Hockey Headlines

Tuesday, 25 August 2009

I Hate To Say "I Told You So"...

I can honestly say that the man to the left is not me. I'm not that old. My hair isn't that gray. I don't wear glasses. I don't have a beard. However, some may wonder if I have some sort of ability to peer into the future after today's motions in the Phoenix courtroom where the Coyotes' fate hangs in the balance. I'm going on record right here to say that this saga has gone on far too long already, and that the Coyotes will suffer mightily for the next few seasons due to the bickering and fighting that has happened in the desert. If you thought the red ink was flowing now, the dam has yet to burst. Things will get significantly worse for the Coyotes before they get better. But back to this peering into the future thing.

On Saturday, August 8, 2009, I wrote a piece regarding this entire legal battle that would change the landscape for both the NHL and Jim Balsillie's camp. Essentially, I asked a very simple question: why doesn't the NHL buy the Coyotes? It makes more sense than dragging the franchise through an auction and crossing your fingers with the hopes that a guy, who wants the team so desperately that he can taste it, doesn't get it. It makes too much sense when it comes to determining how to run and market the franchise because the NHL would have total control over that scenario.

Today - surprise, surprise! - the NHL has filed a motion and submitted their own bid for the Phoenix Coyotes. Exactly what I said they should do, the NHL goes out and does it 17 days after I proposed the idea. Word for word, here is the entire statement from NHL Deputy Commissioner Bill Daly:

"Today, the League filed its own bid to purchase the Phoenix Coyotes’ franchise out of bankruptcy in an effort to maximize the likelihood that the Club ultimately will be sold to an acceptable purchaser who is committed to operating the franchise in Glendale.

"We remain supportive of the other efforts that have been and are being made to purchase and operate the Coyotes in Glendale, and we will continue to do everything we can to assist interested groups in those efforts leading up to the scheduled sale hearing on September 10, 2009 and thereafter, if the NHL is the winning bidder.

"We believe this step was necessary at this time in order to best preserve and maximize the value of the Club asset for benefit of the Club’s creditors and for the community of Glendale.

"The bankruptcy petition and subsequent events have been incredibly damaging to the Club’s business, and the sooner the Club can be extricated from the bankruptcy process, the sooner Club personnel can begin to restore the team’s vitality and local fan base.

"In the event the League’s bid proceeds forward and ultimately is the one approved by the Court, we intend to conduct an orderly sale process to a third party buyer outside of bankruptcy.

"It continues to be our intention and hope to conclude satisfactory agreements with existing Club business partners that will allow the Coyotes to be owned and operated on a viable basis in Glendale for many years to come."
Now, without getting into dollars and sense too much, it works out that Balsillie's $212.5 million bid for the Coyotes can be matched if every single NHL owner, of which there are 29, puts up $7.4 million, give or take a few thousand bucks. If they increase that to an even $10 million a piece? Well, that's $290 million for their bid, and they haven't even broken a sweat yet. Jimmy B? That's a $77.5 million increase for the team from his original bid.

Now, I'm sure $77.5 million doesn't worry Jim Balsillie that much. The guy is a billionaire. But when does common sense take over? How much is "too much" for a guy like Balsillie? If the NHL owners increased their individual bids to $15 million each, the NHL's bid instantly becomes $435 million. That valuation would put the Coyotes up near the Maple Leafs and New York Rangers in terms of their "value" despite only being worth $142 million.

But we're not done there. Sure, the owners can contribute money and split the Coyotes 29 ways. Why not make it a nice, round number like 30, and cut the NHL itself in on the deal? The NHL makes a ton of money itself, and can certainly throw a few bucks in on the deal. Suddenly, the costs are reduced to $7.1 million for each of the 30 partners in the deal. And with every increase that they make, Balsillie has another competitor trying to force him out.

Which is exactly what the NHL wants.

The NHL has ruled that he isn't ownership material. They have talked until they were blue in the face about how he isn't the kind of guy that they want as a part of their team. We know this, Balsillie knows this, the court knows this, and I'm pretty sure aliens on Mars know this. Balsillie asked the courts to rule against this decision by the NHL based on past approved ownership groups that have had less-than-impressive credentials. And that's fine. He's well within his right to ask this.

Where he is stuck now is that when, not if, but when this proceeding goes to auction, the NHL has leveled the playing field when it comes to money. It was clear that Jerry Reinsdorf couldn't outbid Jim Balsillie when it came to an auction scenario, and Jerry Moyes was pushing for the biggest payout he could get. Balsillie alluded to his vast wealth when it came to the auction scenario whenever he could. What the NHL has done is taken the vast wealth of 30 people and matched it dollar-for-dollar with the vast wealth of one man.

If Jim wants to yap about how rich he is and how the franchise is his once it goes to auction, he now has competition. Serious competition, might I add. It's easier to spread the risk over 30 people than it is over one person.

And I'll point out that this is almost IDENTICAL to what happened in Major League Baseball with the Montreal Expos. MLB was forced to take over the Expos, and they proceeded to run the team until a suitable owner could be found. While the circumstances in which the NHL is being forced to take over a dying team are entirely different, if they are successful, this may play out exactly as it did in baseball. That is, the Coyotes would be bought by the NHL, and then could be sold to a group in a city like Kansas City with a brand-new arena in place, and they would play there after the NHL determined that the franchise in Phoenix was not salvageable.

I hate to say I told you so, but on August 8, 2009, I told you so. With both parties slinging mud, this situation is only going to dirtier.

Until next time, keep your sticks on the ice!

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