Sunday, May 31, 2009

Hockeynomics 201

It was announced last week that the Columbus Blue Jackets have entered negotiations with Nationwide Insurance Company and Franklin County (the county where Columbus is located) to discuss the possible sale of the home ice of the BJ's, Nationwide Arena, to the county. The objective is to obtain a more favorable lease for the Jackets and improve their financial condition. Currently, the Arena is 90% owned by the Nationwide Insurance company and 10% by Dispatch Printing Company, the owner of the Columbus Dispatch newspaper. This ownership arrangement was necessitated when John McConnell was awarded the franchise but Franklin County voters rejected a public/private partnership to construct the arena, and the private companies stepped in to build the facility. Because the arena is privately owned, the BJ's gave up income from naming rights, parking revenue in facilities adjacent to the arena, and 30% of the revenue from luxury suites. The BJ's receive all operating revenue from the arena, but these revenues are not covering operating costs. This economic situation has become problematic for the BJ's as their payroll has risen substantially since their inaugural season, and they are currently operating at a loss. According to Mike Priest, President of the Blue Jackets, this situation has forced the team to look at all options, and he has stated that this is being done to stave off a possible relocation of the hockey club. The proposal would be for Franklin County to issue bonds to pay for the purchase of the arena and pay those bonds off with a dedicated revenue stream derived from increased taxes on beer and cigarettes. If this occurs, then the BJ's could re-negotiate their lease on more favorable terms with the county, ostensibly improving their financial situation.

Critics of public/private partnerships to finance venues for professional sports teams will point to this situation as another example of a failed venture. It is important, however, to look past the headlines in these discussions and try to understand the economic impact that a team and its venue can have on a community. In the case of the Nationwide Arena, construction occurred in a downtown area that was in need of revitalization. According to Columbus Business First, Nationwide Insurance and its investment partners have spent over $750MM to build the arena and redevelop the area around the arena. Currently, there are 17 restaurants, 3 hotels, 200,000 square feet of retail space, 1.3MM square feet of office space, and 350 luxury apartments that have been built in the the Arena District. Reasonably, could anyone think that development would have occurred to the extent it has without the arena or its primary tenant, the BJ's? I don't have sales tax information or revenue numbers for the Arena district, but one would have to believe they are substantial. By way of comparison, according to a 2007 report by MZ Sports prepared for the Nashville Predators, the sales tax generated by all arena events at the Sommet Center was $3,178,638, and the portion of that number generated by the Predators was $2,750,544. Add to that number $875,000 in annual seat taxes. Additionally, the report estimates that fans attending hockey games spend $1.5-3.0MM in local restaurants and bars in the downtown area, representing upwards of $67,500 in additional sales taxes, based on Metro Nashville's 2.25% tax rate. The report estimated that a loss of the Predators from Nashville would result in a net loss of tax revenues of $4,331,000 annually.

Public/private partnerships to finance sports venues represent an opportunity cost for the public entity in the relationship. That opportunity cost is dollars that can be spent on other programs or projects are utilized in the construction of a facility used primarily for a private enterprise. This requires that these types of enterprises receive appropriate scrutiny and that revenue sources to repay the indebtedness be sound. Critics of these ventures often point to the opportunity costs associated with them, but a fair comparison is to look at the total picture of on-going tax revenues, the economic vibrancy that these ventures create, and the quality of life they engender.

I am a hockey fan, and I love the Predators. I am glad they are in Nashville. Critics of the lease arrangements for the Preds would be wise to consider the positive financial impact of the team on our community, and be glad that we are not facing the economic challenges that confront Columbus and its franchise.

Thursday, May 28, 2009

Even a Blind Hog Finds an Acorn

The conference finals are over and the Pens are matched up against the Red Wings for the second year in a row for the Stanley Cup. The View picked the Pens in 6 and the Wings in 7; the Pens swept the Hurricanes in 4 and the Wings bested the Hawks in 5. And there you have the reason for the title of this post- the View was correct in his conference final picks.

The Pens and the Wings both looked dominant in the conference finals. Chicago's youth finally betrayed them in the pressure cooker of the the Western Conference finals as they appeared to come unglued as the series progressed. It didn't help their cause to lose Khabibulin to a lower body injury as Huet and Corey Crawford were thrust into action in the crease for the Hawks. Huet was overwhelmed in his first action since Easter, but looked stronger in game five. The Wings D suffered some losses as Lidstrom was injured and Jonathan Ericsson had an emergency appendectomy, yet the D corp for Detroit was stellar, holding the explosive young guns of the Hawks in check. In the Eastern Conference final, Cam Ward was under siege in net for the Canes as the scoring machines of Malkin and Crosby exerted their will in the offensive zone. Carolina could not match the offensive horsepower that the Pens put on the ice, and the result was a 4 game sweep.

Now we move to the Stanley Cup re-match. The Pens should be more seasoned than they were last year and less in awe of making the championship. This will bode well for the Pens as they face a dinged up Wings squad. Never count the Wings out, however, as they have the capability to match up well with the Pens and elevate their game. The surprise of the playoffs has been the play of Chris Osgood in net for the Wings. While looking average during the regular season, he has been outstanding in the playoffs. It is a given that the Wings can score, and the challenge for the Pens will be to contain the scoring threats the Wings have. Fleury is going to have to be on top of his game for the Pens to have a chance in this series. He can be streaky, giving up juicy rebounds and the occasional soft goal. The Pens need him to be solid in net to have a chance in this contest. Home ice belongs to the Wings, and it will work to their advantage.

So who wins? Two teams that look to be evenly matched on paper should produce a great series. The experience edge goes to the Wings; I believe the talent advantage goes to the Pens. It is very difficult for the View to overcome his Red Wings hate, and this colors his pick for the Cup.

The Pick: Pens in 6

We will see if the blind hog can find another acorn.

Sunday, May 24, 2009


Some didn't come home. Some came home, but didn't come home. Having witnessed the carnage of the battlefield and the horror of war, they have been forever changed. Some have come home, never to be physically whole again. Men and women, young and full of life, dreams, and the hope of the future, shouldered the burden of the defense of freedom and made unimaginable sacrifices that those of us who have not experienced lengthy separation from loved ones and combat will ever understand. We enjoy the benefits of freedom and this great nation because of them, because of their unselfish service for our nation and for us. Memorial Day. For most of us, a time to enjoy family, maybe start a vacation, or enjoy a cookout. For those who have served and sacrificed, it is one day where they receive the honor they are due, the honor that they have earned by their willingness to preserve our freedom. A "thank you" is not sufficient, yet that is what we offer- our heartfelt appreciation for your service and your sacrifice. To those who have served, and are serving, you are the embodiment of the greatness and spirit of our nation.

In Flanders Field

In Flanders Field the poppies blow
Between the crosses, row on row
That mark our places; and in the sky
The larks, still bravely singing, fly
Scarce heard amid the guns below

We are the dead. Short days ago
We lived, felt dawn, saw sunset glow,
Loved, and were loved, and now we lie
In Flanders Field

Take up our quarrel with the foe;
To you, with failing hands we throw
The torch; be yours to hold it high
If you break faith with us who die
We shall not sleep, though poppies grow
In Flanders Field

Dr. John McCrae

Thank you for your sacrifice, your service, and your greatness.

Thursday, May 21, 2009

The End Game

The drama of the battle between the NHL and the Phoenix Coyotes/Jim Balsillie contingent continues to unfold in Judge Redfield Baum's bankruptcy court. Both sides have been ordered to mediation to determine who actually has control of the team, and whether Jerry Moyes could rightfully put the club into bankruptcy. There are a number of legal questions involved in this case that will be determined by the judge, and one could be precedent setting, not only for the NHL, but for other professional sports leagues. That question is the one raised by Balsillie's attorneys and claims that the NHL has violated federal anti-trust provisions by not allowing the franchise to move. Courts have traditionally stayed away from this issue, allowing professional sports leagues to run under their agreed upon rules without consideration of anti-trust provisions. Should Balsillie prevail in this argument, the sports world, not just the NHL would potentially be turned upside down as any disgruntled franchise owner could pick up their franchise and move to a more favorable locale. The seriousness of this aspect of the case has drawn the attention of the other professional sports leagues, as lawyers for the NFL, NBA, and MLB have all filed friend of the court briefs in support of the NHL.

The legal wrangling is going to continue for some time before a final disposition of this issue from the court. There will be a tremendous amount of speculation as to the leanings of Judge Baum and argument over the strategy of each side in this case. I am not an attorney and I will leave those arguments to ones better versed in the legal issues that are present in the case before Judge Baum. What I as a hockey fan am trying to understand is the end game- what is Balsillie trying to accomplish? I have some thoughts- purely speculative and just the View's opinion- about what is at play here.

In my opinion, what Balsillie has bid on in his offer for the Coyotes is NOT the entity that is in the bankruptcy proceedings right now. Balsillie has bid $212.5MM for a franchise that can be relocated, and as currently constituted, this is not the case with the Coyotes. The bankruptcy filing by current owner Jerry Moyes served to put Balsillie's bid front and center before the court, and it was a "stalking horse" bid- one that was so far in front of other potential bidders that it would not be matched. Balsillie will not get the Board of Governors to agree on the relocation of the Coyotes to southern Ontario at this time, maybe never, because the owners would then forgo the lucrative expansion fees that a franchise in that market would generate. So the end game for Balsillie is to get the court, through the alchemy of the bankruptcy process, to reconstitute the Coyotes into an entity that can be moved. This is his side door about which he spoke, and that side door would be opened by Judge Baum with an favorable ruling to Balsillie on his anti-trust claim. Otherwise, Balsillie's bid would fall flat as his relocation contingency becomes moot. This is the pivotal issue around which this case hinges.

On my May 7th post, "Follow the Money", I speculated that Balsillie may be trying to avoid ownership of a an NHL franchise in southern Ontario via expansion so as to not have the obligation of paying the expansion fee to the NHL (that fee, in turn is re-distributed to each owner on a 1/30th share basis). It has been estimated that the expansion fee for a franchise in southern Ontario will be in the $300MM range. A bid for the Coyotes of $212.5MM, should it be accepted, would save Balsillie $87.5MM. I do believe that the NHL will expand to southern Ontario. So does Balsillie. He is just trying to come into that market on the cheap.

By conspiring with Moyes to put the Coyotes into bankruptcy, providing $17MM in Debtor In Posession financing, and claiming violation of U.S. anti-trust laws, Balsillie has not only tried to step through a side door, he has kicked it down. Perhaps this is a tacit admission by Balsillie that he would have a most difficult time getting approved as an owner by the Board of Governors. And this is his end game- ownership, under his terms, without their approval.

Saturday, May 16, 2009

Second Round Re-View and Conference Final Picks

The View continues to show why he is not making his living as a bookie as he was 50% on his second round picks. To recap:

Boston versus Carolina

The Pick: Boston in 5

The result: Carolina in 7

At times in this series, the Bruins showed why they were the number one seed in the East, dominating the Canes and controlling play on both ends of the ice. And at times, the Bruins were inexplicably inefficient on the offensive end and committed numerous defensive lapses. Down 3-1, the Bruins roared back to force a game 7 in Boston, but fell in overtime to the grittier Canes. Cam Ward was stellar in this series, and the Canes rode his solid goaltending to the conference finals.

Pittsburgh versus Washington

The Pick: Pittsburgh in 6

The result: Pittsburgh in 7

Arguably the most hyped series in the playoffs lived up to its billing as the Crosby/Ovechkin matchup was most entertaining. Unfortunately for Ovie, many of his teammates failed to produce in this series, notably, Green, Semin, and Backstrom. Simeon Varlamov continued his magical run through the playoffs until the deciding game 7, when it appeared the pressure finally got to him and he crumbled, allowing 4 goals before being pulled in favor of Jose Theodore. The Caps crashed with a thud on home ice in game 7 in what can only be called a total team breakdown and utter disappointment.

Detroit versus Anaheim

The Pick: Anaheim in 7

The result: Detroit in 7

This was the war that everyone thought it would be, with the offensive prowess of the Wings clashing with the grit of the Ducks. In the end, Detroit won the series with a gritty goal of their own as Dan Cleary tallied during a goal mouth scrum. There was no lack of intensity and nastiness in this series, and the Wings proved they were up to the task. At times, Anaheim was able to take the Wings off their game, but the offensive skill of the Wings prevailed. Perhaps the surprise of this series was that the Wings were able to win without offensive production from Pavel Datsyuk.

Chicago versus Vancouver

The Pick: Chicago in 7

The result: Chicago in 6

The high powered offense of the Hawks proved to be too much for the Canucks as the Hawks assaulted the Vancouver D and Roberto Luongo. Even when trailing during a game, one never had the feeling that Chicago was out of any game because of the explosiveness of their offense. Khabibulin exorcised his demons that were the Canucks, finally coming out on top in a series. The youth of the Hawks and overall lack of playoff experience was considered a negative going in to this series, but their youth and enthusiasm carried the day.

And now on to the conference final picks:

Pittsburgh versus Carolina

Cam Ward has been outstanding in goal for the Canes throughout the playoffs, and he will have to be on top of his game if the Carolina is to have a chance in this series. Carolina is a squad that personifies heart, getting valuable contributions from role players on the squad. Pittsburgh epitomizes a team with abundant star power. If this becomes a wide open, pond hockey type of series, then the Canes will get smoked. Carolina wants to make this series a grind it out contest, which favors their talent. An interesting sidelight will be the brother on brother matchup of Jordan and Eric Staal, which is the first time to occur since Phil and Tony Esposito met in the playoffs. Look for the explosive Penguin offense to take control of this series.

The Pick: Pittsburgh in 6

Detroit versus Chicago

Two Central Division rivals square off in the conference finals, and the familiarity between these two squads will be reflected in the play. I expect an explosive offensive series with the teams trading goals. The playoff experience of the Wings will be a plus for them, but it will be essential for their D to be solid. Osgood will face his biggest test in this series as the Hawks have several lines that can light it up. The pressure is going to be on the young Chicago D to be at their best.

The Pick: Detroit in 7

There you have it, the View's view of the conference finals. If you are a betting person, I would pick exactly opposite of the picks I have made.

Tuesday, May 12, 2009

The Changing Face of Hockey News

If you have picked up your local paper, you know that hockey rarely rates more than a cursory mention in the sports pages, even when your local team is on the ice. Local television coverage is not much better. The NHL has done a good job of disseminating information through alternative sources, such as its website and through local and national bloggers. We are fortunate here in our area to have a number of very good bloggers that provide insight not only on our beloved Predators, but on the state of hockey in all markets. Two of those local bloggers are Buddy and Jackson Oakes who write the Preds on the Glass blog and Dirk Hoag who pens the blog On the Forecheck (also known as the Forechecker). Both blogs are linked on the right side of this blog, and I encourage the readers that are gracious enough to visit my blog to take a look at their blogs for new insight and perspectives on the Predators and hockey in general. I have written several recent posts about what is happening in Phoenix. Buddy Oakes does an internet radio show on Mondays, and this past show included and interview with Travis Hair who writes a blog in Phoenix called Five for Howling. Go to Buddy's site and click on the link to BlogTalk Radio and take a listen for the unique local perspective from Phoenix about the Coyotes, their bankruptcy filing, and the state of hockey in that area.

While the mainstream media continues to abdicate their role in covering hockey, others are picking up the torch and providing excellent coverage of this great game. Take a listen or a glance at these blogs to get the news we need.

Monday, May 11, 2009

Us Versus Them

As the continuing saga of the bankruptcy and potential relocation of the Phoenix Coyotes continues to unfold in the venue of the Judge Baum's bankruptcy court, an interesting aspect of this situation has started to emerge. There is now a website, Make It Seven, that has begun soliciting signatures in support of relocating the Coyotes to southern Ontario, and currently has over 100,000 signatures. A corresponding website, Keep It Six, has originated that is supporting the attempt to keep the Coyotes in Glendale/Phoenix. Understandably, proponents of both positions are passionate about their cause, and rightfully so. The interesting aspect of this to me is the level of vitriol that is being spewed, primarily by Canadian hockey fans and writers toward hockey in the States, especially in the "non-traditional" markets. Phoenix is the primary target of this venom, but all hockey in non-traditional markets is susceptible to the invective put forth by hockey fans north of the border. Some prominent hockey writers have jumped on this bandwagon as well. Consider this quote from Ed Willes in the Vancouver Province in his column on May 10,

"Simply put, it should be obvious by now the league doesn't work as currently constructed and the sooner it moves to markets which care about hockey, the better for all concerned."

Mike Brophy, a writer for The Hockey News , writes in a May 8 column,

"Beyond that, Canada deserves a seventh franchise and I think it is high time Canadians are given their due by the NHL. We sat back quietly when Quebec and Winnipeg packed up and left and we should not let the NHL sweep this opportunity under the carpet. It is also a slap in the face of all Canadian hockey fans for the NHL to turn down this golden opportunity to locate a franchise in what can only be deemed as the most desirable and fail-safe market in North America."

The ethnocentric view of these writers is mirrored by the many comments that I have read from hockey fans north of the border. A virulent stream of nationalism runs through many, not all, but a majority of hockey fans in Canada. The question is, does this serve the greater good of the game we all love? Realistically, none of us are privy to the deliberations of the Board of Governors as to the disposition of existing franchises and the potential for the location (or relocation) of new franchises. I can see the perspective of Canadian fans that feel they have been slighted or ignored by the league when it comes to additional franchises in their markets. However, does the shredding of league rules to relocate a struggling franchise benefit the league, its fans, and the growth of the game? I think fans of the game realize that the Greater Toronto area, or southern Ontario can easily support another team, but should another team be placed in these markets at the expense of uprooting an existing franchise and the destruction of its fan base?

The reality of the demographics of the North American market dictate that hockey should be in the south and in other "non-traditional" markets in the U.S. Will it take time to grow the game in those markets? Absolutely! Is it worth it to grow the game in those markets for the long term health of the league? I think it is.

There are numerous legal and financial issues to be resolved by the bankruptcy court regarding the fate of the Coyotes. There are issues about potential expansion of the league into new markets that must be addressed. There are issues about growth of the league, both in revenues and its fan base. All of these issues will take time to resolve, and they will be resolved through appropriate channels, and some interested parties will be satisfied with the disposition of these issues, and some will not. The fact is that the game we all love is desperately attempting to grow its fan base. We need the markets and the fans in Canada. And they need us. Its time to put aside the nationalism and nurture the great game we all love.

Thursday, May 7, 2009

Follow the Money

The initial hearing on the bankruptcy petition filed by the Phoenix Coyotes was held this afternoon in Judge Redingfield Baum's bankruptcy court in Phoenix, and some interesting details have emerged. First, let's set the stage. Jerry Moyes purchased the Coyote franchise in 2001 for $125MM and has invested a total (including the purchase price) of $301MM. I have looked at the bankruptcy petition, and Moyes is listed as the largest unsecured creditor at $103,857,561. Moyes' equity in the franchise is estimated to be approximately $206.5MM, which is negated by the bankruptcy filing. The petition lists assets in the range of $50-100MM and liabilities in the range of $100-500MM. As a point of reference, Forbes magazine estimates the value of the franchise to be $145MM. Moyes has stated that the franchise has lost $73MM over the past three years. Additionally, the arena management arm of his business has lost $20.1MM over the same period. These numbers are indicative of the dire financial straits that Moyes is in since he has taken over ownership of this franchise. Until the economic slump, he was able to cover these losses from income derived from his trucking business, Swift Transportation. That has not been the case for the last two years.

Another financial variable is the lease the Coyotes have with the City of Glendale for arena. Should Moyes break the lease, he is responsible for the payment of the annual rental expense for the term of the lease, which is 30 years. That payment is estimated at $750MM. The lease does provide an out for Moyes, and that is filing bankruptcy. Typically, a landlord is not awarded the value of the lease in a bankruptcy filing; rather, the courts have tended to award a year's lease payment to the landlord. Obviously, the City of Glendale does not want to see this occur, as taxpayers are on the hook for Arena with no anchor tenant and no consistent revenue stream.

This brings us to the Balsillie bid and what it does for Moyes. Depending on how one reads the numbers, Moyes stands to recover most of his unsecured loans to the franchise if the Balsillie bid is accepted by the bankruptcy court. I think it is a given that Moyes could not find another bidder that would buy the franchise at the price that Balsillie is offering. Moyes says that his equity in the franchise is $206.5MM; Balsillie's bid is $212.5MM. Moyes purchased the franchise in 2001 for $125MM and has advanced unsecured loans to the franchise totalling $103MM, totalling $228MM. Balsillie's bid, using these numbers allows Moyes to recover $87.5MM of the unsecured dollars that he has outstanding.

We don't know if Jerry Reinsdorf was (is) going to make a bid for the franchise. It is safe to assume the bid would be less than the $212.5MM bid that Balsillie has on the table. For the sake of argument, let's say that if he bid, it would be $180MM. A bid at that level allows Moyes to recover only $48MM of his unsecured loans. Obviously, Moyes would prefer that Balsillie's bid be the winning bid.

Why would Balsillie pay $212.5MM for a franchise that is bleeding red ink and estimated to be worth only $145MM, according to the Forbes estimate? To answer that, let's play "What If?" What if the NHL decides to expand AND agrees to put another team in southern Ontario. Forget for a moment the opposition from the Toronto Maple Leafs and Buffalo Sabres. What would the price be to purchase the franchise rights for this market? Recall what Craig Leipold paid to get the franchise rights for Nashville. It was $80MM to put a team in a non-traditional, unproven market. What do you suppose the franchise fee would be for a hockey mad market like southern Ontario? $300MM? $400MM? While not an apples to apples comparison, look at the Houston Texans. Bob McNair, the owner of the Texans, wrote a check to the NFL for $800MM for the RIGHTS to have a franchise in Houston. Yes, I know it is the NFL, and the comparison to the NHL doesn't hold, but the point is that the price of anything is what a willing buyer will pay. Everyone that follows hockey knows that Balsillie desperately wants a team in southern Ontario and specifically in Waterloo, home of his company Research in Motion. He is definitely a willing buyer. There is tremendous fan support for another NHL team in that market, and I believe the NHL will eventually put a team there. So, if you were a potential owner, would you rather pay $212.5MM for an existing franchise and relocate to your chosen market, or pay a larger sum to just have the RIGHT to put a franchise in your chosen market? I think the answer is obvious.

It goes without saying that the previous paragraph is just speculation on the part of the View. However, one is usually on the right track when following the money.

Wednesday, May 6, 2009

The Mess in Phoenix- And What it Means for the NHL

More details are starting to emerge today about the bankruptcy filing of the Phoenix Coyotes and the bid by Jim Balsillie for the purchase of this troubled franchise. Balsillie has provided $17MM in Debtor In Possession financing to the franchise, which in a bankruptcy proceeding would place him at the front of other creditors. Various sources have reported that this filing was a complete surprise to the management of the NHL, and that the league has removed Jerry Moyes, the current owner of the Coyotes, from management and operating responsibilities. The emergence of Balsillie into this situation occurred even as the NHL was courting Jerry Reinsdorf, owner of the Chicago White Sox and whose team has a spring training complex in the Glendale, less than one mile from Arena. Reinsdorf was ostensibly being courted because he had the financial wherewithal to run the team and was amenable to keeping the team in Glendale.

There are a number of interesting aspects to this case that will have to be resolved. Could Moyes actually file bankruptcy is a question that must be determined on the front end. Behind Moyes' $100MM, the NHL is the largest unsecured creditor of the franchise, having fronted $35MM to keep the team afloat. The NHL may argue that they have been "in control" of the franchise and that Moyes' actions were invalid. Many have speculated that the bankruptcy filing is designed to move the franchise out from under the 30 year lease that it has with the City of Glendale, which to my understanding is the only "out" the franchise has in the lease agreement. However, in a bankruptcy proceeding, a judge may deem a lesser offer to be a better offer IF it keeps the team in Glendale and the lease intact. Again, this was rumored to be part of the Reinsdorf bid. Balsillie's bid is contingent upon his ability to move the franchise to southern Ontario. Should the bankruptcy court rule in favor of Balsillie and his bid, and if there are no competing, superior bids, then the question becomes can the court tell the NHL how to operate one of its franchises? Specifically, will the court allow relocation of the franchise against the specific wishes of the league and its management? That is a question that will involve an enormous amount of legal wrangling to resolve, and I am certain that the NHL will appeal an adverse ruling. Finally, ownership of a franchise and any potential relocation of that franchise must be approved by the NHL Board of Governors. The tactic employed by Balsillie and Moyes is an attempt to circumvent that governance provision.

There is another aspect to this change of ownership that has started to emerge. Today, Paul Kelly, head of the NHL Players Association, has endorsed Balsillie's bid and relocation proposal. This is no surprise, because a team in southern Ontario will certainly generate more revenue for the league than has the franchise in Phoenix. Player salaries are tied to league revenue through the salary cap, and a team that bleeds red ink like the Coyotes is a detriment to the overall compensation of the players. Additionally, 22% of a players salary for this season goes into a league controlled escrow account to be paid back to the players when (and if) the league hits a pre-determined revenue target. Kelly and the players look at the revenue generated by a franchise in Phoenix and compare that to the potential revenue generated by another Canadian franchise and they see the potential for those escrow payments to come down. No one can fault the players for operating in their own economic self interest, and short term, this is decidedly in their best interest. However, if the precedent is established to potentially relocate a franchise by these maneuvers that are being attempted by Balsillie and Moyes, then growth of the fan base base and corporate sponsors, particularly in non-traditional markets, will be more difficult with this this option looming. And long term, this will have a detrimental affect on the total league revenue.

This situation could shape the future of the NHL and its relationship with all of its franchises. Balsillie is determined to own an NHL franchise, but seems to chafe under the strictures of ownership that are currently in place. His aggressiveness has alienated many on the Board of Governors. If the bankruptcy court awards him the Phoenix franchise, it will remain to be seen if the BOG will then have the ability to vote on his purchase. If they do, I would buy a ticket just to watch that meeting.

Tuesday, May 5, 2009

Balsillie's Back

The Phoenix Coyotes franchise filed for Chapter 11 bankruptcy protection today. Included in the filing is a conditional offer to buy the franchise for $212.5 million by PSE Sports and Entertainment, which is owned by Jim Balsillie, and the stated intent of Balsillie is to move the franchise to southern Ontario. The bankruptcy filing means that any offer to buy the franchise and any potential relocation of the franchise will be under the supervision of the bankruptcy court. Balsillie has provided the franchise $17MM in advance of the sale to keep the franchise operating until the final disposition of the court. The bankruptcy court will entertain all offers to purchase the franchise, and the court will award ownership of the franchise to the bidder that will offer the best terms for the purchase.

Jerry Moyes, owner of Swift Transportation and the Coyotes franchise, has been losing copious sums of money for several years with the franchise. He has been able to sustain those losses because his business income from his trucking company could offset those losses. With the slump in the economy, and subsequently the trucking business, Moyes could no longer support these deficits. The attendance for the Coyotes has been abysmal, and the franchise is located away from downtown Phoenix. Couple those facts with the mediocre brand of hockey the Coyotes have played over the past several years, and you have a formula for disaster. Balsillie has managed to anger a number of people in the NHL with his heavy handed tactics (remember how we felt in Nashville), but the fact remains that he has the financial horsepower to right this financially ailing franchise. The interesting question is will he be able to relocate the franchise in light of the NHL's stated desire to keep the franchise in Phoenix/Glendale?

This is indicative of the fragile economic conditions that surround some of the franchises in the NHL. Pred fans should be thankful for sound, local ownership in these tenuous economic times. For more on this story, follow the link on the the right to James Mirtle's blog
From the Rink.

Saturday, May 2, 2009

The NHL Awards, And How They are Determined

Much has been made recently about the omission of Pekka Rinne from consideration for the Calder Award, given to the Rookie of the Year in the NHL, and Shea Weber for the Norris Trophy. Rinne was certainly worthy of consideration, compiling numbers similar to Steve Mason of the Blue Jackets, one of the finalists. Weber had an outstanding campaign, certainly worthy of the recognition for the Norris. Curious about the process, I contacted Kevin Allen, a hockey writer for USA Today and President of the Professional Hockey Writers Association (PHWA). Kevin told me there are 160 voting members of the PHWA out of the 270 total members of the organization. These writers vote for the following awards: Hart, Norris, Calder, Selke, and Lady Byng. Additionally, they vote for the All Rookie team and the NHL All Star team. According to Alan Adams, secretary of the PHWA, the membership in this group has declined markedly over the past year, continuing a trend of declining membership, and includes some bloggers (mostly affiliated with a newspaper) and part time writers. I understand from Kevin that John Glennon is a member of the PHWA, but calls to Glennon to confirm this were not returned.

Anyone that has followed the newspaper business knows that circulation- and staff- is shrinking. Hockey coverage for the Predators, for instance, is now relegated to home games, with wire reports providing game coverage for road games. This is true for many teams in the NHL now. This leads one to ask how extensive is the knowledge of a player like Rinne or Weber by writers/bloggers in other markets? A player may be seen for a game once every couple of years in a market such as Toronto, which has a high concentration of PHWA members. Does this affect the voting for one of these awards? While I have no empirical evidence that it does, one can't help but believe that the lack of exposure that a player in Nashville has is going to hurt in the voting for these awards. If Nashville has one member of the PHWA, and there is a concentration of members in a market like Toronto, where do you think the interest and exposure will lie?

While the dissemination of information about the league and its players has moved to other channels, such as bloggers, the fact remains that a player in a non-traditional market is going to have to put up eye popping numbers to be considered for a major hockey award, as many of the bloggers that provide excellent coverage are not members of the PHWA. Since the Tennessean and other traditional media outlets are pulling back their coverage, perhaps it is time to recognize what bloggers bring to hockey coverage in their local markets and accept them into the PHWA.

All of this points to the fact that players in non-traditional markets will face an uphill battle to receive the recognition they are due. Bloggers like the Forechecker and Preds on the Glass that are starting to receive national recognition and following will be the new conduits to get the message out about the play of of budding stars in their local markets. Time for the PHWA to recognize the realities of the marketplace and let their membership reflect those realities.