SBD/Issue 181/Franchises

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  • Coyotes Hearing Underway In Phoenix, Decision Not Expected

    Moyes Believes He Can Sell
    Coyotes Through Court
    The NHL and its position runs "headlong" against bankruptcy policy focused on maximizing value for creditors, said Coyotes Owner Jerry Moyes' attorney Thomas Salerno today in opening a hearing on the future of the Coyotes in U.S. Bankruptcy Court. Salerno said that Moyes believes he can sell the Coyotes and change the owner and the location of the team through the court. Salerno said, "The economic reality is this team has been in Arizona since 1996 and has never made a profit." He objected to the NHL's claim that it can't process a relocation application before the '09-10 season, pointing to the Quebec Nordiques sale and relocation in '95 over the span of less than a month. Judge Redfield Baum, who is hearing the case, at the start of today's hearing said, "I've read everything and I think I've read everything more than once. ... I'm proudly as prepared as I can be." Baum said, "We're not selling a used car here. It's a pretty significant asset. There's a lot at stake." Baum added that he is not a great hockey fan, and said that it is the first time to his knowledge that someone has tried to move a hockey team from the U.S. to Canada and not vice versa. Baum: "It's possible that some of you at a minimum will be unhappy when I rule. And it's quite possible that all of you will be unhappy when I rule." The hearing comes on the heels of RIM co-CEO Jim Balsillie's bid in late May to buy the Coyotes for $212.5M, provided he can relocate the team to southern Ontario -- a move the NHL opposes. Today's hearing on that debate over the team's portability has the potential to alter future transfers of sports franchises. Its importance is underscored by NHL Commissioner Gary Bettman's attendance at today's hearing. It is the first time he has traveled to Phoenix for a hearing since the bankruptcy trial began. Baum has said previously that he doesn't expect to rule from the bench today (Tripp Mickle, SportsBusiness Journal). Baum said that his ruling "will come out before the end of the week" (, 6/9). For updates on the trial, visit SBJ/SBD's Twitter page, and see today's Closing Bell for a recap of the day's events.

    STATING HIS CASE: Balsillie Friday on ESPN Radio’s “Tirico & Van Pelt” show said the Coyotes franchise has “lost a lot of money. It has a fairly difficult financial and limited fan base issue for whatever reason there is. The judge has to pay attention to creditors, and I said I’ll look after the creditors if I can put (the team) in a market where it can afford to pay its bills. … If somebody thinks they can get value in Phoenix, top the offer.” Balsillie added, “There are twice as many fans in this southern Ontario area as surveyed as there are in the whole New York area. There are three teams there, and there is one here. So if New York can support three, you could argue that southern Ontario could support six.” Balsillie also discussed the Maple Leafs’ possible objection to a team in southern Ontario, saying, “The Leafs have a huge following and they sell out forever, and will forever. We put a list up for ticket signups and it sold out in a day, so there’s no question the team will do very, very well and continue to do well. I don’t think it’s a principle concern in terms of their gate” (“Tirico & Van Pelt,” ESPN Radio, 6/5).

    Attorney Reveals That Maple Leafs Profited From
    Exhibition Games Played At Copps Coliseum
    DEFENDING THEIR TURF: In Toronto, Kevin McGran notes an issue before the court is whether the Maple Leafs "hold a veto preventing another team from coming to Hamilton." A court document filed by Balsillie's attorney Richard Rodier revealed that the Maple Leafs “earned $150,000” from an exhibition game between the Penguins and Sabres at Copps Coliseum in Hamilton in ’06. The document also stated that the Maple Leafs “profited from games played in Hamilton” in the '80s, and the money was “paid by the promoters as indemnity fees for playing a game in the NHL team’s home territory” (TORONTO STAR, 6/9). The GLOBE & MAIL’s David Shoalts writes if the Coyotes are allowed to move to Hamilton, the Maple Leafs likely “will fight the move with all of owner Maple Leafs Sports and Entertainment’s considerable resources.” Rodier told the court that he “believes the Leafs told Bettman they will sue the NHL if it approves any move ordered by the court and they will sue any other NHL team that plays a game against the invaders” (GLOBE & MAIL, 6/9).

    FOLLOW THE RULES: Oilers Alternate Gov. Cal Nichols said, “This is Balsillie’s third attempt to reach his goals and objectives and, you know, I have watched it from a long distance, and he is just going about it in an inappropriate way.” Nichols: “The first thing you do, is you go and do your homework and build your consensus with those who run the league -- Gary (Bettman) and his staff -- or you chip away, one by one, at the board of governors. … It seems to me this is a very bullish way to try and achieve what you want.” The NATIONAL POST's Joe O'Connor notes a prospective owner requires 23 of 30 votes from the NHL BOG, and an NHL exec said of Balsillie, “I am not sure he would have the 23 votes, to be blunt. … Sometimes in life, whether we like it or not, rules are rules. And guidelines are guidelines. And at the end of the day, if there can’t be an acceptance or a realization that certain things have to be followed well, then …” (NATIONAL POST, 6/9). Meanwhile, the GLOBE & MAIL’s Stephen Brunt writes it is “increasingly hard to believe” the court battle involving Balsillie and the NHL is not about personalities. Brunt: “Would it have really come down to this -- a decision by a bankruptcy court judge in Arizona with acres of earth scorched en route -- if it weren’t” Balsillie and Bettman involved? (GLOBE & MAIL, 6/9).

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  • Timeline Details The Ongoing Battle Over The Coyotes' Future

    Coyotes Drama Has Been
    Ongoing Since Last Year
    The future of the Coyotes is one of the most closely followed stories in sports business, and THE DAILY today presents the most comprehensive timeline to date on the ongoing dispute between Coyotes Owner Jerry Moyes, RIM co-CEO Jim Balsillie and the NHL over ownership and relocation of the Phoenix franchise. The court battle began on May 5, when Moyes filed for bankruptcy protection and reached a tentative agreement to sell the team to Balsillie, but the drama over the club has been ongoing since last year, when reports began circulating about the Coyotes’ perilous financial situation.

    HINTS OF TROUBLE: One of the first reports detailing the Coyotes’ financial struggles surfaced last December, with claims the team was expected to lose between $25-35M for the ’08-09 season. NHL Commissioner Gary Bettman in January admits the Coyotes are in need of “an infusion of capital,” and says the league is assisting in the club's effort to find additional investors or a buyer. But in February, Bettman, appearing on FS Arizona, lashes out at the media coverage of the Coyotes’ financial situation, saying “reports about the franchise's demise are just ridiculous.” By the end of February, more details of the team's shaky financial situation continue to emerge, as Glendale city documents reveal that the Coyotes have not made lease payments for Arena in the previous seven months. A report also claims if the team fails to pay its debt, the league will take the club over. But Coyotes President & COO Doug Moss asserts that the NHL has not assumed control of the club, and NHL Deputy Commissioner Bill Daly says a report claiming the league could take over and potentially move the team “contains some inaccuracies.”

    WHO'S IN CHARGE? Moyes' Chapter 11 filing in May comes as a surprise to many, including Bettman, who says he was in Phoenix on his way to discuss sales offers with the team when he was notified. It quickly becomes evident that the case will come down to whether Moyes has the right to sell the team, or whether the NHL is in control of the franchise. Daly claims Moyes "had no right to seek bankruptcy protection and sell the team" to Balsillie, and the NHL characterizes Balsillie's effort to buy the Coyotes and relocate the club to Ontario as a "sham" that "should be rejected" by the bankruptcy court. But Balsillie, who has previously bid on the Penguins and Predators, claims the bankruptcy judge must allow the sale to go through because his $212.5M is the highest bid for the team, and the court has an obligation toward the club's creditors. The resulting showdown in a U.S. Bankruptcy Court in Phoenix could have far-reaching implications in the sports industry, as a ruling on the case could set a precedent on how much control leagues have over who can buy a franchise.

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  • Multiple Groups Reportedly Looking At Buying, Moving Thrashers

    Current Ownership Unlikely To Agree To
    Move Thrashers Out Of Atlanta
    Multiple investor groups, including one from Winnipeg, have "explored the potential of buying the Thrashers and moving them out of Atlanta," according to sources cited by Scott Burnside of However, there are a "number of factors that likely mean the team will remain in Atlanta for the foreseeable future." The Atlanta Spirit ownership group is "actively looking for new investors to essentially cover the cost of buying" estranged partner Steve Belkin's 30% stake in the team. In recent weeks, there has been "some discussion about an investor simply buying the team and taking it out of Atlanta, but current ownership is unlikely to agree to that." Philips still owes about $100M in arena naming rights to Atlanta Spirit, but that agreement "stipulates that there be two anchor tenants" at Philips Arena, and that the Thrashers are "one of them." Burnside noted the "implication is that anyone looking to move the team out of Atlanta would have to factor that into the purchase price" (, 6/8).

    WELCOME TO MIAMI? TSN's Bob McKenzie said the NHL Panthers' sale to Sports Properties Acquisition Corp. is a "definite maybe." McKenzie noted the sale agreement "still does exist, but there's a major step between the agreement to purchase and actually getting the sale completed, and they're in that gray area right now." McKenzie said the Panthers reportedly are "having some second thoughts about closing the sale with this group." McKenzie: "It could go either way. There are no guarantees it will be sold, but there's certainly a fish on the hook. But whether it gets into the boat or not remains to be seen" ("NHL Live," NHL Network, 6/8).

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  • Park Avenue Equity's William Mayer To Own UFL's N.Y. Franchise

    United Football League (UFL) Commissioner Michael Huyghue yesterday announced Park Avenue Equity Founder & Senior Partner William Mayer as the owner of the league’s N.Y. franchise. Ted Cottrell, the franchise's head coach, also was on hand at the media event. Huyghue said that the league is in final negotiations for the team's stadium. The UFL is scheduled to begin play in October of this year (UFL). Huyghue yesterday in introducing Mayer said, "Can't play without New York." Mayer said that the franchise could play their home games at Citi Field or Hofstra Stadium, and ticket prices will average $20 per game. In N.Y., Jay Greenberg notes the team also "will play one contest in Hartford as a test for a franchise there" (N.Y. POST, 6/9). Mayer: "We will be playing somewhere in the city, so you don't have to go across the river." Huyghue added, "We just think that that's really where our market is. I think that's where people really want to have some ownership in a football franchise, that will never feel that way about the Jets or Giants." Huyghue said the team will announce their home stadium in "two to three weeks" (Newark STAR-LEDGER, 6/9).

    CALLING THE SHOTS: PRO FOOTBALL TALK's Mike Florio cites sources as saying that former Saints personnel exec Rick Mueller "has secured a key position" with the UFL as VP & GM. A formal announcement is expected as soon as today. Mueller will "serve in that role for all four franchises" in the league's inaugural season, and he will "oversee all aspects of player scouting and acquisition" (, 6/8).

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  • WNBA Mercury Reducing Operating Budget, Seeking Profitability

    Mercury Are Reducing Operating Budget
    By At Least $200,000 This Season
    The WNBA Phoenix Mercury are "slashing at least $200,000 from this season's operating budget, seeking profitability after nearly a decade of losing money," according to Chris Casacchia of the PHOENIX BUSINESS JOURNAL. The franchise has "eliminated one week of preseason training and cut its training camp and season rosters -- moves encouraged" by the WNBA. Under the league's CBA, "each franchise must cover housing and transportation expenses, which typically include a vehicle, for every player under contract during the five-month season." Mercury President & COO Jay Parry said that "trimming the preseason roster from 18 to 15 and the regular-season squad from 13 to 11 'adds up to a pretty significant savings.'" Parry: "The ancillary costs of players really add up." Parry said that the team "averaged about 8,000 fans per game in 2008" at US Airways Center, "about 2,000 short of their goal." Suns and Mercury President & CEO Rick Welts said that the team "turned a profit in its first few years in the league, but hasn't been in the black for 'a long period'" (PHOENIX BUSINESS JOURNAL, 6/5 issue).

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  • Paul Saving Hoops In New Orleans Through Work On- And Off-Court

    Strong Record, Paul's Performance In '07-08
    Boosted Average Attendance 20% This Season
    Hornets G Chris Paul, "besides lifting his team on his shoulders," has done "more than anyone to save pro basketball in New Orleans," according to Monte Burke of FORBES. The Hornets have made the playoffs each of the last two seasons, and the team finished the '07-08 regular season with a franchise-best 56-26 record. The club this season also saw a "boost in season-ticket holders (11,000, from 6,000 last year) and sponsors." The increases have translated into bigger revenues, as the Hornets for the '07-08 season posted $95M in revenues, up 5% from the previous season, as well as a "rise in the Forbes estimate of the team's value," up 5% to $285M. The increase in fan interest "kept the Hornets in New Orleans, voiding a clause in the team's lease" for New Orleans Arena that would have allowed the team to move. The "improved record and Paul's runner-up finish in the MVP voting" in '07-08 "helped push up average attendance this past season by 20%." Hornets Owner George Shinn: "Could we have accomplished this without Chris? Probably not." Meanwhile, Paul has "helped the Crescent City off the court, too, largely through his CP3 Foundation." Paul "swiftly went to work in his adopted home." He "fed 200 needy families on Thanksgiving Day," and at Christmas, Paul "took 100 kids on a toy-shopping spree." He also has "built basketball courts downtown and partnered with Habitat for Humanity to rebuild houses." Paul: "People ask me if I feel obligated to give back, especially given what New Orleans went through. I tell them you should never feel obligated to do it; you should want to do it." Burke notes Paul earns $4M annually in endorsements from Jordan Brand, Right Guard and others, which supplements his $4.6M annual salary (FORBES, 6/22 issue).

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  • English Soccer Notes: Ownership Switch Leaves West Ham In Limbo

    West Ham United's Ownership
    Transferred To CB Holding
    In London, Gary Jacob reports EPL club West Ham United is "in financial limbo after the club's ownership" yesterday was transferred from Björgólfur Guðmundsson to Icelandic asset management company CB Holding. The new ownership group has a "three-year plan to run the club, aiming to recoup the money it is owed" by Guðmundsson "when the financial climate improves." However, CB Holding reps have "held talks with interested parties in the past week and a takeover could occur sooner rather than later." CB Holding "will want to maintain the value of West Ham and is unlikely to sell too many top players because it could risk relegation and therefore a drop in value." But the new owners also are "unlikely to invest much money" for players (LONDON TIMES, 6/9).

    EXPENSE REPORT: In Manchester, David Conn reports EPL club Liverpool is "being made to pay" about $2.99M (all figures U.S.) to "cover the travel, legal and other personal expenses" of co-Owners Tom Hicks and George Gillett. Financial records show Hicks during FY '08 charged about $310,796 for "third party consulting, travel and other expenses," while Gillett charged about $208,816 for "reimbursable travel, legal, personnel and other expenses." The accounts do not offer further detail on what the expenses entailed, and Hicks and Gillett did not comment (Manchester GUARDIAN, 6/9).

    TIME TO TOON IN: Seymour Pierce Exec Chair Keith Harris, who is charged with brokering a sale of Newcastle United, said that there are "'two or three' rival parties vying to buy the club." Harris: "I'm confident there will be offers to consider in quite short order." Harris indicated that he "expects a deal to be completed by the end of June." Newcastle yesterday confirmed that the Owner Mike Ashley is seeking $161.9M for the club (, 6/8). Newcastle yesterday posted the sale price, as well as an e-mail address for interested buyers, on its Web site, and in London, George Caulkin wrote, "What this announcement has done is simply add another layer of embarrassment to the club. Short of putting it up for sale on eBay, it's hard to see how this could have been handled in a more amateurish way" (, 6/8).

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  • Franchise Notes

    In DC, Theola Labbe-DeBose reports DC Fire Chief Dennis Rubin prior to Sunday night's Mets-Nationals game ordered that Nationals Park launch "no more fireworks" after a fan "felt paper debris fluttering down on him and his grandson." The Nationals typically ignite fireworks for the national anthem, a home run, after a win and on every Friday. The fire department lifted the ban yesterday after the Nationals "agreed to change the direction in which the fireworks are set off and the content of the explosives and make other adjustments." Since the Nationals did not play last night, the "brief ban never played out" (WASHINGTON POST, 6/9).

    Larry Brown Says Bobcats Need
    Jordan To Be Involved With Team
    BE LIKE MIKE? In Charlotte, Rick Bonnell analyzed Michael Jordan's tenure running basketball operations for the Wizards and Bobcats under the header, "On Jordan's Watch." We still "don't know, three years into Jordan running" the Bobcats, "what to make of him as a basketball executive." He has "done some things poorly," including drafting F Kwame Brown and G Adam Morrison, and "done some things well," such as trading for G Boris Diaw last season and hiring Larry Brown to coach the Bobcats. But overall, his "body of work suggests Jordan has yet to master what it takes to build a championship team." None of the teams he has "assembled reached the playoffs," winning a combined 38% of their games (CHARLOTTE OBSERVER, 6/7). Larry Brown said that he wants Jordan "fully engaged with running the team." Brown: "If Michael's not involved, I'd be nervous about that. I came here because of Michael. He's special and he's great to be around. We need him engaged and involved" (CHARLOTTE OBSERVER, 6/6).

    NOTES: The Bills yesterday said that season-ticket sales at Ralph Wilson Stadium have "surpassed 52,000 for the second straight year, the first time that's happened since the early 1990s." In addition, the Bills said that single-game tickets for the first three games of the '09 regular season are sold out (, 6/8)....Mariners DH Ken Griffey Jr.'s contract stipulates that if he "preserved his previous year's statistics and helped draw just 259 more fans" on average to each game at Safeco Field, he would earn a $1.25M bonus. However, the Mariners are "actually seeing fewer fans" this season, cutting Griffey's "potential bonus by $450,000" (WALL STREET JOURNAL, 6/8).

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