District arena project.  The development was to be the final brick in laying the groundwork for the Coyote’s long term future in Arizona.  Then the ballots came in…

Up to this point, Meruelo and Bettman’s interests had been aligned, however, you have to begin to wonder how much patience Meruelo has left.  Meruelo purchased the team as a distressed asset with a plan to turn the organization’s fortunes around; while terms of the deal were not disclosed it’s believed he acquired a 95% ownership stake for approximately $300 million.  All of his actions since then have indicated a long term vision to organically grow a fan base and increase revenues by delivering a winner on the ice.  It’s why he was willing to make a significant capital investment as part of the ASU agreement.  Absorbing short term losses to build towards sustained profitability can be a very sound strategy, provided there is a path to achieve it. 

In an interview in January, Coyotes CEO Xavier Gutierrez indicated that the team is losing north of $10 million annually.  In addition to the limited seating capacity at Mullett Arena, the Coyotes do not have the same opportunities to generate revenue from fans in attendance that an NHL caliber arena would provide.  The limited number of fans in attendance results in significantly less concessions revenue, which is then split with ASU.  The Coyotes do not split merchandise revenue but, again, the limited number of people through the gates each night limits sales.  The current situation is simply not sustainable for an NHL franchise! 

Phoenix is on the clock…Meruelo was willing to invest nearly $2 billion to build an arena in Tempe and the residents of the city stopped him.  Two years prior the city of Glendale told him that their arena could be put to better use than serving as host to an NHL team.  The Phoenix Suns appear to have no interest in leasing the Footprint Center to the Coyotes.  At a certain point, the organization needs to look to move on, especially when there is a long list of cities that would be lining up to welcome the NHL. 

The league is also beginning to face pressure from the players.  Executive Director of the NHL Players’ Association, Marty Walsh, is on record saying, “If we don’t have, in the near future, a new location, we have to have a serious conversation.  These players can’t continue to play in a college hockey arena as National Hockey League players. They just can’t do it.  It doesn’t look right; it doesn’t feel right.”  Bettman may still wish to be patient and find a solution in Arizona, but if there isn’t an agreement for a new arena soon, we may be headed towards a showdown between an owner pursuing relocation and a commissioner resistant to the idea. 

Ultimately, if it comes to that, Meruelo holds most of the cards at this high stakes table.  Bettman is employed by the owners, and it would be hard to believe that a significant majority of team owners wouldn’t support Meruelo if he were to formally pursue relocation of his franchise, given the circumstances.  I don’t believe the door is completely closed on Arizona yet; however, if there is not a clear path towards a new Arena by the end of the 2023-2024 season, there’s a very good chance that it may be the Coyotes last in the Valley.   

Relocation

If the team is forced to flee the desert, where might they land???

Wild Cards

Sacrament, CA | San Diego, CA | Portland, OR | Hartford, CT | Hamilton, ON, CAN – fun to think about, but none of these are going to happen!

Quebec City, QC, CAN

As an NHL fan, restoring the Quebec Nordiques is by far my favorite option but, it is also the least likely of the five detailed here.  A move to Quebec would likely require a sale of the team to a Canadian based ownership group for a variety of reasons.  I believe that Meruelo is committed to running a highly successful NHL club and that a sale is not under consideration at this time.  The biggest deterrent for Meruelo to retain ownership while taking his team north of the boarder would be the significantly higher tax rates compared to other potential destinations in the United States.  Despite having an NHL ready arena in the Videotron Centre, the return of the Nordiques will likely remain on hold until future NHL expansion.  

Salt Lake City, UT

A little over 20 years ago, Salt Lake hosted the world’s greatest winter sports athletes for the 2002 Winter Olympic Games, serving as the home to an NHL team would seem like a natural fit.  In recent years, Utah Jazz Owner, Ryan Smith, has expressed interest in bringing a team to the city.  Smith’s interest would not prevent Meruelo from bringing his team to town but, the market is probably too small for him to gamble on.  The Salt Lake City metropolitan area houses around 1.2 million residents and, while a team would likely draw support from the neighboring Idaho, Wyoming, and Montana, it seems like a better fit for an expansion franchise than one looking to quickly turnaround its finances. 

Kansas City, MO

At about double the size of the Salt Lake market, Kansas City cannot be dismissed.  The city has a brief NHL history with the Kansas City Scouts from 1974-1976 and the level of sports fandom in the region is on constant display with the NFL’s Kansas City Chiefs.  Additionally, the city’s downtown features the NHL ready T Mobile Center.  While KC is certainly a viable market, it is only about half the size the Phoenix metro area, making it a better candidate for future expansion than for the relocation of Meruelo’s team.  

Atlanta, GA

It’s been a long time, long time, we shouldn’t of left you, left you……And if at first you don’t succeeeeed, dust yourself off and try again, you can dust it off and try again, try again!  Okay, I get it, this one is going to drive some people insane!  Atlanta is already 0 for 2 in the NHL, but it’s one of two markets available to Merulo that are larger than Phoenix (it also gave me an excuse to shoutout the late great Aaliyah!).  State Farm Arena is ready to welcome the NHL back to the same sheet that the Thrashers skated for 12 years.  There’s also been an interesting buzz in league circles about the return of the NHL to the Peach State, with the question being asked not if, but when?  

Houston, TX

Hockey in H-Town!  The city represents the 5th largest metropolitan area in the country, about 1.5x the size of the Phoenix market.  It also has an NHL ready building in the Toyota Center and has been a great home for the Rockets, Astros, and Texans.  As for hockey in the state of Texas, the success of the Stars cannot be overlooked.  Additionally, the city is located close enough to Dallas to form a natural rivalry with the Stars, yet far enough away that the team wouldn’t be trying to establish their new brand in Stars territory.  One potential hurdle here is that Houston Rockets Owner, Tilman Fertitta, also owns the Toyota Center.  A lease agreement could be worked out, but Fertitta has also expressed interest in owning a NHL team.  If Meruelo is not looking to sell, Ferititta could try to block a move by refusing to enter into a lease agreement, keeping Houston open for a potential expansion team under his ownership in the future.

Prediction – The NHL makes its return to The A in the 2024-2025 season!