Wednesday, August 5, 2009

Would You Buy A Used Blackberry From This Guy?


This morning, NHL Deputy Commissioner Bill Daly filed a declaration with the bankruptcy court of Judge Redfield Baum in the Phoenix Coyotes bankruptcy case about the vote against Jim Balsillie being approved as a potential NHL franchise owner. This was much discussed last week as Balsillie was unanimously rejected by the 26 governors from each team in attendance (3 teams were not represented at the meeting and the Coyotes did not have a vote). James Mirtle has a link to the declaration that Daly gave the court on his site, From the Rink, which is linked on the right. I have read the declaration, and there is not much in it that hasn't already been reported or discussed as most of the declaration relates to Balsillie's aborted attempt to acquire and relocate the Pittsburgh Penguins. There is, however, an attachment "C" to the declaration, which is a statement from former Predators owner Craig Leipold that provides an interesting look not only into Leipold's dealings with Balsillie, but I think provides great insight into the character of this wannabe owner.



In his attachment to Daly's declaration, Leipold outlines three points against Balsillie becoming an owner. First, Balsillie attempted to devalue the Predators franchise through his attorney, Richard Rodier, prior to contacting Leipold about acquiring the Predators. Leipold details the contact by Rodier (Balsillie's hired legal gun and advisor that has been his knight errant on all his failed attempts to acquire an NHL franchise) to the City of Nashville Director of Finance office inquiring about the terms of the lease between the City and the Predators, and more importantly, whether the team was in compliance with the lease. These contacts occurred on February 23, 2005; February 25, 2005, and again on March 7,2005. These contacts were via e-mail, which Leipold is said to have copies. Additionally, there are said to be several telephone conversations between Rodier and administration officials for the City. One of the items questioned by Rodier was compliance by the Predators in meeting the net worth requirements of the lease. According to Leipold, prior to these conversations, the City of Nashville had never made an inquiry about compliance with the lease or about the calculation of the team's net worth. Leipold further states that a letter was forwarded by Rodier to him (Leipold) on March 9, 2005, two days after the last e-mail to the City, to introduce himself. The Toronto Globe and Mail newspaper then, over the span of the next ten days published a series of three articles about the Predators and their financial difficulties. Those articles appeared on March 10; March 16; and March 18. The gist of the reporting was that the Predators might be in default of their net worth requirement of their lease and could be in trouble. Leipold discloses in his declaration that officials from the City of Nashville never disclosed to Rodier that the team did not meet the requirement- in fact, the City did not have documentation of the Predators net worth.



Fans of the Predators may recall this period when outside sources were reporting numerous stories about the Predators and their supoosed violations of the terms of their lease. Mayor Bill Purcell's office took the position (which I believe to be grossly incorrect) that the net worth of the hockey club could only be calculated using tangible physical assets. This dispute, as Leipold outlines in his declaration, caused the City of Nashville to withhold large sums of money due to the Predators which had a negative financial impact on the team in the last year of Leipold's ownership. Leipold states that he did not learn of Rodier's contact with the City or his line of questioning until after he discontinued negotiations with Balsillie in 2007.



Leipold goes on to recount his negotiations with Rodier and Balsillie for the purchase of the Preds. There were some interesting points that are itemized in this section of the declaration. Leipold says he agreed to a provsion in their confidentaility agreement that required Leipold and Predator officials NOT to discuss a potential transaction with Balsillie with any party- INCLUDING THE NHL. This a clear violation of the NHL constitution and by-laws, to which Leipold (he says "naively") agreed. The first offer ("term sheet") that was received from the Balsillie camp required the Predators to relocate to southern Ontario (presumably Hamilton and Copps Coliseum) by the end of the follwing season (2008) and that Leipold was responsible for obtaining the consent of the NHL for the relocation. Leipold said he refused because of the lease with the City and because that would violate the NHL constitution and by-laws (by-laws, meet Mr. Leipold. Mr. Leipold, NHL by-laws). Eventually, it was agreed that Balsillie would purchase the team and assume the risk that relocation of the franchise might not occur because the Predators couldn't terminate their lease or the NHL might not approve the relocation. Regardless, Balsillie agreed to execute the standard form of consent required by the NHL which provides for a non-relocation provision of seven years after a change of ownership. Balsillie also agreed to place $10MM in an escrow account as a break up fee payable to Leipold should the deal not close. Leipold states that he met with Balsillie and Rodier in Balsillie's office and that he agreed to buy the Predators "where is, as is" and was committed to make the team work in Nashville. On May 24th, Leipold executed the binding nature of the term sheet and announced that he was selling the franchise to Balsillie. At that moment, Balsillie was to deposit the $10MM escrow. Guess what? Never happened. In fact, Balsillie's camp sent back to Leipold a purchase agreement that was not what was agreed upon in the conditions of the term sheet. Furthermore, Rodier advised that the team should now sue the City of Nashville for "bad faith" under the terms of the lease. Then, after the closing on June 30th, the team could be moved "in the dead of night" using the pending litigation as an alibi.



As Predator fans are all too painfully aware, we watched in horror as our franchise was nearly wrested away. Pred fans should know that the application to move the franchise was filed by Balsillie on June 11th, 19 days before the sale of the franchise was to close. Also prior to closing, Balsillie announced the lease with Copps Coliseum for the coming season as the new home of the Hamilton Predators and he began taking ticket orders for the team.



Once these actions came to light, Leipold informed Rodier on June 10th that the sale of the franchise to Balsillie was not going to happen. Rodier responded to this news with the threat of an investigation of Leipold by the Canadian Competition Bureau (their equivalent of the Federal Trade Commission) and the potential for Leipold to have personal liability in this matter. Sure enough, Leipold was contacted on June 13th by Bill Miller of the CCB. This investigation was initiated, and subsequently terminated by the CCB in October of 2008 with no action taken.



Jim Balsillie, he of the coprophagic smile and cloaked in Canadian nationalsim, has set himself out to be just a passionate hockey guy that loves the game and wants to bring it "back home". Those facts may be true, but the character of Jim Balsillie- and his associates- became even more suspect in my opinion after seeing the manner in which he operated in trying to acquire the Predators. Lying, bullying, failing to honor binding agreements, duplicitousness are not the traits that the NHL needs in an owner. Is it any wonder why the vote against Balsillie was a resounding and unanimous "no". So now the fans in Hamilton are left hanging, wondering if they will have a franchise either by relocation or expansion. And the fans in Phoenix are being yo-yo'ed with an owner (Moyes) that decided to circumvent the NHL protocol via bankruptcy and hand a franchise to Balsillie. Oh, by the way, this will be the only way that Moyes can recover even a portion of financial investment, so the rules be damned. So do the Coyotes stay or go, and will Balsillie's money win out in the end? Balsillie has shown that he has no regard for the rules in his attempts to get what he wants, and the NHL owners have seen him for what he is. Now, it remains to be seen if the bankruptcy court will allow him to join a club that doesn't want him as a member.

11 comments:

  1. It's as if you gathered up all the bad taste these two conniving Canadians left behind here in Nashville and expectorated it all at once. May the sputum cover Copps Coliseum! Many thanks.

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  2. Great, great work Mark. Man, I read through it TWICE to make sure I caught all that info. Thank you so much for all the work-- there was no way I was going to go through and read all the declarations, etc....

    To answer your question: No, I wouldnt buy a Blackberry from that guy. But it wouldnt matter... because I wouldnt want to only be able to talk on it in Hamilton. :)

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  3. Good article, maybe sheds some light on why now Mr.Bettman and the NHL BOG are so against this guy after approving him as a potential owner a couple years ago. True hockey markets still deserve NHL teams when people with that much money want to put them there, they will actually make money, and it is not like a lot of past NHL owners have been choir boys, Boots, Bruce McNall etc. Hockey in Az will never produce a profit, there is simply no interest- even if the team wins on the ice, sadly the other bids for the team are a joke.

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  4. Balsillie's bid is a joke, he pays $100 million to Moyes who isn't even a creditor and doesn't take into consideration the $500 million that Glendale would be owed if the lease is broken.

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  5. You don't see Balsille trying to drag people's names through the mud. He just wants to bring a hockey team to a market that wants a team.

    This time he's going to do. Atlanta and Nashville are next once Bettman is gone.

    Bettman knows that once Balsillie is on the BOG that his days are numbered as commish. The day is coming soon!

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  6. I give Leopold a little more credibility than Daly. Still I have to wonder how much truth there is. This would explain Leopold's abrupt decision to drop negotiations for the Preds two years ago.

    But again, all of this wouldn't be an issue if the NHL didn't force teams into markets where they run up bad debts. The NHL could absolutely keep Balsillie out if the Coyotes didn't become deadbeats. This insistence that it's acceptable for franchises to continue to lose money and run up debts is the only reason this Bankruptcy route has a chance to work. If Phoenix were a successful market this wouldn't be an issue.

    At the end of the day I imagine the Coyotes will have to be relocated, but the Judge won't rule against Balsillie, unless someone else comes up with a comparable relocation bid (AEG and KC as alluded to on Puck Daddy?)

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  7. Great article. Speaking as a Canadian, I would love to see a seventh team, but I am firm in my belief that Balsillie is NOT the man to do it.

    And for the record, I remember in the mid 90s when there were so many threats to move the Oilers to Houston. I wouldn't wish that on anybody and I hope the Predators can be successful in the Nashville market.

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  8. Not like there wasn't a pattern here...wasn't exactly up front in trying to buy the pens either. Shifty SOB, and glad to see the board doing what they can to have him uninvolved.

    That said, I still wouldn't be surprised if secretly he works for the NHL and helps to create a sense of urgency in failing markets.

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  9. Personally I don't care if the Predators stayed in Nashville, or moved to Canada. Same with Phoenix. However, the league has a responsilibty to itself and the other owners to ensure a franchise can be sold for the highest good bid. A good bid does not force the current owner to lose everything invested.

    Also- look like this- what financial backing- bank or otherwise, can be expected for a franchise if the honest fact is the NHL will allow an inferior deal to force the backers to lose the investment.

    This would only seem to make a franchise less saleable, and devalue it. An across the board devaluation would be the worst thing to a league that has financial troubles already.

    I don't think Balsillie is the ideal choice- but at least his bid will ensure a stable market for all teams in the near future.

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  10. Nice info about that Nashville bid. I've become a fan of the Coyotes, and want to see them stay. Moyes sure has enough money for his lawyers, but not for the team he bought. He ran it into the ground and that's why he won't get all the money back that he put into it. Plus, he signed a deal with Glendale with that huge lease penalty. They should get all that money if the judge makes a bad decision to allow a move. Balsillie will do anything to bypass the NHL's rules, and I hope he never gets approved.

    I don't want any teams to move either, because I think they can all thrive with some better leadership leading to better play. Gretzky should've been gone a long time ago, but his ownership deal wasn't gonna get him the boot. I'm sure Hamilton would support a team greatly, but they can't go stealing a team to get it.

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