Wednesday, May 06, 2009

Jim Balsillie vs Gary Bettman: Round 3

Round 3 of the ongoing battle between Canadian billionaire Jim Balsillie and NHL czar Gary Bettman has officially begun and it will be vicious. Round 1 and 2 were easy takedowns by Bettman.

You may recall that back in 2006 Basillie had put in a bid to purchase the Pittsburgh Penguins from Mario Lemieux. However, before the deal could be closed the NHL requested that a number of new conditions be added to the deal including one that would have closed the door on relocating the team. Balsillie walked away. He returned in 2007 to attempt to purchase the Nashville Predators. A tentative deal was reached but suddenly Predator owner Craig Leipold backed away and accepted less money. Subsequently Leipold was able to acquire the more viable Minnesota franchise. In both cases it was obvious that Bettman was pulling strings behind the scene to keep Balsillie from joining his “exclusive club.”

So here we are again but now the drama is taking place in Phoenix. Gary Bettman shows up this week in Phoenix to inform owner Jerry Moyes that he had found a buyer for the Coyotes – it is White Sox owner Jerry Reinsdorf. Bettman was shocked to learn that Moyes had been secretly meeting with Balsillie and had filed for bankruptcy. Balsillie then announced that he was offering to buy the Coyotes for $212.5 million and relocate it to Southwestern Ontario.

The Globe and Mail is suggesting that Balsillie has finally got the jump on Bettman. But it’s not a slam dunk. A few hours after the announcement, the NHL removed Coyotes owner, Jerry Moyes, from all decision making regarding the future of the Phoenix Coyotes. Essentially giving the NHL full control over the bankruptcy and purchase proceedings. That might not stop bankruptcy proceedings. However, the Balsillie offer is conditional on moving the franchise to Ontario. How will a judge treat a conditional offer against a clean offer for less money? I can’t see a bankruptcy judge ordering the NHL to allow the franchise owner to move the team. So the judge may decide to go with an offer without any conditions. Now Balsillie has no interest in owning a team in Arizona. Another possibility is that the NHL provide a potential owner with an “interest-free loan” which would allow that person to beat the Balsillie offer.

I believe Bettman has successfully painted Balsillie as a dangerous maverick. His threats to move a franchise even without league approval is a potential threat to all owners. If a court agrees with an unapproved relocation then every owner understands that the next maverick owner might move a team into their territory. The Flyer owner does not want a team move to South Jersey and the Bruin owner wouldn’t want to see another team in New England. So the answer is keep franchises out of the hands of people like Jim Balsillie.

As in the past, the other NHL owners are totally silent which suggests that Bettman continues to run the NHL with an iron fist.