Illustration: Lorenzo Gordon, Photo: Getty Images
Alex Meruelo doesn't just keep the Arizona Coyotes name, IP, and Arizona minor league affiliation. He also holds the team's sports betting license, at least for now.
In 2022, Arizona granted licenses to each of its top professional sports teams, giving them valuable concessions that they could sell to operators looking to do business in the state. The Coyotes, owned by Meruelo, partnered with Meruelo's gambling company to launch Sahara Bets for business in the state.
That license is still valid, according to a representative from the Arizona Gaming Authority, but could it change now that the team's roster and hockey operations have been sold to a new ownership group in Utah? declined to comment. If there is a discussion to be had about Meruelo staying, he may have two arguments. First, although the Coyotes are an “inactive” team, they are still technically an NHL team. And second, Meruelo still owns the AHL's Roadrunners in Tucson, which may be enough due to the state's gaming laws.
A representative for Mr. Meruelo declined to comment.
The Coyotes' recent move wasn't a typical team sale. Ryan and Ashley Smith agreed to pay $1.2 billion for the Coyotes' assets alone, leaving Meruelo with the team's IP, its records and AHL franchise. More importantly, Meruelo also has the option of the Coyotes returning to the NHL within the next five years if certain conditions are met, especially in the team's search for a new arena. According to the league's official announcement, the Coyotes are “inactive.”
Meruelo has publicly said he intends to bring the team back within five years, but the Coyotes could still claim to be an NHL franchise even during their dormancy. Arizona's gaming laws and amendments do not appear to include language about what happens if a team leaves the state or disappears.
The law also defines professional sports teams as teams that compete in the “highest level of league or organized play in their respective sport.” If the Coyotes no longer count, Meruelo could argue that the Roadrunners are the highest level of professional hockey in the state and therefore eligible to hold a license. This nuance was specifically raised in public comment two years ago by a representative for USL's soccer team, Phoenix Rising, who noted that USL is the “highest level” of soccer possible within the state, as MLS is not. He argued that it could be considered. We have a franchise there. Rising does not have a license. The team reportedly decided the $100,000 application fee was too high without any guarantee of eligibility.
Arizona sports teams use these licenses as the backbone of extensive sponsorship deals, which often include upfront payments and revenue sharing. For example, the Arizona Cardinals partnered with BetMGM. Arizona Diamondbacks and Caesars. The Phoenix Suns and Mercury, owned by Matt Ishbia's Player 15 Group, signed FanDuel and Barry Bett. TPC Scottsdale (DraftKings) and Phoenix Speedway (Penn Entertainment) also received licenses and sold them to operators.
The Coyotes took a slightly different path. The NHL team launched Sahara Bets in partnership with Meruelo His Gaming, a division of Meruelo's broader gambling portfolio. In other words, Meruelo secured market access for game companies through NHL teams. The sportsbook only operates in Arizona, according to its website, and has less than 1% market share, according to March numbers from gaming research firm Eilers & Krajcik.
The market value of that license may have decreased over the past two years. With a total of 20 licenses in Arizona, the sports betting landscape is less crowded now than it was in 2022. There aren't many sportsbooks that can generate large volumes with revenue sharing, but almost all of them already have access to Arizona. The consolidation also reduced the upfront capital required for transactions.
“Arizona's market access is probably worth more in the millions, rather than the five million or tens of millions,” said Chris, partner emeritus at Eilers & Krajcik and co-founding partner at Asies Investments. Grove said in an interview.
That said, there are geographic advantages unique to SaharaVets and Meruelo, which owns the Grand Sierra Resort in Reno and the Sahara Hotel and Casino in Las Vegas. Arizona is the only state bordering the southern half of Nevada where sports betting is legal, and many Arizona residents travel to Las Vegas for gambling and entertainment purposes. This may allow Meruelo to offer certain reward opportunities to those users.
“anything [Meruelo] “Anything we can do to increase visitor numbers and improve consumer loyalty from feeder markets like Arizona probably makes sense,” Grove said.
Arizona law provides for a $100,000 application fee, plus an initial license fee of $750,000 and an annual license fee of $150,000. The legislation sets aside a total of 20 licenses for sports teams and local Native American tribes, with 17 currently in place. Earlier this year, the State Gaming Authority began the process of selling the remaining three games.
The Roadrunners averaged about 4,000 fans per game this season. sportico does not value AHL franchises, but for reference, the Chicago Blackhawks are paying their affiliate team $11.8 million in 2021, which would put the team's minimum value at around $15 million at this point. It is being Meanwhile, the Henderson Silver Knights, an affiliate of the Las Vegas Golden Knights, generated approximately $11 million in revenue in the 2022-23 season, two-thirds of which came from tickets.
With the support of Kurt Badenhausen, barry bloom and Scott Soshnick.
