Arizona Coyotes Revisit Arena Woes With Scripps TV Deal in Hand
The Arizona Coyotes are embarking on their 27th National Hockey League season in the Phoenix area, and it is perhaps their most important yet in the Valley.
The team has a new television partner, Scripps Sports; it is embarking on the second of three seasons playing in 5,000-seat Mullett Arena, a sure money-loser; and it has one more shot at earning approval to build a new arena.
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The Coyotes, which open the 2023 season Friday against the Devils in New Jersey, haven’t made the playoffs in a non-COVID season since 2011-12. The NHL and commissioner Gary Bettman are certainly watching closely.
“We’ve been very clear with the NHL and commissioner Bettman and the league office what our [arena] plans are, and they’re very supportive of it,” club president Xavier Gutierrez told Sportico Friday in a phone interview. “That’s what they’re focused on.”
The new television deal with Scripps, inked late last week, came after the collapse of Bally Sports Arizona, which earlier this year carried the Coyotes, the National Basketball Association’s Phoenix Suns, the Women’s National Basketball Association’s Phoenix Mercury, and Major League Baseball’s Arizona Diamondbacks.
Bally’s parent company, Diamond Sports Group, filed for bankruptcy and eventually parted ways with the four Arizona pro sports franchises. None of the four teams were generating enough revenue and viewers to support previously signed multiyear, multi-million-dollar contracts by Fox Sports in the halcyon days of the regional sports network.
“The RSN model, especially in this market, was actually shrinking in terms of the households able to watch Coyotes games,” Gutierrez said. “We wanted more viewers. We wanted more touch points. We wanted more engagements.”
Gutierrez said the catalyst for looking elsewhere came when Bally dropped the D-backs. At that point Diamond announced that Bally Sports Arizona would disappear from the air, leaving the Coyotes with a contract through the 2024-25 season, but no place to air the games.
The decision to go to Scripps, which was launched in December, was based in part on the network signing the defending Stanley Cup-champion Vegas Golden Knights to a similar free over-air TV deal in the Las Vegas market in May. It was the fledgling network’s first major men’s pro sports deal.
The Coyotes sought a very strong television commitment, if not the upfront money. Gutierrez would not divulge the value of the new rights deal with Scripps nor the length of the contract, saying only it was a “multiple-year deal.” The games and programming will be broadcast on a local ABC affiliate, giving the Coyotes a chance to build their broadcast revenue in the years to come.
Scripps is offering the Coyotes three million over-the-air television homes across Phoenix, Tucson, Salt Lake City and soon neighboring New Mexico, “making it more of a regional opportunity for us,” Gutierrez said.
“There’s a little of going back to the future as free TV and free games are concerned,” he added. “It’s a different model of how you generate revenue.”
To be sure, the huge television rights fees, at least in the Arizona market, are a thing of the past.
The Coyotes’ deal includes a basic rights fee but allows for growth based on engagement, ratings and increased sponsorships as the team hopefully gets better, Gutierrez said. Thus, the deal is incumbent that the product on the ice grows and becomes more viable and interesting not only to sponsors, but to banks and financers willing to partner on the arena project.
As far as the arena is concerned, after the 2021-22 season, the Coyotes were ejected from playing in what is now called Desert Diamond Arena in Glendale, Ariz., over a lease dispute. Last season, the Coyotes lost in excess of $10 million playing in Mullett Arena on the campus of Arizona State, even though seats were priced high—on average, $160 a ticket. Bettman called playing in the college arena at best a short-term solution, and they have one more season beyond this one to go on their lease.
The team attempted to pass a referendum to build a $2.1 billion arena and entertainment complex on a landfill in nearby Tempe. But in May, Tempe voters rejected three referendums that would’ve approved the complex by about 3,500 votes each; the campaign cost the club millions of dollars.
“We put our best foot forward and ran a very comprehensive campaign,” Gutierrez said. “We still think the proposal was compelling and was in the best interest of the people in Tempe, but the voters didn’t agree.”
After the referendums failed to pass, the Coyotes are back to square one researching multiple land options in the east Valley with these three stipulations: no public money, no public vote and 100% private funding.
“We’ve committed to the NHL that we will have a viable solution in the first quarter of next year,” Gutierrez said. The fact is, Coyotes owner Alex Meruelo has a net worth of about $2 billion, which is about the price of the new area complex, replete with a practice facility, an auditorium, retail, residential and office space. The club has yet to define how it will obtain the financing for such a costly project.
During the past few seasons under general manager Bill Armstrong, the Coyotes have been effectively tanking to obtain higher draft picks but haven’t won the draft lottery.
Last season, the Coyotes were never a playoff contender, although they played surprisingly well in the small confines of the Mullett where they finished with a 21-15-5 record. Any chance of them contending was thwarted by going 7-25-9 on the road.
Armstrong knows this has to change. Ahead of this season, they’ve bulked up the roster, and both Armstrong and coach André Tourigny were signed to three-year contract extensions to oversee the entire growth process.
“This is a great market,” Armstrong said during zoom call in September, the day he signed his extension. “We want to be an organization that brings back playoff hockey and gets the fans excited. That’s the goal, through and through, to become a playoff team every single season.”
With so much on the line—the new television deal, a new arena and increased fan interest—that must start this season.
Remember that without an arena, the new TV deal doesn’t matter.
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