Arizona Coyotes – Hockey in the Desert

Introduction

The Arizona Coyotes are a professional sports team that plays in the National Hockey Leauge. They started as a franchise in 1996, and have had many years of struggling to keep the organization running.  They are in the entertainment business and provide fans with some of the best hockey players in the world right in front of their eyes. Its major work activity is to provide Arizona and Coyotes fans around the world with a first class hockey team that they can follow and be part of. With ticket sales, merchandise and Arizona taxpayers, they are working to maintain a professional hockey team in Arizona. They are represented in North American under the National Hockey League. Their players are only represented on the international stage during world tournaments and they Olympics, where they represent their respected country. The world economy is something that does not affect them as they are based out of North America and do not work outside of the continent. 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).

There have been many conversations about the teams, relocation, folding the team, new ownership etc.. yet they still, continue to have a team in the National Hockey Leauge. “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” (Garofalo & Waldron, 2012). The city of Glendale is constantly taking taxpayers money and continuing to pay the National Hockey Leauge 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. The City of Glendale is a major reason why this team is still in Arizona. Without their support, they would have been relocated a very long time ago.

Organizational Structure

With only one location for the teams home games, this dies not make their organization very dynamic for their fans internationally who want to catch a game. The Coyotes organization is a large company in regards to having fans and attention around the world, but in supporting the team it can be tough unless you are at the game as their merchandise sales are extremely low. This organization has been struggling to stay afloat for over 10 0years 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. 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 while making decisions best fit for the success of the players. The organization relies on each individual to strive in its designated role in order to help the players achieve the best success. They have the ability to recruit these staff members from all over the world, as this is the highest level of hockey that you can compete with, making the recruiting process much easier.

The Arizona Coyotes are considered a “flat” organization on the organizational complexity graph. 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 decision that the organization is making and leaves the general manager John Chayka and Head Coach Dave Tippett in charge of directing his staff members.

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 nd 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.). They are competing with the newly NCAA Division 1 hockey team from Arizona State 20160724234435_11919University. Fans have been more attracted to this team beacause 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

The Coyotes organization is very unpredictable, as much of their revenue is based on the teams’ 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 change. 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

Jobing2

three separate occasions. If the organization chooses to stay in Glendale, it must do a better job of attracting fans and 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 had, along with building new fans and 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. This is a challenge because he is not going to bring is the household name fan favorites around the world because those players generally get overpaid. The reason they get overpaid is because those types of players generate more revenue, as the fans pay to watch those prestigious players play. While you are saving money by only having players worth their salary, you take away from the fan enjoyment and lose fans because they do not have a favorite player to watch and follow.

Recommendation #1: Relocation

With the team being inconsistent from year to year in gross revenue, fan attendance based on the team’s success which has been the worst in the NHL the past 5 seasons (HockeyDB, n.d.) and with the debt they had the Glendale taxpayers pay off to the NHL to save them is likely not going to happen again (Garofalo, P.,& Waldron, T., 2012). Hockey fanatic towns like Quebec City and Seattle are dying to have an NHL franchise in their respected cities. The Coyotes should choose one of these locations and start a fresh fan base while trying to retain some of its loyal Arizona fans. In the direction they are going they will never move up and will never be able to make a significant change, which is needed. There are too many comepting professional sports franchises in the State of Arizona for a hockey team to compete and succeed.

Recommendation #2: Sign one or two Allstars

The Coyotes are sitting in the bottom spot in the NHL right now, 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 the fans choose not to attend the games. By using this money to sign two or at least one of the no;’s biggest superstars is a necessity. This will not only better your team, but it will bring more fans to the stadium just to watch that one individual. They need to change the dynamic of the team from being bang for your buck players to a winning culture and powerhouse. This will still that the Coyotes can make it possible for a successful Professional hockey franchise in the desert. These players arefan fovorite for their country too. For example, one of the best russian born hockey players in the world right now is Alex Ovechkin. He plays on the Washington Capitals. As soon as he was drafted to the Capitals, the organizations international fan rate increased by 9%, mainly coming from Russia (HockeyDB, n.d.)

Conclusion

The Arizona Coyotes organization is competing in the most competitive and prolific professional hockey league in the world. Their continued lack of success is determinizing the franchise and is causing them barely make payments every year. Internal changes in leadership has not changed anything 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 ar 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 inito place at the right time, but they hae tried many different otions since their existence and they have been unsuccessful. Las Vegas just succesfully opened up a Franchinse for the National Hockey League. Based on the people behind this project and the entangibles that went into it, the Coyotes organization should really look into this process and take the neceary steps to build a successful and stable franchise.

Appendix A

SWOTTTT

Appendix B

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Appendix C

Prt 1.png

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References

Coyotes, A. (2017, February 13). Official Arizona coyotes Website. Retrieved February 14, 2017, from NHL, https://www.nhl.com/coyotes

Coyotes, A. Hockey operations. Retrieved February 21, 2017, from https://www.nhl.com/coyotes/team/hockey-operations

Gaines, C. (2016, May 5). Phoenix coyotes’ new GM is reportedly a 26-year-old “analytics guru” who co-founded a hockey statistics firm. Retrieved February 1, 2017, from Business Insider, http://www.businessinsider.com/phoenix-coyotes-promote-wiz-kid-to-gm-2016-5

Garofalo, P., & Waldron, T. (2012). If You Build It, They Might Not Come: The Risky Economics of Sports Stadiums. Retrieved February 1, 2017, from The Atlantic, http://econ2.econ.iastate.edu/classes/crp274/swenson/URP290/Readings/If%20You%20Build%20It,%20They%20Might%20Not%20Come_%20The%20Risky%20Economics%20of%20Sports%20Stadiums%20-%20Business%20-%20The%20Atlantic.pdf

HockeyDB: NHL Attendance. (n.d.). Retrieved February 4, 2017, from (http://www.hockeydb.com/nhl-attendance/att_graph_season.php?lid=NHL1927&sid=2016).

McLennan, J. (2013, February 22). Phoenix: Which Sport Reigns Supreme? Retrieved February 07, 2017, from http://www.azsnakepit.com/2013/2/22/4011804/phoenix-sports-nfl-baseball-hockey-basketball

NHL Average Ticket Prices. (n.d.). Retrieved February 6, 2017, from http://blog.tiqiq.com/2016/10/2013-14-nhl-average-ticket-prices-team/

Ozanian, M., Macramalla, E., Mitchell, J., Berg, M., Lee, B. Y., Brown, M., … Groves, D. (2017). Arizona coyotes on the Forbes the business of hockey list. Forbes. Retrieved from http://www.forbes.com/teams/arizona-coyotes/

Phoenix coyotes revenue 2005-2016 | statistic. (2016, October 10). Retrieved February 14, 2017, from statista, https://www.statista.com/statistics/196875/revenue-of-the-phoenix-coyotes/

 

 

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