Jun 302009
 

It seems that the majority of the Toronto hockey media seem to have the belief that the Maple Leafs are at least 3-4 years away from being a good team and that the best way to get there is to do nothing this summer and hope to get another high draft pick in next years draft. Howard Berger is a prime example as we can see from his latest article, as well as his comments on the radio today.

It’s the reason Burke has to do his utmost to resist temptation this week. A number of distinguished names will be available on the open market, but none will lift the Maple Leafs into the Promised Land. At least, not yet. Furthermore, signing expensive free agents will diminish the ice time required for the club’s growing list of youngsters to prove whether they belong in the NHL.

I understand Howard’s argument that you build success through the draft and player development and there is some truth to that. You can build your team by being bad for a number of years and stocking up high draft picks as the Pittsburgh Penguins and Washington have done. But more often than not, that doesn’t work. See Columbus. See Atlanta. See Florida. See Los Angeles. See Phoenix. Maybe someday these teams will be good, but honestly, can you see Columbus, who made the playoffs for the first time in franchise history, compete for a Stanley Cup in the next few years? Not me. On the flip side, how many high draft picks has the Detroit Red Wings had over the past 10 or 15 years? Their highest pick in the past 15 years was in 2005 when they drafted Jakub Kindl 19th overall and more often than not, they don’t even draft in the first round.

If anything, the NHL in the new salary cap era is probably less about drafting well because talented young players are getting big time money upon leaving their entry level contracts which is completely different from the pre-lockout environment when you could keep your young players relatively cheaply for much longer. The biggest difference in the new system is you can’t afford to make mistakes or over pay players for what they provide. This is what makes Burke a good General Manager. He is resolute in that he has a game plan and he will stick to it. In trades, he won’t over pay even if it is for someone he really wants (see moving up in the draft) and likewise in free agency he won’t pay more than he thinks a player is worth. But there is no reason why Burke shouldn’t try to sign a big name, big salaried free agent so long as he believes that the player is a player who can be a component of a winning team both now and in the future and so long as he isn’t over paying for that player.

The New York Rangers have made mistakes. Signing Gomez, Drury and Redden to such big contracts was a mistake, not because those are bad players, but because they are all making probably 1-2 million more per season than they should be. Had they been on more reasonable contracts the Rangers could very well afford another $4-5 million player which would make them a much more competitive team and might move them from a first round playoff exit to a contender to go deep into the playoffs. If Brian Burke can sign a big name free agent or two for a reasonable contract then I absolutely believe that he should, and I believe he will.

Free Agent Signings

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Jun 302009
 

The following are free agent (or pending free agent) signings.  I’ll update as free agents are signed. Newest free agent signings will be at the top.

Player Team Yrs Cap Hit Comments
Alexei Kovalev Ottawa 2 5.0M Expensive for a streaky 36 year old who most years ends up with ~65 points.
Francois Beauchemin Toronto 3 3.8M Decent price for a solid defenseman. Leafs likely to trade a defenseman now.
Shane O’Brien Vancouver 1 1.6M Needed to keep O’Brien after Ohlund left for Tampa.
Andrew Raycroft Vancouver 1 500K Dot he Canucks now have the best goalie and the worst goalie in NHL?
Christopher Higgins NY Rangers ? ? Had a break out season last year but can he repeat or improve?
Shane Hnidy Minnesota 1 ? Useful depth defenseman.
Ryan Clowe San Jose 4 3.5M Had a break out season last year but can he repeat or improve?
Ruslan Fedotenko Pittsburgh 1 1.8M Surprised he went with just a one year deal.
Mikael Samuelsson Vancouver 3 2.5M Will provide the Canucks with some decent secondary offense and all-round play.
Chad LaRose Carolina 2 1.7M Good solid 3rd line guy who may still improve some.
Jordan Leopold Florida 1 1.75M He is no Bouwmeester but will fill the hole on defense at a relatively low cost.
Rob Scuderi Los Angeles 4 3.4M The Kings are putting together a pretty solid defense, just need a good goalie.
Karlis Skrastins Dallas 2 1.375M
Adrian Aucoin Phoenix 1 2.25M Aucoin’s best days are behind him but still useful.
Nik Antropov Atlanta 4 4.0M This and the Kubina trade are to show Kovalchuk they are committed to winning to get him to sign an extension.
Mark Recchi Boston 1 1.0M Good veteren leadership and he’ll chip in a few goals too.
Chris Thorburn Atlanta ? ?
Martin Havlat Minnesota 6 5.0M Havlat has the talent and if he stays healthy $5 million is a reasonable cap hit.
Jason LaBarbera Phoenix 2 ? An average at best backup goalie
Fredrik Sjostrom Calgary 2 750K Flames need some cheap players to fill out their roster and Sjostrom achieves that.
John Madden Chicago 1 2.75M Good defensive center that Blackhawks hope can help them go deep in the playoffs.
Marian Gaborik NY Rangers 5 7.5M If he is healthy, might not be a bad deal but he has only once played more than 65 games since 2002-03.
Brian Gionta Montreal 5 5.0M Gotta love how Montreal is adding size to their lineup.
Chris Neil Ottawa 4 2.0M That’s a lot of money for a 3rd liner with 9g and 30 points over the past 2 seasons.
Mathieu Garon Columbus 2 1.2M Nice experienced backup for Steve Mason.
Jason Strudwick Edmonton 1 700K
Samuel Pahlsson Columbus 3 2.65M Nice player, but way too much money.
Steve Sullivan Boston 2 3.75M If he stays healthy he’ll put up 60+ points.
Steve Begin Boston 1 850K Nice 3rd/4th line center
Greg Zanon Minnesota 3 1.66M
Vernon Fiddler Phoenix 2 1.1M
Mike Komisarek Toronto 5 4.5M He and Schenn make for two solid physical defensive defensemen.
Byron Bitz Boston ? ?  
Michael Cammalleri Montreal 5 6.0M Pricey but he’ll add some needed scoring punch
Kent Huskins San Jose 2 1.7M Nice 5/6 defenseman with Stanley Cup experience.
David Koci Colorado 1 575K  
Ian Laperierre Philadelphia 3 1.17M Adds some toughness and grit.
Mike Rupp Pittsburgh 2 825K Useful role player.
Hal Gill Montreal 2 2.25M I like Hal Gill though many do not. Not a bad signing.
Scott Clemmensen Florida 3 1.2M Good replacement for Craig Anderson at a decent price.
Adam Pardy Calgary ? ?  
Nikolai Khabibulin Edmonton 4 3.75M Oilers had to do something after being unable to re-sign Roloson.
Erik Cole Carolina 2 2.9M Cole should be a Hurricane
Jaroslav Spacek Montreal 3 3.83M I like Spacek as a #4 defenseman at this point in his career but not at that salary
Brian Boucher Philadelphia 2 925K Boucher and Emery = NHL backup and KHL starter. Can Pronger play goal?
Joel Ward Nashville 2 1.5M Seems like a lot but then I haven’t seen Ward play a whole lot.
Aaron Rome Vancouver 1 $525K Yawn…
Lukas Krajicek Tampa 1 ?  
Scott Niedermayer Anaheim 1 6.0M Plus bonuses. Good signing considering Pronger trade.
Mike Knuble Washington 2 2.8M Nice addition of a more physical second line player.
Donald Brashear NY Rangers 2 1.4M Colton Orr replacement.
Steve Montador Buffalo 2 1.5M Solid all-round defenseman for 3rd pairing.
Tomas Kopecky Chicago 2 1.2M  
Dwayne Roloson NY Islanders 2 2.5M What does this say about DiPietro’s health?
Ty Conklin St. Louis 2 1.3M Good backup for Mason
Matt Walker Tampa Bay 4 1.7M Is Tampa once again going by the lets sign a bunch of players and hope someone pans out theory?
Marian Hossa Chicago 12 5.2M Two Stanley Cup appearances, 13 games and 3 goals (and maybe not coincidentally no ring).
Craig Anderson Colorado 2 1.8M He is better than Raycroft but can he repeat last years good season.
David Booth Florida 6 4.25M Good signing so long as he doesn’t pull a Nathan Horton and take a step back after signing long term.
Andy Greene New Jersey 2 737.5K Useful depth defenseman
Colton Orr Toronto 4 1.0M Some toughness that Burke desperately wanted.
Radek Dvorak Florida 2 1.7M Re-signed at a reasonable price.
Mattias Ohlund Tampa 7 3.75M A Swedish mentor for Hedman.
Daniel Sedin Vancouver 5 6.1M Probably never seriously considered leaving Vancouver.
Henrik Sedin Vancouver 5 6.1M  
Erik Christensen Anaheim 1 ?  
Jay Bouwmeester Calgary 5 6.68M Better hope he learns how to win because he didn’t in Florida.
Jere Lehtinen Dallas 1 1.5M If healthy, very good deal for Stars
Johnny Oduya New Jersey 3 3.5M Good signing, reasonable price
Peter Budaj Colorado 1 1.25M Still in market for goalie help
Rob Blake San Jose 1 3.5M Affordable after good season
Bill Guerin Pittsburgh 1 2.0M Quality veteren at very good price
Brad Winchester St. Louis 1 800K  
Mike Weaver St. Louis 1 800K  
Jussi Jokinen Carolina 2 1.7M Rewarded for good playoff.
Craig Adams Pittsburgh 2 550K  
Dave Bolland Chicago 5 3.375M Needs to continue improving to make contract worthwhile for Blackhawks
Cody McLeod Colorado 3 1.03M  
Keith Tkachuk St. Louis 1 2.15M Will provide size and mentor kids again.
Petr Prucha Phoenix 2 1.1M  
Steve Reinprect Florida 3 2.05M  
Alex Goligoski Pittsburgh 3 1.83M Important signing after Whitney traded
Ray Emery Philadelphia 1 1.5M Taking a gamble but could work out
Marty Reasoner Atlanta 2 1.15M  
Curtis McElhinney Calgary 2 525K  
Anssi Samela Atlanta 2 ?  
David Krejci Boston 3 3.75M Good to get him locked up.
Rick Rypien Vancouver 2 550K  
Jay McLement St. Louis 3 1.45M  
Steve Bernier Vancouver 2 2.0M  
Jun 252009
 

The 2009 NHL entry draft takes place tomorrow evening so lets talk draft and trade rumours. The first thing that everyone needs to know is that not all players drafted tomorrow night in the first round will become NHL star players, or even good NHL players. The truth is the majority of those drafted in the first round tomorrow will go down in history as ‘draft flops’. That is unfortunate because most of them aren’t flops, they are just subject to the laws of reality and the reality is that it is simply not possible for every top 18 year old hockey player to make the NHL and excel. There just aren’t enough NHL roster spots for that to occur.

Toronto media and fans love to talk trash about the Leafs drafting ability over the past decade or two but it is really unfounded. Many call Nik Antropov a bit of a failure because while he is a good player, he didn’t turn out to be a star as one would expect from a 10th overall pick. Let me toss out 10 names for you: Jocelyn Thibault, Nolan Baumgartner, Radek Dvorak, Lance Ward, Brad Ference, Bransilav Menzei, Mikhail Yakubov, Dan Blackburn, Eric Nystrom, and Andrei Kostitsyn. Those names represent the 10th overall draft picks in the five years before Nik Antropov was drafted in 1998 and the five years after. Dvorak has had a pretty decent career as a second line player. He’s played 976 games, scored 194 goals and racked up 502 points. Kostitsyn is a skilled player that looks to have a promising career probably not unlike Dvorak’s though possibly a bit better. He currently has 52 goals and 108 points in 186 games played. Jocelyn Thibault had a pretty decent career has a second tier starter or solid backup. The rest didn’t really turn out to be much of anything. So is Antropov, who currently sits at 527 games played with 132 goals and 304 points, a bust. Not even close. Rather, he seems more like the upper end of the scale of what you can expect with the #10 pick. Yes, there will be the odd truly star player taken 10th overall like Teemu Selanne in 1988 but they are rare.

For more discussion on draft picks and the likelihood that they will become NHL regulars you can take a look at my Draft Schmaft post from a few years ago. Scott Cullen over at TSN.ca has a similar analysis and you can also find an interesting draft analysis over at Pension Plan Puppets.

There has been a lot of talk about Brian Burke’s public statements that he would love to trade up in the draft and select John Tavares. This task just became more difficult when it seems that Oren Koules has won the power struggle over Len Barrie. Koules it seems is more interested in cutting salary to levels very close to the salary cap floor ($40 million). If this is ones goal it probably means that you want young players on your roster so they are more likely to keep the pick and are less likely to be interested in someone like Kaberle who, outside of Luke Schenn (who is unlikely to be traded), is their most valued asset. It seems more likely that Burke could trade up with Atlanta to get the #4 pick where he could select Evander Kane or Luke’s Schenn’s brother Brayden. My gut tells me that if Burke can’t trade up to get into the top 5 and one of the top 5 for some reason doesn’t fall to #7 he’ll seriously consider looking at trading down and picking up an extra pick or two in the process, not unlike what the Islanders did last year when they traded the 5th overall pick to Toronto for Toronto’s 7th overall pick and a 3rd round pick and a 2nd round pick in this years draft and then flipped the 7th overall pick to Nashville for the 9th overall pick and a second round pick. So the Islanders dropped from 5th to 9th and picked up two second round picks and a third round pick in the process. Burke may try to do something along those lines to help fill out the Leafs prospect pool.

Another Leaf rumour going around is that the Leafs are interested in Wade Redden. This has shocked many because most people see Redden as a flop and at his salary and contract length is a waste of time. There is some truth to this. His game has fallen off a bit the last couple of seasons and he is over paid at $6.5 million but he is still a good player capable of playing big minutes (he was 23 in time on ice per game for defensemen at 23:24) and in the right trade, it could make sense. First off, acquiring Redden would make it easier to trade one or both of Kaberle and Kubina which should land Burke with more prospects or draft picks which would amount to cheap players being on the team to offset Redden’s expensive contract. Second, it may be possible for the Leafs to rid themselves of a big contract in the process by, for example, including Jason Blake in the deal. It may also be the case that the Rangers, who have cap issues, may be looking to get rid of Redden at any cost and may be willing to include a draft pick and/or a prospect in the deal just to make it happen. Burke is looking long term and he desperately wants to stock up on prospects to make that happen and if he can flip Kaberle and Kubina (and their $9.25 million in contracts for the upcoming season) for prospects and pick up Redden to offset that loss and maybe pick up a draft pick or prospect or dump a big salary of his own as well it may very well make sense to make that move and it should not be dismissed as a mistake in the process.
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Jun 192009
 

I have written a lot about the Phoenix Coyote situation the past several weeks so let me get back to addressing some hockey issues.

Dany Heatley

Wow, this guy is getting lambasted here in Ottawa for asking for a trade. Two years ago at this time he was a hero in Ottawa coming off back to back 50 goal seasons and a run to the Stanley Cup finals but now he is being compared to Alexei Yashin. If I were a Sens fan I might actually consider this trade request a good thing as it will give GM Bryan Murray an opportunity to change a top heavy team with no real second line and an average defence into a more balanced team. But he has to make the right deal which may or may not be out there, and certainly may not be available prior to Heatley getting a $4 million bonus on July 1st. There are two routes that I could see Bryan Murray going. The first, which is probably the better route to go in my opinion, is to trade Heatley for prospects and draft picks and then use the freed up salary cap space to sign 2-3 useful free agents to plug holes on the current roster. The second route would be to trade Heatley for current NHL players. It was speculated that the Edmonton Oilers might be willing to trade defenseman Tom Gilbert and forward Patrick O’Sullivan but if that is the best you can get in return I’d definitely suggest Murray go the prospect and draft pick route. While Gilbert is a pretty good defenseman and would fill a need for the Senators, O’Sullivan hasn’t impressed me much at all early in his career and it would makes Ottawa’s offense even shallower than last year. Plus the salaries of those two players wouldn’t add much extra salary cap space to sign a quality offensive forward as a free agent. It’ll be interesting how this pans out but.

The Sedin Twins

We learned yesterday that the Sedin Twins have each asked for a 12 year, $63 million contract which works out to a $5.25 million salary cap hit per year. There seems to be a general negativity towards the Sedins asking for this much for this long but is it deserved? Henrik Zetterberg recently signed a 12 year contract with the Red Wings at $6.08 million and Johan Franzen signed an 11 year contract at just under $4 million per season. A couple years ago the Philadelphia Flyers signed Mike Richards to a 12 year contract at a $5.75 million cap hit. Here are each players 2-year averages:

Zetterberg: 76gp, 37g, 82.5pts
Franzen: 71.5gp, 30.5g, 48.5pts
Richards: 75gp, 29g, 77.5pts
D. Sedin: 82gp, 30g, 78pts
H. Sedin: 82gp, 18.5g, 78pts

In terms of point goal and point production, Daniel Sedin is almost identical to Mike Richards despite Richards playing on a more offensive oriented team. The Sedin’s have been remarkably consistent over the past 4 seasons (post lockout) as well. Henrik has had 75, 81, 76 and 82 point seasons and Daniel has had 71, 84, 74 and 82 point seasons and combined they have missed just one game (Daniel in 2006-07). Additionally, both players have been + players ever year of their careers except their rookie seasons. Considering all of this, I honestly don’t think that the Sedin’s request is all that out of line. Steve has more on the Sedin’s request while Jason seems a little outraged.

NHL Awards

I didn’t watch the awards and am not going to comment on them other than to say I think they should be handed out in a location where at least a small percentage of the citizens know who Zdeno Chara is let alone know what the Norris Trophy is for.

Steve Simmons on Balsillie

Ok, so I can’t completely ignore the Coyotes situation in this but consider this more of a Steve Simmons bash than a Coyotes discussion. In today’s article Simmons wrote:

In the online letter to Bettman, that Canadian fans were asked to click on and send, it read: “It is clear Hamilton remains the best location for the Coyotes versus letting it wither in the desert.”

This may well be true, but it’s no way of conducting business.

You just have to love Steve Simmons, the often nonsensical and seemingly always bitter hockey journalist, handing out business advice to the multi-billionaire businessman who built one of the most successful telecom companies in the world.

Jun 162009
 

Jim Balsillie spokesman Bill Walker and Lawyer Richard Rodier held a press conference this morning and made some very interesting points.

1. Jim Balsillie hasn’t given up his quest to move the Coyotes to Hamilton and it is likely that they will submit another bid to purchase the team with a different timeline. No details were given and a lot will depend on consultation with Jerry Moyes and his lawyers.

2. Of the four ‘expressions of interest’ in keeping the team in Phoenix, Richard Rodier is only aware of one of them having done any due diligence so far (likely Jerry Reinsdorf but he didn’t specify).

3. Richard Rodier found it interesting that the NHL is hanging its hat on the idea that so long as there is someone interested in operating the team in Phoenix the team will remain in Phoenix. Rodier found that interesting because it is essentially telling the other owners, who may have spent $175 million on their franchise, that even they will have to sell at a possibly significant loss. He used the Nashville franchise as an example. The current owners paid $193 million for the team and have an out clause in their lease should they lose $20 million over a 3 year period. Rodier hypothesized that what the NHL is trying to say is that if someone from another city offered $200 million to purchase the team and relocate it and someone from Nashville offered $25 million to keep the team in Nashville, then the team would have to be sold for $25 million to the group intent on keeping the team in Nashville. Now, if I was a current owner that would be disturbing to me. If I was a potential future owner, say through expansion, would I want to pay a $150 million expansion fee if I could be forced to sell my team for a fraction of that if for whatever reason the expansion franchise was not a success? Furthermore, the NHL does not consider loans made by the owner to the team loans and not repayable upon sale of the team. It isn’t sounding like the NHL is treating its owners all that fairly and one wonders how long the owners will stand by Bettman’s side.

4. Most interesting though, Rodier mentioned that it appears there are teams that cannot be sold in their local markets and that at least one has approached the commissioner about moving. I’ll speculate that that team is the Florida Panthers but it could be the Islanders as well.

In other news, one of Bettman’s vaunted potential ownership groups for the Phoenix Coyotes may now meet the NHL’s required level of dysfunctionality.

Jun 152009
 

If you haven’t heard yet, Judge Redfield T. Baum has ruled against the Balsillie bid to purchase the Phoenix Coyotes and move them to Hamilton. This means that the Coyotes will remain in Phoenix for at least one more season.

In the 21-page document he said the court didn’t believe there was enough time to resolve all the various issues before the sale of the insolvent team to Balsillie for US$212.5 million that was due to close June 29.

I haven’t yet read the document but when I do I’ll have further comment but I think it would be premature to just assume that Balsillie’s bid to move the Coyotes to Hamilton is now dead in the water. From what I have read the judge has just ruled that Balsillie hasn’t proven his case that the NHL has violated anti-trust laws so he wasn’t going to order the relocation of the team and that the other issues related to the sale of the team cannot be resolved in the time frame required (by the June 29th deadline in the Balsillie bid). The largest outstanding issue was the relocation fee which the Balsillie bid did not address.

The judge did rule that that the NHL will have to address Balsillie’s bid to relocate the team to Hamilton which was submitted to the league a couple weeks ago. Presumable the NHL will reject that bid but the NHL may have to be careful in how that bid is rejected to not clearly violate anti-trust laws. Also, the situation surrounding the Coyotes is still not anywhere close to being finalized. Presumably the next step will be according to the NHLs proposed schedule which will be to hold an auction to sell the team in September with bids only from prospective owners intent on keeping the team in Phoenix. If there are no bids at that time then there will be a second auction where prospective owners looking to relocate the team will bid on the team. At this point Balsillie could once again put in a bid on the team.

We now await comment from the Balsillie camp as to what their plan is from here on. Will they pull their application to the NHL for relocation? Will they stick with it and see what the NHL decides? Will he wait it out and hope to put in a bid when it goes up for auction? Will he attempt to purchase another team that might be for sale?

Update: After reading the full decision this is certainly not a clear win for the NHL or a clear loss for Jim Balsillie. In fact it may be more of a win for Balsillie than the NHL. If I understand the decision correctly (and feel free to correct me if I am wrong) on the issue of relocation, the Judge decided that he was not in position to impose relocation on the league because he could not determine that there was a real dispute in that matter. The judge ruled that the NHL does have the right to approve or deny relocation and does have a right to charge a relocation fee but since the NHL has yet to respond to Balsillie’s request to relocate the Phoenix Coyotes nor have they set a relocation fee to move the team to Hamilton, Balsillie is not in position to claim anti-trust violation or any other reason for dispute and thus the Judge was in no position to rule on the dispute.

The judge also ruled that since this is a busy time of the year, with the NHL Stanley Cup playoffs just ending, the NHL did not have time to act on Balsillie’s request to transfer the Coyotes to Phoenix and ruled that the NHL would not have the time to do so before the June 29th deadline. Although the judge did order the NHL to address the Balsillie request to relocation the Coyotes he did not set a time frame to do so. That said, if the NHL does not act on the request in a timely fashion (i.e. deliberately delaying the issue) or if they unfairly dismiss or vote against the Balsillie transfer request or set an unfairly high transfer fee then Balsillie could go back to the court with a valid dispute and the judge would be forced to make a ruling.

Although Bill Walker, spokesman for Jim Balsillie said there is still time to resolve the issue and have the Coyotes begin next season in Hamilton, that seems unlikely at this point. That is unlikely to end the Balsillie bid but how it affects his offer is unknown. He previously has volunteered to keep the team in Phoenix for another season if the NHL picked up the losses but that is a non-starter for the NHL and may give the NHL a valid reason to reject the Balsillie bid which is a risk I would not want to take if I were Balsillie. Would Balsillie be willing to absorb the losses of another year in Phoenix? That is not yet known, but he may need to if he wants the team because time is not on his side.

Jun 122009
 

Over the past couple of days I have heard all kinds of numbers thrown out on what a reasonable transfer would be, most of these numbers just picked out of the air and given little thought from the people tossing them out there. I have heard numbers like a $300 million transfer fee plus additional fees for entering into the Maple Leafs and Sabres territory. I heard one media member suggesting that Balsillie’s end cost could be upwards of $600 million or more.

The number tossed around in the court room on Tuesday was $100 million. Supposedly this number came out of sealed court filings but we don’t know exactly where that number comes from. Other media members have been tossing out a number of $300 million stating that that number came from unspecified owners and governors that they contacted.

But if the Hamilton franchise is worth $300 million, does that mean that the relocation fee is $300 million? And if the relocation fee is $300 million, do indemnification fees need to be paid to the Leafs and Sabres on top of that?

The answer to the first question is no. At best the relocation fee should be the difference between the value of a franchise in Phoenix and the value of a franchise in Hamilton. So, what is the value of the franchise in Phoenix? Well, if you listen to Balsillie, the answer is zero because there is no one interested in buying and keeping the team in Phoenix. If you listen to Bettman and the league, the answer is somewhere around $130 million because supposedly he has 4 potential owners interested and rumours are that one of them (Jerry Reinsdorf) might be interested in paying $130 million. So, that might set the cost of the Hamilton market at $170 million. If you use the value that Forbes places on franchises they estimate the value of the Phoenix franchise at $142 million, the lowest in the NHL. At the other end of the scale, the Leafs are worth the most at $448 million followed by the Rangers ($411 million), Canadiens ($334 million), Red Wings ($303 million) and Flyers ($275 million). Would a new Hamilton franchise worth as much as Montreal or Detroit? Not likely considering they don’t have any history where as the Canadiens and Wings have nearly a century of hockey behind them and the local Hamilton market is at least half the size of Montreal or Detroit. Using these numbers one could easily argue that a Hamilton franchise is worth less than $300 million making the difference between the value of a Hamilton franchise and the Phoenix franchise somewhere probably closer to $150 million.

So, if the cost of using the Hamilton market is $150-170 million, will Balsillie have to pay additional fees to the Leafs and Sabres for entering their territory? The NHL would probably argue yes, but recent precedent says no. From 1991-92 to 1993-94 the NHL expanded by 5 teams (Sharks, Senators, Lightning, Ducks and Panthers). Each of those teams paid $50 million in expansion fees, except that, supposedly, $25 million of the Ducks expansion fee went straight to the kings in indemnification fees. So recent precedent is that the NHL takes indemnification fees out of the ‘location’ fees and are not assessed on top of the location fees. The NHL would argue that the New Jersey Devils, when they moved to New Jersey from Colorado, paid indemnification fees directly to the Rangers, Islanders and Flyers but to the best of my knowledge I am not aware that they also paid the NHL location fees (please correct me if I am wrong). As far as I can tell, there is zero precedent in charging location and indemnification fees in a transfer of a franchise. In fact, when the Minnesota North Stars moved to Dallas, Quebec Nordiques moved to Colorado, Winnipeg Jets moved to Phoenix and the Hartford Whalers moved to Carolina no relocation fees were charged at all. Has the NHL ever charged a relocation fee?

To me, a relocation fee of around $150 million seems reasonable with no additional indemnification fees to be paid to the Leafs and Sabres being placed on top of that (the NHL would have to pay these fees, should they decide to, out of the $150 million). Is that too steep for Balsillie? Probably not, but he may decide to lower his offer to purchase the Coyotes from $212.5 million to offset some of the added cost. For example, he could change his initial offer to $170 million for the Coyotes (instead of $212.5 million) plus the $150 million relocation fee making the total cost $320 million. From there he would only have to up his offer to purchase the Coyotes should another bidder step in and bid against him. But would he really balk at owning a team in Hamilton if the total cost were $262.5 million? I suspect not.

So long as the judge rules that the franchise is relocatable, which he seems inclined to do, I believe that the Phoenix Coyotes will be playing hockey in Hamilton next season. We may find out today.

Jun 102009
 

Ever since Jerry Moyes decided to take the Phoenix Coyotes to bankruptcy the NHL has chosen to take a hard line against the Moyes-Balsillie scheme but when it comes to the court proceedings their hard line stance has been softened by the judge.

Initially the NHL claimed vehemently that Jerry Moyes did not have the authority to take the team to bankruptcy because the league was in control of the team and had been in control of the team since last November. Moyes argued that he had given up some control of the team, but had not given up the right to file for bankruptcy. The NHL requested a hearing on the issue and essentially Judge Redfield T. Baum to toss out the bankruptcy filing. The judge chose not to make a ruling and instead decided to order the two sides to mediation which essentially didn’t resolve anything and left things pretty much status quo. That being that the team would remain in bankruptcy and court will proceed with the next issue.

The next issue was whether the team was relocatable. Publicly, and in court filings, the NHL insisted that the NHL and only the NHL could decide that matter and that so long as there was a possibility to sell the team to someone interested in keeping the team in Phoenix they had no interest in considering to move the team anywhere. To some extent this was still their stance in court yesterday but the judge has seemed to effectively shift the debate not to whether the team can be moved to Hamiltion, but what relocation fees the NHL would be entitled to if they did move. Although the judge has yet to issue a ruling, it appears that he will either ask the NHL to come up with a suitable relocation fee (with a rationale for that fee) or possibly mandate the two sides into mediation to negotiate an acceptable relocation fee. Depending on your perspective, this can be viewed as either a win for the leaugue or a win for Balsillie. It’s a win for the league because the judge said that the league owns the Hamilton location and has the right to collect a reasonable fee for use of the Hamilton location. From my perspective it is a loss for the league because once again the court is siding against the league in the argument that the league, and only the league, has complete control of relocation. We don’t know for sure but the judge has hinted he would side against the league so long as there aren’t any firm offers on the table that keeps the team in Phoenix and pays off all the creditors. For Balsillie it is a win because the debate has to some extent shifted from can the team be relocated to Hamilton to what will the price of relocation be and that can only be viewed as a positive.

For much of yesterday the judge seemed to go with the idea of ‘we have one, and only one, offer here for $212.5 million, let’s make it work’ and really didn’t give the NHL any leeway because of expressions of interest from other potential buyers. The judge’s mandate is to the pay off the creditors and as of right now he only sees one way to do that and that is with Balsillie’s offer to purchase the team, but this is where things are going to get real interesting. If the NHL’s ultimate goal is to keep a team out of Hamilton they are going to have to argue that Hamilton is such a prime location for hockey that it deserves a high relocation fee which is just strange because if it is such a good market, why would the NHL be so reluctant to have a team there. Second, they will hope that whatever Balsillie’s final offer is less the relocation fee will not be enough to pay off the creditors in full. So, if there was a $100 million relocation fee and Balsillie was willing to pay $250 million, which would only leave $150 million to pay the creditors. This is interesting because according to Moyes, creditors are owed more than that but the league has argued that the creditors are owed less than that because the loans Moyes made to the team are really not loans but capital infusions. They made those arguments in the context that in reality a bid to keep the franchise in Phoenix only needs to be $120 million in order to pay off all the creditors but those arguments may very well come back to haunt them in the future.

The only other caveat in the Balsillie bid is what the judge will decide the City of Glendale is owed for breaking its lease agreement should the team be relocated. The city has argued that that number is over $500 million but that judge countered with ‘he city feels they have a legal right to have team there until 2035. What about in November if league says ‘we’re done. We’re not paying anymore.’ By that he meant you may not be owed anything because there are no assurances that in the future you will get anything because at some point the NHL could just pull the plug on the team. What the judge determines the city is owed for breaking the contract will go a long way to determine whether a Balsillie bid is able to pay off all the creditors in full but even if he can’t pay off the creditors in full he may still win because as of yet there are no offers to pay off any of the creditors anything let alone in full.
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