Sep 212012
 

There is an article in the Globe and Mail today discussing the possibility of the NHL expanding to 32 teams, and more specifically Seattle being one expansion possibility.  To many expansion seems counter intuitive considering there are a lot of teams that are already in financial distress that can hardly keep their heads above water as it is.  Some people are actually suggesting contraction is the much better option and on the surface that makes sense.  At least to us the fan.  Drop off the weak teams that can’t support a strong fan base and in the process improve the average talent level among the remaining teams and presumably make the product more enjoyable to watch.  The thing is, from the owners perspective that is the completely wrong way to solve the problem of weak teams.  The solution is rather, bring in more weak teams and collect a hefty fee while doing so.

Let’s put aside the fact that the owners will probably collect $300-400M, possibly more, from expansion fees to say Seattle and Quebec City and lets take a look at the impact such an expansion will have on the financial viability of the other weak teams in the league.

The 2012-13 league wide revenue is/was projected to be $3.3B, or about $110M per team.  But, a sizable portion of that revenue (National TV contracts, league licencing, etc.) is not team generated but league generated.  Let’s suggest that that amount is a mere $300M to make some numbers easy (it is probably significantly higher).  This would make team generated revenue $3B or an average of $100M per team.  Some teams most certainly bring in closer to $150M in revenue and maybe more, the weak teams probably bring in closer to $50M, maybe less.  Lets, for argument sake, suggest the NHL expands by 2 teams that are in markets that will generate slightly below average revenue.  Say $75M/yr.  Now, let’s crunch some salary cap numbers using the old CBA where the players get 57%.

At $3.3B in league revenue, the revenue per team average is $110M and the players allocation is 57%, or 62.7M which makes the salary cap $70.7M and the salary floor 54.7M.

Now, if we add in to $75M revenue generating teams the league-wide revenue rises to $3.45M but the team average revenue falls to 107.8M.  57% of that comes to $61.45M making the salary cap 69.45M and the salary floor 53.45M.

Expanding to 2 smaller markets just caused the salary cap and salary floor to drop $1.25M which essentially cuts the expenses of weaker teams such Coyotes by $1.25M per year.  That is not insignificant to a team losing money.  If you were a salary floor team you can cut your player expenses from $54.7M to 53.45M, about 2.3%, all while collecting $10-15M (per existing team) in expansion fees.  On top of that, you can do it without making the NHLPA mad because the NHLPA will be all for expansion because it means more jobs for them.  The only complaint the NHLPA may have is, why not expand to a big market like a second team in Toronto.

Now, the only loser in all of this is us, the fans.  We get a more diluted product and potentially more diluted rivalries (likely fewer games and less chance of playoff meetings against true rivals) but since when did the NHL ever care about the fans more than the dollars.

 

Oct 152010
 

Yesterday David Shoalts of the Globe and Mail wrote a story that the potential sale of the Phoenix Coyotes to Matthew Hulsizer has stalled in part because the reportedly Hulsizer wanted a discount to the $165M the NHL is asking for to cover all their costs in purchasing and operating the team out of bankruptcy court.  Later last night Darren Dreger of tsn reported that although nothing had been signed indications of a deal to purchase the team was close and that for the most part an agreement in principle had been agreed to.  Obviously this conflicts somewhat with what David Shoalts wrote.

Today NHL deputy commissioner Bill Daly said

“We’re moving toward an agreement, which we’re hopeful can be concluded relatively quickly.  The next step will be proceeding to the NHL ownership approval process.  We are hopeful this represents the beginning of the end of this long process, which if successfully completed, will ensure the long-term future of the Coyotes in Glendale.”

So the question is, who are we to believe?  I know for a fact that I have to question anything that comes out from the NHL.  Remember, it was the NHL that stated that they were about to present former owner Jerry Moyes with a purchase agreement from Jerry Reinsdorf way back in May 2009 when Moyes first took the team into bankruptcy but we now know that at best that offer would be full of conditions relating to concessions Reinsdorf must get from the City of Glendale with respect to the lease agreement.  Bill Daly also stated last December that he was confident that an Ice Edge purchase of the Coyotes would occur though clearly that didn’t happen either so forgive me if I don’t put too much stock in what he is saying.

The reality is, the Coyotes will only remain in Phoenix if one of the following things occur:

1.  A deep pocketed owner steps up who really wants to keep the team in Phoenix and is willing to lose $15-25 million per year.

2.  The City of Glendale steps up and is willing to significantly renegotiate the Coyotes lease agreement or provide significant concessions so that a new owner won’t be in a position to lose $15-25 million per year.

3.  Or some combination of #1 and #2.

The reason for this is that the Coyotes cannot survive under the current lease agreement.  That’s a fact.  There just has not been enough of a fan base and corporate support to sustain the team.  So, if the Coyotes are to stay in Phoenix, someone has to be willing to eat those losses.  As of yet no deep pocketed owner has stepped up to the plate willing to take on those substantial losses and while the City of Glendale has discussed a variety of options to help out a new owner, none of the concessions they have discussed in the past year and a half have resulted in a new owner stepping up.

Could the Coyotes remain in Phoenix?  Sure, but until someone (the city or a potential new owner) steps up and states that they are willing to fund the teams significant losses for the forseeable future I won’t be betting on that to occur.

Oct 292009
 

Back in the summer the NHL presented the names of Toronto Argonaut co-owners Howard Sokolowski and David Cynamon as an interested group in purchasing the Phoenix Coyotes. Later it was rumoured that these two potentially joined up with the Ice Edge Holdings Inc. group which would purchase the Coyotes. Today we hear that the two Argonaut owners have decided to go on their own again and have broken away from the Ice Edge group.

Sokolowski and Cynamon had been linked to Ice Edge Holdings, a group of eight Canadian and U.S. businessmen who have made a pitch for the club. But their involvement with Ice Edge ended several weeks ago, according to sources familiar with the bidding.

Just to give a little background on Sokolowski and Cynamon, these two purchased the Toronto Argonauts when the Argos were in financial/bankruptcy trouble of their own. They had some early success on the field which turned the franchise around financially but the past couple seasons have been a disaster on the field and attendance and the image of the team within Toronto has been hurt because of it. But overall the franchise is doing OK, but we have recently heard that they may be looking to sell the team and get involved in the NHL.

We also heard this summer that when Sokolowski and Cynamon purchased the team for a mere $2 million, the owner of the BC Lions put up half of the franchise fee and has continued to lend money to the franchise since the purchase in 2003. None of these transactions were approved by the CFL nor did the CFL even have knowledge of these transactions. The CFL has issued a statement that the transactions that took place only took place because of the love of the game by the people involved and that there is no evidence that the integrity of the league has been affected in any way. That is all fine and dandy, but that raises several questions with respect to the suitability of these two as owners of an NHL franchise.

1. Can Sokolowski and Cynamon actually afford an NHL franchise? If they only put up half of a $2 million fee and then required additional loans to fund ongoing operating losses, can they really afford a $140 million price tag on the Coyotes along with whatever losses the franchise will suffer over the next few seasons?

2. If the NHL rejected Jim Balsillie for his questionable negotiation tactics during the negotiations to purchase the Penguins and Predators, can they just brush aside the fact that they, without CFL permission and presumable against CFL regulations, accepted funding from a fellow CFL owner?

As for question 1, I honestly don’t know how wealthy Sokolowski and Cynamon are or what kind of investors that they may have backing them but based on the CFL example I have my doubts that they themselves have the financial ability to put up $140 million and then fund the teams losses for the next several years. But of course, not having financial wherewithal has never stopped the NHL from approving an owner. See Len Barrie and the Tampa Bay Lightning as a prime example.

As for question 2, the answer should be no, the NHL should not just ignore that fact and it should be held against them just as Balsillie’s negotiation tactics were held against him. Nothing Balsillie did could have harmed the integrity of the on ice product, which in my opinion is the most important thing to preserve, while having an owner having a financial interest in two franchises at least opens the door to possibility of integrity issues, or at least the appearance of a possibility of integrity issues. I consider the Cynamon/Sokolowski team funding issues to be of greater significance than the Balsillie negotiation tactics issues but of course the NHL does not agree as evidenced by the fact that there was no backlash against current Minnesota Wild owner Craig Liepold for lending money to Boots Del Biagio (who we now know had no money) to allow him to become a minority owner of a group purchasing the Nashville Predators from then owner of the Predators, Craig Liepold.

It seems to me that all you really need to be an NHL owner is Gary Bettman’s blessing and play by Gary Bettman’s rules. In that regard, Sokolowski and Cynamon may be perfectly qualified to be NHL owners. But of course, I don’t believe that anyone purchasing the Coyotes really believes the Coyotes have a future in Phoenix but rather they just see it as a cheap way to get into the NHL and eventually move the team to a location where they want. With that in mind, I expect Sokolowski and Cynamon, and their financial backers, are really a group that wants to put a second team in the Toronto area and so long as they don’t tell Gary Bettman that or make it publicly known, it may work out for them.

Oct 272009
 

Yesterday the NHL, Moyes, and the other creditors were in court before bankruptcy judge Redfield T. Baum and they have apparently come to an arrangement that will see the NHL purchase the Coyotes.  The intention of the NHL is to secure the Coyotes and then quickly flip them to another potential owner interested in keeping the team in Phoenix.  The most talked about potential buyer is a group called Ice Edge Holdings which had previously expressed interest in purchasing the team but was not able to come to an agreement with the City of Glendale and possibly other creditors in time to put in a bid during the bankruptcy process.

Azcentral.com conducted an interview with Daryl Jones of Ice Edge in regards to the situation.  Two things he said deserve some consideration.

Any new buyer is going to need some help, and I don’t mean concessions. You need help from the NHL to draw fans, and Glendale on a grassroots level.

Interesting that he said “I don’t mean concessions” which I read to mean concessions from the city. I don’t buy this. I believe this is a publicity statement because everyone agrees that the Coyotes cannot operate under the current lease arrangement and the NHL is purchasing the Coyotes only committing to keep the current lease through the end of this season. Essentially the existing lease agreement is going to be torn up at the end of this season and anyone purchasing the Coyotes with the intent of keeping them in Glendale will only do so with a different lease arrangement. Ice Edge, or any other ownership group, will have the ultimate bargaining power with the City: let us play here for next to nothing, or we will leave. Daryl Jones can call it something other than ‘concessions’ but the only way the team stays in Glendale is under a new, and much cheaper, lease arrangement that will see less net flow of money from the team to Glendale.

No we’re not going to do that. I know other parties have tried to do that. We quite frankly don’t have a backup plan. Our plan is to make it work in Phoenix. In our opinion, it’s the wrong way to approach the partnership with Glendale – a “we’ll try it but if it doesn’t work out we’re going to leave.

That statement is just plain stupid. No one, and I mean no one, will be willing to put $140 million into a relatively risky investment without a backup plan. They may not state it publicly but I can guarantee you they have discussed a backup plan. The guys behind Ice Edge Holdings Inc. are investors looking to make a profit, not mega rich guys looking for a hobby to spend their money on. They view this as a way to get into the NHL on the cheap. If an NHL franchise in say Kansas City is worth $200 million and they purchase the Coyotes for $140 million, that gives them a $60 million cushion to work with. If they can get a much better lease arrangement with the City of Glendale and get some additional revenue from playing a handful of games in Saskatoon they could theoretically test the Coyotes market for say 3 years before they eat up that $60 million. From an investment standpoint, they don’t start losing money until they go beyond the $200 million point. If anyone thinks that Ice Edge Holdings hasn’t discussed this you are fooling yourself. Even the NHL didn’t want to buy the team without an out clause in their conditions to purchase the team.

There is also some talk that Gary Bettman is continuing discussions with a Toronto group that is interested in purchasing the Coyotes and keeping them in Phoenix. Again, my skepticism remains the same. I just can’t imagine anyone without any specific ties to the Phoenix area being willing to purchase the Coyotes and be committed to keeping the team in Phoenix long term. No one will put that much money at risk without at least some assurances that if it doesn’t work out in a few years they can move the franchise. Publicly they may state otherwise, but most assuredly they will be looking at an out.

Since we are on the topic of the Phoenix Coyotes, Gary Bettman conducted and interview on Coyotes TV in which he said something completely ridiculous in regards to the Coyotes franchise.

The vital signs with everything that this franchise has been through are actually pretty good.

Here is the reality of it all. They held an opening night promotion selling all tickets at $25 or less and they managed to sell out the arena. Since then they have average just under 9,000 tickets sold per game (with fewer fans bothering to show up). Barring a completely unexpected change of fan interest the Coyotes will not reach an average of 14,000 fans per game which will see their revenue share allotment cut back by 25%, or nearly $4 million and if they don’t reach that level again next year it will be cut back even more. That makes a dire situation look even worse. Now, I am not sure of Bettman’s definition of ‘pretty good’ is, but I would not call those pretty good vital signs.

Oct 162009
 

So the word out of Phoenix last night was that the announced attendance for the Coyotes game was 6,899 but that probably more like 5000 people actually showed up. Clearly attendance in Phoenix is going to be a major issue this year, but it won’t just be Phoenix if early attendance numbers are any indication. Here are attendance numbers for three other southern U.S. teams that have played at least 3 home games so far.

Carolina Hurricanes

2008-09 2009-10 Difference
18680 18680 0
18680 16186 -2494
15016 13597 -1419
15635 14053 -1582

Nashville Predators

2008-09 2009-10 Difference
17113 14797 -2316
13259 14209 950
12042 12179 137
14704 13103 -1601

Tampa Bay Lightning

2008-09 2009-10 Difference
18552 17454 -1098
14420 14212 -208
15191 14126 -1065

It is still early but those are significant drops in attendance figures. Nashville is going to be particularly interesting to watch because they need to keep attendance above the 14,000 mark to maintain a full share of revenue sharing. Failure to achieve an average of 14,000 will cause them to lose 25% of their revenue sharing allotment which would equate to close to $4,000,000 which is significant to any team, particularly one that is struggling to break even. If Tampa struggles on the ice and fans become more disinterested because of it this could become a problem for them as well and we already know how unstable their ownership situation is. This despite a significant drop in average ticket price for Lightning games.

What is also interesting is that falling attendance may not be limited to non-traditional southern US hockey markets.

Ottawa Senators

2008-09 2009-10 Difference
20182 18075 -2107
20179 19360 -819
19318 17014 -2304
18952 17732 -1220

The rise in the Canadian dollar will help offset some of the drop in attendance revenue and if Ottawa can play well then I can see their attendance improving, but clearly some of the luster of high flying Senators teams of a few years ago when they sold out every game has faded away.

Detroit Red Wings

2008-09 2009-10 Difference
20066 20066 0
19011 19122 111
20066 17782 -2284

We all know that Detroit is an extremely hard hit city economically and it may start reflecting in the Red Wings attendance this year. The 17,782 that showed up to watch the Red Wings last night is 1,080 fewer fans that last years lowest attendance level of 18,862.

I revisit these teams and also take a look at a few other franchises (Atlanta, Florida, Dallas, etc.) in a few weeks once each team has played a few more home games but early indications are not all that good for some franchises.

Aug 052009
 

Judge Redfield T. Baum has decided to allow all bidders into the September 10th auction, including Jim Balsillie against the pleading of the NHL. It was the most significant decision that Judge Baum has made so far in the bankruptcy case and in my opinion has clearly put Jim Balsillie’s offer for the Coyotes at the front of the line.

On June 15th, Judge Baum ruled against the Balsillie offer to purchase the team largely because Balsillie could not prove that the NHL was violating anti-trust laws mostly because they had not yet denied his request to move the team to Hamilton. This was a setback for the Balsillie camp, but only a setback. Today’s decision of Judge Baum’s to allow Balsillie to participate in the September 10th auction is an outright nightmare for the NHL. It really is a worst case scenario because unlike what was set to occur, a Glendale only auction followed by a relocation auction only if necessary, the new setup will see any bids to keep the team in Glendale directly compared to Jim Balsillie’s bid and that is bad news because it will likely now just come down to how much Jim Balsillie is willing to pay for the team. In essence the Phoenix Coyote’s are now Jim Balsillie’s team to lose. Yes, there will be appeals by the NHL and possibly by Glendale, but that probably won’t change the outcome.

I suspect that there are two key factors in Judge Baum’s decision today. The first is that he has no assurances that either the Reinsdorf or the Ice Edge bids can resolve all of their outstanding issues (and there are still a number of significant outstanding issues with both bids) prior to the September 10th auction meaning there might still be no bidders on September 10th just as there were no bidders for the auction that was supposed to be today. The second significant factor, and maybe the primary factor, is the statement from Michael Dell’s investment company SOF Investments Ltd. in which they supported the Jim Balsillie bid as it was the only bid that provided cash to fully repay the nearly $80 million in secured debt that SOF is owed and neither the Reinsdorf or the Ice Edge bids had come to any satisfactory arrangement with SOF (Reinsdorf has stated he wants to renegotiate the loan arrangement but hasn’t even talked to SOF yet). Furthermore, SOF and nearly every other creditor outside of the NHL spoke to the importance to have these bankruptcy proceedings resolved by the end of September at the latest and of course right now, keeping the Jim Balsillie bid alive is the only way to assure that of happening. These factors made the NHL Board of Governors vote against Balsillie look like a small issue in comparison.

With all the issues that still surround the Jerry Reinsdorf and Ice Holdings bids and the fact that they are now going to be bidding against Balsillie, it would not surprise me if one or both of them drop out of the process. Jerry Reinsdorf has previously threatened to drop out and his attorney’s in court on Monday stated they they never expected to be bidding against relocation bids. With all the backlash that has come about regarding the $23 million subsidy request Reisndorf has made to the City of Glendale I might actually be surprised if Reinsdorf just says it is not worth it anymore and pull his offer.

I eagerly await the response from Gary Bettman and the NHL regarding this decision. I expect the response will be to fight the decision however it can, but the proper response should be, at least behind closed doors, is to start preparing for hockey in Hamilton this October.

Aug 022009
 

Monday is going to be an interesting day in the Phoenix bankruptcy court room, and it could be a bad day for the Coyotes future in Phoenix.

Up for discussion is a motion filed by the NHL and the City of Glendale to postpone the auction for the sale of the Coyotes to parties interested in keeping the franchise in Phoenix until mid-September and thus cancel or delay until after the 2009-10 NHL season the auction to relocate the Coyotes. But there are a number of other issues that have arisen as well.

1. We have learned that neither the Jerry Reinsdorf or the Ice Edge Holdings bids for the franchise include any cash and will only assume debt. This is an issue because the court bidding procedure required a $10 million deposit be placed, something neither Reinsdorf or Ice Edge Holdings have done. This has prompted Moyes and Balsillie to put forth a motion calling for the cancellation of the August 5th auction stating that there are no qualified bids.

2. Within the Jerry Reinsdorf bid there are indication as to what arrangements have been discussed with the City of Glendale. Apparently what has been discussed is having the city set up a new taxing district around Jobing.com arena that could provide up to $23 million in new funds which presumable would get funneled into team coffers. There is also an out clause that if the team is losing money after 5 years Reinsdorf can get out of the lease and move the team.

3. But maybe the most significant development is we have learned that SOF Investments Ltd., the largest secured creditor and owed approximately $80 million, has come out in support of the Jim Balsillie offer for $212.5 million stating that that was the only bid that would repay them in full.

4. Also rejecting the Reinsdorf offer was AEG who has a contract to manage Jobing.com arena stating there is a dispute over how much money AEG is owed. As we know, a significant condition of the Reinsdorf offer is that they can renegotiate the terms of the contracts and debts with many of the creditors. The more they can’t come to an agreement with (and SOF and AEG are significant) the more difficulties the Judge will have in accepting the Reinsdorf offer (and presumable the Ice Edge offers are similar).

In short, what the Reinsdorf and Ice Holdings offers entail are just an assumption of restructured debt and contracts without any up front cash. At this point in time the largest secured creditor (SOF), the largest unsecured creditor (Moyes), and at least one contract holder (AEG) object to the offers. Plus, neither Reinsdorf or Ice Edge have come to a final agreement with the City of Glendale either. Right now, the Coyotes remaining in Phoenix might be a long shot at best. I look forward to hearing what Judge Baum has to say on all of this tomorrow but with everyone wanting Wednesday’s auction either delayed or canceled outright, the chances of getting a resolution to this mess on Wednesday seems somewhere between slim and none, and leaning towards none.

More details can be found here and here.

Jul 312009
 

Yesterday, both the NHL and the City of Glendale have filed motions to the court to delay the ‘Glendale only’ auction from August 5th to sometime in November.

From the NHL:

Based on the foregoing, the NHL moves the Court to extend the hearing date for the sale of substantially all of the assets of the Phoenix Coyotes to September 10, 2009.It is clear to the NHL that the Reinsdorf Group’s Bid presents a significant opportunity to sell the team to an owner thatis dedicated to keeping the team in the City of Glendale, thereby avoiding the massive damage to the City, which has been described to this Court, as well as providing for the Debtor’s secured creditors and a substantial percentage of Debtor’s unsecured creditors.The NHL also understands that the Reinsdorf Group is close to a deal with the City of Glendale, which representsits most significant outstanding contingency. The NHL believes that once the Reinsdorf Group reaches an agreement with the City of Glendale that the other deals they are attempting to work out with creditors will also fall into place.

From the City of Glendale:

In recognition of that fact, each of these two bidders has steadfastly worked over the three weeks permitted here to satisfy all such contingencies and to make the modifications necessary to make such bids fully compliant with what this Court and all creditors would expect as a final bid. Glendale is very pleased to report that it has conducted very extensive, constructive and good faith discussions with each bidder and as of this day, is very close to a definitive agreement with each of the Reinsdorf Group and Ice Edge that would allow the Team, under new ownership, to continue to play at the Jobing.com Arena in Glendale for the foreseeable future with strong economic essentials and support from all necessary constituencies.

Those statements from the NHL and from the City of Glendale are quite telling because they are essentially arguing that over the past three weeks they have worked their butts off to come to an agreement with Jerry Reinsdorf but have not quite been able to cross all the t’s and dot all the i’s yet but given another few weeks they could accomplish just that. But what has me confused is the NHL’s assertions that Jerry Reinsdorf was set proceed with an intent to purchase agreement way back on May 5th only to be shunned by Moyes taking the team to bankruptcy only hours before a meeting with Moyes. If the City of Glendale, the NHL, Reinsdorf, and the creditors have only been working on an agreement for the past 3 weeks, what were they doing during May and June?

If the NHL/Glendale can get Judge Baum to postpone any relocation auction it will give the NHL/Glendale almost another full year to find a new owner for the franchise that will keep the team in Phoenix, even if both Jerry Reinsdorf and the Ice Edge groups drop out which if they can’t come to an agreement with the City of Glendale will certainly happen. The hope might be that a couple things happen: 1. The economy turns around and credit becomes more obtainable making the purchase of an NHL team more viable to more people. 2. The Coyotes young players really take a step forward this season and turn the Coyotes into a playoff team generating more fan interest and more revenue and thus making the Coyotes a more attractive team to buy and keep in Phoenix. Or, failing that, it will give the NHL more time to find an owner of their choosing (read: anybody but Balsillie) to relocate the team to a location of their choosing (read: Kansas City, Las Vegas, etc.).

As I wrote yesterday, I expect Judge Baum to view this as a delay tactic and choose not to delay the Glendale only auction and rather just state that these bidders can participate in the open auction already set for September 10th if they can’t participate in the August 5th auction. The question will be, will there be any bidders come next Wednesday’s auction? Presumably not since everyone is stating they need more time.

Jul 302009
 

There have been a lot of developments over the past couple days in the Phoenix Coyote situation and the next week will be an interesting one for sure.

Yesterday the NHL Board of Governors voted to approve Jerry Reinsdorf as a potential owner of the Phoenix Coyotes while voting against Jim Balsille and postponing any decision on the Ice Edge group do to an incomplete application. None of this is really surprising news but the vote against Balsillie is an interesting one as Judge Baum in an earlier ruling that barring material changes PSE (Balsillie’s company for purchasing an NHL team) should be an acceptable owner.

Absent some showing by the NHL that there have been material changes in PSE’s circumstances since 2006, it appears to the court that the NHL can not object or withhold its consent to PSE becoming the controlling owner of the Phoenix Coyotes. –Judge Baum

So if this was Judge Baum’s ruling, why would the NHL vote against Balsillie? The NHL was quick to point out that the vote was because of a clause in the NHL by-laws addressing ones character and integrity.

“The criteria set forth in the (NHL) constitution and bylaws relates to financial wherewithal, character, integrity and the view whether or not the other owners would deem you a good partner,” –Gary Bettman

Clearly financial wherewithal wasn’t the concern so it had to be in regards to character, integrity and whether Balsillie would be a good partner. It will be interesting to see the NHL defend their vote in the court of law should it get that far because they didn’t seem to have many problems with him when Balsillie was looking into buying the Penguins or Predators.

The other thing that the NHL was quick to point out was that this had nothing to do with relocation. To me, I believe that this had everything to do with relocation in that the last thing the NHL wants to do is consider relocation. By voting against Balsillie the person they don’t have to conduct a vote against relocation of the Coyotes to Hamilton because had they made that vote that would be all the ammunition that the Balsillie group would need to conduct an anti-trust case against the league. The main reason why on June 15th Judge Baum rejected the Balsillie bid was because he rejected Balsillie’s claim the NHL was violating anti-trust laws because the NHL had never voted against any team relocating and without such a dispute the judge felt no obligation to overrule the NHL constitution and by-laws. The NHL does not want to open themselves up to that so they are avoiding it by not addressing the relocation issue and clearly stating that the vote against Balsillie had nothing to do with relocation.

There have been more developments today as well that are quite interesting.

In a motion filed in bankruptcy court on Thursday, Moyes’ attorney said that Reinsdorf’s bid “cannot be approved as a matter of law” and that “there are no qualified bidders” based on terms set by the court.

We should find out tomorrow what the details of the argument against Reinsdorf and we’ll find out if the motion has substance or just more legal posturing.

Glendale said that it is “very close to a definitive agreement with each of the Reinsdorf group and Ice Edge that would allow the team, under new ownership, to continue to play at the Jobing.com Arena in Glendale for the foreseeable future with strong economic essentials and support from all necessary constituencies.”

The filings did not divulge what the “strong economic essentials” would be or provide details of the negotiations.

Glendale asked Judge Redfield T. Baum to postpone the sale to “early to mid-September.” The NHL, meanwhile, asked Baum to set a Sept. 10 deadline.

In my mind the agreement between the City of Glendale and the Reinsdorf and Ice Edge groups is a key to whether Balsillie has any chance of purchasing the team. If no agreement can be reached both the Reinsdorf and the Ice Edge offers to purchase the team go away and Judge Baum will have no choice but to open up bids to groups interested in relocating the team, and for that matter, the NHL will have no choice either.
Continue reading »

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.