Sometimes, smaller is better.
For decades, major sports leagues have tried to place teams in the country’s largest markets in the hopes of selling more tickets and sponsorships as well as satisfying broadcasters who want to reach the largest number of viewers 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, in search of financial incentives, newer arenas and stadiums, and more devoted fans.
In early April, the NHL 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 begin play next season in the Delta Center in Salt Lake City, home of one of the Smiths’ other teams, the Utah Jazz of the NBA.
On its face, the move could be seen as a step down. Salt Lake City’s metropolitan area is less than half the size of Phoenix’s; Salt Lake City is the 29th-largest media market while Phoenix is the 11th largest. Utah has never been home to an NHL team. But the league’s decision was less about the size of Salt Lake City and more about its demographics. Like Phoenix, Salt Lake City is one of the country’s fastest-growing cities. But in Utah, a thriving tech industry has attracted an influx of young workers with disposable incomes.
“People aren’t coming to Utah to just retire,” Ryan Smith said in an interview. “If you have two states that are growing fast, you would always take the youthful one for the future of prosperity.”
Leagues have been “right-sizing” their operations for years with an eye toward making money off fewer fans. The New York Mets were one of many baseball teams that built smaller stadiums with more exclusive clubs and suites. Citi Field, which opened in 2009, has just 42,000 seats, compared with 55,000 at the team’s previous home, Shea Stadium. Smaller arenas and stadiums are easier to fill — the sight of empty seats on television is a bad look — and teams can focus on more high-end concessions, club seats and exclusive “experiences.”
It typically takes a team several years to prepare for a relocation. But Commissioner Gary Bettman said the NHL had to act quickly because the Coyotes needed stable owners and a big-league arena. The team had trouble drawing fans, and 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 an assortment of places. This past season, their home was a college arena with just 5,000 seats.
But in Salt Lake City, enthusiasm for the new team has been strong. Fans have paid deposits for more than 30,000 tickets in an arena that seats about half that number. Sixty-four percent of those who signed up had not attended a Utah Jazz game in the past three years, Smith said. While the Coyotes were overshadowed by the NFL, NBA and MLB teams in Phoenix, 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 may be more innovation, especially with the team being new and having some buzz around them to ride the coattails,” said Frank Hawkins, a longtime lawyer at the NFL who is now a media consultant. “The other thing is you’re moving from a four-team market where your target is snowbirds who probably aren’t from hockey country.”
Salt Lake City and its surrounding counties, by contrast, already are 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 is trying to do so again in 2034. Many U.S. Olympic teams train in the area.
The broadcast media landscape is also changing. When the NHL relied on broadcasters to show its games nationally over the air, networks wanted to reach the country’s largest markets so they could charge more for advertising. Similarly, cable networks like ESPN seek markets with the most cable subscribers.
But millions of households have been ditching 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 further than traditional cable territories.
“With vast numbers of people cutting the cord and not taking the typical cable bundle, the issue now is how many committed fans will pay extra for a streaming product versus what used to be just the pure size of the market when everyone paid whether they watched the games or not,” said Marc Ganis, a consultant on media issues to numerous sports teams.
The NHL has not ruled out returning to Phoenix. Bettman spent decades trying to keep a team there, and the league believes a Phoenix franchise could still succeed with the right owner and arena.
Alex Meruelo, the owner of the Coyotes, will retain the team’s intellectual property, including its logos and records. Meruelo could reactivate the Coyotes if he finds a suitable home and pays a $1 billion expansion fee — essentially what he received for letting the team leave for Utah — to get back in the league.
The league has also considered other markets, including, reportedly, Atlanta and Houston, which had a team in the defunct World Hockey Association. For now, the league’s focus is on 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 a chance to kind of start from the very beginning with their family and say, ‘This is one of the things we’re going to do,’” Smith said.
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