A whole new game for Balsillie and NHL
- From today's Hamilton Spectator:
A whole new game for Balsillie and NHL
Major strides since May 5
June 18, 2009
The Hamilton Spectator
(Jun 18, 2009)
Richard Rodier was certainly correct earlier this week in his general description of bankruptcy proceedings:
Things do change, radically and quickly, all the time.
Rodier, his boss Jim Balsillie, the NHL, the hockey world as a whole and the part of the general public that cares face an altered landscape from the one on Cinco de Mayo, just hours before the Phoenix Coyotes filed for Chapter 11 bankruptcy protection.
What's different six weeks down the road? Follow the bouncing ball.
* Balsillie has been forced to openly accept the idea of paying compensation for this market.
Through his oral comments and implied in his Monday ruling against Balsillie's PSE buying the Coyotes to move them to Hamilton, Judge Redfield T. Baum supports the concept of "market opportunity" held by the NHL. Therefore, anyone coming into that territory must pay for the NHL's loss of that opportunity.
Despite arguing that the league constitution requires only a payment for the "goodwill" investment in the market, it's unlikely that Balsillie ever thought he would pay nothing to play in the richest hockey market in the world. But he wanted to start the fee bargaining at zero. The Balsillie group is now taking the initiative to meet with the NHL over relocation fees and indemnity to the Toronto Maple Leafs and Buffalo Sabres.
* We know much more about the business of hockey.
The NHL constitution and bylaws, jealously guarded for decades, are now public documents, revealed and mercilessly parsed in court filings. The regulations have been introduced into court not just by one side, but by both, and are being used to defend, and attack, the NHL.
Now the general public has a handbook by which to follow off-ice NHL business. If, for instance, the league approves a new franchise owner -- several teams are for sale, we've also found out in court -- the public will know that at least 75 per cent of the other owners had to approve him or her. And if an owner is rejected, we can begin tabulating which eight (or more) owners turned thumbs down.
We also know that the Toronto Maple Leafs, through the "written permission clause," have a de facto veto over a Hamilton franchise. But through Judge Baum, we know that's irrelevant unless it's proven it has been applied.
* It's been revealed just how rich this market is.
Between the commissioner's memos and a Coyotes submission by consultant Andrew Zimbalist, it has been confirmed that the Toronto area is financially ripe for another team. The Toronto-Hamilton corridor has 226 large businesses, nearly three times more than any other city in Canada, and upwards of 2.5 million NHL fans, 44 per cent more than the New York area, which has three teams.
We also know the Toronto Maple Leafs' franchise value has increased 70.3 per cent in the past five years, to at least $448 million.
This all creates, in the mind of the ticket-buying public and other NHL owners, the idea that the Leafs have it too easy financially.
* Balsillie has created his own competitors.
By smashing down the walls of secrecy over the past three years, Balsillie has actually stimulated a whole horde of potential rivals for a team in Hamilton or, most commonly, in another part of the GTA.
He has done the heavy sledding but has incurred NHL wrath. And when NHL commissioner Gary Bettman was cited several times in court filings saying the GTA is an opportunity for expansion, the carpetbaggers got to work.
Now the NHL knows there'll be a heavy auction for a Toronto-area team and that Balsillie isn't the only one with bottomless pockets for hockey.
And if the search for keep-it-here ownership fails in Phoenix, Balsillie could be bidding against those competitors at a second auction for a "moveable" Coyotes team.
But the law of supply and demand -- combined with Canadians' uncontrolled addiction to the game -- may create what has happened, for other reasons, elsewhere in the league: a purchase price out of whack with market sustainability.
* Balsillie must be acceptable to the NHL as an owner.
The league doesn't say this, Judge Baum does. In his ruling Monday night, he wrote that because the league approved Balsillie as an owner in the Pittsburgh Penguins purchase attempt of 2006, "it appears to the court that the NHL cannot object or withhold its consent to PSE becoming the controlling owner of the Phoenix Coyotes."
* The NHL will take deeply personal shots, and so will the other side.
In a recent filing, the league hinted that Balsillie's recent $77-million payback to the U.S. Securities and Exchange Commission over backdated stock options could be held against him when his applications for ownership and relocation are considered. Balsillie's lawyer Susan Freeman replied in court by citing the jail term served by Harold Ballard when he owned the Leafs; Bettman-promoted Boots Del Biaggio, who was brought in to top up the local ownership of the Nashville Predators and was shortly thereafter convicted of fraud; and Anaheim Ducks owner Henry Samueli, who pleaded guilty last year to lying to the SEC. The NHL has also ridiculed Coyotes owner Jerry Moyes, claiming his $100-million loan isn't a loan but an equity stake, which would entitle him to nothing under Chapter 11.
* The players' union is only a partial ally.
Yes, over the past month, the NHL Players' Association has reiterated its belief that it should have some say in where franchises are located, and that southern Ontario should have another team. But in interviews with The Spec and The FAN 590 sports radio station two weeks ago, union executive director Paul Kelly expressed concerns that a team in Hamilton would adversely affect the Buffalo Sabres. And Kelly has to contend with two dozen Coyotes who love living in the Valley of the Sun.
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