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The Wages of Sports Stadium Subsidies

May 6, 2009, 9:24 am

Well, you can't say I didn't predict this.  The Phoenix NHL hockey franchise (the Coyotes, a case of obvious before-the-fact trademark infringement on this blog) has declared bankruptcy.  The only current buyer is RIM's Jim Balsillie (a section-mate of mine at HBS) who will only buy the team if he can move it to Canada.  Gee, who would have thought that ice hockey would struggle to be successful in Phoenix?

Several years ago, Phoenix suburb Glendale paid about $180 million to build a hockey stadium for the Coyotes.  The Coyotes had already been in the Valley for several years, losing money all the while, and had shed one ownership team for another fronted by Wayne Gretzky.  It was shear madness to build them a stadium, as their chances of financial success were almost non-existant.  It was already clear at this point that hockey was not going to be a big draw in Arizona.  For this reason, Scottsdale and Phoenix both ended up passing on subsidizing the team before Glendale, out to prove it was a "real" city, stepped up to the plate with a wad of taxpayer money.   The stadium ended up being about as close to the center of mass of the metropolitan area as the Denver airport is in that city.

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Category: Sports
  • John

    I'm struggling with the east side vs. west side thinking of this post along with a lot of similar posts in other venues on this topic.

    Not sure if the Coyotes would have succeeded in downtown Phoenix or on a corner of the 101/202 interchange. They have not been much of a product in the last 10 years or so. If there was a fan base of mass, they would have found their way out to Glendale.

  • DrTorch

    They should have named them the "Arizona" Coyotes, that pretty much guarantees success out there ;-)

  • EconGrad

    I am offended! Denver International Airport attracted the city to it! And it has already surpassed it's expected annual passenger load!

  • eCurmudgeon

    Speaking of Denver, I suspect it's time to move that NHL franchise back over the border as well.

    (And don't get me started about DIA - remember that there was an internal Environmental Impact Statement that pointed out that Stapleton could have been rennovated to handle double the traffic DIA does now for about $1 billion or so. Not to mention that it would have been easier to get to, more favorable for convention traffic, etc. Funny how the Pena administration managed to sweep it under the rug...)

  • Esox Lucius

    Wait, Hockey. I seem to remember this sport from my youth. Didn't this have something to do with a stick and a ball or something...

    Hmmm. Does anyone watch that game anymore?? Didn't they go on strike and nobody noticed?

  • http://www.mastersdegreebusiness.net/ MastersDegreeBusiness

    the NHL is not the same of 6 past years.

  • Rick C

    EconGrad, for what, last year?

  • http://www.t-nation.com/ spiro

    I love this story as a basic lesson in business and marketing.
    I lived in Arizona around the time the Coyotes and D-Backs were established, and I remember thinking then:

    D-Backs - Great idea! we've had decades of spring training camps in Arizona to stir up the appetite, AND the state's fastest growing demographic (hispanics) love the sport. And it was a great choice for a mascot.

    Coyotes - What? Hockey in Phoenix? The only justification was "hockey is growing in popularity all over the country, why not Phoenix?" and "Hey this Gretzky guy was a hit in L.A., maybe it'll work for us too"

    The only reason the Cardinals have survived so long is all the fans of their OPPONENTS that live in the greater PHX area and fill their stadium. Yes, even after thier NFC championship, if Dallas comes to town it'll be 65% Cowboy fans (they're the ones all sitting together in the serial numbered orange jumpsuits).

  • http://johnsterling.wordpress.com John Sterling

    You mean to write "sheer madness."

    "Shear Madness" is an off-broadway play.

    http://en.wikipedia.org/wiki/Shear_Madness

  • Allen

    eCurmudgeon, I'm with you. Add to that they new Rocky Mtn Flats was closing and would've had plenty of land to expand the airport. But at least the DINKs have some nice spendy homes. It's now the most expensive zip code by median housing price in Colorado.

  • dave.s.

    I like 'shear madness', it has a very nice odor of shearing the taxpayers. The golden fleece is long gone, now...