NHL Faced With A Total Mess With Phoenix Coyotes

I hope if nothing else, I have proven to be the first one to admit when I am wrong. Tonight is the perfect example. As I was leaving for dinner word broke that the NHL had submitted a bid to purchase the Phoenix Coyotes. I WRONGLY assumed that signaled the end of Jim Balsillie’s makeitseven push. I failed to realize that there had to be a reason for this move by Gary Bettman. It wasn’t until after my dinner that I received word that Jerry Reinsdorf has pulled out of the bidding for the Coyotes that I realized exactly what was going on here. The actual timeline of events was in contrast to how news broke tonight. You see, those who have been covering this story in Phoenix saw the NHL release but couldn’t get court confirmation of the actual bid or intention of a bid with the court. The reason was, that the NHL bid was entirely a reactionary move. The league knew that it’s white knight Jerry Reinsdorf has had enough and has decided that this really isn’t worth the headache. So rather than facing a PR disaster, the NHL went on the offensive and issues it’s own press release announcing their bid for the team. As a result of this diversion, almost all media outlets carried the NHL bid for the Coyotes as the main story tonight. Reinsdorf pulling out is an after thought. Diversion successful. Don’t be fooled sports fans. The story tonight is simple. When Reinsdorf informed the league that it was done, the league was left with the daunting realization that it was out of legitimate options. They can’t go forward with only Jim Balsillie bidding on the Coyotes. That would be a total disaster. So what do the do, prior to the Reinsdorf news coming out, which would have been really bad news for team Bettman, they issue their spin, their bid for the team and their intention to deal with this in their own way.

So, where are we tonight? We now have 2 bidders for the team, the NHL and Balsille. Bruce Arthur lays this out perfectly in tomorrow’s paper:

“There’s truth in that statement, though it is not contained in the part about somebody operating the franchise in Glendale, Ariz. Operating the franchise in Glendale is idiotic and always was, which is the issue at the heart of this whole sordid drama. The NHL has too many franchises in too much trouble; it is a regional league pretending to be something else.

And in the case of this particular failure, the truth is that nobody else was foolish enough to own and operate the team in Glendale, and the NHL is desperate to keep it out of the hands of combative Canadian billionaire Jim Balsillie, who wants to move the team to Hamilton over the NHL’s objections.

To do that, the NHL will have to pay. The league’s preferred straw man, Chicago sports owner Jerry Reinsdorf, withdrew his house-of-cards bid yesterday, saying “we have been unable to reach an acceptable lease deal for the operation of the team” with the city of Glendale.

In other words, Mr. Reinsdorf’s mirage finally evaporated, since it proposed that in a state with a US$3.4-billion budget deficit, the city of Glendale should surrender up to US$23-million in annual concessions.

And even that league-approved pipe dream put the lie to the NHL’s position that hockey belongs in Glendale: Mr. Reinsdorf’s bid also included the inevitable escape clause, which stated that if the team were still losing money after five years of new administration, the city of Glendale would either have to pay the team US$15-million per year of losses, or watch the Coyotes walk away.

The only other guys at the table, a group of Canadian gentlemen calling themselves Ice Edge Holdings LLC, have proposed that the team play some of its games in Saskatoon or Halifax, which is precisely as ridiculous as it sounds.”

What a friggin mess. Richard Rodier has to be laughing tonight. This has unfolded almost entirely as he has predicted. The problem is, where does this go from here. Bettman is as stubborn as he is short. There is no way he can go back. It is really too bad that the Melnyk’s name has been smeared as the only way that I saw this ending in Balsillie’s favor was by having someone bridge the gap. Eugene could have been that guy. Clearly that isn’t going to happen now. Can you imagine a scenario where the bidding on the franchise is between the NHL and Balsillie? Furthermore, Balsillie turned up the heat by etching in pencil a new deadline to have this wrapped up by September 14th or he is out. The worst thing for the court in this matter is to only have one bidding party and that party being the NHL who wants to pay the least amount for the asset as possible.

“o after all the bluster and the blather and the bull, this is what it has come to. If Mr. Balsillie bids US$212.5-million, the National Hockey League has to come up with US$213-million. That, and try to keep a straight face when it talks about this team staying just where it is.

We don’t know the bid’s details just yet, but it seems likely that this could be a blow to Mr. Balsillie’s chances, since the league might actually be willing to put up money where Mr. Reinsdorf was not.

Regardless, the NHL has finally found its last stand, with the Sept. 10 auction looming. When Mr. Balsillie’s bid for the Coyotes was revealed back in May, the league protested that it had another bidder all lined up and willing to buy the team. The league protested that Mr. Moyes lacked the legal authority to sell the team. And of course, before that, the league assured anybody who would listen that the Coyotes, which the NHL was secretly funding, were not in trouble.

But at the end of the day, money talks and all of that walks, and the NHL loses no matter what. Finally, after all the endless mendacity, we have arrived at the unpleasant but necessary truth.”

Bettman, some say won the lockout. If his idea of winning here is keeping Balsillie out of the club he certainly is doing a lot of damage to achieve that goal. What a mess. it was suggested to me tonight that the league would sooner fold the team than allow Balsillie to own it. I want to be there when someone tells Paul Kelley that is happening. As a fan, I would love to see one less team. As a fan of sports though, it’s hard to root for a city losing a team. No one wins in those scenarios. I would love to see the lawsuits filed as a result of the NHL folding the team though, that would be interesting.

This is going to be a wild 7-14 days, I am loving watching this, it’s way more intreging to me than the team Canada hold hands and sing camp. Buckle up, its going to be a bumpy ride.


Bruce Arthur is here

When twitter is working, which it isn’t right now, you can follow me at @yyzsportsmedia

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August 26, 2009 9:15 am

nice analysis TSM. I don;t think they could get a fold through the NHLPA so it looks like they’ll run it and absorb the losses until they can relocate it (assuming they can sign a new lease with an out-clause). This will cost them $200M up front + operating losses ($20M/year) + whatever it takes to get out of the lease when the time comes. When they sell it they will get upwards of $400M for a southern ontario team, or less than $200M for anywhere else.

this doesn’t look like a good deal for the owners. they would make very little in the best case scenario and would absorb losses in the more likely scenarios. this also costs them the big payday for an expansion team into southern ontario.

i would like to see the team returned to Winnipeg as a gesture of good will by GB. as we all know, Canadian teams make money so it would be good for the league.

p.s. – can we get a preview option for posting?

August 26, 2009 9:18 am

In my humble opinion…this has nothing to do with Phoenix. It has everything to do with a leagues ability to protect territorial rights at this point…the NHL is pulling out all the stops…and all professional sports teams are in their corner. As they say; you never know what can happen in court so you don’t want it to get to court (the territorial rights issue). Is Phoenix an ideal location for an NHL franchise? Probably not – but worse would be the courts deciding that Ballsilie can move a team without league/board approval. Call the Leafs and Sabres greedy if you want…but they have rights as franchise owners….could they negotiate a deal? Yes…but Ballsilie is not taking that approach. Yes this is a mess and I’m not a huge Bettman fan but….he won the NHLPA battle, the league is better than it was before the lockout and he is now defending territorial rights….I see nothing wrong with that.

August 26, 2009 9:33 am

worse would be the courts deciding that Ballsilie can move a team without league/board approval.

there’s precedent for this in the NFL so i don’t think that is the major issue, although they obviously wouldn;t like it. further, if the judge gave it to Ballsilie and Hamilton then the league would have converted a money losing team into a money making team, increasing league revenues in the process. Why would the owners be against that? (see next paragraph)

this is about protecting the big payaday which GB has promised will arrive when they exapnd into s. ontario. But, i don’t see how asking all the owners to cough up money to prop up losses is a good means to doing that. Sure, the payday might come but if you’ve already had to pay out 30M to keep Phoenix afloat then it hardly seems worth it.

GB is close to painting himself into a corner. the rabbit in the hat right now is finding someone willing to run it in Glendale and i have no idea who would want to do that.

August 26, 2009 9:36 am

A league owning a team is crazy. It’s like a fully government owned bank in an open economy. What happens when the NHL Coyotes (new name?) has a goal dispute? The NHL determines if their team scores a goal? What if it is in a playoff game and the team needs the revenue? If the NHL buys a team EVERY game that it plays is suspect and outside the scope of fair play. If it is for sale and there is only one guy willing to fork up for the team….well, you kinda have to sell it to him. As of now it I wouldn’t rule out Hamilton Hockey by Oct 1st.

August 26, 2009 11:25 am

Watch Ballsilie bid the price up just to screw the NHL.These two guys deserve eachother.

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