The NHL has painted itself into a corner in Phoenix. The leaked details of Jerry Reinsdorf's bid and the flimsy Ice Edge Holdings bid are nothing more than straws that the NHL is desperately trying to hang on to.
When compared to Jim Balsillie's offer, they are a pair of laughable jokes that any smart investor would dismiss as pipsqueaks.
The Reinsdorf bid which is mostly composed of non-Reinsdorf money, offers nothing to the existing creditors and demands so many concessions, subsidies, and perks, that the Coyotes will end up one the most hated items in Phoenix instead of a sports franchise that is valued.
The hilarious bid by Ice Edge is conditional on letting the Coyotes play some games in Canada including all their playoff games in order to make up for the deficit that they know will incur.
There is a $70 million difference between their bids and Jim Balsillie's. If the NHL expected Judge Baum to exclude Balsillie based on these bids, the effect instead is the NHL handing him a loaded gun and saying, "Go ahead, shoot us." It's that ridiculous.
Let's go back a bit before we dissect this situation.
If I were an NHL owner, I'd hate Jim Balsillie, too. He's been like a pushy home buyer who won't take no for an answer, and when he couldn't get his own way, he used tactics to embarrass the league.
He played up the anti-Canadian angle and tried to rally Canadian public support by trying to sell tickets before buying the Predators and setting up MakeItSeven before buying the Coyotes. His actions even threatened the constitution of the NHL. He won't make friends with Gary Bettman and the NHL Board of Governors that way.
But the NHL has behaved even worse. They've treated Balsillie as an upstart with contempt and made no attempt to come to terms with him.
As far as the anti-Canadian angle, the reason Balsillie was able to exploit it is because it exists and Canadians know it. The NHL's old-boy's club arrogance has been on public display.
Since the first expansion in 1967, there has been an alliance between Canadian franchise owners eager to protect their territory and tv money and ignorant American owners who want to make the NHL an American league on equal terms with MLB, the NBA, and the NFL, complete with rich American tv contract.
The policies of this group have included delaying Vancouver's admission for three years; opposition to the NHL-WHA merger; the easy departure of Quebec and Winnipeg; and no expansion to Canada and the northern United States during the Bettman years.
Probably during his attempt to buy the Penguins, Balsillie could sense this unspoken hostility and contempt towards him and formed his own judgement and plan to crack and embarrass this old-boy's club. If he has made enemies, he hasn't cared about it.
His flamboyant grandstanding was the red flag to the bull. Every owner and the commissioner have formally rejected him. But somehow he has ended up looking good and poised to force his way into the NHL. The NHL has a big fat egg on its face.
Let's list in point form, all the ways the NHL looks stupid in this matter:
1. They are opposed to the best offer that offers the most money.
3. Bettman's declaration on Hockey Night In Canada that, "It's not personal," has been shown to be a sham.
4. If one of the other bids is accepted which have no compensation for the creditors the NHL will have made powerful American business enemies. Lawsuits will follow.
5. If you are an American investor, would you want to invest in a league that has treated Moyes and the other creditors in this manner when things go wrong?
6. Why are you defending a franchise that has never made a profit during its entire existence and lost $60 million last year?
7. If Reinsdorf's bid is accepted, the NHL, which claims it doesn't want any of franchises moved, accepts a bid that contains an escape clause.
8. If the Ice Edge bid is accepted, the NHL which has steadfastly opposed Hamilton and other Canadian expansion has to allow games played in Saskatoon including all the playoff games.
9. By taking an anyone-but-Balsillie stance the NHL will be backed into a corner should the franchise be awarded to him. Ever since Balsillie tried to buy the Penguins he has been treated as a contemptuous upstart. There has been no attempt to build bridges, close gaps, and heal wounds.
10. The tax concessions, subsidies, and other perks that the Ice Edge and Reinsdorf's bids are demanding will only increase the unpopularity of hockey in Phoenix. They also show how little faith the two bidders really have in the market.
11. If the NHL continues to reject Balsillie, if he is awarded the franchise and they can't find anyone else, they will have the humiliating choices of folding the team or running it themselves. Do they hate Balsillie enough to lose $60 million every year?
12. The poor quality of the two American bids might mean that Baum will have to give Balsillie the team almost by default.
13. By already formally rejecting Balsillie, what will it say about the NHL if Baum give him the team?
There are a few other things to be noted:
1. Poor Manitoba Mythbusters. If Winnipeg had built an NHL size arena instead of an AHL one, you might have got your team back. If an investor from Winnipeg with a proper arena, could have beat the Ice Edge and Reinsdorf bids with compensation to the creditors, the judge would probably award you your team again, given the anti-Balsillie NHL stance.
2. If Quebec and Hartford which want back in the NHL had settled the ownership-arena problems, they probably could have submitted a winning bid as long as it satisfied the creditors.
3. The poor quality of the two American bids plus the lack of any American investors who would move the team to another American city show how unpopular hockey is in the United States. Imagine if an NFL team was going to be auctioned.
When I compare the three bids, I almost have to bet that Balsillie will get the team, something I would not have believed less than a week ago.
The NHL was counting on the judge to be an "American patriot" and keep the franchise out of Canadian hands. But the judge can also be an "American patriot" by preventing American creditors from being ripped off.
The NHL claims they are defending the interests of the Phoenix fans. Believe me, that's the least of their considerations. Assuming Balsillie gets the team how much of a threat is he to what the NHL is really defending?
Canadian tv deals.
The Canadian teams will have to share and get less per team. But until the late 1990's, there were eight Canadian teams and they made a lot of money. If they can make money with eight teams, they can make money with seven.
There's no threat here except to greed. And all this could be avoided in the future by negotiating a new type of tv deal that pays more money if more Canadian teams are added.
Compensation to Toronto and Buffalo
If New York-New York-New Jersey and Los Angeles-Anaheim can settle their differences, than so can Toronto and Buffalo. But given the hysterical arrogance of the two NHL teams, I doubt if they'll make it easy. In Toronto's case, I doubt if there will be a mass desertion of fans to Hamilton.
In fact I believe that Hamilton will be treated like a "poor cousin" franchise in Ontario unless Hamilton starts winning championships. It will be like L.A. Lakers-L.A. Clippers. Toronto will lose some fans but there won't be a mass exodus. And if Toronto wants to stay in front of Hamilton, the best way is to build a championship team instead of operating in the dithering way they've done for the past 40 years.
In Buffalo's case, a Hamilton franchise won't mean the end of the team as Buffalo's owner likes to portend. Buffalo will still have all of northern New York State from Syracuse to Erie, Pennsylvania plus the northern shore of Lake Erie, half-way to Detroit. That's a population of 3-4 million people. Better marketing instead of the current lazy effort to win fans should keep them afloat.
American Owners Dream Of Getting A Rich American TV Contract
If shifting one franchise to Canada where it came from in the first place is enough to sink this goal, then it shows how flimsy and unpopular hockey is in the United States. If the NHL is so worried about this, the answer is to expand the league.
And Bettman put the teams in markets like Hartford, Milwaukee, Seattle, or Portland this time, where hockey means something, where you might get some decent tv ratings instead of outposts like Phoenix where tv ratings were zilch.
Let's face it Bettman, it was your idea to put teams into cities where hockey meant nothing instead of the northern United States and Canada. And contrary to what you said, it is personal. The smart move if Balsillie is awarded the team would be to bury the hatchet, move on, and heal wounds.
But you and the Board of Governors seem ready for a fight to the death. Is it really in the NHL's best interest to spend resources that way? And while that is going on, what will you do if the New York Islanders, Florida, Nashville, and Atlanta also explode?
And so I have come to the end of this analysis of the latest chapter of the Phoenix Coyotes saga. My final words are that I hope that Hamilton, though not necessarily Balsillie finally gets a team after the shameful way it has been treated by the NHL.
There is one way I would reject Balsillie and that is by an examination of his sanity. Anybody who wants to be partners with a group that hates his guts the way the NHL does has to be insane.
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