Arizona Coyotes get deal to lease playing space at ASU arena for 3 years

Higher education leaders have agreed to a deal that would let the Arizona Coyotes play at a new multipurpose arena at Arizona State University for at least the next three seasons.

The Arizona Board of Regents signed off on the proposal Thursday, paving the way for the National Hockey League franchise to play home games in Tempe through 2025 as the team continues to hammer out plans for a permanent home with city officials in Tempe.

“We are thrilled that we have arranged to play our home games in Arizona State University’s new multi-purpose arena starting next season,” Coyotes President and CEO Xavier Gutierrez said in a news release. “This will be an incredible, intimate and exciting fan experience in a state-of-the-art new arena in a fantastic location in the heart of Tempe.”

The ASU arena, which is expected to be completed in October, will be less than a third the size of the Coyotes' current home in Glendale. And the team will have to start its season on the road as ASU documents indicate the arena won't be available for NHL games until December.

The Coyotes, for the long haul, want to build a $1.7 billion arena and entertainment district on 46 acres near Priest Drive and Rio Salado Parkway in Tempe. A city committee is reviewing the team's bid.

The Coyotes have long had a contentious relationship with city leaders in Glendale, where the team has played since 2003. Glendale announced in August that it wouldn’t renew the team’s lease at Gila River Arena after the season ends in April, leaving the team to find an interim ice rink.  

The Coyotes approached ASU officials in December with interest in playing at the arena, ASU’s Chief Financial Officer Morgan Olsen said.

Officials with both parties engaged in negotiations and reached an agreement that would accommodate the team while benefiting the university, Olsen said.

ASU’s 5,000-seat multipurpose arena will be home to the university’s hockey, gymnastics and wrestling teams.

The Coyotes will make nearly $20 million in capital improvements to build separate locker rooms and upgrade arena equipment. They also will pay an annual fee to lease the space, although the amount wasn't available. 

A license agreement between the arena manager, Oak View Group, and the Coyotes hadn’t been finalized and neither team or ASU officials could provide a dollar amount. Olsen told the regents that payments would be made in advance.

ABOR Regent Robert Herbold, the only member of the board to oppose the deal, said it sounded like an exciting project but he was reluctant to approve it until he had more information about the financial contract.

Coyotes will pay to bring arena up to NHL standards

The arena, located in the Novus Innovation Corridor east of Sun Devil Stadium across Packard Drive, was approved by the Board of Regents in November 2020.

It will be home to the three ASU sports teams and the university envisions using the space for community events, concerts, lectures and large meetings. An adjacent community rink will host youth hockey programs and be available to students.

The arena includes 20 luxury suites, two group suites, a club lounge and premium club seats.

NCAA rules prevent professional sports teams from sharing certain spaces with college athletes so ASU will build a two-story, 15,000-square-foot annex on the northeast corner of the arena to house NHL-quality locker rooms for the Coyotes and visiting teams, training facilities, a fitness room and coaches offices.

Inside the ice rink, crews will modify ice-making equipment, broadcasting equipment and analytic and game-play mechanics to bring them up to NHL standards.

Contractor Mortenson Construction, which is building the arena, also will build the Coyotes’ space.

The project’s total cost is $134.7 million, including $19.7 million for the additional Coyotes facilities and upgraded equipment, which the team will cover.

The team will keep game-day sponsorship revenue while the university will retain naming rights and other vendor sponsorship funds, Olsen said.

The Coyotes, who were one of 18 organizations that received a sports betting license from the state this month, don’t plan to open a sportsbook in ASU’s arena but could explore other options in Tempe, according to the team.

ASU will continue to use the facilities once the Coyotes move into a permanent home and the university hopes the new space can help attract larger NCAA competitions and events, Olsen said.

Coyotes could hit the ice in Tempe in December

Oak View Group, the arena manager, will sign an agreement with the team to use the facility through 2025 and the agreement can be extended one year if necessary.

Board of Regents policy limits university agreements with professional sports teams to three years but ASU asked the board to waive the rule to allow the team to play at the facility beyond 2025 if construction of a new arena isn’t finished yet.

While the lease amount wasn't provided on Thursday, Olsen did say the Coyotes will have to prepay the annual fee.

Glendale had threatened to lock the team out of Gila River Arena late last year for failing to pay $1.3 million in taxes and other unpaid balances to the arena manager. The team quickly paid up, blaming the late payment on “an unfortunate human error,” but arena officials asked the Coyotes to prepay the rest of the season to make sure the team didn’t fall behind again.

The Coyotes will only be able to use the facilities during home games. ASU and team officials will hash out a schedule that will prioritize ASU events, Olsen said.

It’s likely the team will begin the 2022-2023 season on the road as construction on the new arena is finalized. University documents show the arena would be available to the team beginning in December.

The NHL schedule for next season hasn’t been finalized but the pre-season typically starts in September and the team played this season's home opener on Oct. 18. The New York Islanders spent the first part of the season on the road before moving into a new arena.

The Coyotes will relocate the team's corporate offices from Glendale to the East Valley in the spring, according to the team.

The team is in discussions with Ice Den Scottsdale to be the team’s full-time practice facility, the team said. The facility, off Loop 101 and Bell Road in north Scottsdale, was built in 1998 as the Coyotes’ practice facility and the team continues to use the space when Gila River is unavailable.

Herbolt, the university regent, and Regent Larry Penley called on ASU to provide the board with more details about the lease agreement and to ensure the university did its due diligence as it finalized the contract.

“I’m a bit reluctant right now but from the standpoint of getting those things nailed down it’s an exciting proposition,” Herbolt said.

Olsen told the regents he felt comfortable with where negotiations stood and that the university would share additional contract details when the agreement is finalized.

League doesn't expect revenue impacts

It’s unclear what the smaller arena footprint will mean for fans or team revenues. The arena is about a third of the size of Gila River Arena which has roughly 18,000 seats.

It’s not unprecedented for professional sports teams to play in smaller interim facilities. The Los Angeles Chargers spent two years in the smallest NFL stadium after it left San Diego and before its new stadium opened. At about 30,000 seats, the soccer venue where the team played was about half the size of a typical NFL stadium.

Ticket information for the coming Coyotes season will be announced in the coming weeks, according to the team.

League officials don’t believe there will be a significant impact to the team’s revenue sharing by playing at ASU, NHL Commissioner Gary Bettman said during last week’s All-Star Games. The interim deal makes sense as long as a new arena gets approved, he said.

Bettman on Thursday thanked ASU for working with the team to find a temporary home and for supporting growing hockey in the region.

“The National Hockey League thanks Arizona State University for its support of the Coyotes during this transition period and for what will be just its latest major commitment to growing our game in the Valley,” he said. “Hockey is thriving in Tempe, and we are delighted that the Coyotes’ passionate fans will get to experience ASU’s on-campus energy while the Club’s new arena is being built.”

Tempe elected leaders have been mum on the bid the team submitted to the city in September. City staffers continue to review the bid, which could come before the City Council as early as this month. A group last week launched a campaign against any taxpayer money going toward the arena. 

The Coyotes propose developing a hockey arena, hotels, apartments and shops on city-owned land on the south bank of the Salt River. The team says it would be financed by billionaire owner Alex Meruelo and private investors. But the proposal calls for a portion of city sales tax revenues generated on the site to help pay for $200 million in additional costs to remediate the land, which was previously used as a sand and gravel mining operation and a dump.

Reach reporter Paulina Pineda at paulina.pineda@azcentral.com or 480-389-9637. Follow her on Twitter @paulinapineda22.

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