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Date Submitted: 09/26/2011 05:44 PM

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Should The Phoenix Coyotes Be Allowed To Relocate To Hamilton, Ontario?

Since 1996, the Phoenix Coyotes have been incurring losses and continue to go into debt. Consequently, majority owner, Jerry Moyes, put the NHL franchise into chapter 11 Bankruptcy. Subsequently, on May 5, 2009, Jim Balsille, founder and CEO of Research In Motion, aggressively placed a bid for $212.5 million for the Phoenix Coyotes under the condition that the team be relocated to Hamilton, Ontario.

Phoenix is the 5th largest and most populated city in the United States, but has failed to capture a ``large fan base`` after 12 years. The Coyotes currently rank 24th in attendance in the NHL, with ticket prices $12.21 below the league average. Furthermore, they have lost $73 million over the past 3 seasons and reportedly have been penalized by the NHL, suffering a cut in the amount of revenue sharing they are to receive. Figure 1 illustrates the Coyotes` current situation in Phoenix. P0 represents the current ticket price the Coyotes set, and Q0 is the quantity sold (demanded) at that price. However, the Average Total Cost (ATC) curve lies above the demand curve, meaning that costs are greater than ticket prices set. The coloured rectangle in figure 1 illustrates the losses that the Coyotes are incurring. Alternatively, it is likely that there will be a completely different result if the Coyotes are relocated to Hamilton. According to an article, ``Hamilton is a hockey hotbed`` the move would ``increase the output of hockey, number of fans attending the games and fan intensity levels in the relevant markets``. Southern Ontario is heavily populated with hockey lovers and would miss out on a ``tremendous business opportunity if not relocated to Hamilton``. Figure 2 illustrates the change in prices, quantities demanded, and profits if the Phoenix Coyotes were to relocate to Hamilton, Ontario. This time P0 (ticket prices) are set at an amount above the cost indicated by the ATC curve....