With Glendale Kicking Them Out, Is The Coyotes’ Future Viable In Arizona?

Albert Einstein’s definition of insanity was “doing the same thing over and over and expecting different results.”  

Since the Arizona Coyotes moved to Phoenix from Winnipeg in December of 1995, the team has experienced more chaos and instability than perhaps any other franchise in the NHL.  Seven ownership changes, a lengthy bankruptcy case, a league takeover, a decimating expose and now a mandate from the team’s arena’s landlord to get out have all dominated the headlines since the team’s arrival in the desert.  

All of the troubles, old and recent, pose one question: Are the Coyotes a viable business in Arizona, or is relocation the only answer?

None of the people interviewed for this story believe the latter is truly the answer.  But almost all added that time may not suffice to figure that out.

NHL deputy commissioner Bill Daly told ESPN in 2020 that he hoped Arizona’s latest owner – Alex Meruelo, who bought the team in the summer of 2019 – would “crack the code” when it came to the franchise’s struggles, signaling that the league still hoped to keep the team in town.  Instead, figure after figure has failed to do so, including Meruelo himself.

To Matt Layman, he was just different.

Then a reporter with 98.7 Arizona Sports, Layman walked out of Meruelo’s introductory press conference as the Coyotes’ new owner in late July of 2019 certainly amused, and perhaps confident about the team’s future success.

“I actually remember being impressed with him,” Layman said via phone from Dallas, where he currently works outside of the journalism industry. “I thought he was good.  He seemed like somebody the Coyotes needed, at least from what was said about him and what he said about himself.”

Meruelo was an espresso shot into a drained body.  He had bought the team from Andrew Barroway, who represented the last remaining tie to the franchise’s infamous bankruptcy saga in the late 2000s and early 2010s.  He was the first hispanic owner in NHL history, and hoped to blend Maricopa County’s 31.4% hispanic population with hockey by introducing spanish-language social media accounts and celebrating Hispanic Heritage Month.  He also replaced CEO Arhon Cohen with Xavier A. Gutierrez, who became hockey’s first Latino President and CEO.

“He seemed like a really fiery, energetic guy who used a swear word in his introductory press conference,” Layman said. “That definitely stood out to me.”

On the ice, Arizona made big changes too.  They traded for Taylor Hall and Phil Kessel and signed Clayton Keller and Oliver Ekman-Larsson.

“There were some things that you noticed, and correlation doesn’t always mean causation, but there were certainly things that were new or that changed with the franchise in that time since Meruelo took over,” Layman said.

In that introductory same press conference, the Coyotes new leader spoke about the difficulties the team had faced since moving to Arizona, and how he intended to fix that.  Treating the franchise as purely a business – Meruelo’s self-proclaimed strength – was the plan.

“He talked a lot about trying to turn the business in the right direction and make good business decisions,” Layman recalled.  “It was all about business and what he had done previously in his other industries – casinos and hotels.  It was ‘Yeah, I’m going to do what I did in those other places and I’ve done this before and I’m going to do it again.’”

While his words were seemingly reassuring, hiccups could be found.  According to Layman, Meruelo seemed “a little nervous or chatty during the press conference.  He kind of ad-libbed and went off the cusp.”  While the former reporter was hesitant to correlate that with the new owner’s struggles, it perhaps was a look into the future.  According to Katie Strang’s piece in The Athletic, “several employees felt there was a lack of understanding about what makes running an NHL team… different from a private business.”

But to the public eye, Meruelo was set up for success, and Layman didn’t raise a finger.

[Meruelo] was probably reassuring for the fans,” he said. “I would say on a personal level, I bought it to an extent too.”

The allegations in The Athletic piece – and the extent of them – are startling.

Strang details Meruelo’s berating of team employees and lack of following through on promises and missed payments (to players, employees, vendors and sponsors).  She also mentions the dysfunction behind the drafting of Mitchell Miller, the dismissal of former GM John Chayka, the reign of control exerted by current GM Bill Armstrong and reported sexual harassment within the workplace.

According to Todd Merkow, a Walter Cronkite School of Journalism and Mass Communication faculty associate and the owner of Three Screens Media, Arizona’s wild inconsistency over the years is the perfect breeding ground for issues within an organization.

“When you talk about ownership, there’s been so many [with the Coyotes] that stability is the greatest key to success,” he said. “Stability and strength.  I’m not sure that those all existed with every ownership that has been a part of the Coyotes with the exception of, to a degree, Gluckstern and Burke.”

The group headed by Steven Gluckstern and Richard Burke brought the Coyotes to Arizona from Winnipeg in the mid-1990s and experienced relative success.  In its first four seasons, the team made the playoffs, and in five of its first six, it did as well.

“In those early days, when they came here with that product, they had great stars,” Merkow recalled.  “They traded for Jeremy Roenick to boost the star power.  They went into the playoffs their first four years.  The White Out was introduced.  The energy in that building [in] downtown [Phoenix, where the Coyotes played at what is now the Footprint Center] was unbelievable.”

But during the 2000-01 season, Arizona failed to qualify for the playoffs, which triggered a stretch that resulted in the Coyotes missing six of the next seven postseason tournaments.  At the same time, things outside of hockey began to change.  Gluckstern was bought out by Burke in 1998, and Burke later sold the team to Steve Ellman in 2001.  

Ellman had big plans.  While the team had success in downtown Phoenix on the ice, and perhaps attracted the most fans in its Arizona existence, what was then America West Arena brought obstructed views to some of those attending games.  The venue was constructed for the Phoenix Suns and Phoenix Mercury, and didn’t have hockey in mind.

So Ellman looked elsewhere for the Coyotes to play.  He wanted them to have their own venue – a place meant for hockey.

The flashy Phoenix suburb of Scottsdale made perfect sense, but an article written by Carolyn Dryer quoted Ellman saying that Joe Arpaio, the former Maricopa County Sheriff, “got me thrown out of Scottsdale.”  According to Dryer, the deal went “sour” and Arpaio wanted the site Ellman chose to eventually be a jail.

Ellman then shifted his focus to Glendale, who he “had a long history with,” according to Ellman in Dryer’s article.  He touted the Coyotes as being a “significant sales tax generator for the city” and planned on the Coyotes arena and surrounding area (now the Westgate Entertainment District) to be where “every meeting in the Valley is going to be held.”  

“This was a real estate deal for him,” Merkow said of Ellman.  “That was the play for him.”

Al Gage, a real estate agent in the Valley since 1996, agreed with Merkow’s opinion.

“I think that it was the incentives from the city and a little bit of badgering from the location on the east side and a willingness to embrace them on the west side,” he said.  “Essentially, the land was cheaper.”

The decision to build in Glendale could be seen as the catalyst for all of the Coyotes’ problems over the years.

Ticket revenue for Arizona has long been near the bottom of the NHL, and while Gila River Arena may be nice, it isn’t a particularly flashy venue – nor is it a historic one.

In addition, the arena’s location – at the Loop 101 and Maryland Avenue in the West Valley – is far from the Coyotes target audience.

“Being in Glendale doesn’t help them at all,” Layman said.  “As somebody who lived in Chandler when I was a teenager and in my early years of college, Glendale was a long way to go to go watch a hockey game, especially on a weeknight.  

“That’s not doing them any favors.”

The arena’s location – in addition to an elongated stretch of no success on the ice – has put the Coyotes in financial hell.  People don’t want a bad product, and certainly aren’t making the long haul to see it.

Merkow said that when Ellman moved the team to Glendale, Ellman was betting on the west side of the Phoenix metropolitan area eventually taking off, which would bring fans in from shorter distances.  But the growth wasn’t as sharp as expected off the jump.  

“It was too early to go out West,” Merkow said.  “I don’t know if it was going to grow at the rapid pace they expected.”

Ellman sold the team to Jerry Moyes in 2005, who took over just two years before a catastrophe no one saw coming struck: the recession.

“That area just hit a wall,” Merkow said.  “There was no growth whatsoever.

“It got killed because of the recession.  All the way around, he got killed.”

The Coyotes lost any progress they had made, setting them back years in their quest to be a mechanism for growth in the West Valley.  Now, the franchise sits in the purgatory Layman described: bad and far away.

“You still have to have a winning franchise and it has to be in the right location,” Merkow said.

On Thursday, a push to get the franchise out of Glendale came in ways previously unseen, as the city told the Coyotes that they must leave Gila River Arena at the end of the 2021-22 season. While the team has been exploring a new arena based in Tempe, no ground has been broken, and the Coyotes have been here before. With the same issues still existing at the Footprint Center in Phoenix, the Coyotes are homeless starting one year from now.

Gage believes location isn’t as large a part of the equation.  Consistency in the product on the ice is.  When the team moved to Glendale, it was coming off of a season in which it finished fourth in its division and missed the playoffs.  The losing continued for multiple seasons after that.

“I’m a huge hockey fan, and was there Opening Night at Gila River,” Gage said.  “Did you know that the first three pucks in regulation to go over the glass went to the same guy?  That’s statistically impossible, but it happened, because they slid down the net at the same place and he was the only one sitting there.

“The biggest problem they have in my opinion is that they don’t put the product on the ice.  I don’t think it’s a matter of West Valley vs. East Valley.  I think you’ve got to have a team that plays well for more than a couple of half seasons in a row.”

Success eventually found the Coyotes again after their early successes downtown.  Arizona made the playoffs three straight years from 2010-2012, and even came within three wins of making the Stanley Cup Final.  But while the franchise found the winning it craved on the ice, problems off it overshadowed the achievement.

Moyes secretly handed control of the team over to the NHL in 2008, just three years after he purchased it from Ellman.  He then filed bankruptcy, hoping to escape the losses incurred from the team’s losing and location during the recession.

After a lengthy saga, the NHL eventually found a taker in 2013: Ice Arizona.  But a year later, the savior group sold half its interest to Barroway, and three years later, the Ice Arizona party was completely out of the picture.

“Owners have to deal with the team being out of Glendale,” Merkow said. “I just think it is like being in a ring with a boxer. Anybody who owns that team and is operating out of Glendale, you’re just going to take on hits left and right, jabs and uppercuts with what is going on out there.”

Meruelo figured to be the saving grace.  

Arenas are expensive – and the Coyotes’ latest owner seemed to have pockets deep enough to take care of that.  But Layman noted that the billionaire isn’t likely to receive much help from the public if he intends to move the franchise elsewhere in the Valley.

“The willingness of the general public to pay money for sports arenas has dwindled,” he said. “That’s not as easy to accomplish as it used to be.  There’s now just hostility for that, even when the taxes are just tourism taxes or hotel taxes or are district-specific.  People don’t want to hear that.  They don’t want to spend taxpayer money, they don’t want new arenas being built.  They say, ‘The Coyotes already have an arena.’  That’s probably different now than it was when Gila River was built.”

That forces Meruelo to potentially come completely out of pocket for a new venue, and use cash that he seemingly doesn’t have if the reports from The Athletic are accurate.

Merkow believes that it’s a unique set of circumstances that has given the team such extensive problems.  Glendale is one of them, but the effect of the COVID-19 pandemic can’t be understated.

“Look at the pandemic – what’s the effect in the first year of ownership?” Merkow said. “Coming into sports ownership for the first time and the growth that needs to occur.  These early years come with growing pains and these are coming with an incredible growth spurt because you don’t have fans.”

Merkow cites Arizona’s invitation to the NHL bubble in the summer of 2020 as evidence for on-ice success translating.

“[Meruelo] pulled the trigger when he first got here,” Merkow said. “He said, ‘Hey, let’s go for it.’  And there was a payoff – the postseason – that was really good for them.  But it didn’t translate locally because those games were being played at neutral sites.  They didn’t have what you’d normally get out a lift like that.  They would’ve had a White Out for all of those playoff games, I’m assuming.  The energy would have lifted.  That carries, man.  That carries into the next season, and that carries with your fan base.  It creates a tremendous amount of energy to build upon. 

“I don’t think they truly have the one-on-one relationship with their fans yet and how that’s going to all convey.  You have to look at the pandemic in this case, because it’s all so vital to the first year of ownership.”

The first year of ownership is a larger theme Layman and Merkow both went deeper into.  While Meruelo strived to run the Coyotes like he did his prior enterprises, that can be tough.

“With any new owner that comes into the sports business world, there are expectations that these businesses can be run like other businesses, and in general, the answer to that question is ‘Yes, they can be,’” Merkow, the former COO of the Los Angeles Avengers AFL team, said.  “But sports offers just a uniquely different platform when it comes to business.  Business in itself is uniquely tied to your customer relationships.  In sports, it is highly tied to the relationship of your fans.  How it translates through to the play on ice, how it translates through to the screen, how it translates through to the environment in the arena.”

Layman said some of Meruelo’s ripples so far can be excused, but issued a similar warning as Merkow: sports are different.

“Alex Meruelo has never owned a sports team before,” he said.  “The point is, when you have people that are in a new position – and sports is a business, but it’s also a unique thing that’s unlike a lot of industries.  So when you have people that are new in the industry, sometimes you screw up.  I got a new job recently. I make some mistakes too.”

Meruelo did attempt to own a sports team before.  According to Strang’s piece in The Athletic, the NBA had concerns about Meruelo’s supposed wealth when he was interested in purchasing the Atlanta Hawks in 2011.

Those might be coming to a head now.  

Merkow remains optimistic.  He believes the pandemic is a major reason for Arizona’s issues, and believes Meruelo has the cash on hand to do whatever he wants – whether that means moving the team or not.  

“I do believe that if he’s the owner they will do the right things and will end up being successful,” Merkow said.

Part of him believes the pandemic shouldn’t be giving Arizona as hard of a time as it is, but also thinks Meruelo should be able to recover.

“He certainly has got the pockets to withstand some of the hits that occur being out there, but he certainly has the pockets to go into other places as well,” Merkow said.

It’s early, he claims.  Meruelo hasn’t fully gotten the chance to see what his product looks like in its final stage yet, nor has he been able to really experiment with growth.

“I think this is really trying to understand what your challenges are and how to overcome them,” Merkow said.  “Part of that might mean that they need to move to a different location in the Valley.  I don’t see them going somewhere else.  I think Meruelo is in it for the long haul and is going to make it work in Arizona.  It’s just a question of whether it’s going to be in Glendale or somewhere else.”

Layman worries if Arizona is still in the cards given all the turmoil the Coyotes have experienced.  Articles have been written wittily about why a relocation hasn’t occurred already, while NHL commissioner Gary Bettman is on-record about keeping the team in the desert.

“I think that Alex Meruelo’s ownership of the Coyotes might be one of the last interactions of the Coyotes that we get if they are going to move,” Layman said.  “I’m not predicting that they’re going to move, but I’m saying that it needs to work eventually.  Because if it doesn’t work eventually, it might be difficult for the owners or the league office to justify continuing to support the franchise.  That’s just my take.  I’m not a businessman.  

“There have been so many changing of hands and there was the bankruptcy about 12-13 years ago.  I think there may come a point when somebody throws their hands up and says ‘Enough is enough.’  But I don’t know when that is.”

In some ways, it’s fair to compare the Coyotes to the Cardinals, who play right across the street all the way out in Glendale.  Why do people travel for them and not for hockey?

“Bottom line is, if you build it, they will come,” Gage said.  “That’s always been the [slogan].  If they were putting good hockey on the ground, it doesn’t matter whether it is in Glendale or Scottsdale.  Or Tempe.  People are going to come.  The Cardinals aren’t having a problem when the Cardinals put out a good product.”

Layman wonders if Phoenix just isn’t as crazed for the Coyotes – or sports as a whole.

“You look at a team like the Arizona Diamondbacks,” he said.  “They’re not one of the top spenders in MLB, and there’s probably a reason for that.  I found in my 20 years living in Phoenix that fans in Phoenix tend to be fair weather except for the die-hards of course, but those tend to be the exception to the rule.  But there’s a lot of people who aren’t from Arizona and a lot of people who cheer for teams that aren’t in Arizona.”

Gage agreed and offered another way of thinking about it: “We are a transistient community.  We don’t have fans in Chicago that have been Diamondback fans their entire life.  It doesn’t happen that way.  We don’t have people moving from here to somewhere else.”

If the Arizona population isn’t very sports-centric, then the Coyotes seem to be the odd team out.  None of the people interviewed for this story claimed to be Einstein-like, but all expressed pessimism in some regard considering the health of the Coyotes – on the ice or off it.  As the cycle repeats with yet another struggling new owner, and now a mandate as serious as any other in history, the time to do something drastically different could be now.

“That team has just been mixed up for all the wrong reasons,” Merkow said. “It’s easy to say all the wrong reasons, because there are so many franchises that have done this, and done it successfully.  It could have been the right reasons.  But the timing in all of this is everything.”