Coyotes Owners Talk Business

Craig Morgan caught up with Coyotes owners Anthony LeBlanc and George Gosbee on the final day of 2013. He asked them questions about recent and lingering misconceptions.

Click here to read his story with all the questions and answers and no commentary.

Clarification Of An Earlier Story

George Gosbee

George Gosbee

Sarah Mclellan had a Christmas Eve piece that ruffled feathers on the Interwebs stemming from misinterpretation of statements from Anthony LeBlanc. I offered my opinion on December 26 in “Coyotes Attendance – Again (Still?)“.

I understand the fan angst and why trolls were encouraged. While the reactions to Mr. LeBlanc’s comments shouldn’t have any “real life” effect, social media distortions spread rapidly and soon gather a whiff of truth.

Maybe the Coyotes guys wanted to dispel some of the more popular falsehoods and exaggerations about ticket sales and attendance, among other things.

The NHL Business Model

The number of empty seats at an individual NHL game almost doesn’t matter to the success of an NHL hockey club.

George Gosbee joining the group aiming to purchase the Coyotes was a game changer. It SHOULD be clear (based on actual statements) that Mr. Gosbee would have remained on the sidelines without recent changes in revenue sharing and it’s likely that this current deal would have never happened.

Gosbee explains why buying the Coyotes was a vote of confidence in the NHL:

“It was buying 1/30th of the NHL and managing the team in Phoenix. All you need to do is look at the economics of sports. The whole game has changed.”

The distinction is important. Even detractors using a “Canada is subsidizing NHL hockey in the US” argument have a mild grasp of the idea, yet they don’t understand the big picture is that the National Hockey League IS the business, individual hockey clubs are the product.

Despite losing the Jets and the Nordiques to the United States while the economic pendulum was swinging south, the northern troll contingent refuses to grasp that the NHL has made great strides through concerted effort to ensure that the effects of economic swings on their individual clubs are “flattened out” and shared throughout the league.

The small market teams, like the Jets with the smallest arena in the NHL, are also protected from being squashed by the huge metropolitan markets.

Coyotes Business Model

Gosbee on the hockey business in Glendale:

“We’d all like to see a ticket spike but there are other revenue drivers in sports now. Corporate sponsors — the TV deal in Canada helped us out a whole lot! There are a lot of things that work now in professional sports, especially in a pure revenue sharing model that allows a small market team to not be so reliant on ticket sales any more. That was one of the biggest drivers of us buying the team, that it would not be so reliant on ticket sales any more.

“That said, our No. 1 focus now is getting people in the building because all of those other areas are set. It helps revenue and it’s nice to play in front of a full house, but it’s not the biggest driver in the sport any more.”

The other revenue drivers are what will make the Coyotes a success in Glendale, not ticket sales.

LeBlanc speaks to the rumor about the average number of seats that need to be sold, per game, for the Coyotes to “make it” is over 15,000:

“Our goal is to average 15,000 for this year even though, quite frankly, that was the model we set for next year, not this year.”

The only way people not involved with the team can “measure success” is by looking at publicly available attendance numbers. Beyond that, those attendance numbers are immediately questioned and scoffed at by detractors. So, it’s a fool’s errand to base one’s argument that the Coyotes will fail on attendance.

The converse is also true, success and ticket sales are also not connected in lock step except as it pertains to funds due to Glendale.

Money Talks

Anthony LeBlanc (Phoenix Coyotes)

Anthony LeBlanc
(Phoenix Coyotes)

Parking revenue, LeBlanc:

“From our perspective, parking revenue is coming in line with what we budgeted. There is a lag between the games and the reporting of parking revenue to the city — and an even bigger lag in the reporting of supplementary fund money going to escrow for the city. That number will not be reported until the end of the year and that’s $1.50 per ticket. That’s upwards of a million dollars.”

Suite sales and corporate sponsorships, Gosbee:

“It’s up over 50 percent from last year. Everything is up quite dramatically and it’s all pure numbers now. There’s nothing misleading about the numbers that we’re printing.”

First quarter losses reported by Glendale (click here for my take), Gosbee:

“We went into this saying we were going to do three years of losses so if we’re looking at that after a couple of months, no it’€™s not concerning and it’s not surprising. I’ve got to tell you that I’ve never gone into a business deal before where you could look at six different revenue drivers and every single one of them is working. We were hoping that three out of six would work; we have all six cylinders firing and it’s a great feeling.

Both men come across as confident that the current state of the Coyotes business is AHEAD of schedule and promising for the future.

Attendance Increase

The attendance figures look to be on track, with the only caveat being the unknown number of comped tickets. That’s a subject for another post. Despite attendance not meaning life or death for the Coyotes, fans REALLY want attendance to take a big jump.

LeBlanc:

“…we are approaching 20 percent higher attendance than the last time we played games in the fall, which was the 2011-2012 season. We just want them to be up higher, and we’re working very hard to do just that.”

There’s more to the attendance story and how it relates to the partnerships between the Coyotes and Glendale and Westgate, I’ll take a stab at that in the near future.

Upcoming Expectations

LeBlanc:

“…and we are getting ready to announce another major concert in a couple of weeks, which means huge revenue for the city.”

For fun, I’ll take a guess that the performer Mr. LeBlanc will be announcing in a couple weeks is Lady Gaga. I didn’t spend much Google time looking for likely suspects, but Lady Gaga would be a big “get” and she has a likely slot in her tour in June after her gig in San Jose.

grow_the_game_webDespite ongoing unsolved budget woes in Glendale, I imagine the objections and finger pointing at the Coyotes will continue to dwindle as the city figures things out. It seems clear the Coyotes are on track for success and that will hopefully translate to success for all parties involved. Those numbers WILL be tied to attendance, so let’s talk about that next time.

Shameless Plug

Please read Caitlin McGlade’s story about a bunch of Glendale First! people that are stepping up to give back to Glendale, to Arizona and eventually the Coyotes by bringing hockey to kids and adults that would otherwise never enjoy our sport. And yes, for FREE. Click here, please.