Friday, May 09, 2008

Gary Bettman's bad dreams may be set to return

Stephen Brunt of the Globe and Mail is back on the Balsillie beat, with an interesting examination of how Canada's hockey reclaimer may be in a pretty good position to stake a claim to yet another attempt at bringing a franchise north of the 49th parallel.

The stumbling American economy, empty rinks, large debt and a salary cap structure that is rewarding the Canadian franchises with their television contracts and full houses is all rolling into a nice little package for Balsillie to use to gain access to one of at least eight potential franchises that could be inclined to migrate north.

It's a fairly thorough examination of the situation and one which may prove troublesome for Commissioner Bettman if he's still dedicating his spare time to running interference on any future Balsillie bids. The article is in Friday's Globe and Mail and posted to their website.

Balsillie still in the game
From Friday's Globe and Mail
May 8, 2008 at 6:50 PM EDT

Like a bad penny, he just keeps turning up.

At least that's the way Gary Bettman must see it, though for most Canadians, billionaire businessman Jim Balsillie remains a bit of a hero, despite the best attempts by the NHL brass to paint him as some kind of reckless kook.

His real-world success would suggest rather strongly that he's not that, and his great side project – to bring NHL hockey to people who actually like it – seems a whole lot more cool and rational than the league's own expansion strategy over the past 40-odd years.

But trapped between the Toronto Maple Leafs' territorial veto, as enshrined in the NHL constitution, and the knowledge that said veto might well be illegal, opening the league up to a nasty anti-trust suit, Bettman has precious little choice but to try to counter each Balsillie move with a countermove as the Research in Motion co-founder attempts to buy a franchise and move it to Hamilton.

Bettman leaped into the breach in Pittsburgh to keep Balsillie from purchasing the Penguins, then executed what may well have been the greatest masterstroke of his commissionership, persuading Nashville Predators owner Craig Leipold to take a $40-million (U.S.) haircut on the sale of his team and then arranging a nice soft landing for him as the new proprietor of the Minnesota Wild.

Give Bettman full style points for that one. But Balsillie wasn't about to quit, and now larger forces are working in his favour.

That would be the American economy, arguably already in recession, and the fact that not a few NHL owners are finding it a bit of a tight squeeze right now because of the growing credit crisis.
The lockout may have helped create a system that's been a boon to some franchises (mostly the rich, high-revenue ones, which certainly wasn't the stated intent).

But for those teams carrying large debts, looking at empty seats and minuscule local broadcast revenue and having trouble spending up to a salary cap driven higher by the strong Canadian dollar, there's not a whole lot of light at the end of the tunnel.

When Balsillie started poking around looking for a team that he could buy and move into the Copps Coliseum, there were three or four obvious targets, including the Pens, who had fallen into bankruptcy and were struggling to secure a new arena deal, and the Preds, whose owner had already triggered the exit clause in his lease, having given up on making NHL hockey work in that market.

Because Balsillie was more than willing to overpay, it took every bit of Bettman's guile to keep those deals from closing. Both were killed before ever coming before the league's board of governors for approval.

But what if the number of teams now quietly on the block has multiplied to six or eight or 10?
What if there is a whole bunch of owners who need to cash out, right now? That's a whole lot of fires to put out all at once.

And if Balsillie does find another willing vendor, and manages to conclude a sale before Bettman can find a way to kill it, the barriers to his grand plan become a whole lot less certain.

In theory, the board could reject him as a potential owner, though the grounds for doing that in the league's bylaws are only two: lack of financial wherewithal and lack of “character.”
By any measure of NHL precedent, Balsillie would pass both tests with flying colours – and so if a sale was blocked by the board, the aggrieved seller might well be moved to sue his fellow owners for de facto breach of contract.

If Balsillie did get a team, there would seem to be no legal way for the league to block him moving it (see the Al Davis v. NFL decision), provided he was free of a lease and met the criteria for relocation, which have to do with whether the new market is suitable for NHL hockey.
(Remember how quickly Hamilton resident jumped at the chance to put down deposits for season tickets when it looked as if the Predators might be coming to town?)

Which brings matters back to the territorial veto and to the league's precarious legal position.
Obviously, Bettman is going to do everything in his power to prevent being stuck between a wealthy franchise determined to protect what it believes is its right and a wealthy potential owner more than happy to put up a fight.

In the commissioner's dreams, after the last round, after the failure and the character assassination, Balsillie would have slunk back to Waterloo, Ont., and found another hobby.

If it wasn't clear then, it's clear now:

He's not that kind of guy.

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