An improved financial picture for the Arizona Coyotes will see the city of Glendale receive a “17 per cent” increase in the revenue it receives from the NHL team and its arena operation this year, according to co-owner, president and CEO Anthony LeBlanc.
As part of the annual $15-million management fee the organization receives for running Gila River Arena, money is generated for the city through parking, taxes and other surcharges.
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When the arena management agreement was signed with Glendale in 2013 the goal was to eventually return approximately $9-million to the city annually, according to LeBlanc, who added that a more lucrative naming rights deal has helped the Coyotes take a step in the right direction.
“Last year we came in somewhere between $6- and $7-(million), this year it’s going to be between $7- and $8-(million),” LeBlanc told Sportsnet in a recent interview. “I mean we’re trending this thing completely towards (our goal).
“There is a scenario for the city that some time in the near future it’s even better than what we had predicted a couple years ago.”
LeBlanc strongly disputes recent reports that the team may have violated its management agreement — “We have never ever been notified in any capacity by city council or administration that they feel there’s been any form of violation, not once” — and says majority owner Anthony Barroway will meet mayor Jerry Weiers this week “just so everyone knows that everything’s good.”
There is constant speculation the money-losing Coyotes will eventually be relocated, especially since ownership holds an out clause in its deal with the city for 2018. But LeBlanc continues to believe it can work in Glendale and intends to prove the doubters wrong.
“The elephant in the room is always going to be the five-year out clause until we get past that five-year out clause and it’s dead and done,” said LeBlanc. “I’m not Pollyanna about this. … We understand the genesis (of speculation), but we would just hope that people would listen to what we’ve said at face value — things like ‘hey, look at the money that has gone to the city.’
“They get percentages of what we get: If they’re up over $1-million, double digit percentage growth, wouldn’t that indicate that we’re doing the same with all of our finances?”
LeBlanc was part of the group that purchased the Coyotes from the NHL in the summer of 2013 and remained a co-owner after Barroway bought a majority stake in the team earlier this season.
The organization has used the slogan “hockey the hard way” and LeBlanc views the business challenges in the same manner. His stated goal is seeing the team break even by his third year of ownership — the coming 2015-16 season — and says a significant increase in corporate sponsorships and the improved arena naming rights deal have helped stem some of the losses.
The Coyotes officially reported an operating loss of $34-million in 2013-14, but LeBlanc believes the number is misleading because it includes the entirety of a buyout that will be paid to Mike Ribeiro over the next five seasons along with closing costs from the sale of the team.
The current fiscal year ends June 30.
“Our (2013-14) losses have been reported at $34-million, but our view of the operating losses, when you subtract those two items, our losses for the first year were sub $20-million,” said LeBlanc. “Our losses for next year are going to be substantially less than the number being reported for this year, the year we’re in right now.
“Those are substantially less than the losses we reported in Year 1.”
The Coyotes are likely heading into the busiest summer of any NHL team. They currently have about $35-million committed to contracts for next season, leaving them more than $15-million shy of the projected salary floor.
The focus of bi-weekly ownership calls has been centred around making sure general manager Don Maloney has the proper resources to improve the team, according to LeBlanc. The losing this season was extremely hard on key members of the organization, including longtime captain Shane Doan and coach Dave Tippett, and there’s a push to make sure the Coyotes are much more competitive next year.
That means the addition of veteran players in addition to prospects like Max Domi and Anthony Duclair.
“We know we’ve got to make some moves,” said LeBlanc. “We’ve got to pick up a player or two, we’ve got to add some veteran depth, and that’s going to cost some money. … Look at what Ottawa and Calgary were able to accomplish this year, that’s exactly the model we’re looking at. How do we add those couple of pieces and continue to have that really good prospect pool and young players? You do have to add certain pieces.
“That’s what I expect Don and his staff to accomplish over the next several months.”
The staff is evolving. John Chayka, a 25-year-old with a background in analytics, was named assistant general manager on Monday along with Chris O’Hern, who was promoted after several years of handling contract negotiations and CBA-related issues for the team.
They’ll be looking to help Maloney and Tippett squeeze as much as they can out of a budgeted payroll, just as the Coyotes did while making three consecutive playoff appearances during NHL stewardship.
In the meantime, the off-ice work of getting the organization on stronger financial footing continues.
“The facts don’t lie, and the good news about the facts is that this year has actually been very positive,” said LeBlanc. “We continue to grow this business and the city is ultimately going to get a heck of a lot more revenue than they were getting.”
