Commentary

Another fall of discontent in Phoenix

Updated: August 27, 2010, 7:05 PM ET
By Scott Burnside | ESPN.com

With less than a month until training camps open, you would think the Phoenix Coyotes would be going gangbusters at the box office.

Coming off a record-breaking season in which they finished with a franchise-record 107 points and qualified for the playoffs for the first time since 2002, you'd think the Coyotes would be capitalizing on the buzz to take a step toward viability -- selling sponsorships, season tickets and board advertising, and finally entrenching themselves in the sporting and business community in the desert.

Of course, you would be wrong.

Sources tell ESPN.com that season-ticket sales have once again stalled in the face of uncertainty surrounding the team's future. One source said season-ticket sales have topped out at about 4,000, ahead of last year but still about half of what should have been in place given the team's success last season. Perhaps even more significant is that around one-quarter of the 87 suites at Jobing.com Arena have been sold for the coming season.

There's a reason those familiar with the Coyotes' twisted saga call the team's home Gong-dale as opposed to Glendale.

Critics have wondered all along whether this market could support an NHL franchise. Perhaps a better question is whether the team can survive the local politicians and city officials, who seem oblivious to the clock ticking away on the Coyotes' future in Glendale.

Instead of moving quickly to come up with a new lease agreement this summer with the Ice Edge Holdings group -- the only viable contender to buy the team regardless of rumors to the contrary -- the city has balked at conditions demanded by the group of Canadian and American businessmen.

Ice Edge is demanding the city of Glendale guarantee monies expected to be raised through parking revenues in a new community facilities district (CFD), a taxing area established by the city to collect tax money from local vendors. The city has thus far balked at guaranteeing up to $7.5 million annually, explaining it doesn't want to endanger the city's credit rating. Of course, if there is no lease deal and the city ends up losing the team, something that could become official by Dec. 31, Glendale's credit situation will take a hit because it will no longer have the ticket surcharges it collects on tickets sold to Coyotes home games.

Earlier, the city balked at even more dramatic guarantees demanded by former suitor Jerry Reinsdorf, owner of the Chicago White Sox and Chicago Bulls. Those demands ultimately led to city of Glendale officials quietly begging the Ice Edge group to come back to the table last spring, even though the city council previously voted against an Ice Edge lease proposal in favor of the Reinsdorf bid.

Sources have told ESPN.com that no one is going to buy the team without extracting a lease agreement from the city that includes some form of financial guarantees. And if there is no lease agreement, there is no team, at least not in the arena local taxpayers have built.

The failure to get a lease deal done in a timely fashion this offseason is even more puzzling given that the city of Glendale took the step this spring of guaranteeing to pay the NHL up to $25 million in operating losses if an owner can't be found for the team. Further, the NHL will have the option to move the team if there is no ownership in place by Dec. 31, presumably to Winnipeg, where there is a ready-made buyer in the form of Canadian billionaire David Thomson.

One source close to the situation called city officials "incompetent," while another described the current situation as a "disaster." City officials declined to comment for this story.

All of this will be hard to explain to angry voters next time around if the Coyotes pack up their skates at the end of the season, a likelihood that grows each day there isn't a new lease agreement. Another wrinkle to this summer of missed opportunity is that the failure to get a lease deal done might make the actual sale of the team more difficult, as the asking price continues to be a moving target.

An initial asking price of $140 million to $145 million has jumped to somewhere between $160 million and $175 million, as NHL commissioner Gary Bettman has pledged to the other 29 owners they will not lose money sunk into the team. The league has been absorbing the team's losses since taking over operation after former owner Jerry Moyes snuck the team into bankruptcy in a failed attempt to sell it to Canadian businessman Jim Balsillie.

Even if a lease gets done, whether it's with Ice Edge or another group, there looms the issue of whether any potential buyer would pay that much for the Coyotes or whether the NHL would back off its price point with a deep-pocketed buyer waiting in Winnipeg.

The NHL would like to keep the team in Phoenix and has done yeoman work to see that happen (some would say too much effort). A move to Winnipeg is nice optically; it will make the perpetually critical Canadian hockey media happy and return a franchise to a market that lost the Winnipeg Jets to Phoenix back in 1996. But the reality is such a move would rob the NHL of a team in a major television market and move it to a Canadian market where there is little room to expand television revenues.

Then there's the corporate fall-off in moving from Phoenix to Winnipeg, which has a fraction of the corporate potential, even if it is smack in the middle of the first nation of hockey.

When it comes to markets like Phoenix, the theory has always been that if you win, the market will establish itself. It was so in the Phoenix area with the Diamondbacks and the Suns. It has proven to be so in other non-traditional NHL markets like Dallas, Tampa and Carolina.

Last season, the Coyotes sold out five regular-season and four postseason games. All but one of those sellouts (opening night, when tickets were heavily discounted) were in the second half of the season when the team had started to roll. The previous season, the team sold out just two home dates.

Yet, instead of developing a comprehensive marketing strategy off last season's improbable run to the playoffs, there has been only stagnation. Top executives, including president Doug Moss and veteran executive Jeff Holbrook, were let go. There was disagreement on a price point for season-ticket packages during the latter stages of last season that led to deposits being taken instead of full sales being completed. One source called the situation "crushing."

On the ice, GM Don Maloney has been working with a restrictive budget that saw top defenseman Zbynek Michalek sign in Pittsburgh because he couldn't get a long-term deal done with the Coyotes. Maloney would like to sign Lee Stempniak, who flourished after being traded from Toronto at the trade deadline, but might not be able to because of budget issues.

So, a summer of so much possibility fades into yet another fall of discontent and uncertainty.

Only one thing remains to be revealed: Is this the last fall for the Coyotes in Phoenix?

Scott Burnside covers the NHL for ESPN.com.