CXLI - UPDATE 1/27 - Coyotes working on deal to play at 5,000-seat arena at ASU

[Boris Zubov]

I hate the relocation talk, but if we must.....

It's going to come down to a value judgment, and $$ isn't going to be the only thing involved...

There is, somewhere, a tipping point between less $$ from Fertitta in Houston (to get the Houston market), and more $$ from Quebec.

So, for example.....if QC can offer 550M USD and
Houston offers 350M.....that's not enough, so they go to QC, but.....
If Houston offer 425M....that's enough, and they go to Houston

I'm not guaranteeing the exact numbers, those are only for showing the idea. However, I am very sure this is the kind of balancing that the NHL and Meruelo will be doing.

And what happens if only Houston is interested?

 

[MNNumbers]

And what happens if only Houston is interested?

That's a good question. A really good question. A really good question.

However, there are lots of signs that QC is interested.

 

[voyageur]

I hate the relocation talk, but if we must.....

It's going to come down to a value judgment, and $$ isn't going to be the only thing involved...

There is, somewhere, a tipping point between less $$ from Fertitta in Houston (to get the Houston market), and more $$ from Quebec.

So, for example.....if QC can offer 550M USD and
Houston offers 350M.....that's not enough, so they go to QC, but.....
If Houston offer 425M....that's enough, and they go to Houston

I'm not guaranteeing the exact numbers, those are only for showing the idea. However, I am very sure this is the kind of balancing that the NHL and Meruelo will be doing.

The NHL controls any franchise relocation, they went to court over this with Moyes. So it's the owners collectively who decide. Winnipeg got into the league at the same time Detroit wanted to move East, and the NHL wanted no part of getting sued by ASG, who met the terms and conditions in their purchase, blocking the sale.

I would say the circumstances are different in this case.

I am not going to comment on relocations or numbers, because there are a lot of scenarios. I don't know what kind of traction there is for a Canadian division amongst the owners, with the way two sets of Covid regulations on different sides of the border has affected revenues this year. It's interesting that an arena in Tempe could be a hot button election issue, and in Quebec, it is probably the key to securing a provincial election. So the government part of hockey is pretty interesting.

I haven't heard anything about Houston at all. Just one rumour. You know the NHL works behind the scenes if there is relocation. There is usually something that sets off the alarm. In Winnipeg I think the Iceplex, completed in 2010, started the rumour mill.

The NHL has invested 25 years in Arizona, at time keeping the franchise afloat. I have no idea what they have in mind. Meruello seems to have a good sense of how to get an arena built, with minimal investment. If he gets the investment the team won't move, that's a guarantee, because that's a civic commitment to the NHL. Sounds like he is in tough though, with a clock ticking.

I learned never to write off the Coyotes about 10 years ago.

 

[MNNumbers]

The NHL controls any franchise relocation, they went to court over this with Moyes. So it's the owners collectively who decide. Winnipeg got into the league at the same time Detroit wanted to move East, and the NHL wanted no part of getting sued by ASG, who met the terms and conditions in their purchase, blocking the sale.

I would say the circumstances are different in this case.

I am not going to comment on relocations or numbers, because there are a lot of scenarios. I don't know what kind of traction there is for a Canadian division amongst the owners, with the way two sets of Covid regulations on different sides of the border has affected revenues this year. It's interesting that an arena in Tempe could be a hot button election issue, and in Quebec, it is probably the key to securing a provincial election. So the government part of hockey is pretty interesting.

I haven't heard anything about Houston at all. Just one rumour. You know the NHL works behind the scenes if there is relocation. There is usually something that sets off the alarm. In Winnipeg I think the Iceplex, completed in 2010, started the rumour mill.

The NHL has invested 25 years in Arizona, at time keeping the franchise afloat. I have no idea what they have in mind. Meruello seems to have a good sense of how to get an arena built, with minimal investment. If he gets the investment the team won't move, that's a guarantee, because that's a civic commitment to the NHL. Sounds like he is in tough though, with a clock ticking.

I learned never to write off the Coyotes about 10 years ago.

Totally agree with respect to Meruelo and Tempe. That's not worth guessing about. This is the reason I started with 'I don't like relocation talk.....'

As for alignment: I don't think there is giong to be an all Canadian division or conference again.

As for sales for relocation: The league controls who can buy a franchise. That was the real issue in Phoenix with Balsillie. His problem was the 'power hungry, I am going to do this my way' attitude he brought. In this case, if there is a sale for relocation, it seems clear that the buyer will either be someone in QC, or Fertitta in Houston. If it gets that far, the BOG won't have a problem with either, but they will have to choose one.

The rest, concerning Houston and Quebec: I think my reasoning is correct.

And, again, that's all very very idle speculation......Concrete word on the Tempe situation is of much higher value.

 

[Llama19]

We were talking about Coyotes fans going to Council meetings.

No one really needs to attend any council meetings...instead...you can contact each of the City of Tempe councilmembers individually via their city web page: www.tempe.gov/government/communication-and-media-relations/connect

Or...you can address all of the councilmembers using this email address: [email protected]

 

[OG6ix]

The NHL controls any franchise relocation, they went to court over this with Moyes. So it's the owners collectively who decide. Winnipeg got into the league at the same time Detroit wanted to move East, and the NHL wanted no part of getting sued by ASG, who met the terms and conditions in their purchase, blocking the sale.

I would say the circumstances are different in this case.

I am not going to comment on relocations or numbers, because there are a lot of scenarios. I don't know what kind of traction there is for a Canadian division amongst the owners, with the way two sets of Covid regulations on different sides of the border has affected revenues this year. It's interesting that an arena in Tempe could be a hot button election issue, and in Quebec, it is probably the key to securing a provincial election. So the government part of hockey is pretty interesting.

I haven't heard anything about Houston at all. Just one rumour. You know the NHL works behind the scenes if there is relocation. There is usually something that sets off the alarm. In Winnipeg I think the Iceplex, completed in 2010, started the rumour mill.

The NHL has invested 25 years in Arizona, at time keeping the franchise afloat. I have no idea what they have in mind. Meruello seems to have a good sense of how to get an arena built, with minimal investment. If he gets the investment the team won't move, that's a guarantee, because that's a civic commitment to the NHL. Sounds like he is in tough though, with a clock ticking.

I learned never to write off the Coyotes about 10 years ago.

The NHL could have stepped up and taken ownership from ASG but the writing was on the wall as the team had no Arena to play in. This was not the case with the Yotes who had an arena and the league was wiling to take their chances. ASG absolutely did not want the team to play in StateFarm arena. Also, Mark Chipman did all the things right so it was easier to give him a team than JB. I could see them doing the same thing with the Yotes again and moving them to KC, Austin or some other market themselves until they find a non-canadian owner in a market they desire. The MLS has done this before for example. MLB did something similar with the Expos playing out of Puerto Rico until a buyer came in.

Bottom line the NHL could wait it out rather than having to sell the team to Quebecor.

 

[MNNumbers]

The NHL could have stepped up and taken ownership from ASG but the writing was on the wall as the team had no Arena to play in. This was not the case with the Yotes who had an arena and the league was wiling to take their chances. ASG absolutely did not want the team to play in StateFarm arena. Also, Mark Chipman did all the things right so it was easier to give him a team than JB. I could see them doing the same thing with the Yotes again and moving them to KC, Austin or some other market themselves until they find a non-canadian owner in a market they desire. The MLS has done this before for example. MLB did something similar with the Expos playing out of Puerto Rico until a buyer came in.

Bottom line the NHL could wait it out rather than having to sell the team to Quebecor.

Could. You are correct. There are lots of pieces, and even in Quebec there are lots of pieces. Bettman is talking to their government this week, I think. It's not guaranteed that Quebecor is the only possible owner.

But, again, that's getting way ahead.

 

[Boris Zubov]

The NHL controls any franchise relocation, they went to court over this with Moyes. So it's the owners collectively who decide. Winnipeg got into the league at the same time Detroit wanted to move East, and the NHL wanted no part of getting sued by ASG, who met the terms and conditions in their purchase, blocking the sale.

I would say the circumstances are different in this case.

I am not going to comment on relocations or numbers, because there are a lot of scenarios. I don't know what kind of traction there is for a Canadian division amongst the owners, with the way two sets of Covid regulations on different sides of the border has affected revenues this year. It's interesting that an arena in Tempe could be a hot button election issue, and in Quebec, it is probably the key to securing a provincial election. So the government part of hockey is pretty interesting.

I haven't heard anything about Houston at all. Just one rumour. You know the NHL works behind the scenes if there is relocation. There is usually something that sets off the alarm. In Winnipeg I think the Iceplex, completed in 2010, started the rumour mill.

The NHL has invested 25 years in Arizona, at time keeping the franchise afloat. I have no idea what they have in mind. Meruello seems to have a good sense of how to get an arena built, with minimal investment. If he gets the investment the team won't move, that's a guarantee, because that's a civic commitment to the NHL. Sounds like he is in tough though, with a clock ticking.

I learned never to write off the Coyotes about 10 years ago.

I'm unclear of what you mean by minimal investment? He is funding the arena project minus the $200M that Tempe is providing for a parking garage & tax breaks. Am I missing something?

 

[TheLegend]

No one really needs to attend any council meetings...instead...you can contact each of the City of Tempe councilmembers individually via their city web page: www.tempe.gov/government/communication-and-media-relations/connect

Or...you can address all of the councilmembers using this email address: [email protected]

Oh good…

Now everyone from outside of Arizona can tell Tempe what a bad idea it is.

 

[OG6ix]

Could. You are correct. There are lots of pieces, and even in Quebec there are lots of pieces. Bettman is talking to their government this week, I think. It's not guaranteed that Quebecor is the only possible owner.

But, again, that's getting way ahead.

Governments and leagues take these meetings all the time. Adam silver's right hand man met with Quebec politicians when the NBA was in town for a pre-season game to talk about the potential for expansion/relocation. Manfred met with the Mayor there as well.

Still no teams. I really think the NHL wants nothing to do with QC other than using it for leverage down the road for Ottawa or Calgary. He deferred their expansion application and re-opened the process only when Seattle was ready.

The owners know that growth with seven franchises already in Canada is limited; it's diminshing returns. Ticket revenue is not something they want to rely on (look at what's happening with Covid). Lets look at NHL teams that have rivals in their province (pre-covid) - Edmonton had an average ticket price of 79 dollars, while calgary 56 dollars (Calgary and Edmonton metro areas are bigger than QC). Ottawa Senators had approximately 59 dollars too and they don't draw. The Ottawa metro area has 1.4 million people while QC has like 800k.

The notion of having the Nordiques back is poetic and nostalgic but not attractive from a business perspective especially if you are in the business of buying an asset to increase cap value. If the NHL

 

[RABBIT]

No one really needs to attend any council meetings...instead...you can contact each of the City of Tempe councilmembers individually via their city web page: www.tempe.gov/government/communication-and-media-relations/connect

Or...you can address all of the councilmembers using this email address: [email protected]

you come into our house....and steal my post, bro?

 

[gstommylee]

Its the commissioners job to talk to potential cities that doesn't mean the BOG will actually vote to throw out the alignment out the window or vote to force Detroit or Columbus back to the western conference just for the shake of adding quebec.

NHL has the right to deicde who owns it and where it ends up and i doubt they want quebec.

 

[Ernie]

I hate the relocation talk, but if we must.....

It's going to come down to a value judgment, and $$ isn't going to be the only thing involved...

There is, somewhere, a tipping point between less $$ from Fertitta in Houston (to get the Houston market), and more $$ from Quebec.

So, for example.....if QC can offer 550M USD and
Houston offers 350M.....that's not enough, so they go to QC, but.....
If Houston offer 425M....that's enough, and they go to Houston

I'm not guaranteeing the exact numbers, those are only for showing the idea. However, I am very sure this is the kind of balancing that the NHL and Meruelo will be doing.

I rather disagree with this analysis.

Franchise values are set by the markets they exist in. If they give Fertita a deal worth $425m, he immediately profits by around $300m!

That would leave a very bad taste in the other owners' mouths. They may cut the price a bit but he'll have to step up, but he'll do very well still if they sell for say $650m or thereabouts, if you compare Houston to Dallas.

But the thing is that Quebec just isn't in the same ballgame. They were sort of able to justify $500m price tag back when the CAD was at par. But the lower CAD has made things much more difficult, both for the league (which will be subsidizing the team through revenue sharing) and Quebecor (which as a public company must deliver a credible ROI).

That said, if Fertita plays hardball and the team has nowhere to play, I can see the price falling to a doable level, especially if backed up by loan guarantees from the Government of Quebec.

The league would get a feel good story, and Bettman would be declared a national hero for bringing back both the NHL teams that left in the 90's.

 

[gstommylee]

I rather disagree with this analysis.

Franchise values are set by the markets they exist in. If they give Fertita a deal worth $425m, he immediately profits by around $300m!

That would leave a very bad taste in the other owners' mouths. They may cut the price a bit but he'll have to step up, but he'll do very well still if they sell for say $650m or thereabouts, if you compare Houston to Dallas.

But the thing is that Quebec just isn't in the same ballgame. They were sort of able to justify $500m price tag back when the CAD was at par. But the lower CAD has made things much more difficult, both for the league (which will be subsidizing the team through revenue sharing) and Quebecor (which as a public company must deliver a credible ROI).

That said, if Fertita plays hardball and the team has nowhere to play, I can see the price falling to a doable level, especially if backed up by loan guarantees from the Government of Quebec.

The league would get a feel good story, and Bettman would be declared a national hero for bringing back both the NHL teams that left in the 90's.

Quebec will not make the NHL more money nor would it actually increase the canadain tv deal. Its also a smaller market compared to arizona and houston in terms of population.

Can we stop acting like the NHL owes Quebec anything. Also lets not acting like Houston will low ball the NHL you don't know that. No team has actually been actually available on the movable market since the thrashers.

Its the comissioners job to make the league grow in revenue and viewership. Quebec isn't going to increase the league's overall revenue and its potential viewership growth is limited. Quebec again is not that huge of a canadian market.

 

[voyageur]

The NHL could have stepped up and taken ownership from ASG but the writing was on the wall as the team had no Arena to play in. This was not the case with the Yotes who had an arena and the league was wiling to take their chances. ASG absolutely did not want the team to play in StateFarm arena. Also, Mark Chipman did all the things right so it was easier to give him a team than JB. I could see them doing the same thing with the Yotes again and moving them to KC, Austin or some other market themselves until they find a non-canadian owner in a market they desire. The MLS has done this before for example. MLB did something similar with the Expos playing out of Puerto Rico until a buyer came in.

Bottom line the NHL could wait it out rather than having to sell the team to Quebecor.

Absolutely, it's the NHL who controls the fate of any franchise. And there are a lot of variables. One, the Canadian dollar is not certain. Two you have an owner in Ottawa who has burned every bridge with the city in building a new arena. Where do they find a home, and is the league willing to invest in their losses? You also have franchises like Buffalo or San Jose, who are starting on a downward trend. What is the capacity for big revenue teams, the top 12 say, to support the bottom in this league, with all revenues being on the decline because of Covid.

As for Winnipeg Chipman was able to show a revenue generating model on par with Nashville, with higher ticket prices. That's where Houston I think will have troubles. From what I remember the Dallas Stars have among the lowest price points for any NHL ticket, in a gate driven league. The Texas advantage is corporate support and no state taxes. And Winnipeg gave the NHL a significant merchandising bump, as any new franchise would. I think if you look at that angle Nordiques would probably generate close to $200 million in ancilliary revenues, in their first year, which is some much needed revenue in a revenue hungry league. I think the TVA share invested in the league broadcasting also goes up, which means more revenue.

But in terms of optics Houston makes a lot of sense, if they want to buy into the league at a lower price than expansion. What that price is isn't in my knowledge range, but usually when the NHL starts kicking tires on a market, there is some smoke. Fertitta has been mum since he said he didn't know if it would be a profitable market, and he is pretty tied up in the Rockets, so I don't what his liquidity is for an NHL franchise.

All that said, if the Coyotes get an arena in Tempe, the team stays in Arizona, no question about it.

Then the circling can begin around Calgary, who I think would be a market that is worth more than Arizona, so I don't know how that would play out for a prospective party like Fertitta.

For the Nordiques ownership group Ottawa would be their next target, and if you look at how poorly the Sens draw, not only at home, but on the road, there is some traction there. Fans who travel represent a significant revenue source, and we have seen a market like Florida advertise to them. Not to mention the fans who would travel to Buffalo, among other places.

It's an uncertain time, and all fans can do is speculate on how it plays out.

 

[WeaponOfChoice]

Absolutely, it's the NHL who controls the fate of any franchise. And there are a lot of variables. One, the Canadian dollar is not certain. Two you have an owner in Ottawa who has burned every bridge with the city in building a new arena. Where do they find a home, and is the league willing to invest in their losses? You also have franchises like Buffalo or San Jose, who are starting on a downward trend. What is the capacity for big revenue teams, the top 12 say, to support the bottom in this league, with all revenues being on the decline because of Covid.

As for Winnipeg Chipman was able to show a revenue generating model on par with Nashville, with higher ticket prices. That's where Houston I think will have troubles. From what I remember the Dallas Stars have among the lowest price points for any NHL ticket, in a gate driven league. The Texas advantage is corporate support and no state taxes. And Winnipeg gave the NHL a significant merchandising bump, as any new franchise would. I think if you look at that angle Nordiques would probably generate close to $200 million in ancilliary revenues, in their first year, which is some much needed revenue in a revenue hungry league. I think the TVA share invested in the league broadcasting also goes up, which means more revenue.

But in terms of optics Houston makes a lot of sense, if they want to buy into the league at a lower price than expansion. What that price is isn't in my knowledge range, but usually when the NHL starts kicking tires on a market, there is some smoke. Fertitta has been mum since he said he didn't know if it would be a profitable market, and he is pretty tied up in the Rockets, so I don't what his liquidity is for an NHL franchise.

All that said, if the Coyotes get an arena in Tempe, the team stays in Arizona, no question about it.

Then the circling can begin around Calgary, who I think would be a market that is worth more than Arizona, so I don't know how that would play out for a prospective party like Fertitta.

For the Nordiques ownership group Ottawa would be their next target, and if you look at how poorly the Sens draw, not only at home, but on the road, there is some traction there. Fans who travel represent a significant revenue source, and we have seen a market like Florida advertise to them. Not to mention the fans who would travel to Buffalo, among other places.

It's an uncertain time, and all fans can do is speculate on how it plays out.

The team shouldn't even have been put in Ottawa in the first place. Hamilton is where you go to make money.

 

[voyageur]

Its the commissioners job to talk to potential cities that doesn't mean the BOG will actually vote to throw out the alignment out the window or vote to force Detroit or Columbus back to the western conference just for the shake of adding quebec.

NHL has the right to deicde who owns it and where it ends up and i doubt they want quebec.

You have to think though that Rogers would love to have a Canadian division, and that's more money for the NHL especially if you guarantee a Canadian market in the Final Four. You could definitely go back to the Covid divisions, and I think U.S TV would eat that up, because you are giving them more Boston-New York, Detroit-Chicago. That's more TV revenue for investors, than Arizona-Winnipeg. Seattle-Colorado will sell more advertising space than Seattle-Calgary right?

So there is a business sense that goes beyond the East-West narrative.

Tell somebody at the networks you could have a Toronto-NY Rangers Stanley Cup, or Montreal-Boston and I think they eat that up.
But there's other factors too, like travel, that make decisions for the NHL.

I think the other error you make is market size. When the Jets played in front 8 000 fans in Arizona, there were tickets available on Stub Hub for $20. Now contrast that with 18 000 fans at a higher price point over the course of the year, and you are looking at significant revenues.

Atlanta was a huge city, but the GM came out and said that the team has trouble attracting fans that are more rooted in other sports. There was some demographics behind that and you look at how many black players the 2010-11 Thrashers had, there is evidence that they were trying to get through barriers. Phoenix seems to have a similar problem, I believe there is about 1 million Latin American migrants in the city, at least. And with getting on Spanish language broadcasts, there also seems to be some attempts to create new fans there.

One thing that has been heard from both Atlanta and Arizona fans is arena location is a problem. With Arizona there is still a chance to address that. Atlanta never had that opportunity.

 

[Boris Zubov]

Quebec will not make the NHL more money nor would it actually increase the canadain tv deal. Its also a smaller market compared to arizona and houston in terms of population.

Can we stop acting like the NHL owes Quebec anything. Also lets not acting like Houston will low ball the NHL you don't know that. No team has actually been actually available on the movable market since the thrashers.

Its the comissioners job to make the league grow in revenue and viewership. Quebec isn't going to increase the league's overall revenue and its potential viewership growth is limited. Quebec again is not that huge of a canadian market.

Who here is acting like the NHL owes Quebec a team? And what reasons do you have to believe that Fertita won't value the team as a distressed asset...because that's exactly what they'll be without an arena in Phoenix. If the NHL wants Houston, he's the gatekeeper. Why wouldn't he use that to his advantage when/if negotiating a sale. I'm not convinced he's all that interested, but that's a completely different conversation.

 

[MNNumbers]

This piece of Ernie's post:

That said, if Fertita plays hardball and the team has nowhere to play, I can see the price falling to a doable level, especially if backed up by loan guarantees from the Government of Quebec.

is exactly the situation I am describing, without any numbers.....

Again the point is: The NHL, for marketing reasons, would much rather be in Houston. This is obvious. However, it's likely that Fertitta won't pay what someone (and it might not be Quebecor) will pay in Quebec. There is a grey area in the there of what the 2 places would be willing to pay, and that grey area would decide the issue....

IF it came to that.

 

[gstommylee]

The team shouldn't even have been put in Ottawa in the first place. Hamilton is where you go to make money.

So where was the arena plan and group back then?

 

[gstommylee]

Who here is acting like the NHL owes Quebec a team? And what reasons do you have to believe that Fertita won't value the team as a distressed asset...because that's exactly what they'll be without an arena in Phoenix. If the NHL wants Houston, he's the gatekeeper. Why wouldn't he use that to his advantage when/if negotiating a sale. I'm not convinced he's all that interested, but that's a completely different conversation.

People act like the NHL should "solve a wrong" and give Quebec a team again just for the sake of doing so.

No team has actually moved since thrashers. The only option was expansion and no one from Houston was even interesting in expansion especially not at that price. Not at 500m especially not at 650m.

Until NHL actually pulls the plug on the franchise in arizona. We won't really know what actually interest is and i doubt the NHL will let the Yotes owner sell to who ever he deems fit. The NHL will have its hands on whom he sells too. In the long term of the growth of the NHL, its Houston and they'll make it look like the total value of the franchise under the Houston owner as 500m 650 etc even though the total sale + relocation fee wasn't that much.

 

[voyageur]

The team shouldn't even have been put in Ottawa in the first place. Hamilton is where you go to make money.

No arguments here. Every sign points to Hamilton being a successful market. Harold Ballard and Jeremy Jacobs were powerful opponents at that time though.

With the Rogers/Bell media investment in MLSE, I think the conditions are more favourable. I know the Toronto 2 investors in the expansion talks are part of refurbishing the arena there, but I haven't heard anything other than that.

 

[aqib]

The one thing about Houston is he could relocate there and be a tenant in the Toyota Center and build his own arena outside of Harris County. Sure during the period they are just tenants in the arena they would only be getting game day revenue, but that's the same situation they are in now. At least in Houston they would get bigger crowds at higher price points while there is still a novelty.

 

[TheLegend]

No arguments here. Every sign points to Hamilton being a successful market. Harold Ballard and Jeremy Jacobs were powerful opponents at that time though.

With the Rogers/Bell media investment in MLSE, I think the conditions are more favourable. I know the Toronto 2 investors in the expansion talks are part of refurbishing the arena there, but I haven't heard anything other than that.

Some truth to Hamilton.

During the Coyotes bankruptcy the NHL was forced to show the court their value of Hamilton as a market. Can’t recall the exact number but it would have probably put Hamilton in the upper third of all franchise values at the time.

They did this to show Balsillie was trying to force his way into league at a bargain basement price.

Of course that can come back to bite you in another way later on.

 

[gstommylee]

Some truth to Hamilton.

During the Coyotes bankruptcy the NHL was forced to show the court their value of Hamilton as a market. Can’t recall the exact number but it would have probably put Hamilton in the upper third of all franchise values at the time.

They did this to show Balsillie was trying to force his way into league at a bargain basement price.

Of course that can come back to bite you in another way later on.

Hamilton still needs an arena and needs someone with the actually $$$. That price for Hamilton given 500m for Vegas 650m for Seattle as well as the arena cost would probably make it extremely difficult.