Arizona Coyotes – Hockey in the Desert

Introduction

The Arizona Coyotes are a professional sports team that plays in the National Hockey League. They started as a franchise in 1996, and have had struggled as an organization for most of their 21 years. They are in the entertainment business and provide fans in the state of Arizona with some of the best hockey players in the world. Its major work activity is to provide Arizona and Coyotes fans around the world with a first class hockey program while producing championships and making money for their owners, management, staff and the state of Arizona. Ticket sales, merchandise and revenue from the Arizona taxpayers are the main sources of income and revenue. Unfortunately, the franchise has been struggling to turn a profit and maintain a professional hockey team in Arizona.

The Coyotes are represented in North America under the National Hockey League (NHL). Their players are only represented on the international stage during world tournaments and the Olympics, at which time they represent their respected country. While the athletes play on teams that represent their country rather than their NHL team, they are paid and trained separate from their NHL contracts (Campbell, 2015). While these opportunities are considered second jobs, often times the compensation is minimal, in comparison to their NHL contracts.

While the NHL teams are only located in North America, the world market does have an effect on the NHL and its teams, including the Coyotes. NHL International, a division of NHL Enterprises, is responsible for the development of international competition, corporate sponsorship, marketing, broadcasting, new media, licensing and other NHL business activities conducted outside North America (NHL International, 2012).

According to the NHL, here are the main points of their international profile (NHL International, 2012):

  • More than 33 percent of NHL players hail from outside North America from 14 nations
  • Last season there were 71 NHL players from the Czech Republic, 64 players from Russia, 50 from Sweden, 38 from Finland, 25 from Slovakia, six from Germany, five from Latvia, four from Ukraine, three from the United Kingdom, two from Poland, two from Lithuania, and one each from Belarus, Norway, and Switzerland.
  • NHL television programming, including NHL regular season games, the NHL All-Star Game, the Stanley Cup Finals and NHL Power Week, is available in more than 160 countries around the world
  • More than $1 billion dollars are generated from NHL licensed products sales worldwide
  • The NHL has more than 50 international licensees and corporate marketing partners
  • The first regular-season games played outside of North America (Vancouver vs. Anaheim) was during Game one in Japan marking the start of the 1997-98 season. Subsequent series included games in 1998 between Calgary and San Jose, as well as in 2000 with Pittsburgh facing off against Nashville.

These statistics show the importance of the sport market and hockey scene across the US, Canada, and Internationally.

The Arizona Coyotes are a very structured organization that is owned by IceArizona, LLC (Andrew Barroway, owner, chairman and governor), and lead by John Chayka (general manager) and Dave Tippet (head coach) (Appendix A). There have been many conversations about what the ownership can do to ease the financial hemorrhaging, such as , relocation, folding the team, new ownership,  but they have yet to make any drastic changes and they continue to have a team in the NHL. In fact, according to Garofalo, “In June 2012, the city council of Glendale; Arizona, decided to spend $324 million on the Arizona Coyotes, an ice hockey team that plays in Glendale’s Jobing.com Arena” ( 2012). The city of Glendale is constantly taking taxpayers’ money and continuing to pay the National Hockey League the debt that they owe to continue the team’s franchise. Another quote from the same article stated, “For each of the past two seasons, Glendale has paid $25 million to the league to manage the Coyotes, even as the city faced millions of dollars in budget deficits” (2012). The citizens and the City of Glendale is a major reason why this team is still in Arizona. Without the community’s financial support, the team would have been relocated years ago.

Organizational Structure

The state of Arizona has not traditionally been known as a “hockey state”. The current Coyotes roster shows 21 of the 28 players as hailing from a country other than the USA. With only one location for the team’s home games, it does not make the organization very dynamic for their fans living internationally who want to catch a game or connect with the team on a more personal fan level. The Coyotes organization is a large company in regards to having local fans and but struggles to connect with hockey fans in the greater US and around the world.

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This organization has been struggling to stay afloat for over 10 years now, and the option for relocation has been offered on 3 separate occasions. General Manager John Chyka is in charge of the financials for the team (Coyotes, n.d.). He overlooks everything his staff is doing, signs players to contracts, makes trades, drafts players and is the overall leader of the franchise. The head coach overlooks the players on the ice and is in charge of making the decisions directed towards the player’s performance. Under the general manager and head coach, they have an assistant general manager, 3 assistant coaches, 2 goaltender coaches, 1 video coach, 2 development coaches, 1 skills coach, 1 skating coach, 1 hockey operations coordinator, and 1 manager of team services (Coyotes, n.d.). All of the individuals listed above have important roles in the organization that include making decisions that best fit for the success of the players and the team (Appendix B). The organization relies on each individual to thrive in their designated role, in order to help the achieve great success. They have the ability to recruit these staff members from all over the world, as this is the highest level of hockey.

The Arizona Coyotes are considered a “flat” organization on the organizational complexity graph (Appendix C). Their organization fits the definition perfectly, as they are low on horizontal and high on vertical differentiation. They have Large middle management that focuses on information processing. Their President of Hockey Operations Gary Drummond overseas programmatic decisions that the organization makes,  leaving the general manager John Chayka and Head Coach Dave Tippett in charge of directing their hockey players and hockey operations staff members.

SWOT Analysis

Strengths

  • Taxpayers help support the organization
  • Shane Doan (One of the most historic players)
  • Family-friendly Atmosphere
  • Affordable prices

Weaknesses

  • Other NHL teams with more of a fan base
  • Consistently having a losing record
  • Low hockey market in Arizona
  • Lack of History
  • Young General Manager

Opportunities

  • Young Talent
  • Lack of success in other Arizona sports franchises

Threats

  • Unhappy Taxpayers
  • Recent Arizona Cardinals success (NFL)
  • Relocation
  • Other professional sports franchises in Arizona
  • Arizona State Men’s Hockey

Strengths

Taxpayers help support the organization – The City of Glendale, Arizona supports the Arizona Coyotes of the National Hockey League. Taxpayers have helped support the organization since 2012, when the team started going into with the NHL (Garofalo & Waldron, 2012). Having this extra support from the city of Glendale allows the Coyotes organization to save millions of dollars and use that money elsewhere. I firmly believe that the organization would be forced to relocate if the city did not support them in this manner.

Shane Doan – Shane is one of the most iconic players currently playing in the National Hockey League. He is currently the organization’s all-time leader in goal scoring, he led the team in scoring from 2003-2011 consecutively and is also the longest-serving captain in the NHL (http://www.hockey-reference.com/players/d/doansh01.html). This is a player that hockey fans will spend big money on, just to watch him play in-person. He can single handily help increase tickets sales if he performs to his highest abilities. . Shane has represented Canada numerous times in the Olympics, World Cup of Hockey, World Championships and World Juniors. He is the only original player left on the Arizona Coyotes since they became a franchise in 1995, which is a rare feat for any NHL program. He is at the tail end of his career, which means fans will want to see him play before he is retired and is inducted into the Hockey Hall of Fame.

Family Friendly Atmosphere – The Arizona Coyotes offer a great family experience during their home games held at the jobing.com arena in Glendale. The in-game animations shown on the jumbotron are meant for all ages. Their mascot “Howler” (picture is shown below) has great reviews among reading further into his bio. During the intermissions, they provide activities on the ice before the Zamboni comes on like “Chuck a puck,” “Ice bowling” and more. This is a great atmosphere for young kids and fans can also go with a group of friends to enjoy the game.20e74ecdc94d0469b2bb8d51ad5fed97.jpg

Affordable prices – The Arizona Coyotes rank 2nd in the NHL for the cheapest ticket price (http://blog.tiqiq.com/2016/10/2013-14-nhl-average-ticket-prices-team/). Their average ticket price in the 2014-2015 season was $65.57 respectively, with their lowest ticket price being $16.9 average. The highest ticket price in the NHL is the Toronto Maple Leafs with an average ticket price of  $185.43. This makes it much more affordable to watch a game.

Weaknesses

Other NHL teams with a bigger fanbase – The Coyotes have the lowest attendance rating in the NHL. In 2015-2016, the Arizona Coyotes averaged 13,350 fans per home game. The Chicago Blackhawks who had the highest attendance rating had an average of 21,860. This is a massive margin when you look at a 41 home game schedule (Hockey DB, 2016).

Consistently having a losing record – The Coyotes have not been able to reach the playoffs since the 2011-2012 season. This 5-year drought makes for an uneasy fan base as they do not have any success to look back at. Since becoming an organization in 1996, they have not won a Stanley Cup. They are not giving the fans much to cheer about when they are consistently losing.

Low hockey market in Arizona – Hockey is not a major sport in Arizona. With the hot weather they have, people do not want to spend their afternoons or evenings inside a cold rink to watch a hockey game.  The state is also lacking in numbers when it comes to kids in youth hockey programs, although that number is showing to be rising steadily in the past 10 years (Shott, 2014).

Lack of History – The Arizona Coyotes do not have a rich hockey history. This is tough to have young fans attracted to your team when they have nothing to look back on. For example, the Montreal Canadiens have won 25 Stanley Cups, and are an original six team. This is something that new fans can look at and want to be apart of. Becoming a team in 1996 limits the new fans that can be attracted to the organization. Many fans already had a favorite team before the Coyotes started, meaning the loyal fans would still root for their favorite team.

Young General Manager – In 2016, the Arizona Coyotes named twenty-six-year-old John Chyka as their new general manager. He is the youngest general manager in National Hockey League History (Gaines, 2016). Having the youngest general manager in NHL history only proves one thing, that he has no experience in the NHL. There could be a major trust issue with fans as they may not agree with this signing.

Opportunities

Young Talent – The benefit of having a losing record during the season provides you with a high draft pick. The Coyotes have had the luxury of choosing in the top 7 of the NHL draft 4 years in a row (Max Domi, Anthony Duclair, Oliver Ekman-Larson, Dylan Strome). These four individuals were very highly touted in the draft and are highly praised. They are the future of the team and they have not disappointed. Max, Anthony, and Oliver have been very consistent and have been one of the key players for the team at such a young age. Dylan, who was drafted last year (3rd overall selection) is projected to make a major impact in the league starting next season. Max Domi is also the son of former Toronto Maple Leaf legend Tie Domi. These players bring life to the building every night and they are expected to change the culture of the team into a winning organization (Marshall, 2016).

Lack of success in other Arizona sports franchises – Arizona has not had much success with their professional sports teams. The Arizona Cardinals (NFL) have never won a Superbowl since being founded in 1898. The Phoenix Suns (NBA) have never won an NBA Championship since being founded in 19868. The Arizona Diamondbacks have only won the World Series one time which was in 2001(http://www.azsnakepit.com/2013/2/22/4011804/phoenix-sports-nfl-baseball-hockey-basketball). Arizona sports fans can look at the upcoming players in the Coyotes organization and believe they have the best chance of winning a championship.

Threats

Unhappy Taxpayers – Not everyone is willing to support the Arizona Coyotes, especially when they are struggling and are in debt with the National Hockey League. This can cause waves as fans do not want to spend their own hard earned money on a losing franchise that they do not wish support. “For each of the past two seasons, Glendale has paid $25 million to the league to manage the Coyotes, even as the city faced millions of dollars in budget deficits” (Garofalo & Waldron, 2012).

The recent success of the Arizona Cardinals (NFL) – The Arizona Cardinals were pegged to win the SuperBowl for the 2016-2017 season. Unfortunately, they did not do as well as they were projected, but this shows how strong the team is and proves they have a chance to win. This is very attracting to fans as they want to support a team that wins. Football is a much more popular sport than hockey in the state of Arizona.

Relocation – The Arizona Coyotes have been in relocation talks for 5 years now. This may attract fans to a different team as they do not want to be faithful to a team that may not be there in the near future. Without a hockey team in the city of Arizona, many fans may choose to start fresh and find a new team to be loyal to.

Other professional sports teams in Arizona – with the Arizona Cardinals (NFL), Arizona Diamondbacks (MLB), and the Phoenix Suns (NBA), there are many different teams to chose from. It is difficult to find enough time to support more than one team. Season ticket holders will have to prioritize which team they decide to root for and support. Having four professional sports teams in the same city is always a threat as it gives fans options and spreads the attendance and support thin.

Arizona State University Men’s Ice Hockey – ASU’s men’s ice hockey team became a Division 1 program in 2015. They play their home games in the same arena (Jobing.com) as the Coyotes do. This provides another alternative for hockey fans to spend their time at. With the lack of success the Coyotes have had, hockey fans may be looking for something new, and the next best alternative for high-end hockey is the Sun Devils of Arizona State.

Industry and Competitors

The professional hockey industry is very inconsistent as to where it will be considered the “hockey hub” from year to year. Many fans only enjoy watching hockey when they are cheering for a winning team. With Arizona being in a hockey depleted state already, their unsuccessful seasons are hard to compete with places like Chicago, Pittsburgh, and the seven Canadian NHL teams. These teams have loyal fans year to year, and with their successful seasons in recent years, many fans are choosing to jump the bandwagon and join these prestigious hockey franchises. They sell many of their merchandise and collectibles online, but they are generally combined with the other 30 NHL teams on the NHL Shop website. This is a tough way to sell merchandise as many fans will be choosing other teams over the coyotes, and the way the website works is it works by popularity, with the Coyotes ranking 30th out of 30 for popularity (NHL Shop, n.d.).20160724234435_11919

They are competing with the newly NCAA Division 1 hockey team from Arizona State University. Fans have been more attracted to this team because of the young talent they bring and a much better atmosphere at the games. In Appendix A at the bottom, it shows the Arizona Coyotes SWOT analysis.

Complexity

As are many of the professional sports organizations on the world stage, the Coyotes organization is very unpredictable, as much of their revenue is based on the team’s’ year to year success. In the 2012-2013 season, the team generated only $67 million in gross revenue, whereas in the 2015-2016 season they generated $101 million in gross revenue (“Phoenix coyotes revenue 2005-2016 | statistic,” 2016).  If the team is having a successful season, they generate more fans at each game and their merchandise sales skyrockets. They are not a very complex organization, as much or their approach year to year does not and has not changed. While the Coyotes are one of the newer HNL organizations, they are no longer new to the NHL and they must start making changes to see growth in support and revenue. They must prepare for the team to have success to generate fans, as when they are having a low season there is not much they can do to turn things around for the better. The Arizona Coyotes exist in a general environment, as the sectors do not have a direct impact on the company as they may not change them often, but they can indirectly affect the organization over time.

Challenges

The Arizona Coyotes are faced with an uphill battle, as they are making marginal gains in revenue from year to year and have been put in a bid for relocation on three separate occasions.

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If the organization chooses to stay in Glendale, it must do a better job of attracting fans and raising gross revenue. If the team does, in fact, decide to relocate, then they would have to try to keep as many of the loyal fans Glendale as possible, while building a new fan base and new working relationships in their new designated city. The new General Manager John Chyka is a professional statistician and was brought in to have the best “bang for your buck players” on the ice while still competing to win (Gaines, 2016). This is a challenge because it is difficult to get household names in the door for less than what they’re currently being paid.  The reason they get overpaid is because those types of players generate more revenue, as fans will pay more to see the greatest athletes on earth playing in their backyard (Gaines, 2016). Unfortunately, a program is less likely to do well at a lower budget and without star players because it generally takes away from the fan enjoyment.

Recommendation #1: Relocation

Arizona’s fan attendance is based heavily on the team’s success, which has been the worst in the NHL the past 5 seasons (HockeyDB, n.d.) The team also won’t be able to rely on the Glendale taxpayers paying off their debt to the NHL as they did a few years prior (Garofalo, P.,& Waldron, T., 2012). Hockey fanatic towns like Ontario, Quebec City and Seattle are dying to have an NHL franchise in their respective cities. In fact, a recent study showed that up to 6 more NHL teams could not only survive, they would thrive in various Canadian cities.  The study claims that the best location for a new team is Ontario’s Greater Golden Horseshoe, a market of 9 million people that can support 3 NHL teams alone (Keller, 2011).   According to Keller, “For four decades, the NHL has pursued a Southern Strategy, increasing the number of teams in the United States, particularly in the fast growing Sun Belt, in an effort to grow interest in hockey in the US. These efforts have been largely unsuccessful, with many of these franchises suffering from low fan interest and low revenues” (2011).

The Coyotes should choose one of these more northern or Canadian locations and start a fresh fan base, while trying to retain some of its loyal Arizona fans. One of the most successful franchise moves was when the Minnesota North Stars moved to Dallas, a non-traditional hockey town.  The organization’s leaders were able to successfully maintain the true North Stars fans in MN, while building on the program’s fan base in Texas (Blount, 2016).

Recommendation #2: Sign one or two Allstars

The Coyotes are currently sitting at the bottom of the food chain in the NHL and still have $18.3 million in salary cap to spend on their players. (HockeyDB, n.d.). To get the fan revenue you need fans to attend the games. When the team is losing or in a slump, many of the fair weather fans lose interest and stop attending games. By using this money to sign two or at least one or two of the NHL’s biggest superstars, rather than spending that money across the board on some of the players that are contributing at lower levels within the league, it will end up being better money spent.  One such type of player, who is also one of the best Russian born hockey players in the world, is Alex Ovechkin. He plays for the Washington Capitals who worked hard to build the program around him, rather than the other way around. As soon as he was drafted to the Capitals, the organization’s international fan rate increased by 9%, mainly coming from Russia (HockeyDB, n.d.).

This will not only better their team by filling some of the talent gaps, it will no doubt bring more fans to the stadium just to watch those one or two individuals. They need to change the dynamic of the team from signing and promoting ‘bang for your buck’ players to a winning culture and powerhouse that signs high profile players. This will make it possible for a team to have a successful professional hockey franchise in the desert.

Recommendation #3: Grow the Sport in the Surrounding Communities

With the addition of a Division I hockey team at Arizona State in 2016 (Emerson, 2015) and the number one 2016 NHL draft pick being a Scottsdale native (Morreale, 2016), the Arizona hockey scene is set to explode. Regardless of the specific professional missions of their companies, wise executives recognize that there’s a natural social mission they can tap into that will transform their place in the world, greatly impacting their communities, employees and bottom lines (Scott, 2015). The Coyotes have been gifted not only the top NHL draft pick, but a team at the college level that they can use to connect community to the sport of hockey.  According to Scott, “Engaging in community involvement programs is nothing new for celebrity athletes, teams, leagues and sports leaders. What feels fresh is the increased professionalization of sports philanthropy, as leaders in this field recognize more ambitious ways to serve their communities while forging new partnerships and shaping their brands on a global stage” (2016). If the team were to develop their community outreach programs by partnering with youth teams and creating positive messaging promoted by ASU, they would likely see a stronger hockey presence in the state, which would lead to a stronger fan following.

Conclusion

The Arizona Coyotes organization is competing in the most competitive and prolific professional hockey league in the world. Their continued lack of success has been detrimental to the franchise and is causing them barely make payments every year. Internal changes in leadership has not changed in 18 years, which is a long time to try to keep a professional sports franchise afloat. The Coyotes need to come to realization that unless they are going to be a championship or at least a contending team from year to year, hockey in Arizona will just not be successful. They can be a successful organization if all the right things fall into place at the right time, but they have tried many different options since their existence and they have been unsuccessful. Las Vegas just successfully opened up a Franchise for the National Hockey League. Based on the people behind this project and the intangibles that went into it, the Coyotes organization should really look into this process and take the necessary steps to build a successful and stable franchise.

Appendix

Appedix A

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Appendix B

Appendix C

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