SBD/Issue 167/Franchises

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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