Sean's Blog

Don't Drink the Sand

As the Commish awaits a ruling from a judge in Arizona it is hard to not draw the parallel to the crazy man in the desert, lost without water, hallucinating and staggering aimlessly. 

The Phoenix Coyotes are dead and no matter what Judge Baum rules, that team will be playing elsewhere this time next season.  The scene on opening night in Phoenix is going to be disturbing - it will be like the "fans" thought it was Halloween and came dressed as empty seats.  The Yotes are in for a blood bath with the NHL underwriting the entire mess.

The best thing that could happen is for Judge Baum to not rule.  The league is paying the bills, the players are getting paid and nobody has the right to an appeal.  If the good judge just waits this thing out, the NHL owners will break and the NHL will be forced to do a deal with the only person in the whole wide world who seems to have any interest in buying this club, Blackberry Jim.  If you figure that the Coyotes have nothing by way of revenue coming in, plus are paying rent to the City of Glendale and the club's payroll is north of $45m with staff and things then between now and April, the owners are going to lose north of $6m per month, maybe more.  The NHL simply doesn't have pockets that deep, so they will have to make a credit call to their other owners.  At some point they are going to blink.

Everyone knows this is about keeping a team out of the Leafs geographic territory unless the Leafs get a fat pay day.  Commish insists no team has a "veto" but Melnyk has already contradicted that - while it might not be in the official rules, the unspoken rules are in play and Melnyk gave the game away.  How long before the other owners who are going to get touched by the Commish for keeping his pet project in the desert alive say, "Enough! Do a deal with the Blackberry guy, get him to cover our losses and move that team to Hamilton!"  I'd say we're talking by mid-November.

So Judge Baum, there's your answer.  You can avoid your ruling being appealed by letting commerce have its way in this dirty little affair.  Just do everyone a favour in the meantime and don't let the Commish drink the sand.

NHL Contraction

This mess in Phoenix must have demonstrated to the NHL owners that there are very few rich people out there wishing to swell their ranks.  Now compound the problem with the Florida Panthers being in trouble (apparently the owners won't sink anymore funds into it) and Tampa Bay already in a position where they have admitted they won't meet their costs and you wonder how reducing the number of franchises in the NHL isn't on the agenda?  The Commish and Board of Govenors have set themselves a precedent where now you must be of strong moral character as well as stupidly rich to own an NHL team - that's going to be a tough one.  What with Kumar and Boots currently serving time and Len Barrie by all accounts having borrowed the money for his share of the Lightning from a fund he was entitled to dip into and the NHL continues to look ridiculous.

Why not do a deal with Basillie, get him to pay the league some silly sum of money, $300m or whatever and let him put an expansion team in Hamilton.  Then the league use its powers to revoke franchises, fold them up and setup a wide ranging expansion/dispersal draft.  Each team protect 17 skaters and 2 goalies, anyone you leave unprotected is immediately bought out and becomes a free-agent if they are not taken in the draft.  If you select a player, you let one off your list go.  Basillie gets to pick twice per round, first and last.

This would do a whole bunch of things for the good of the game.  It would get rid of three lame duck franchises and create one strong one.  It would give the owners a chance to clean up some of their contractual messes without taking a salary cap hit.  Ideally the league would be stronger because the 40 weakest players would now be unemployed - technically, every team would get an upgrade.

I think if you got really ambitious this could be part of re-neogtiated and extended CBA.  The players will complain about losing 40-odd jobs.  You solve that problem by not lowering the cap next year (as it will most certainly do), increase revenue sharing among the teams, reduce that stupid hedge fund the NHL gets by withholding large parts of the players' income and look at doing some more inventive things to generate NEW revenue.  I think the NHL should seriously look at MLB.tv as a model - exploit the long tail of fans around the world who will pay on the internet.  Set it up as a JV with the players, make them put some skin in the game - the NHLPA encourages members to promote and help deliver content for the new online medium and the league and players split the revenue.

It is very sad when you have such an awesome sport destroyed by a stupid people in charge.

One Down, Two to Go...

Ice Edge Holdings have pulled out of the Phoenix Coyotes bankruptcy auction leaving just the NHL and Blackberry Jim.  Jim's latest gambit of chucking another $40m on the table for the City of Glendale makes the NHL offer look even more ridiculous because they've not ruled out moving the team (they will certainly move it - maybe Craig Leopold wants another team) and they've made no concessions to Glendale.  This mess just gets crazier and crazier for the Commish.

I'm not a legal expert, but here's how I see things:

• Blackberry Jim has made an offer that sees all secured creditors receive some form of compensation, including the City of Glendale.  My understanding is that Judge Baum (or any bankruptcy judge) has the authority to set aside a lease, so offering them about 25% of the total cost of building the arena is a pretty good offer considering they will still own the facility;
• The NHL's offer has flaws in that it preferences non-secured creditors ahead of secured creditors;
• The judge's role is complicated now only by the fact that there is no precedent to force a professional sports league to accept an owner; and,
• The NHL may find itself up on anti-trust charges if the judge rules in the NHL's favour.

The last point around anti-trust is probably the one I'd be most worried about if I were say, Ed Snyder or some owner who couldn't care less about a team in Phoenix.  The NHL owners have unanimously voted against letting Blackberry Jim into their club on pretty flimsy grounds considering the Boots just got sent to the can recently over his purchase of the Preds.  If the NHL now convince Baum that they alone can determine who enters their "club" and Blackberry Jim is ruled out of the auction, then the NHL stands to make some money out of this.  They will certainly look at moving the team somewhere else because NOBODY will want to own it in Phoenix.  They'll certainly sell it for more than the $140m they'll end up paying for it.  So in the end, their club refused entry to someone willing to pay more and profited on keeping their ranks closed.  Smells like an anti-trust violation to me.

One other interesting side note in all of this - Michael Dell (of Dell Computer fame) is the controlling shareholder of SOF Investments.  Imagine a scenario where Blackberry Jim does a deal overnight with Mr. Dell that let's Dell Computers license the Blackberry OS for the new Dell Mobile Handset and suddenly in exchange, SOF Investments no longer supports the NHL bid, but is enthusiastically in favour of Blackberry Jim's.  That could muddy the waters.  Of course that won't happen, Michael Dell and Jim Basillie are men of integrity, I wonder how they got mixed up with the Commish and the NHL?

Commish, Let Me Solve Your Problems!

There's a new ownership drama cooking down in Tampa where it would appear that Len Barrie didn't use his own money to buy his share of the Lightning, nor has he ever repaid it.  The former owner's estate is effectively underwriting the current ownership and Len Barrie is talking about an injection of $350m from a Dubai company to buy a luxury resort project where he apparently "borrowed" the money from to fund his NHL ownership dream.

News Flash for Len Barrie, Dubai is on struggle street!  They have their own debt issues and the desert is slowing reclaiming the place.  And just what the NHL needs, another franchise backed (albeit indirectly) by more people who live in a desert.

Needless to say, I have an answer!  Now that Jim Basillie has so kindly fronted up with the extra money to buy out the City of Glendale, why not Blackberry Jim have the Coyotes and move them to somewhere that experiences proper winter.  Then the NHL can take its $140m off the table, do a deal with the estate of Bill Davidson to buy back the Lightning and then sit down with Quebecor to let them buy the franchise and relocate them to Quebec City.

This would take two of the league's most seriously misplaced basketcase franchises, put them in the hands of deep pocketed owners who want to own NHL clubs and have them operating out of hockey markets!  I know, I know, Quebec versus Hamilton isn't going to sell Versus subscriptions but who cares?!?  This is a television network that virtually nobody subscribes to even if they can get it in their local package, but in their own titlebar on their website, BULL RIDING comes ahead of the NHL!

I think the NHL needs to stop the constant bleeding with these crazy franchises, get them in the hands of people will more money than brains and situate them in places where fans appreciate the game.

The Purpose of the NHL?

The NHL is now claiming that for Phoenix to relocate to Hamilton a fee of around US$195m is more reflective of what the market would bear.  The NHL has entered into court documents that a team in Hamilton would be worth nearly US$200m more than a team in Phoenix!  This begs the question, "Why is the Commish having this fight?"

At its core, what is the purpose of the NHL as an entity?  First and foremost, to define its purpose, you should probably articulate just what the entity is - it is a cartel.  It is a loosely affiliated group of "owners" who by working together can regulate and control an industry for their own benefit.  I know plenty of people would disagree with that assessment but I don't think it can be accurately described as anything else.

So now that we have defined the structure as a cartel, its purpose is self-evident, the NHL exists to maximise the value of the assets to the cartel members and to keep out any who would challenge the status quo.  The last part is interesting in that a guy like Basillie would certainly challenge the status quo - he has no concern for salary caps, he's not interested in the hegemony the Leafs have over Southern Ontario and he's a realist, he believes in market dynamics, he would be pushing for teams in Winnipeg and Quebec City because they would draw people and he'd make more money.

This is where the position of the Commish (he who will not be named) is just so stupidly at odds with his mandate.  If a team in Hamilton is worth $200m more than a team in Phoenix, surely the value of the Leafs and Sabres won't drop by $200m, so the cartel ends up better off by accepting a team in Hamilton.  I also think there's no doubt that Basillie is in this for the money, so he's trying to further maximise the value.

None of this makes sense until you start to look at the history and performance of the Commish himself.  It is easy to work out that the Lightning would be worth more in Quebec City, the Coyotes would be worth more in Winnipeg had they never left, and the Panthers probably would be better off in a more traditional hockey market like Hartford.  That still wouldn't solve the debacles in places like Atlanta where the NHL repeated its own mistake.  The Commish smashed the player's union, but his expansion and broadcasting strategies have been massive losers.

We all know the Commish is a stubborn and egotistical little man.  He's done very well bringing placid owners who support him.  People like Basillie don't need to be sycophantic to anyone.  Could you imagine a guy like Mark Cuban owning a team and this mess in Phoenix carrying on with his money in play?  No way, they'd have to prescribe Cuban tranquillizers.  What the Commish can't have is a review - he can't have someone stand up at a Board of Governors meeting and ask what his plan is to get them out of this Vietnam he's created by recommending teams in non-hockey markets and then approving crappy owners like Len Barry.

The Commish is comfortable, he's like a dictator without challenge.  I won't make Napoleon remarks due to his height, but the parallels are there.  He decided on world domination (the US TV market) and attacked the Russians in Winter (put hockey teams in the desert and sun belts).  His supply lines are cut off (not many schmucks willing to front $150m in a recession for a hockey team in the tropics) and old enemies are re-grouping (desire and money in Canada for taking back franchises).  I wish he'd surrender and they exile him to Elba (Statton Island).

Phoenix Coyotes Disaster

In less than 24 hours we'll know if Hamilton has a shot at landing the Phoenix Coyotes by way of the defender of Canadian NHL interests, Blackberry magnate, Jim Balsillie.  Jimmy has wrapped himself in the Canadian flag and has pulled out every jingoistic card imaginable short of participating in the Terry Fox Run.  Let's be candid, Blackberry Jim knows that an NHL franchise in Southern Ontario is worth a ridiculous amount of money - $213m is chump change.

Put aside my cynicism in regards to Balsillie because my hatred for the Commish is much greater.  I saw that the Commish's right hand man, Bill Daly said that the NHL would rather find a local owner for the Coyotes because the team "belongs" in Phoenix.  WRONG!  The team belongs in Winnipeg!  Short memories.

Overall though, the sheer pigheadedness of the Commish is amazing.  Not quite as amazing as the fact that the owners are letting this guy spend $140m of their money to buy an ICE HOCKEY team situated in a DESERT!  No doubt he's told them that he'll get their money back with interest.

What irritates me the most is the fact that the NHL itself is suggesting that it might move the team!  Clearly, NOBODY in Phoenix wants this team enough to buy it.  If they City of Glendale believe in it so much, stump up with the taxpayers money and buy it - think Green Bay Packers where the community owns the team.  Let's not even discuss these fools talking about playing some games in Saskatoon - obviously the mayor of Halifax or St. John's wouldn't take their calls.

What I don't understand is, Balsillie and the Commish actually have a common enemy - the City of Glendale.  If Blackberry Jim is ruled out of the auction then the Commish is going to need to play hardball with some politicians or allow the team to be sold and moved.  Why don't these two egomaniacs put their acrimony aside and team up?  The NHL agree to letting Jim move the team to Hamilton.  Jim bids something lower than his $215m and flicks the Leafs $50m, the Sabres $25m and the NHL $25m.  The only people keeping the City of Glendale in the game are the NHL - if they knock back the Ice Edge people and do a deal with Balsillie (who already has a deal with the former owner and largest creditor) then it becomes a big win.  Well, unless you're the City of Glendale, but hey, at some point these stupid politicians need to be taught a lesson - the public purse should not be used for such folly.