Pacific

Arizona Coyotes Reporting $16m in Losses

Arizona Coyotes Reporting $16m in Losses
Cat Silverman

In their first fiscal year under the ownership of ICE Arizona, no one expected the Arizona Coyotes to turn a profit.

The team estimated they would lose $20 million in that first year; not a good number, considering the Coyotes signed a lease with the city of Glendale that includes an optional buy-out clause if the team hits $50 million in losses in the first five years of the lease’s term. The buy-out clause doesn’t automatically get activated when the losses hit that point, but Glendale mayor Jerry Weiers has made it more than clear — if the team is that far in the red within the first five years, he’d like to show them the door.

Considering the $20 million losses estimation, things didn’t go as poorly as planned.

The team announced Friday afternoon that ICE Arizona lost a total of $16 million in their first fiscal year of ownership; this is coming after the city of Glendale managed to finally undergo the long-delayed process of auditing the Coyotes to determine if money was lost in that first fiscal year. They did so with the help of former Anaheim Ducks president Tony Tavares, who went over everything from parking and ticket revenue to additional cash flow from merchandise sales, concerts, and other miscellaneous sources of income.

This is the first time anyone has been given an official count for the losses last season; the team had not previously put out a public statement regarding how much had been netted in the red.

It’s a good number, if not exactly what people want to see — with speculation that the team had lost anywhere from $8.9 million (an estimate based on negative operating cost revenue, reported by Forbes.com) to $29 million, the number falls comfortably somewhere in the ‘we aren’t doing so hot, but things could get better.

Things likely have already. The team has actually seen a jump in ticket sales and attendance since last season, despite the team’s plummeting record — and with the resounding success of events such as the team’s Throwback Night, the addition of a new majority owner and the cash flow he’s injected into the organization could see those losses take a pretty big dip when they’re reviewed after the second fiscal year. Fans shouldn’t be expecting the team to have turned a profit the second year under ICE Arizona and CEO Anthony LeBlanc, but it shouldn’t be much of a shock if the numbers hover closer to the $8 or $9 million estimation had for this past year.

Put together, that nets a ceiling $26 million in losses over two seasons; unless the team continues to lose between eight and ten million for each of the seasons following, it can be assumed that the franchise is in the ‘safe zone’ by that point. That alone could be cause for Coyotes fans to breathe easy; although new majority owner Andrew Barroway and LeBlanc have both been adamant that they have no plans to exercise the out clause, that would eliminate any lingering doubts that someone could change their mind.

What would bring that kind of dip in losses?

The team should hopefully see a boost in attendance next season, with Anthony Duclair, Max Domi, and likely at least one more highly touted prospect — Connor McDavid, Jack Eichel, and Mitch Marner all factor to be strong possibilities as Coyotes draft selections this June — on the roster, the ‘surface draw’ to watch games will skyrocket. Even for non-Coyotes hockey fans in the region (of which there are quite a few), the temptation to go see this young group of superstars should be enough to see a decent upswing in attendance; the team’s fanbase actually remained pretty steadfast this season, despite a lack of on-ice production to justify it. The 2013-2014 season (the first under ICE Arizona) saw the Coyotes finish dead last in attendance per game (via ESPN’s reported numbers), but this season saw them surpass both the Carolina Hurricanes and the Florida Panthers for attendance rates. They also saw a huge jump in attendance for road games; not exactly relevant to ticket revenue at Gila River Arena, but promising when considering the size of the fanbase. The Coyotes actually saw stronger attendance rates on the road than the San Jose Sharks, Washington Capitals, and St. Louis Blues, in addition to a handful of other franchises. They’re a team people, based on the raw numbers, are interested in seeing play.

The big question moving forward is whether that can be kept in Arizona or not; with the city of Glendale’s mayor an outspoken proponent of shifting away from hosting hockey in the desert, the team would have to make a strong case for their continued presence in Arizona to remain where they are.

Some of the signs that they could pull it off? An increased number of corporate sponsorships, stronger ownership stability, and spikes in fan interaction help the team remain secure where they are. That’s a proven fact; it was stated by LeBlanc during his announcement that the team’s sponsors helped alleviate some of the pain of the first fiscal year’s losses, and the Barroway family has done a good job of making an effort to befriend the Arizona community. There’s also the added financial stability the team will find just from being in Phoenix; while a Canadian market would likely have a more readily-made fanbase, the fluctuation of the Canadian dollar make relocating a team back north of the border a tough case to sell.

Some signs they may not be able to, though? The struggles the team has had getting Glendale Mayor Jerry Weiers to cooperate with them look bad; his open admittance that he didn’t meet with new majority owner Andrew Barroway for nearly four months after the sale went through suggest he won’t be moving mountains to keep the team’s home secure for them.

At this point, the team can really only wait it out and see — but if the losses are lower than expected for year one, it can’t hurt to be optimistic looking forward.

For fans who want to hear more about the situation and ask the ownership group questions, the team is holding a Town Hall meeting on Saturday, March 14th. For more information, head to the Arizona Coyotes official website.

Pacific
Cat Silverman
@catacarryon

Catherine is the first American in a long line of Canadians, making her the black sheep before she even decided she wasn’t going to be a Leafs fan. Her cousins may never forgive her for the 2012 Stanley Cup playoffs, but they’re at least glad she’s a rink rat, too. She’s a pretty terrible goalie, but she’s got a good grasp on the game from her seat on the bench.

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