Thursday, July 30, 2009

The Phoenix Coyotes are Staying Put: Is It Good or Bad?

On Wednesday, the NHL Board of Governors unanimously rejected Canadian billionaire Jim Balsillie's application to purchase the Phoenix Coyotes. Instead the board approved a bid by Jerry Reinsdorf, owner of the Chicago White Sox and the Chicago Bulls.

Balsillie's bid was turned down mostly because he wanted to move the team from the Phoenix area to the city of Hamilton in southern Ontario, Canada. Ice hockey is the most popular sport in Hamilton and the city is craving for an NHL team.

Reinsdorf agreed to buy the team and keep it in the Phoenix area. All this sounds legitimate so far, but I see one problem with it. Since moving to Phoenix in 1996, from Winnipeg, Manitoba (remember the Winnipeg Jets), the Coyotes have lost money every year so far. Not one profitable year in the 14 years they've been in Phoenix. So what makes Mr. Reinsdorf think he's going to turn that around?

When asked about Reinsdorf's approval, NHL Commissioner Gary Bettman said: "I think based on Mr. Reinsdorf's experience and reputation as an owner of two very successful franchises in other sports leagues, it's no surprise that his application would be endorsed."

Yes Mr. Bettman, but those two franchises you mention are a baseball team and a basketball team in Chicago. Don't compare those two juggernauts, from two highly popular American sports, to a hockey team in the desert.

Now let's put it in perspective. Reinsdorf's bid of $148 million was unanimously approved while Balsillie's bid of $212.5 million was rejected simply because he wants to move the team out of Phoenix to a city that would welcome them with open arms. The team hasn't made a penny in Phoenix and judging from their attendance records, ice hockey hasn't quite caught on in the desert. There are even rumors of inflating attendance numbers in order to hit revenue sharing targets. Meanwhile, it wouldn't be surprising if every game sells out in hockey-loving Hamilton, Ontario.

Maybe I'm reading too much into this, but it seems to me it would've been a much wiser business decision if the NHL pocketed the extra $64.5 million from Balsillie's offer and let him move the team to Hamilton (where they may actually make a profit). Or maybe, Bettman and Reinsdorf have something up their sleeves. But for now, hockey in Phoenix ain't working.

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