SBD/Issue 167/Franchises

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  • Balsillie Willing To Keep Coyotes In Phoenix For One Year

    Balsillie Would Be Willing To Have Coyotes 
    Play One More Season In Glendale
    Should RIM co-CEO Jim Balsillie be allowed to purchase the Coyotes, he is willing to let the team play one more season in Glendale, Arizona, provided the NHL pays for any losses the team incurs and approves the club's relocation to Hamilton, Ontario. The offering was disclosed in a filing late Friday and serves as the latest wrinkle in the ongoing dogfight between Balsillie and the NHL over the Coyotes. The filing also compares the city of Glendale's expectation that the team play in Jobing.com Arena for 30 years to a "death warrant" and says "it would cause any buyer to continue the Coyotes’ practice of hemorrhaging millions of dollars every year." The filing suggests that there are not enough paying fans in the Phoenix area to support the team and urges moving the team to Canada because "children in Canada often strap on hockey skates before they start school, and grow up in an atmosphere of intense hockey enthusiasm." To deny a move to Hamilton "benefits the Maple Leafs by enabling them to enjoy the benefits of no competition in the Toronto area, but it is disastrous to the Coyotes’ creditors." The filing and a declaration by Balsillie's attorney Richard Rodier contest the NHL's assertion that Balsillie's previous efforts to buy NHL teams -- the Penguins in '06 and Predators in '07 -- attempted to circumvent league rules. Rodier also asserted that Balsillie's purchase should be approved by the NHL's BOG quickly because he was approved by the board in '06 when he tried to buy the Penguins. Rodier also said an NHL decision to deny Balsillie as an owner or the team's relocation would “likely be on account of an effort to block competition in Toronto area or a dislike of Mr. Balsillie and would be unreasonable, illegal and an abuse of discretion.” Rodier said, “In my view, the NHL's view that PSE or Mr. Balsillie doesn't play by the rules does not relate to the written rules of the NHL. Rather there seem to be secret, unwritten, and arbitrary practices of the NHL, that have allegedly been violated by Mr. Balsillie and for that the NHL seems determined not to deal with him, even if the creditors of the team have to suffer the consequences.”

    WHO'S IN CONTROL? The NHL's claim that it exercised a series of proxies and took control of the Coyotes in November '08 is wrong, according to a filing submitted to the court late Friday night on behalf of club Owner Jerry Moyes. The filing contends that Moyes had full power to file for bankruptcy on May 5 because he still controlled the team. A series of declarations by Moyes, former Coyotes CEO Jeff Shumway and Coyotes attorneys support the filing. Moyes said, “The NHL did not manage, control, run or direct Coyotes Hockey, the Phoenix Coyotes hockey team or any of their related operations.” By way of support, Shumway said that he, not the NHL, recommended the Coyotes cut non-player payroll in late '08 by 20%. He said that the league never intervened in player negotiations or trade talks after allegedly taking over operations in '08. He also said he resigned in January '09, contradicting NHL Deputy Commissioner Bill Daly's claim that he was relieved of his job. That assertion was supported by an attorney with the team who suggested that the league learned of Shumway's resignation when he called NHL Exec VP & General Counsel David Zimmerman to inquire about making Moyes the team's governor to the NHL in place of Shumway. In his declaration, Shumway says the Coyotes ran out of money in November '08. He said he had concerns about the proxies the NHL drew up for the club that month and described them in an e-mail to Zimmerman as “sweeping,” but Zimmerman assured him that they were the same as proxies the club signed in '06. Shumway contends that the NHL's assertion that it took control of the club through those '08 proxies contradicts what Zimmerman said before those proxies were signed (Tripp Mickle, SportsBusiness Journal). In the court filings, Balsillie and Rodier said that they “negotiated the proposed sale with Moyes believing he was in charge.” Rodier: “At no time did anyone suggest that Mr. Moyes did not have the authority he seemed to have” (GLOBEANDMAIL.com, 5/16). Moyes noted that the NHL “never publicly said it was in charge and in fact [Daly] was quoted in January as saying Moyes’ group was ‘making day to day business decisions’” (GLOBEANDMAIL.com, 5/16). 

    Labatt Breweries, Home Hardware Already
    On Board With Balsillie's Web Site
    CORPORATE MUSCLE: Make It Seven, the Web site set up by Balsillie to promote efforts to bring an NHL team to Hamilton, Friday announced the launch of the full site at MakeItSeven.ca. Also Friday, Labatt Breweries, an NHL sponsor, and Home Hardware were announced as the first two major corporate sponsors to sign on with the site. The Web site includes a section where fans can post their comments and an online shop selling “Make It Seven” merchandise (THE DAILY). Labatt VP/Corporate Affairs Charlie Angelakos said that the company “gave the NHL a ‘heads-up’ that it was throwing in with Balsillie.” Angelakos: “We love the NHL and would love to see more of the NHL in Canada.” Daly said in an e-mail Labatt Breweries “are free to do what they want. We have no issue” (GLOBE & MAIL, 5/16). In Toronto, Damien Cox wrote the fact Balsillie signed up two corporate sponsors “made the suggestion he would keep the team in Phoenix one second longer than he had to seem rather empty” (TORONTO STAR, 5/16).

    THE RIGHT MOVE? A TORONTO STAR editorial stated, “What’s not to like about Jim Balsillie’s bid to bring another NHL team to southern Ontario? Hockey fans would benefit from another option … for NHL tickets; the economy would be boosted by an increase in tourism and other activity; and the beleaguered city of Hamilton … would get a much-needed shot in the arm.” Now is the “time to rally around Balsillie’s bid, not to second guess it” (TORONTO STAR, 5/16). However, in N.Y., Jeff Klein wrote, “In much of the cheerleading coverage of the current Balsillie vs. NHL saga from some Canadian sources, the use of the vague ‘southern Ontario’ obscures the potential damage to the Sabres that Balsillie’s move to Hamilton could cause.” Under “longstanding NHL rules, Hamilton lies within” the Sabres’ territory, and it would take an “enormous indemnification payment to the Sabres to make them give up as much as 15[%] of their annual business.” Buffalo is "by far the NHL’s strongest TV market in the U.S., despite its small size," and the Sabres are “often the No. 1 American team in sweater sales.” The NHL “would lose plenty” if a Hamilton team caused the Sabres to fold (NYTIMES.com, 5/16). In Toronto, Steve Simmons wrote Hamilton is “not the proper place for an NHL team.” The “best location for a second team in Southern Ontario is Toronto,” and the “second-best location is Western Ontario, somewhere in the highly populated area of Guelph-Kitchener-Cambridge, where there is significantly more business and more money than there is in the Hamilton area” (TORONTO SUN, 5/17).

    Bettman Using Radio Talk Show
    To Talk Directly To Fans
    DEFENDING HIS POSITION: GLOBESPORTS.com's Bruce Dowbiggin writes Bettman has used the “unfettered radio access” he has during his “NHL Hour” show on Sirius XM Radio to “talk over the heads of conventional media to fans.” Bettman “plays the reasonable fixer, the man who only wants solutions, not conflict in Phoenix.” Bettman on Thursday’s show said, “With all due respect to our great fans (in Ontario), this isn’t about trying to deprive you of a team. This is first and foremost about fixing problems in Phoenix and the enforcement of the League’s rules and procedures” (GLOBESPORTS.com, 5/18). Bettman Friday added, “What happened was the owner of the Coyotes came to us early in the season and said he wasn't in a position to keep funding the team. We kept the team going as we were going through a sale process, and we were trying to get to a point where we could effectuate an orderly change in ownership, and the owner of the club decided to file a bankruptcy petition. Not really to protect the creditors as much as to give somebody an opportunity to avoid league rules as it relates to ownership approval and franchise relocation” (“Mike Francesa,” YES, 5/15). The TORONTO STAR’s Cox wrote the “greatest danger for Gary Bettman many not lie in losing to Jim Balsillie in bankruptcy court. It may lie in winning.” If Bettman is able to successfully block Balsillie’s attempt to move the Coyotes to Hamilton, “he’ll be stuck with Phoenix.” Bettman has “positioned himself as the protector of franchises and league rules,” and that “doesn’t leave him much wiggle room if the Coyotes … still can’t cut it in Phoenix even after Balsillie is chased off” (TORONTO STAR, 5/17). Meanwhile, in Ottawa, Ken Warren wrote the “uncertain status of the Coyotes has taken at least some of the bloom off the rose of the opening two rounds of the playoffs.” While the “sun should be shining solely on the league’s successes, the meltdown of the Sunbelt team in Arizona is focusing attention on so much of what hasn’t gone right for Bettman and company in their bold, ill-fated expansion into southern United States” (OTTAWA CITIZEN, 5/16).

    BUYER BEWARE: In Hamilton, Steve Milton wrote the NHL “has publicly attacked Moyes’ integrity -- right in the town where he’s been a leading citizen for years.” So, if you are an owner with a franchise to sell, “which route are you going to follow?” What the league “suggests you do or what your accountants and lawyers suggest?” The recent “ugly history points directly to the former.” So “how many other owners would dare to deal with Balsillie, if he loses this round? Not many” (HAMILTON SPECTATOR, 5/16). The GLOBE & MAIL’s Stephen Brunt wrote the Coyotes situation is an “interesting test of how the NHL treats its own.” Moyes “kept hockey alive in [the] Valley of the Sun by himself for the past six years.” He “bought in to the program. He believed what he was told. He got creamed.” There is a “lesson there, if you’re an NHL owner in a market struggling for survival.” However “they treat the least of their partners, some day that’s how they will treat you” (GLOBE & MAIL, 5/16).

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  • Bettman Allegedly Preferred Coyotes Move To Winnipeg

    Daly Says NHL Considered Winnipeg
    As Last Option For Coyotes
    Coyotes lawyer Earl Scudder in an affidavit filed Friday claimed that NHL Commissioner Gary Bettman told Coyotes officials in early April that the league “would consider moving the team to Winnipeg but not Hamilton,” according to Paul Waldie of the GLOBE & MAIL. Scudder said he told Bettman on April 3 that there was interest “by a purchaser from Canada that wanted to move the team to Southern Ontario.” The affidavit claims that Bettman “replied that the league would not approve relocating the Coyotes to Hamilton because Copps Coliseum was over 30 years old.” However, Scudder alleged Bettman said “if the team did return to Canada, it would be to Winnipeg.” The filing also claimed that Bettman said that a new team in southern Ontario “would have to be an expansion club.” Waldie noted Scudder’s allegations "refute the NHL’s position that it was unaware" of RIM co-CEO Jim Balsillie’s offer until after Coyotes Owner Jerry Moyes "put the team into Chapter 11 protection on May 5 and announced the proposed sale to Balsillie" (GLOBEANDMAIL.com, 5/16). NHL Deputy Commissioner Bill Daly said that moving the team to Winnipeg was “considered only if there were no other options.” Daly: “In the event there turned out to be no options in Phoenix -- and only in that event -- we thought it was worth exploring what might be available in Winnipeg” (TORONTO STAR, 5/17).

    WHAT HAPPENS IN VEGAS...: The GLOBE & MAIL’s David Shoalts reported a new twist emerged Friday that might see the Coyotes “wind up in Las Vegas in a couple of years -- with the NHL’s approval.” A source familiar with Bulls and White Sox Chair Jerry Reinsdorf’s letter of intent to buy the Coyotes from the NHL said that Reinsdorf's "autograph is the only thing" he would put toward the team, as “any cash will actually be provided” by producer Jerry Bruckheimer and MGM Studios Chair & CEO Harry Sloan. Daly said in an e-mail such an offer is “entirely fictitious,” "not accurate," “comical” and “totally untrue.” However, Shoalts noted if the Reinsdorf-led group purchases the club, “some sort of escape clause will be inserted” into the Jobing.com Arena lease, and if attendance and revenue “do not hit certain targets in two years, the team can move.” An exit fee “might be paid,” and the source said that the team could end up in Las Vegas with Bruckheimer “at the controls -- which is what many in the NHL would like to see anyway” (GLOBE & MAIL, 5/16). But the GLOBE & MAIL’s Jeff Blair writes, “Baseball people who know Reinsdorf say that regardless of his financial stake or ultimate intentions in a purported bid to buy” the Coyotes, he “has no stomach for a protracted public battle” over the team. The “deeper the matter sinks into a legal morass, the greater likelihood he extricates himself completely from the affair” (GLOBE & MAIL, 5/18).

    LOST IN THE DESERT? In Phoenix, Paola Boivin wrote hockey in the city is “nothing but dead air right now.” The team held a “Save the Coyotes Rally” on Saturday and “attracted several hundred without a single player or team official in sight.” It is a “sad turn of events for a brilliant sport and raises important questions" about Coyotes Managing Partner and coach Wayne Gretzky’s accountability. Gretzky “always wanted to make it about the players, not him,” but if he “could have done more to encourage fans to come out and see those players, why not?” If the NHL “wins its court battle with Moyes, the Coyotes would be best served by Gretzky sticking to one role” (ARIZONA REPUBLIC, 5/17). In Arizona, Scott Bordow wrote the Coyotes are “on the verge of leaving, and over a span of several hours only a few hundred bother to show up at the rally? Doesn’t that make a fairly significant statement about the Coyotes’ relevance here in the Valley?” (EAST VALLEY TRIBUNE, 5/16). In Toronto, Kevin McGran noted, “Less than 1,000 had signed up for a Save-the-Coyotes Facebook site” as of Friday (TORONTO STAR, 5/16). Daly said that the team’s “problems can be directly tied to its lackluster performance.” But he said that the team is “poised to make a ‘competitive breakthrough.’” Daly: “I think this market would be good if the Coyotes would ever win” (ARIZONA REPUBLIC, 5/18).

    ARENA DEBT MET: In Phoenix, Watters & Sanders reported Glendale records show the city "has met its arena debt as expected, although that could change if the Coyotes were to leave." That “could leave the city having to dip into taxpayer coffers to meet its obligation,” as the loss of the Coyotes “would result in a direct loss to the city of $2.4[M] a year in rent payments from the team and other fees” (ARIZONA REPUBLIC, 5/17).

    FEELING THE STING: The GLOBE & MAIL’s Waldie notes the NHL also is “indirectly caught up in a little-known battle over the location” of the NLL Arizona Sting. The Coyotes and Sting are both owned by Coyotes Hockey LLC, which is majority held by Moyes. Court filings “show that Moyes has had a long-running dispute with the NLL over the Sting, which has not fielded a team for two seasons.” The fight “boiled over into a lawsuit filed in March by the Coyotes,” who allege that in May ’08 the NLL “improperly rejected the club’s application to suspend operations for the 2008-09 season.” The NHL has become “caught up in the saga because it claims it took control of Coyotes Hockey last Fall and began running day to day operations, which would presumably including managing the lawsuit against the NLL” (GLOBE & MAIL, 5/18).

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  • Newark Mayor Predicts Sale Of Nets, Demise Of Brooklyn Project

    Booker Expects To See
    Nets Up For Sale Very Soon 
    Newark Mayor Cory Booker Thursday night on WBGO-FM's "Newark Today" predicted that a "sale of the Nets is imminent -- but he worries that investors in Kansas City and Seattle may prove fierce competition to his goal of seeing the Nets move to the Prudential Center," according to John Brennan of the Bergen RECORD. The Nets "have insisted ... that they will break ground" on Barclays Center, part of Brooklyn's Atlantic Yards project, "this summer and move into it in the fall of 2011." But Booker said he is "confident now more than ever that the deal in Brooklyn is just not going anywhere." Booker: "I think there's going to be a comeuppance very soon where the team is going to go up for sale. That's my prediction. I really do believe it. ... I know people involved in the deal, and it does not look like it's going anywhere in Brooklyn." Booker added, "This is my fear -- that there are going to be people competing from Kansas City to Seattle, and Newark is going to have to get in that game. There's a lot of very good investors who are already stepping up that want to look to purchase the team should it be put up for sale" (NORTHJERSEY.com, 5/16).

    POSITIVE DEVELOPMENT: A New York state appeals court last week ruled 4-0 against opponents of the Atlantic Yards development, upholding the state's right to use eminent domain given the public benefits associated with the project. Forest City Ratner Chair & CEO and Nets Owner Bruce Ratner said that he is "confident the project would break ground this year," and reiterated the Nets would move in for the '11-12 season. Eight companies, in addition to Barclays, have signed on as founding partners for the arena (Forest City Ratner). Ratner said of the court ruling, "I'm honestly overjoyed. This is a weight off my back." Ratner added that he plans to "break ground by October" on Barclays Center, and that he "wants to pare the projected $1[B] cost of the arena by about" $200M. Ratner said that he will "decide within 60 days whether to keep the original design, by the architect Frank Gehry, or use another." In N.Y., Charles Bagli noted opponents of Atlantic Yards "vowed to continue their fight and expressed skepticism that Mr. Ratner would get the financing at a time when lenders are refusing to invest in real estate projects." Meanwhile, the housing and the commercial building at the Atlantic Yards development "may have to wait for some time ... given the anemic economy" (N.Y. TIMES, 5/16).

    NOT OVER YET? In N.Y., Rich Calder noted the four-member appellate panel "determined the project has enough 'public benefits' -- such as the creation of 2,250 affordable housing units and thousands of jobs -- to warrant condemning land." Opponents said that they "plan to take the appeal to the state's highest court," but Ratner said that he "believes the latest ruling is the 'final hurdle' holding up construction and vowed to finally break ground" (N.Y. POST, 5/16). In N.Y., Jotham Sederstrom noted further appeals could delay the project "from several months to three years." But state officials indicated that Friday's ruling "removes the final obstacle to construction" (N.Y. DAILY NEWS, 5/16).

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  • AEG Not Interested In EPL Investment Despite Strong Soccer Ties

    Tim Leiweke Says AEG Focused
    On Arena And Concert Businesses
    AEG President & CEO Tim Leiweke said that AEG Chair Phil Anschutz "will not be investing" in any EPL franchise, now or "in the near future," according to Grahame Jones of the L.A. TIMES. Leiweke: "We've had many opportunities to jump into the Premier League. We've also had teams in Germany and Italy and Spain that have been offered to us. I would not be lying if I told you that we've probably had 40 different clubs approach us in the last 10 years to invest." Leiweke added, "We've just never felt that that was a core (business interest for AEG) because, one, we were busy here trying to build soccer in the U.S., and, two, we have a pretty good relationship with all the teams over there. ... Our focus right now is in a different world. It's arenas and it's content and it's concerts." Meanwhile, Leiweke said that the AC Milan-Galaxy exhibition on July 19 at The Home Depot Center is "virtually sold out," and added that the August 1 FC Barcelona-Galaxy game at the Rose Bowl "could draw '70,000 or 80,000.'" Jones noted AEG also co-owns the WPS L.A. Sol, and the team's "small crowds add up to large losses," and AEG "will not put up with that beyond this season." Leiweke: "Are we going to lose money the first year? Yes. Is it a million-plus? Yes. Did we expect that? Yes. Will that continue? No." More Leiweke: "We've made it clear that our job is to get it started, and then we're going to let others step in here and continue this. But we felt we owed it to the women's game to give them a shot. We were never intent on being here forever" (L.A. TIMES, 5/17).

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  • New Yankee Stadium Still Facing Issues As Season Progresses

    Yankees Still Struggling To Find
    Ways To Fill Up New Ballpark
    With the Yankees in the middle of their third homestand at the new $1.5B Yankee Stadium, the "early issues confronting it -- from disappointing attendance and intimidating ticket prices to home runs that jump on the wind's back and race out of the yard -- seem to be sticking around," according to Joshua Robinson of the N.Y. TIMES. Attendance for Friday's game against the Twins was 43,856, which "fell well under the 52,325-seat capacity and seemed rather low when compared with equivalent games last season." As of Friday afternoon, two tickets "directly behind home plate were available for $1,100 each on FanSnap, well below their face value," and at the game, "large chunks of blue seats remained unoccupied." The only tickets that "seem to be selling online at huge markups are for Sections 201 and 239," as tickets in these sections for Friday's game were "going for no less than 400[%] of face value." But Robinson noted those are the "two sections of bleachers where much of the outfield is obstructed from view and tickets normally sell for $5" (N.Y. TIMES, 5/17).

    TIME TO TAKE CHARGE: In N.Y., Mike Lupica wrote Yankees co-Chair Hal Steinbrenner, who is running the franchise, "needs to start reminding the people who report to him that they work for him, not the other way around." People are "always going to tell him that things aren't as bad with their fans as the media says they are," which is "just another way the underbosses look out for themselves instead of the Yankees." Sources indicated that Streinbrenner is a "good guy, doing the best he can while getting on-the-job training" and "deciding whom he can trust." But within the Yankees organization there is President Randy Levine "letting everybody know he's the president of the Yankees pretty much every chance he gets," and COO Lonn Trost "taking fire these days for everything that goes wrong at the new Yankee Stadium." Lupica: "Sometimes the war to win the AL East is nothing compared to the turf wars that go on behind the scenes at the new Stadium." One MLB exec, who "thought he'd never miss" Yankees Chair George Steinbrenner, said of the franchise, "There's not one voice." Lupica wrote Yankees fans "shouldn't miss [George Steinbrenner] because they miss the show," but they "should miss him because he would have banged a few heads over the run-out of the new stadium" (N.Y. DAILY NEWS, 5/17).

    Several Celebrities, Athletes Showing Interest
    In Purchasing Some Old Yankee Stadium Items
    PIECES OF HISTORY: In N.Y., Angela Montefinise reported former N.Y. Mayor Rudy Giuliani is "planning to grab grass, dirt and seats" from the old Yankee Stadium as part of the ongoing sale of memorabilia from the ballpark. But Steiner Sports CEO Brandon Steiner, whose company is handling the sale, said that Giuliani "isn't the only bold-faced name interested in pinstriped pieces of ballpark history." Montefinise noted actor Richard Gere, Cavaliers F LeBron James, Mavericks G Jason Kidd, talk-show host Maury Povich and MSNBC's Keith Olbermann all are reportedly interested in purchasing ballpark memorabilia (N.Y. POST, 5/17).

    PRODUCT PLACEMENT: The WALL STREET JOURNAL's Russell Adams notes an "astounding 47 homers were hit in the first 13 games" at the new Yankee Stadium, and "two thirds of those were hit to right field where the names of sponsors like Sharper Image and Toyota are displayed." Sharper Image VP/Licensing Federico de Bellegarde: "We couldn't be happier with our investment" (WALL STREET JOURNAL, 5/18).

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  • Franchise Notes

    Media Weighs In On Cuban's Actions
    During Nuggets-Mavericks Playoff Series
    In N.Y., Mike Lupica wrote of Mavericks Owner Mark Cuban's actions during the Nuggets-Mavericks Western Conference Semifinal playoff series, "Cuban is rich and thinks that money means he can say anything he wants to anybody. So he did. Then he thought apologizing in a blog was enough." Cuban is "no thug for doing that, just an idiot," and NBA Commissioner David Stern "thinks that Cuban making a phone call is enough, upon further review." But how would Stern "have reacted if one of his basketball players had confronted an owner's mother?" (N.Y. DAILY NEWS, 5/17). Boston Globe columnist Bob Ryan said, "If there was such a thing as ‘conduct unbecoming an owner,’ David Stern would bar him from his own building for at least 30 games" ("The Sports Reporters," ESPN, 5/17).

    ZEROING IN ON A CANDIDATE: In Minneapolis, Jerry Zgoda reported the T'Wolves appear to have "focused on hiring" Trail Blazers Assistant GM Tom Penn to lead the team's basketball operations after former Heat GM Randy Pfund withdrew from consideration on Friday. Penn is the "last known candidate interviewed" by T'Wolves Owner Glen Taylor and CEO Rob Moor (Minneapolis STAR TRIBUNE, 5/16).

    COSTLY TURNOVER: In California, Carl Steward wrote the Warriors "don't deserve" outgoing Exec VP/Basketball Operations Chris Mullin, whose contract was not renewed. Mullin "gave the franchise a level of respectability and admiration it hadn't had since" Owner Chris Cohan bought the team in '95. Steward also characterized new GM Larry Riley as coach Don Nelson and President Robert Rowell's "puppet" (CONTRA COSTA TIMES, 5/16).

    LOSING THEIR BITE? About 2,400 Sharks fans attended the annual state of the team meeting last Thursday at HP Pavilion, and it was "far from a hostile crowd." About half gave coach Todd McLellan and four players a "standing ovation." However, there were "plenty of fans who remained seated with their arms folded across their chest, silently showing their frustrations" (SAN JOSE MERCURY NEWS, 5/15).

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