Will the Phoenix Coyotes be the first team in modern times to be contracted? Probably not, but the very fact the idea is being discussed shows how poorly things are going in the desert for the NHL.
Will the Phoenix Coyotes be the first team in modern times to be contracted? Probably not, but the very fact the idea is being discussed shows how poorly things are going in the desert for the NHL.
That the franchise is in bad financial shape is no secret: the team has been borrowing against future revenue-sharing/broadcast/licensing funds from the NHL to meet payroll has been well-documented elsewhere.
But the team’s financial structure is strained, to say the least. Virtually everything connected with the team is pledged as collateral to SOF Investments LP of New York, itself a investment fund set up to manage investments made by the family of computer tycoon Michael Dell. The team now owes $80 million to SOF Investments in a secured loan. (We’re not going to go too far into the intricacies of the deal; check out the Globe and Mail for an excellent overview of the team’s financial picture.)
Given the financial times and the precarious financial sitation of the team, there are really only a few options, and none of them pretty. It sounds like some owners are tired of carrying the Coyotes and want to see some resolution to the situation. The first would be bankruptcy, giving owner Jerry Moyes a chance to restructure debt and renegotiate the lease for Jobing.com Arena. That’s not as likely as you might think: its not as though there’s a pot of money in Jobing.com Arena waiting to be uncovered, and Phoenix isn’t the sporting nirvana many anticipated a decade ago. A bankruptcy would have one desirable outcome: it would free the team from its 30-year lease. But there’s always the chance a Jim Balsillie would swoop into the bankruptcy proceedings and purchase the assets in an attempt to move the team elsewhere.
Indeed, moving the team is probably an attractive option for anyone buying the team. Seattle and Portland are frequently mentioned as new homes for the team, and you can bet the usual suspects will be brought up again (Winnipeg, Hamilton, Hartford, etc.). None are bad options, but every one has a drawback.
The more drastic act is contraction, with the NHL paying off the team’s debts and closing down operations. It’s not a first option because it feeds into the notion that the NHL is not a financially stable entity (though, according to some in in the know, too many teams are carrying too much debt). But the very idea that it’s being discussed shows what dire straits the team is in.
If you like this story, consider subscribing to the weekly Arena Digest newsletter, where this story first appeared. And it’s free! You can subscribe here.
