If Greg Jamison thought he had a major hurdle to leap over in getting the Glendale, Ariz. City Council to approve a lease agreement to operate Jobing.com Arena, a larger obstacle clearly remains.
After the council agreed to give Jamison and his investment group $320 million over the next 20 years to manage the Phoenix Coyotes' home rink, Jamison’s contingent completed step one of a two-step process.
Since the group became a major player 17 months ago, its priority focus was acquiring the Coyotes franchise from the NHL, which has maintained ownership for the past three years. The lease agreement assured Jamison’s group that it could control the hockey venue and use the arena as a bargaining tool to purchase the team.
For the past three years, the NHL merely acted as a custodian for the Coyotes franchise and was never involved in marketing the team, filling seats in Jobing.com Arena, obtaining corporate sponsors or selling suites.
The only interest the NHL maintained was the viability and sustainability of a franchise in the Phoenix market.
In the end, the league had no interest in the direct operation of the team but to see that the franchise did not relocate. It only sought a buyer that would keep the Coyotes in the Phoenix market.
With the final “i’s” dotted and “ts” now crossed, Jamison’s investment group has until January 30, 2013 to acquire the team from the NHL. Jamison told reporters, after the council approved the lease agreement, that his group will meet that deadline.
The significant issue facing Jamison’s group now is making the Coyotes a viable NHL franchise. If the latest numbers are correct, the task to accomplish this could be monumental.
In a story posted online on Nov. 28, 2012, Forbes indicated that only the St. Louis Blues are now worth less than the Coyotes.
The Phoenix franchise's value at $134 million is far below the NHL’s asking price of $175 million, the figure the league determined after it took ownership of the Coyotes. Jamison’s group may therefore have some fuel going to the bargaining table, with the hope of reducing the current asking price.
By comparison, the Blues are estimated by Forbes to be worth $130 million, while the Toronto Maple Leafs are the most valued franchise, at $1 billion. Forbes estimated the Leafs made a profit of $81.9 million in the 2011-12 season, followed by the New York Rangers, who earned $74 million and the Montreal Canadiens, who netted $51.6 million.
For the immediate task at hand, Jamison says it’s time get down to business and, with a large effort, reintroduce the Coyotes to the Phoenix market.
“Everything has to come together now,” he said after the council vote on the lease agreement. “We have work to do. [GM Don Maloney and coach Dave Tippett] have put a great product on the ice and that’s what we have to do in the front office.”
From all indications, the NHL is thriving and growing, and the Coyotes hope to be part of this financial yield. Clearly, the current lockout is not making new friends and may have a problem sustaining current relationships.
The figures Forbes published on its web site in late November show that league numbers are strong and appear to be getting stronger.
The average worth of a franchise is $282 million, the magazine reported, up 18 percent from a year ago. Forbes also lists league revenue at $3.4 billion for the 2011-12 season, a nine-percent increase. NHL arenas are filled at a 95.6-percent capacity, but 13 of the current 30 franchises lost money last season.
That would include the Coyotes, who lose an estimated $30 million a year.
Not only does Jamison’s group need to have the financial capability to buy the franchise from the NHL, it also needs deep pockets to sustain its operation.
While captain Shane Doan signed a four-year, $21.2 million contract the day before the lockout began in September, Jamison’s group faces personnel whose contracts are due to expire at the end of the current season.
The contract of goalkeeper Mike Smith, who was instrumental in helping the Coyotes reach the Western Conference finals in 2011-12, expires at the end of the 2012-13 season, as do the contracts of both GM Don Maloney and head coach Dave Tippett.
Jamison’s group will also likely have to dig deep to acquire suitable free agents.
Which all puts it in a precarious position.
Once it closes the deal with the NHL and takes over, the group had better come to the table with deep pockets and long patience.
While the Coyotes reached significant heights on the ice under Tippett and Maloney, the daunting task remains to increase the team’s profile in the Phoenix market and reach a level of some profitability.
Mark Brown is a Featured Columnist for Bleacher Report. Unless otherwise noted, all quotes were obtained first-hand.