From today's Globe & Mail:
Balsillie's power play puts NHL on edge
League vows to block billionaire's bid for bankrupt Phoenix Coyotes, promising to fight move to bring team to Ontario
SEAN GORDON AND DAVID SHOALTS, May 6, 2009 THE GLOBE AND MAIL
An audacious bid by tech industry billionaire Jim Balsillie to buy the suddenly bankrupt Phoenix Coyotes has ignited a furious confrontation with the National Hockey League, which is moving swiftly to block the sale and girding to fight any move to relocate the team to Southern Ontario.
The Waterloo-based tycoon's third attempt to acquire an NHL franchise - he was rebuffed in previous bids for the Pittsburgh Penguins and Nashville Predators - likely puts him in the strongest position yet to exert a backroom power play on league officials who previously spurned him and recently insisted no franchises will be relocated in the near future.
But late last night the NHL signalled its intention to fight Mr. Balsillie every step of the way and insisted it - not the Coyotes' current owner - will determine the fortunes of the team, which has been bleeding rivers of cash for months, much of it provided by the league.
"We have just become aware of today's Bankruptcy Court filing purportedly made on behalf of the Phoenix Coyotes. We are investigating the circumstances surrounding the petition, including the propriety of its filing," NHL deputy commissioner Bill Daly said an e-mailed statement.
"We have removed [majority Coyotes owner] Jerry Moyes from all positions of authority to act for or on behalf of the Club. The League will appear and proceed before the Bankruptcy Court in the best interests of all of the Club's constituencies, including its fans in Arizona and the League's 29 other Member Clubs."
According to a source close to the deal, Mr. Balsillie plans to lean on his sterling business reputation and play the public opinion card. He hit the ground running last night, declining to answer specific questions about the deal while instead pledging his love for the game, repeating the name of his fan website - MakeItSeven.ca, for what would be Canada's seventh NHL club - and using the phrase "unserved market" six times.
Meanwhile, the source indicated there was no prior agreement or consultation between Mr. Balsillie and league commissioner Gary Bettman - who was said to be incensed at news of the proposed deal - although there are suggestions other owners and the players' union could support moving the team. And Mr. Balsillie is reportedly determined not to play by Mr. Bettman's rules, and pulled what appear to be some canny legal manoeuvres.
According to court documents and statements issued by the Coyotes and Mr. Balsillie's Delaware-based holding company, the co-founder of Research in Motion has posted $17-million (all figures U.S.) in debtor-in-possession financing to keep the team afloat during bankruptcy proceedings.
That puts Mr. Balsillie at the head of the line when it comes to creditors, ahead of the NHL - which has been bankrolling the cash-hemorrhaging team for months - and others.
Mr. Balsillie addressed a hastily assembled news conference last night at the Metro Toronto Convention Centre, after a black-tie dinner marking his induction into the Canadian Business Hall of Fame.
"And a condition of the offer of bankruptcy is that we get permission to move the team to the unserved market of southern Ontario," said a clearly enthused Mr. Balsillie. "I just got told we've been overwhelmingly flooded with thousands and thousands of people registering in the last hour [on the website].
"I'm clearly just a passionate hockey fan. I don't have to tell anybody here it's the greatest game in the whole wide world."
Mr. Balsillie wouldn't comment on the NHL's response, insisting it was a matter for the courts. When asked if the league's position amounted to a declaration of war, Mr. Balsillie thanked everyone and left the room.
A former NHL owner was more forthcoming, saying "a line in the sand" has been drawn by Mr. Bettman, but that it will now be up to an Arizona bankruptcy judge - not the league - to settle the dispute.
"I think Gary overplayed his hand . . . it should never have gotten this far," the owner said. "You can look at the numbers and know it's not going to work in that building. Balsillie put in an offer that nobody in his right mind will top."
Sources say Mr. Balsillie quietly contacted municipal officials in Hamilton about 10 days ago to sound them out over reviving a 2007 deal for lease rights to Copps Coliseum and Hamilton Place.
City officials indicated they would leap at the chance, the source added.
News of the bankruptcy and the offer to buy the team stunned several owners.
"This is a complete surprise, you still need league approval for all this stuff, so I don't know what to say," said Buffalo Sabres minority owner Larry Quinn.
Though it's hoped Mr. Balsillie's offer, worth $212.5-million and conditional on moving the team, will be accepted by June 30 - much depends on whether a U.S. bankruptcy court approves the arrangement - it's not clear the team will take the ice in Ontario any time soon.
There will likely be court fights to follow on the Coyotes' arena lease, whether the team can be moved, and on compensation owed to regional competitors like the Toronto Maple Leafs - who have long argued they hold exclusive rights on the market - and the Sabres.
Either way, Mr. Bettman's sway over the owners, many of whom have been quietly courted by Mr. Balsillie, will be tested in what is shaping up to be a contest of wills.
An NHL governor who spoke on condition of anonymity revealed some of the animus some owners feel toward Mr. Balsillie, whose attempts to move the Penguins and the Predators to the Toronto region earned him no friends among Mr. Bettman and his coterie of allies.
The governor pointed out that franchises are granted by the league, which could just as easily revoke them - although that would surely form the basis of a nasty and lengthy lawsuit.