Thursday’s Tidbits
Just a few random items to pique your interest for today:
THN Predictions — Cellar Dwellers: TSN has begun its countdown of projected finishes for the 2009-2010 hockey season, starting with the #15 finishers in each conference. And the winners are: Colorado Avalanche in the West, and New York Islanders in the East. Full story here.
Phoenix Phollies — Things are heating up in the U.S. Bankruptcy Court in Phoenix. Moyes faces a contempt citation for publicly airing confidential information, including the fact that Reinsdorf wants a special taxing district as part of his plan. Not sure why that is confidential, as it will have to come to light eventually in evaluating the competing bids. More importantly, Balsillie is back in the game, as his bid will be included in the September 10 auction. While the NHL is relying on the fact that the Board of Governors unanimously rejected Balsillie, I would not be too confident, if I were them. In his June 15 ruling, Judge Baum included the following (referencing the NHL’s prior approval of Balsillie as an owner in 2006):
“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.”
So, while technically this statement was not a binding ruling at the time, as that specific point was not at issue, it certainly indicates what the Judge is thinking, and it should serve as a big shot across the bow for the NHL.
What we have here is a gigantic clash of egos. Bettman wants to demonstrate that hockey is viable in the Phoenix market, despite all evidence to the contrary. Balsillie wants to be viewed as a hero for bringing another team to Canada, and Ontario specifically. Glendale blindly assumes that it can sit back and stand on its onerous lease with the Coyotes. Moyes brashly believes he can somehow be portrayed as the victim here.
Everyone needs to remember a basic fact about this whole deal — this is in U.S. Bankruptcy Court. If this were in a “regular” court, and the issue was simply “who gets the team and where do they play”, it would be a different story. However, a bankruptcy judge, first and foremost, is looking at the interests of the creditors. What can’t be ignored is the fact that Balsillie’s bid is $64 million over the Reinsdorf bid, and about $62 million over the anticipated bid of Ice Edge, which proposes to have the franchise play some games in Winnipeg. Making matters worse (from the NHL/Reinsdorf perspective) is the fact that Reinsdorf’s bid is contingent on some major concessions by Glendale, which are no sure thing. From Judge Baum’s perspective, that $60+ million pays a lot of creditors.
Balsillie’s biggest hurdle is his insistence on locating in Hamilton, where Toronto and Buffalo have interests. Under the case law, some provision has to be made to accomodate those interests. Will some part of that $60 + million differential do it? Perhaps, perhaps not. There is also the issue of NHL’s right to control where its franchises play. I sense that Judge Baum is less concerned about that aspect, as right now the Phoenix Coyotes are his — all of their assets and liabilities are subject to the jurisdiction of his court. Not a comfortable fact from the NHL’s perspective.
Balsillie could put the NHL in an almost untenable position if he were to join forces with the Ice Edge contingent, drop his insistence on the Hamilton venue, adjust the bid to reflect the value in Winnipeg vs. Hamilton, and present that option to the Court. Ice Edge and Balsillie would be sharing the risks, they avoid the Toronto/Buffalo issue, and then are left only with the NHL’s expansion rights in Winnipeg. Given that they pulled out of there previously, how can the NHL argue strenuously that those rights are extremely valuable? Taking that step would really put Bettman and the owners in a box. The question is whether Balsillie’s ego will allow him to see that option?
Stay tuned for the next episode of “Rich Men Behaving Badly” . . .
