“Human Error” May Cost the Arizona Coyotes Their Home Ice

If a person doesn’t pay their taxes the IRS can place a lien and if it comes to it levy a person’s property and assets to pay the bill. In some cases, if a person fails to pay taxes for years, they could face jail time. But what happens when an NHL team doesn’t pay their property taxes and arena chargers? Does the team lose their home ice? Can they pay the amount due and stay? This is the current situation for the Arizona Coyotes for run the risk of being locked out of Gila River Arena, their home ice.

Earlier this month, the Arizona Department of Revenue filed a tax lien notice against IceArizona Hockey LLC, which owns the Coyotes. The notice was for unpaid state and city taxes for more than $1.3 million.[1] There is no report about how long the club has not paid taxes and arena charges. Of the 1.3 million that is owed, $250,000 is owed to the city of Glendale and the remaining balance to the state of Arizona.[2]Glendale informed Coyotes that it plans to lock them out of Gila River Arena if the club does not pay its delinquent charges by December 20. This is more bad news for the Coyotes who has struggled this season with a 5-18-2 record and rumors of relocation because of lease agreement issues.

The Coyotes released a statement about the ongoing situation "We have already launched an investigation to determine how this could have happened and the initial indications are that it appears to be the result of an unfortunate human error.''[3] While the unpaid taxes and bills may be the result of human error, that does not dismiss the fact that this happened in the first place. The Coyotes go on to say that the club is going to take steps to make sure that all bills are paid and that this doesn’t happen again. The NHL has not commented on the situation.

The incident adds to the current arena saga that the Coyotes have been dealing with since August of this year. Glendale was opting out of its lease agreement with the team at the end of 2021-22 NHL season. Both sides have participated in ongoing negotiation about a potential extension, but nothing has been finalized.[4] Since 2016, the Coyotes having been leasing Gila River Arena on an annual basis after moving from the America West Arena in 2003.[5] There has also been rumors that the team could relocate to Houston, but they have been denied by the team. As a back up for the Glendale negotiations, the Coyotes proposed a $1.7 billion development in Tempe, a city east of Phoenix. The development would include a hockey arena, restaurants, shops and apartments.[6] The arena would primarily be funded by private investors but would seek city sales tax revenues to help pay for $200 million in additional costs, including infrastructure work. Tempe has not gotten back to the Coyotes yet about the possible city change.[7]

The location change could benefit the club who has seen poor fan attendance and sales in recent years. The Coyotes are ranked 30 out 32 for average attendance at games this year at 12,205 fans per game. Additionally, Forbes valued the Coyotes as the least valuable NHL franchise at an estimated $400 million.[8] However, the location is the only factor to consider for poor sales, Covid led to a shortened season and less fans in attendance for the 2020-21 season. It may take teams years to make up the lost revenue due to the pandemic. In the coming months it will be interesting to see whether the Coyotes will stay in Glendale or relocate to Tempe.

Jessica Shaw is the Secretary of the New York Law School Sports Law Society. She can be reached on Twitter @JessicaShaw22.

[1] Shilton, Kristen. “Arizona Coyotes Face Dec. 20 Eviction from Gila River Arena over Unpaid Taxes, Fees; Club Cites 'Human Error'.” ESPN, Dec 9, 2021, https://www.espn.com/nhl/story/_/id/32825821/arizona-coyotes-face-dec-20-lockout-gila-river-arena-unpaid-taxes-fees-report-says. [2] Id. [3] Id. [4] Id. [5] Sportsnet Staff. “Coyotes Blame 'Human Error,' Vow to Pay All Bills to Avoid Arena Lockout.” Sportsnet.ca, Dec 9, 2021, https://www.sportsnet.ca/nhl/article/coyotes-blame-human-error-vow-pay-bills-avoid-arena-lockout/. [6] Id. [7] Id. [8] Id.