Free Minds & Free Markets

Arizona’s Terrible Hockey Team Wants a Third Taxpayer Funded Stadium Since 1996

The team stinks and the fans are apathetic but the NHL is lobbying hard for a new arena, promising things will be different this time.

Stacey Wescott/TNS/NewscomStacey Wescott/TNS/NewscomThe Arizona Coyotes are a professional hockey team that no one really wants, but taxpayers in Arizona might be forced to subsidize a third new stadium in less than 20 years as the National Hockey League chases the mirage of economic success in the southwest.

A bill that would have committed $225 million in public funds—part coming from state coffers and part from the city of Tempe—does not appear to have enough votes to pass the state legislature, but lawmakers could still resurrect the stadium deal as part of the budget plan. The Arizona Republic reported this week that Senate President Steve Yarbrough (R-Chandler) says it's "unlikely" the legislature would approve the stadium in the budget bill, but, frankly, that's not good enough, because the whole idea should be rejected out of hand. There is no good argument for building the Coyotes another new stadium after they've failed to attract much interest from fans in Phoenix or Glendale, where they've played since 2003.

Despite two decades of disappointments on the ice and at the turnstiles, the NHL is lobbying hard for a new stadium for the Coyotes, promising that this time things will be different.

The new stadium "will create a true win-win for the team, the state, and the community," wrote NHL commissioner Gary Bettman in a letter to state lawmakers. "A victory that will generate new tax revenue capable of funding Arizona priorities like education and public safety."

To believe him, you'd have to disregard the Coyotes' entire history in the Phoenix area, as well as the economic reality of building sports stadiums with public cash.

Since the team is already in the area, building a new stadium would not create a new source of tax revenue for Arizona, says Victor Matheson, a sports economist at the College of the Holy Cross. Moving from Glendale to Tempe, Matheson says, merely would shift the economic benefits from one municipality to another. And that's only true if you buy the argument that subsidizing stadiums is a net economic gain, which it's generally not.

"Independent economic research has typically not found that new hockey areas generate sufficient tax revenue to cover the cost of construction," Matheson told Reason this week. "Of course, even if it did, the question be why is it fair for an NHL team to direct its tax obligations towards its own facility while other businesses have to pay taxes that go to statewide governmental needs."

The Coyotes relocated to Phoenix from Winnipeg, Manitoba, in 1996 and took up residence in the America West Arena (now known as the Talking Stick Resort Arena), which the city of Phoenix built in 1990, at a cost of $90 million, for its professional basketball team, the Phoenix Suns. Even after undergoing extensive, and expensive, renovations to fit a hockey rink into it—unlike most basketball-sized arenas in the country, the America West Arena had not been designed with hockey in mind, probably because no one thought there would ever be a hockey team in Phoenix—the arena soon was determined to be "sub-optimal" for a professional hockey team.

By 2002, the Coyotes and National Hockey League convinced the nearby city of Glendale, Arizona, to put up $155 million in bonds to build a new arena for the hockey team. The Coyotes moved into Glendale's Gila River Arena in December 2003.

After the Coyotes' previous owner put the team into bankruptcy in 2009, Glendale ended up paying the NHL $50 million over two years to keep the team from relocating. During that same period, the city had to lay off city workers, cut services, and raise taxes to close annual budget gaps. A new owner signed a 15-year lease with the city in 2013, but the city council voided that agreement in 2015 after determining that it was a bad deal for taxpayers, leaving the team without a long-term home.

Voiding that deal was the right move. An analysis by the Arizona Republic found Glendale would lose an estimated $9 million annually on the 2013 stadium deal, even under the sunniest of circumstances, which included booking the arena for dozens of major concerts each year and having the Coyotes advance to the Stanley Cup Finals (the NHL equivalent of the World Series) every year for the next 20 consecutive seasons, thus ensuring the maximum number of home games possible.

That seems very unlikely. Since relocating to Phoenix from Winnipeg 20 years ago, the franchise has collected exactly one division title and has won only two playoff series (both in the same season). They will miss the playoffs again this year—the fifth consecutive year they have missed the playoffs, despite the NHL's generous postseason format that allows 16 of the 30 teams to participate.

The team's terrible on-ice performance is worth noting—not to suggest that a more successful team would be more deserving of a public handout—as context for the Coyotes' attendance figures, which are similarly pathetic. Out of 30 teams in the NHL, Arizona has not ranked higher than 28th in attendance since 2007 and has finished dead last three times since 2010. With the final home game of the season scheduled for Saturday night, Arizona has averaged fewer than 13,000 fans per game, placing them second-to-last in the league.

After more than two decades, it seems fair to conclude that residents of the greater Phoenix area just don't care very much about ice hockey.

"You can raise all sorts of questions about whether hockey would have worked at all in Arizona, but even if it did, that's only 41 night per year," Matheson says, adding that you need more than a single professional team to make a stadium profitable. Building more stadiums in a single metropolitan area will only create more competition for a limited number of major events.

"Lady Gaga isn't going to play both Phoenix and Glendale," is how Matheson puts it.

The Coyotes are unlikely to leave for greener pastures, though, because NHL executives care much more about having a team in the Phoenix area than anyone in the Phoenix area cares about having a hockey team. The Phoenix metropolitan area is the sixth largest media market in the United States, which means an NHL benefits from having a presence there—even if the team is terrible and the fans are apathetic—for marketing purposes and television advertising revenue.

If having a team in Phoenix means so much the NHL, you might be thinking, then maybe the league would help pay for the cost of the team's third stadium in 20 years? Close, but not quite. What the league has done is push the state legislature and governor to get the public to pay for a new stadium. Again.

That brings us back to Bettman's March 7 letter urging the state legislature to fund a new stadium for the team.

"The Greater Phoenix region represents a strong hockey market," Bettman wrote, despite all evidence to the contrary.

The rest of the letter has a similarly loose relationship with truth. Bettman argued that the Coyotes "must have a new arena location to succeed," and repeated the same sort of promises of economic growth (3,600 jobs! $600 million in "economic impact!") that are always claimed by supporters of public subsidies for sports stadiums and very rarely, if ever, come to pass. The new facility would be "in a more advantageous location—nearer to the team's established fan base," and would "guarantee the continued growth of hockey in Arizona," Bettman claimed.

With all due respect to Bettman, there's nothing about Phoenix that suggests it is—or ever will be—a "strong hockey market."

If the Coyotes were to move, taxpayers in Glendale would continue footing the bill for an empty stadium, while taxpayers in Tempe would end up footing the bill for a mostly empty one.

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  • Agammamon||

    These idiots. If no one is going to Glendale to watch hockey, they're certainly not going to start because the team moves 5 miles away.

  • Lowdog||

    While I am in total agreement that no taxpayer money should be used to build a stadium, and that Bettman is a douche, Tempe is farther than 5 miles from Glendale, and is a much better location for hockey. Driving over to Glendale for weekday, evening home games sucks, and hockey fans generally live more in the east valley than west.

    Of course, since I don't live there anymore, if the team does move I won't lose much sleep over it. However, I do think all the Canadians and northerners who complain about hockey in the south have no idea what they're talking about. I've been playing hockey for over 20 years, all in AZ and FL, and there are a lot of players and fans in both places. And, as mentioned elsewhere, one of the best rookies in the show this year was raised in AZ.

  • Scarecrow Repair & Chippering||

    Tempe is farther than 5 miles from Glendale

    Google says 10 miles. Big whoop.

  • 0x1000||

    the Glendale arena is on the outskirts of the metro area adjacent to literal farms. For that matter, Talking Stick is too. Tempe would likely be a far better location. I don't like being in the vicinity of the Glendale arena; the whole area is muppety, feels like a rip-off tourist attraction, and the drive (~45m to 1hr from North Phoenix) sucks. Tempe is generally enjoyable to be in and I'd be far more likely to walk around town after a game.

    That can be true at the same time that it's true that most people around here 1) do not care about hockey, or if they do 2) do not care about the Coyotes. I still associate them with that jackass Gretzky throwing his clipboard and generally maintaining the same temperament as my toddler.

    The best thing that could happen for Coyotes would be to disband and rebrand, but instead they went the opposite direction and changed from the Phoenix Coyotes to the Arizona Coyotes. So yeah, they're totally more palatable for the 3 hockey fans in, where, Crown King?

    Giving this organization taxpayer dollars is a terrible, terrible idea.

  • ||

    How many of them are relocated/snowbird Canadians?

  • Fist of Etiquette||

    ...despite the NHL's generous postseason format that allows 16 of the 30 teams to participate.

    Sounds like someone's pushing for expansion.

  • Rat's instance||

    They are already expanding to Las Vegas for the 2017-2018 season.

  • Get To Da Chippah||

    With all due respect to Bettman

    An amount which would struggle to fill a thimble in much the way the Coyotes struggle to fill any of their stadiums.

  • Feminist Killjoy||

    The Coyotes are unlikely to leave for greener pastures, though, because NHL executives care much more about having a team in the Phoenix area than anyone in the Phoenix area cares about having a hockey team.

    Oh goodness, this. Now, I get all my hockey news filtered through my husband, who is the mythical creature of a French Canadian Leafs fan, but there are people just waiting to throw money at whomever it takes to get another NHL team in Quebec, but the NHL really, really, really wants those American markets that don't care about hockey. (And they really want the Chinese market, but don't want to let their players compete in the olympics because people only want more of something they are denied, I guess.)

    Take it from someone with a Thrashers' jersey- it's okay to let your team go to Canada! You just get to be smug when the USA beats Canada at world juniors again.

  • Freedom Frog||

    If you owned a team you would be ok with letting your players play for another team with ZERO return if they get hurt? These guys have it in their contracts that they can't go and play a pickup basketball game but Olympics are ok? Come on.

    The Yankees just lost their starting SS because of that stupid WBC that literally no one gives a shit about.

  • Robbzilla||

    Whoa! A French Canadian Leafs fan? They have those?

    (I will say that Leafs fans are fairly awesome. We were in Toronto in a sport bar and my friend was wearing a Stars jersey during a Leafs/Stars game, and a couple of the fans decided to cheer WITH us, so that we wouldn't be lonely. Heh!)

  • ||

    Your husband is the mythical Hockey Sweater kid. It's basic economics why the NHL pushes for American teams. The stupidity of it all is that the KHL can barely support one team in China.

    ...The world juniors don't count!! lol

  • Marty Feldman's Eyes||

    but the NHL really, really, really wants those American markets that don't care about hockey.

    The point at which I stopped caring about the NHL coincided with Minnesota, Quebec and Winnipeg all moving south. Just didn't seem right. Just couldn't take seriously hockey teams in places where kids don't grow up playing it on frozen lakes. Yeah, also looking at you Nashville and Florida. L.A. got a quasi-pass because it used to just be understood that they sucked (until Gretzky defected, that fucker).

  • dschwar||

    I wouldn't count the Quebec move. Colorado has a pretty strong hockey tradition, as seen by the success of some of their college teams.

  • Freedom Frog||

    This year's most likely Rookie of the Year was born and raised in Phoenix. Just saying.

  • Fk_Censorship||

    Even if the team was the best in the world, the morality of using public funds to build a stadium would not change.

  • Ken Shultz||

    "The Arizona Coyotes are a professional hockey team that no one really wants"

    I can think of a handful of cities with fans that might love to have them.

    At the top of the list, you could go with any city in Canada. The 'yotes were rumored to be going to Winnipeg before the NHL finally brought back the Jets (used to be the Atlanta Thrashers). And . . . um . . . to put it in the kindest terms possible, if a team can make it Winnipeg, it can make it anywhere. Winnipeg is just south of nowhere--but with more mosquitoes.

    Halifax would love to have a team, I'm sure.

    Keeping it in the U.S., Seattle would make a great home for a team--but they somehow think that would bleed off Canucks fans. That doesn't always happen. If Washington and Baltimore can support two baseball teams and two football teams, Seattle and Vancouver can support two hockey teams.

    They may be smaller cities, but a higher percentage are enthusiastic about hockey. Everybody up north loves hockey. That's why they call it "hockey".

    Anyway, there are plenty of other cities that can support hockey, but if I were going to move a team anywhere, I think it's a shame that Toronto hasn't had a professional hockey team in decades. It's just absurd that the biggest city in Canada doesn't have a professional hockey team.

  • 0x1000||

    Maple Leafs?

  • GlenchristLaw||

    "By 2002, the Coyotes and National Hockey League convinced the nearby city of Glendale, Arizona, to put up $155 million in bonds to build a new arena for the hockey team."

    One cannot "convince" a city -- one can only convince an individual ... or, in this case, a small handful of wide-eyed, weak-credentialed local-yokel politicians over the span of a few years who had no skill or expertise to enable them to make decisions more meaningful than deciding what color to paint the police cars.

    Only by reiterating that taxing some for the benefit of others is always -- ALWAYS -- illegitimate and unethical will nonsense like this ever stop. #goodluckwiththat

  • ||

    Hamilton fan reads with interest.

    Mayor: Turn the lights back on Copps Colosseum, Gordie! Wees gots annudder chance!

  • No Yards Penalty||

    The bobble-headed midget Bettman is also jaw-boning Calgary taxpayers to give the Flames a new arena, along with a couple-billion dollars worth of freeway upgrades and land concessions.
    The amount of money Edmonton city council gave Oilers owner Darryl Katz was equivalent to 20 brand new community recreational facilities.
    Pro sports is a shakedown racket. We'd be better off without it.

  • ||

    Everyone gets rich except the fans; who pay for it all.

  • Ken Shultz||

    Consumers are supposed to pay for it all. It's when non-fan, local taxpayers are forced to pay for that there's a problem.

  • ||

    Okay. There's a distinction but should fans pay for the stadiums/arenas too?

  • Ken Shultz||

    Absolutely, they're customers. That's how stadiums should be paid for--by selling tickets.

    Well, that and advertising. Selling the broadcasting rights on game played in that stadium, too.

    In a perfectly free market system, costs are borne by customers. If you don't want to be a customer, you shouldn't have to pay.

  • Mickey Rat||

    Exactly what leverage does the NHL have here to demand anything?

    If the exusting area is losing money for Glendale and there is no expectation the economics would be any better in Tempe, what leversge does Bettman have for such a ridiculous demand? If the NHL wants to keep access to the Phoenix market, it seems all the cards are in the licsl government's hands.

    It seems like this kind arena shopping by the sports leagues is at lesdt coming to a middle. More and more local governments are not buying the rosy economics as sradium lifespans get shorter.

  • Intn'l House of Badass||

    Gary Bettmann is so bad for hockey that he should be tried as a war criminal.

  • Ken Shultz||

    You're just Canadian.

  • ||

    Are you from a certain region of Canada that thinks Lindros should too?

  • Kevin Sorbos Manful Locks||

  • Longtobefree||

    Sadly, the spammers are more interesting than the article.
    However, I would think a new stadium will make a poor team play better like raising salaries for existing teachers will make them better teachers.
    Follow the money.

  • ColoradoKook||

    I think the image illustrating the story is the one where the goalie made a ln amazing save against the Canucks after being out of position on the play.

  • ||

    Because Auston Matthews.
    Oh, and Garry Bettman's idiotic and unwavering devotion to forcing ice where it melts.

  • DaveT1000||

    "The Coyotes are unlikely to leave for greener pastures, though, because NHL executives care much more about having a team in the Phoenix area than anyone in the Phoenix area cares about having a hockey team. The Phoenix metropolitan area is the sixth largest media market in the United States, which means the NHL benefits from having a presence there ... for marketing purposes and television advertising revenue."

    I agree with the overall conclusion of this post, and Eric makes some good points. The part above, however, is a mess of poor reasoning that detracts from his other solid arguments.

    I see a slightly different media market ranking for Phoenix - #12 per Nielsen - but Phoenix is a large market. The thing is, though, that an NHL team (the Atlanta Thrashers) left a similarly large U.S. market (#10) for a small Canadian market (Winnipeg) in 2011. Two other large U.S. markets - Houston (#8) and Seattle (#14) - also don't have NHL teams. So 3 of the top 14 U.S. media markets don't currently have NHL teams, indicating that the NHL may not see a need to stay in Phoenix.

    The argument that a presence in Phoenix is a boon to overall NHL revenue due to TV contract and ad revenue also doesn't hold water, because it's only a boon if viewership is strong. Based on the weak game attendance, it would be very surprising if that's the case.

    It would be preferable to omit this argument. The post doesn't need it, and this particular argument doesn't hold up.


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