NHL, Coyotes Make Another Run at Finding Home Ice in the Desert
The Arizona Coyotes are in transition. They play their last home game at Gila River Arena in Glendale, Ariz., at the end of the month.
Next season they’ll move to a new 5,000-seat arena—by far the smallest venue in the NHL—on the campus of Arizona State University across town in Tempe, closer to where the team’s fan base and the money to support hockey resides. A club proposal to build its own $2 billion privately funded arena and entertainment complex west of the ASU campus has been locked in Tempe’s evaluation process since September. Whether or when it will be approved is anybody’s guess.
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A Tempe city spokesperson said as recently as last week that evaluation is ongoing, and there’s no timetable for resolution.
“Unfortunately, we’re not managing the process,” Xavier Gutierrez, the Coyotes’ president, said in an interview. “We haven’t been informed of a timeline.”
Even if approved, under optimal conditions it could be four years before a new Coyotes’ arena is open for business. But the team insists it is committed to staying in the Phoenix area, where it’s had a rocky existence since moving from Winnipeg in 1996. “This is where we want to be,” Gutierrez said. “We’ve proposed something spectacular that’s a permanent option, and we’re excited to move on to the next phase of that process.”
In the meantime, the Coyotes have signed a three-season lease with no out clauses to play in the ASU facility, said Tim Leiweke, the chief executive of the Oak View Group, a financial partner and operator of the new ASU arena, and corroborated by Gutierrez.
“Right now, it’s their priority to try and get something done with Tempe,” Leiweke said. “We’re supportive of that and staying out of their way. But if it doesn’t happen and we can help in any way, they obviously know where we live.”
While ASU is building the arena for its collegiate hockey program, public documents show that the Coyotes have agreed to contribute $19.7 million in upgrades to the now $134.7 million project to make it NHL ready.
To have the Oak View Group on their side is a huge get for the Coyotes. Oak View and Leiweke had a hand in constructing and operating new NHL buildings such as UBS Arena in Elmont, N.Y., for the Islanders and Climate Pledge Arena in Seattle for the expansion Kraken. They’re also partners and operators of a new arena in Coachella, Calif., for the Kraken’s minor league affiliate.
Both the team and the company have left the door open for working together on a new Tempe arena should it get approved. “[Oak View] has certainly expressed interest in being involved,” Gutierrez said. “We’ll explore it as well as several other folks. I have been very honest with Tim that they will be in the mix if we decide to have partners.”
As a former president of the Los Angeles Kings, Leiweke has a long-standing friendship and working relationship with NHL commissioner Gary Bettman, who is intent on the Coyotes succeeding in Phoenix.
The NHL approved the Coyotes move from a 17,125-seat Gila River Arena to the much smaller ASU facility after the team and the City of Glendale couldn’t agree on a lease renewal, ending a contentious relationship.
Bettman said during a media conference in Las Vegas prior to the All Star Game that Glendale wanted the Coyotes sign a a 20-year lease at Gila River Arena “or get out.”
Bettman also said the Coyotes’ revenue streams “might be even better than they are now” in the smaller capacity building, where the Coyotes will charge higher prices for tickets and retain their current rate of league-wide revenue sharing.
The Coyotes explored playing in the aging Coliseum at the State Fairgrounds; the Footprint Center in downtown Phoenix, which is home to the NBA’s Suns; and even putting down an ice surface at Chase Field, a 48,000-seat Major League Baseball park operated by the D-backs. All were non-starters.
“The Suns didn’t want any part of them; they’re probably hoping they’ll leave town,” Bettman said. “With the right arena situation, they will be not only better than fine, they will be great. And at the end of the day there has to be a temporary accommodation knowing that a new building is coming. This obviously can’t be indefinite.”
The ASU arena deal Oak View and Gutierrez hammered out includes a 15,000-square foot annex to the arena to “accommodate NHL-quality home and away team dressing rooms, training areas, equipment rooms, nutrition stations, coaches work room, team storage and a fitness room,” according to public documents.
To meet NHL requirements in the hockey arena, the Coyotes are also adding upgrades that “include NHL-quality ice equipment and enhanced broadcasting infrastructure, dasher boards, media and medical services, and analytics and replay capabilities.”
Leiweke said there was an easy give and take during these negotiations.
“The Coyotes and Xavier have been fantastic,” he said. “Everything he told us he was going to do he did. We’ve had zero issues. Not one.”
According to Gutierrez, the move will also include another $20 million in club costs to move its offices to Tempe and rent a local facility for daily practices, among other items. The team as well is nearing a $10 million outlay for design, land mitigation and processing public documents on the proposed project in Tempe, he said.
With all that, the ASU arena is not expected to be available for Coyote home games until next December, meaning the Coyotes will open with a long trip on the road, like the Islanders were forced to do this season because of construction delays at UBS Arena.
As the arena saga plays out, on the ice the Coyotes are taking a hit. They go into the season’s final weeks with one of the NHL’s worst records, and spent the last year swapping accomplished talent for draft picks. They’re hoping to land a high lottery pick in June’s amateur draft.
The Coyotes have a checkered ownership history since moving to Phoenix. They shared the downtown building with the Suns for a time but were thwarted in an effort to build in Scottsdale when the City Council there voted down an arena deal.
Glendale ponied up the money to build the Gila River Arena in the west Valley, which opened in 2003, at a price of $220 million in public funds ($332 million in 2022 dollars). The facility, part of a $1 billion restaurant and retail project, was never embraced by the region’s hockey fans.
For a time, the NHL owned and operated the club, which was followed by various hedge fund operators who sacked the product for resale. Current owner Alex Meruelo, worth $2 billion, is the first deep-pocketed owner to operate the team, which according to Sportico’s NHL valuations is worth $410 million, the lowest of any franchise in the four traditional North American major leagues.
Meruelo, the first NHL owner of Hispanic descent, made much of his fortune in casinos, entertainment and media. He bought the team three years ago and brought in Gutierrez a year later.
Neither has a background in sports, let alone the NHL. They made mistakes as they’ve tried to fill a deep financial hole, including a payment late last year of $1.4 million in accrued back taxes owed to the state.
Leiweke said the club’s plan to improve through the draft and move to Tempe is finally steering the franchise in the right direction. “They’re trying to build a 10-year vision,” he said. “It’s the first time anyone who’s owned that team has done that.”
That vision, of course, is contingent on a new Tempe arena.
Oak View is not currently involved in the project, which is planned to be constructed in two phases. The first includes an arena and practice facility and the second the remainder of the retail, residential and entertainment district.
The parcel is 46 acres of land easily accessible from the 202 freeway just east of Sky Harbor International Airport and about 10 miles from downtown Phoenix.
There are height restrictions and some opposition to the arena from airport authorities, and the Suns are not thrilled to have a competing venue for concerts and other events.
This past July, according to public documents, the City of Tempe issued a request for proposal (RFP) to any qualified professional sports franchise, either “locally or nationally,” to build a ballpark or arena on the site.
Locally, the Diamondbacks have been in the market to build a new facility or simply redevelop 24-year-old Chase Field, which is having maintenance issues including problems with the cable system that allows them to open and close the roof. But the parcel was too small for their needs, D-backs president Derrick Hall said.
In the end, only the Coyotes answered the RFP. On Sept. 2, they made their initial proposal under an entity called Bluebird Development LLP, a local company established last year just to handle the proposed development.
“It’s an affiliate of the ownership group,” Gutierrez said. “We created a separate real restate enterprise just for this project. It’s the legal entity we created through which all the funds would flow, all the liabilities, all the risk management, all the insurance. It will only be for this project.”
Shortly thereafter, Tempe put out another RFP for a third-party group to help evaluate the process, and on Nov. 19, selected a $78,000 submission by Hunden Strategic Partners, a Chicago-based group that among other things helps evaluate sports facilities projects for municipalities.
Calls to Hunden’s office were not returned, but Gutierrez said it was his understanding that the firm has concluded its evaluation.
If the project survives the RFP process, it has to be evaluated and negotiated by the Tempe City Council, which if it comes to resolution, must vote to approve it at public sessions complete with comments from those backing and opposing. It doesn’t need a public vote.
Gutierrez said he welcomes such a session. “We have made a request to present to the Council to have a public work session,” he said. “We think we’re in the best position to not only present the proposal, but to answer questions. This is a very complex project, and we want to be transparent.”
All of that could take months.
The only thing that’s certain is that the Coyotes will leave Gila River Arena after 20 seasons on April 29 taking lock, stock, and hockey pucks with them.
“We’re all going to be a lot smarter by the end of the year,” Leiweke said, “because it’s all going to play out by then.”
With assistance from Brendan Coffey and Daniel Libit.