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Arizona Coyotes Financial Woes – AGAIN ?

By William Grigsby

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 The Arizona Coyotes Ownership Group Lost $34.8 Million The First Year

According to a TSN report the team lost more money than what had been reported by Arizona Coyotes president and CEO, Anthony LeBlanc. He stated the losses were more like $16.458 million, but for General Accepted Accounting Principles, one-time acquisition and closing costs of $7.878 million, and the buyout of controversial player Mike Ribeiro’s contract totaling $10.495 million were not added in, giving the grand total of $34.831 million.

This is the dollar figure associated with the infamous “out clause” which states the team can lose up to $50 million after five years, with the provision of relocation taking effect.

LeBlanc’s retort to this was:

"“We have seen solid increases in every revenue stream associated with the team, and this continued during the current season while we experienced less than a stellar performance on the ice. We always said this was a process; that it would take time. The terrific news is that we showed a better than expected financial result in our very first year. This shows we are clearly on a path to success”"

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Now, I don’t know about you, but any business who loses $34.831 million is not on a path to success — far from it.

Don’t get me wrong, being an avid Arizona Coyotes fan and editor of Howlin Hockey, I certainly DON’T want to see the team to continue to lose money, because just like any other business (yes it IS a business) the losses add up, and eventually the owner of the business must decide it’s fate.

The sticky part here is the city of Glendale is getting impatient and is trying to void the arena contract with the team, which calls for taxpayers to pay $15 million a year.

The city is also claiming that the money from the taxpayers is not being used to run the arena, but instead is going to Fortress Investment Group, a New York based asset manager which financed holding company IceArizona’s purchase of the Arizona Coyotes.

Last year the city of Glendale received $6.5 million from IceArizona, meaning the deal cost the city about $8.5 million.

"“I asked our finance director…if the Coyotes packed up and left the next day, what would be the impact, and the answer was an $8.5 million windfall profit for us,” Glendale vice mayor Ian Hughes said. “We increased sales tax to the citizens to cover this (arena management deal). We have needs to put off purchasing of new pumpers for the fire department. We have three libraries in Glendale and all of their hours have been cut way back”"

There’s no doubt that the league has done all it can to keep the franchise on life support, but to ask the citizens of Glendale to foot the bill is way over the top. I’m not sure what the answer is, but I certainly don’t want to hear RELOCATION RUMORS again! This franchise seemed to be settling down when Andrew Barroway purchased the team. I know he’s not a stupid businessman, (far from it) and he must know either he takes the losses, or he figures out how to make this team more profitable. Option two would be any Arizona Coyotes’ fan choice, at this point.

Per the TSN report, city of Glendale council members have wanted to meet with Barroway, only to be turned down, or told that he could meet with him in New York for a whole ninety minutes. I’m not sure why Barroway is not more involved, unless we don’t know his real motives. He sure was eating it up when he and his son were at Gila River Arena to drop the ceremonial first puck (I was in attendance at that game) after his ownership deal was approved by the league. Where has he been since? Will he really put his money where his mouth is, and invest in some better players to turn this franchise around? Good questions, but few answers.

The investment the ownership group put into improvements to the Gila River Arena hopefully will pay off down the road. I also don’t see the ownership group losing money like that if they had intentions of the team re-locating. I’m not EVEN going to get into the painful discussion of where the team may, or may not call home down the road. I’ve been there, thank you very much, got my t-shirt and mug for that one. How about you?

Next: Rumors of an Arizona Coyotes sale, so we're back to this again…

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