Sometimes smaller is better.
For decades, major sports associations have been trying to position teams in the country’s biggest markets. In doing so, they hope to sell more tickets and sponsorship money and at the same time meet the wishes of broadcasters who want to reach as many viewers as possible.
But in recent years, leagues have embraced the charms of smaller markets. Teams have moved to cities like Oklahoma City, Las Vegas, and Winnipeg, Manitoba, seeking financial incentives, newer arenas and stadiums, and more dedicated fans.
In early April, the National Hockey League approved the $1.2 billion sale of the Arizona Coyotes to tech billionaire Ryan Smith and his wife Ashley. The team, which will be renamed, will start playing next season at the Delta Center in Salt Lake City, home to one of the Smiths’ other teams, the Utah Jazz of the National Basketball Association.
At first glance, the move might be seen as a step backwards. Salt Lake City’s metropolitan area is less than half that of Phoenix; Salt Lake City is the 29th largest media market while Phoenix is the 11th largest. Utah has never had an NHL team. But the league’s decision was less about Salt Lake City’s size and more about its demographics. Like Phoenix, Salt Lake City is one of the fastest-growing cities in the country. But in Utah, a booming tech industry has attracted an influx of young workers with disposable income.
“People don’t come to Utah just to retire,” Ryan Smith said in an interview. “If you have two states that are growing rapidly, you would always choose the young one for the future of prosperity.”
For years, leagues have “tailored” their operations with an eye toward making money from fewer fans. The Mets were one of many baseball teams to build smaller stadiums with more exclusive clubs and suites. Citi Field, which opened in 2009, seats just 42,000, compared to 55,000 at the team’s previous home, Shea Stadium. Smaller arenas and stadiums are easier to fill — the image of empty seats on television is a bad look — and teams can focus on more upscale concessions, club seats and exclusive “experiences.”
It usually takes a team several years to prepare for a move. But commissioner Gary Bettman said the NHL had to act quickly because the Coyotes needed stable owners and a major-league arena. The team had problems attracting fansand its finances were such a mess that the league temporarily took over the club a decade ago. Since arriving from Winnipeg in 1996, the Coyotes have played in several places. Last season their home base was a college arena with only 5,000 seats.
But in Salt Lake City, enthusiasm for the new team is high. Fans have put down deposits for more than 30,000 tickets in an arena that seats about half that many. Sixty-four percent of those who applied had not been to a Utah Jazz game in the past three years, Smith said. While the Coyotes were overshadowed in Phoenix by the NFL, NBA and Major League Baseball teams, the new hockey team was already standing out in Salt Lake City, where it would compete for attention with the Jazz and two soccer teams.
“Even though the market is smaller, there can be more innovation, especially because the team is new and there’s some buzz around them to ride on,” said Frank Hawkins, a veteran NFL lawyer who is now a media consultant. “The other thing is you’re going from a four-team market where your target is snowbirds who are probably not from hockey country.”
Salt Lake City and the surrounding counties, on the other hand, are already a winter sports destination. The area boasts some of the best ski slopes in the country. The city hosted the Winter Olympics in 2002 and still does I’ll try to do this again in 2034Many US Olympic teams train in the region.
The broadcast media landscape is also changing. When the NHL relied on broadcasters to air its games nationwide, networks wanted to reach the biggest markets in the country so they could charge more for advertising. Similarly, cable networks like ESPN seek out markets with the most cable subscribers.
But millions of households have dropped their cable connections, undermining the sports cable networks. In response, Smith had the Jazz start its own direct-to-consumer streaming service and struck new deals with over-the-air broadcasters that reached beyond traditional cable territories.
“With large numbers of people cutting the cord and not getting the typical cable bundle, the question now is how much extra dedicated fans will pay for a streaming product, compared to what used to be just the sheer size of the market when everyone paid or they also watched the games or not,” says Marc Ganis, consultant for media issues for numerous sports teams.
The NHL has not ruled out a return to Phoenix. Bettman has tried to keep a team there for decades, and the league believes a Phoenix franchise can still succeed with the right owner and arena.
Alex Meruelo, the owner of the Coyotes, retains the team’s intellectual property, including its logos and records. Meruelo could revive the Coyotes if he finds a suitable home and pays a $1 billion expansion fee — essentially what he received when he shipped the team to Utah — to return to the league.
The league has also considered other markets, reportedly including Atlanta, which was twice home to an NHL team, and Houston, which had a team in the defunct World Hockey Association.
The league’s focus now turns to Utah, where the Smiths have just a few months to sell tickets and prepare for the franchise’s first season in a new city.
Maybe fans will “see it as an opportunity to start from the very beginning with their family and say, ‘This is one of the things we’re going to do,’” Smith said.
