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Tempe approves new Coyotes arena; public vote is next

The Tempe City Council approved a $2.1-billion development that includes a new Arizona Coyotes (NHL) arena, contingent on approval by voters in a May election.

The development calls for the new arena, almost 2,000 apartments and an entertainment district with the usual offerings (retail, restaurants, etc.) on 46 acres of Tempe land west of Town Lake. The Coyotes ownership would pick up the cost of construction with private financing, backed by some $100 million on tax breaks on revenue that wouldn’t exist without the development. The site is currently used as a city operations yard and before that a municipal landfill. Despite that provenance, the site is a relatively attractive one for development due to its size and location.

And that location is one stated reason for opposition. City of Phoenix and Sky Harbor International Airport officials have expressed opposition to the development due to its proximity to the airport. 

In addition, opponents have openly questioned whether the Coyotes ownership can afford a $2-billion development in the wake of the team’s spotted financial history when playing out of Glendale. Fair question: the Coyotes ownership, if there are smart, will outline their financing plan (which, we’re guessing, will include some deep-pocketed partners) in an effort to reassure voters of the viability of their efforts and won’t leave taxpayers on the hook for a half-finished development requiring a bailout. Team ownership can talk all day about the merits of their plan; the key to a victory at the ballot box will require confidence from Tempe voters. From the Arizona Republic:

Tempe isn’t currently collecting any property taxes on that land, however, so it doesn’t necessarily represent a financial loss for residents. City staffers also expect to generate $100 million in new tax collections within 15 years of the project opening its doors.

On top of that, the city anticipates that the development will generate $14 billion in economic impact over the next three decades.

“I think if you look at the project, it’s pretty incredible,” said former Tempe Mayor Neil Giuliano. “Quite honestly, you’re not going to find another project that’s going to come forward with that kind of capacity to impact the future economic well-being of the city.”

What’s at stake with the vote: if the measure does not pass, we’ll likely see the Coyotes leave Phoenix and Arizona, as there are potential ownership groups seeking an NHL franchise. Are they better markets than is Phoenix? In terms of sheer size, the Phoenix-Mesa market is 4.9 million as of 2021 and growing, making it the tenth-largest MSA in the United States. (For comparison, Houston is the #5 MSA in the United States, at an estimated 7.2 million in 2021. The only other top-ten U.S. MSA without NHL hockey is Atlanta.)

Now, market size alone isn’t a perfect indicator for NHL success, but it’s a place where the NHL will start when looking at national broadcast and marketing sponsorship. Smaller Canadian markets can be profitable and enjoy high team valuations—depending on who is doing the ranking, the Edmonton Oilers are a top-ten NHL team despite playing in a smaller market, essentially outperforming the market—but if you ask the NHL powers that be whether they’d rather have Phoenix or Quebec City in the league lineup, their answer would not be a mystery.

Which is why Commissioner Gary Bettman was at the Tempe City Council approving the deal. From the Arizona Republic:

“I have been commissioner for 30 years, which is longer than the club has been here in Arizona, and it’s been an interesting ride,” Bettman said during the meeting. “I don’t think anyone can doubt our support for the Coyotes because we were involved in litigation to keep the team from leaving and we actually owned the team and operated it for awhile. The team is playing with our support in a temporary facility, which is quite unusual at the major league level.”

Bettman added that he has never wavered on his support for the Coyotes staying in Arizona because “this is a great market, there are great fans, and this is a place that we want to be.”

With the deal approved, it will be fascinating to see how the public debate plays out in Tempe before the May referendum.

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