Balsillie/Phoenix part V

[Ted Hoffman]

1) You state a case for zero influence of the players/NHLPA and I suggest a case for some influence due to the fact they are an interested party/stake holder and have leverage because you need the players cooperation for the league to work and to negotiate/ratify a new CBA among other things.

1. Read this again: partnership does not mean 50/50. If you still don't understand what that means, ask carpenter - I'm sure he'll be able to explain it to you in painstaking detail.
2. Read Article 5 in the CBA again, and then attempt to form an argument as to why the owners would sign over the ability to control their team in part or in whole.
3. Where is the precedent for players to have control over team operations in any facet? Name me one (1) professional sports league on Earth where the players get to dictate when, where, how, and if a team operates. When you find this example, I'll consider your "oh, but the NHLPA will one day have a say" claim.

2) And there is an implied assumption that the 30 BOGs are all in agreement and that none of them would support the position of the NHLPA on certain issues such as franchise relocations or revenues sharing, for example, going forward.

So ... you think the BOG is going to band together in a way that any one team can be moved without its consent because a majority of the BOG says it should? That would be grounds for an anti-trust lawsuit, one that the owner targeted for relocation would win rather easily and would likely win huge damages for.

I say you send this idea to each of the 30 teams, and see how quickly it gets shot down.

3) An 'alliance' or rather similar viewpoint between the NHLPA and certain members of the BOG -- that agree on a particular relocation, for example -- does not necessarily require amending the NHL Constitution, but could work more subtly as pressure to consider different views on the direction of the league. It could, moreover, manifest itself with certain BOG member's votes (either implied before the fact or actually taken) on any relocation issue under the current Constitution and By-laws.

Yeah, I can see it all now:

Dear Toronto Maple Leafs, New York Rangers, Montreal Canadiens and Philadelphia Flyers:

We would like to take this time to thank you for your assistance in stabilizing the league through your support of the move of the Phoenix Coyotes to Hamilton. Unfortunately, because of this move league revenues have increases to a higher level and has made it even more difficult for small-market teams to operate at a level that gives a reasonable expectation for profit. Since player salaries are the main driver of expenses, we hereby order you to cut all ticket prices [including fees for luxury boxes, club boxes, and other amenities] by 20%. This price decrease also applies to concessions and parking, and all other in-arena generated revenues.

Please understand that this move is required as a result of the "universal team operations consent" agreement signed on July 1, 2009 which grants all teams the ability to dictate how any individual team should be operated, whether such operations are in the best interests of the team or the owner. As such, you are required to enact the price cuts stated above without objection and without recourse.

Have a good day, and good luck in the upcoming season!

Sincerely,

The Nashville Predators, Tampa Bay Lightning, Buffalo Sabres, Carolina Hurricanes, Colorado Avalanche, Detroit Red Wings, New York Islanders, Boston Bruins, Chicago Blackhawks, and San Jose Sharks

You also ignore the fact that Article 5 of the CBA expressly states that the teams can be run as team management sees fit - which includes the ability to shut down the team on a whim. Moreover, you still can't explain why any team or teams are going to consent to letting other teams or the union say how they should be run. Why the hell would Peter Karmanos let the Boston Bruins tell him how to run his team? If Bill Wirtz was still alive, do you really think he would have let any other team tell him to spend more money on salaries and put Blackhawks games on TV? Do you think Jeremy Jacobs and Ed Snider and MLSE are going to go for being told what to do because some other group says they should?

Your "brilliant" idea would lead to the implosion of the NHL or any other professional sports league to which it was applied in short order. If that's your goal, congrats - you came up with a fantastic idea to accomplish it.

 

[GSC2k2*]

From http://www.thestar.com/sports/article/646915:



If this is true, I do not get why the NHL would rather allow Cynamon and Sokolowski to set up a team in Toronto than to let Balsillie set up a team in Hamilton. If anything, my guess is that the Leafs would prefer a team in Hamilton playing out of an already existing arena than one in Downsview that plays in an entirely new arena that would be a new competitor for the ACC.

I also do not understand why Cynamon and Sokolowski would put on the charade of operating a team in Phoenix. What would ultimately happen to Phoenix under this plan?

I wonder if Damien Cox knows what he is saying to be true or if he is just speculating.

I suspect that it is a reasonable attempt at speculation. Looking at the article carefully: not a single quote, no reference to sources, nothing.

It may be the case, but Damian Cox is simply getting out there hoping to be first with the point in the media on the chance that it turns out to be correct. That is a pretty common motivation in the field.

 

[GSC2k2*]

That's no blockbuster, at least to me. According to court documents, the Phoenix Coyotes have been for sale for a very long time and seriously so since last summer. But no buyer was found acceptable to Moyes and with the current lease situation.

Now, with the prospect of a re-worked deal such as Nashville's that provides additional tax payers subsidies, yearly performance targets and an out on the lease, Bettman has complied a short list of possible suitors, many of which may have designs to relocate the team at some point. The fact that scavengers are circling looking to pick up a potential portable or massively subsidized franchise on the cheap is hardly surprising nor is the fact that Bettman would be promoting alternative bids to Balsillie's.

GHOST

Perhaps it is not a blockbuster to you because you are not keeping up to date.

FYI, contrary to your suggestion, the lease concessions are nothing new, as the team has conceded in numerous sworn declarations now. They have been available since November 2008. You seem to be suggesting that the interested parties are coming forward because the lease concessions have recently been offered; sorry, but not the case.

Any owner coming forward with the intent of moving the franchise will have to make a good faith effort to make the team work in Phoenix and still be failing after a number of years have passed. Even the team's own estimates (and they want to make it look bad) have the team saving tens of millions a year in losses just by running the team and arena better (funny, I remmeber a poster doing an analysis that seemed to point towards that ). Couple that with $14.6 million in lease improvements, and bingo.

 

[GSC2k2*]

I'm not going to bother responding to all of your points except to say:

1) You state a case for zero influence of the players/NHLPA and I suggest a case for some influence due to the fact they are an interested party/stake holder and have leverage because you need the players cooperation for the league to work and to negotiate/ratify a new CBA among other things. Yes, economic issues will come up in such discussions. I would even go so far to say that, yes, the Press and the Fans do have some influence. Does that surprise you? If so, you need to take a course on public relations. It would be naive to think otherwise -- i.e., zero influence from anyone but the 30 BOGs.

2) And there is an implied assumption that the 30 BOGs are all in agreement and that none of them would support the position of the NHLPA on certain issues such as franchise relocations or revenues sharing, for example, going forward.

3) An 'alliance' or rather similar viewpoint between the NHLPA and certain members of the BOG -- that agree on a particular relocation, for example -- does not necessarily require amending the NHL Constitution, but could work more subtly as pressure to consider different views on the direction of the league. It could, moreover, manifest itself with certain BOG member's votes (either implied before the fact or actually taken) on any relocation issue under the current Constitution and By-laws.

GHOST

GHOST, you do have cogent observations from time to time, but this idea (which you have been peddling for some time) that certain members of the owners would join the players in undermining the NHL position is simply goofy. No one with even the slightest understanding of collective bargaining, leverage or common business sense would ever suggest that as a possibility. Honestly, it is simply too funny, and it undermines your credibility on other points.

The league would entertain NHLPA input on relocation moves and franchise management the moment that the NHLPA is prepared to contribute to and bear the risk of losses (note: LOSSES, not merely revenue reductions). I mean, come on. This is ABC-level bargaining. If you have any experience or training at all (and you have stated to Jake16 that you do), you know that this is the case. Reward follows assumption of risk. That negotiation tenet dates back to when cavemen were negotiating among themselves as to who should be the one to go out and kill the sabre-tooth tiger.

Do you seriously not think that this topic was raised at the last CBA, and it was responded to by the NHL as above, and the NHLPA ultimately said "Uh, that's okay, we'll stick with our partnership on the revenue side, you guys take care of the costs".

Enough with this already.

 

[Jake16]

"Slam dunk precedent"? Seattle Pilots case is admittedly factually similar in many respects but legally distinct in critical others. First, Case is certainly not "precedent": it is an unreported decision from the federal bankrupcty court in Washington. Only 9th Circuit Court of Appeals and US Supreme Court cases are precedent on Judge Baum's court in Arizona. Plus many courts do not even allow parties to citie unreported decisions in their brief. Generally they are looked at as less authoritative legal authority. Second, the case never addressed, because it was not in dispute at the time of the opinion, the central issue in dispute here of "what asset" the Pilots actually had to sell to Milwaukee - a team in Seattle or a "mobile"/"portable" asset. Third, the League was not making any claim for the value of the lost "business opportunity" in Milwaukee - the Braves had just abandoned the market for Atlanta. Fourth, while the Court issued an order to show cause to American League on the issue of prompt league approval, it does not appear that it was ever challenged: rather any opposition to league approval of the transfer appears to have been dropped by the League. The Seattle Pilots opinion never mentions any protest by the league or any issue in dispute over consent rights, relocation fees, territorial rights etc. - the real meaty issues in dispute here. Rather, case primarily dealt with staying the City of Seattle's and State of Washington's temporary restraining order preventing the sale. Finally, there does not appear to have been any challenge or other problem by the league to the new owner (Selig). Here, that is certainly in question becuase while JB has the $$$ and the Canadian flag wrapped around him, I do think other owners will have a significant 'trust' issue with him and look long and hard at whether he will play by the rules or be disruptive. Selig wasn't doing any of that in the Seattle Pilots case

If the case is on point to anything here is that a league can transfer and rework its schedule in short order. Frankly, I don't know how that was possibly done only a week or 2 before the baseball season started (unless there are unstated facts about that case that show alternative plans/scheduling being working on by the AL throughout the 1969-70 offseason) but one should not forget that most baseball stadiums are not the multi-use facilities hockey arenas are (sharing arena with NBA basketball, concerts, etc.) allowing for easier scheduling.

A subsequent case Selig v. US, 565 F.Supp 524 (E.D. Wis. 1983) shows that "the deal was closed with a handshake in October 1969 with Milwaukee agreeing to purchase Seattle, including its complete roster of players for $10,800,00." The deal was reduced to writing on March 8, 1970.

So it could very well be true that the league made contingent plans /schedules for both cities during the offseason allowing the quick change.

 

[Ted Hoffman]

I am starting to get to the point of not giving a crap anymore. I think that if a new owner is dumb enough to think he can make a penny off keeping the team in Phoenix then he/she has the right to lose hard earned money.

If owners who pay into revenue sharing also support the team not moving then again it is their money that they are flushing down the toilet.

Let the millionaires lose the millions, doesn't effect me at all.

Exactly. How multi, multi-millionaires wanting to lose $20 million a year [or more] affects posters here, I've yet to understand - but apparently, it does.

While it's true that those owners would pay the same revenue sharing if Phoenix were to move - it's a matter of whether the money spent was worth it or not.
It can be seen as an investment in the league where they'll get their money back in another way down the road.
Paying into revenue sharing to keep the Coyotes in Phoenix now is just throwing money into a bottomless pit. They'll never get that money back in any way. It's like giving money to a junkie instead of a family where the hard-working parents were just laid off.

Let me explain this once and for all so everyone understands this, because no one has done it so far.

Why do we even have revenue sharing? The answer is found in the opening paragraph of Article 49:

Preamble. The NHLPA has conditioned its agreement to the Team Payroll Range System, set forth in Article 50 of this Agreement, on the NHL's agreement to establish this Player Compensation Cost Redistribution System. ... In addition, there may be lower-revenue Clubs that may have challenges in spending much more than the Lower Limit of the Payroll Range. The NHLPA has focused on the limitations on the spending ability of the Clubs, and desires that these Clubs be financially supported and thereby able to spend sufficient amounts on Player Compensation Costs to achieve a closer range of payroll spending than might otherwise occur.

Answer: because the players wanted it. So ... for those of you *****ing and whining about revenue sharing, go ***** at the players about it.

Now ... to the facts of the revenue sharing system. Let's assume that Phoenix does indeed move to Hamilton [if you don't like Hamilton, insert your favorite non-Phoenix, non-Hamilton city here] and that the relocated franchise becomes a top-10 revenue team in terms of HRR and all other revenue-based measures used in Article 49:

1. There's a minimum level of money put into revenue sharing every year regardless of need. That's 4.5% of HRR. So, regardless of where teams get moved, there will always be a pot of money allocated for revenue sharing. [Whether it's used or not is another story - I'll come back to this later.]

2. Revenue sharing payouts are designed to get every team to a minimum of the Targeted Team Player Compensation, which is no less than $4 million above the Lower Limit and no higher than the Midpoint [plus benefits]. None of us have any idea where that threshold really sits, because it can move from year to year and is never made public. So, it could be that this threshold is the Midpoint plus benefits.

3. Every year, Article 49 provides that monies be collected so that payouts can be made to teams as necessary to enable them to be able to spend up to the Targeted Team Player Compensation level. [They are not required to spend to that level, they just need to have the ability to get there; see Article 5 for management's rights wrt spending and team operations.]

4. Teams that contribute to revenue sharing are the following:
-- All 30 teams when there are "excess centrally-generated league revenues", which occurs when such revenues exceed $300 million.
-- The top-10 revenue-generating teams, when there is an overage in the escrow account and such teams had an Actual Club Salary [the actual payout of salaries and bonuses] in excess of the Midpoint;
-- Any team that made the Playoffs and hosted playoff games, and
-- The top-10 revenue-generating teams based on gross revenues of preseason and regular season games, net of arena costs.

So ... it's not "oh, it's just the top-10 revenue teams that always pay in" - it's potentially every team, and it's certainly every team that makes the playoffs - including the low-revenue teams.

5. By moving Phoenix to Hamilton, you increase HRR - and thus increase the amount of money in #1.

6. You also raise the cap floor [because the Payroll Range is tied to HRR], so teams already on the lower end of the revenue scale now have a more difficult time hitting it - which means they need more revenue sharing.

7. Because of #5 and #6, any team already receiving revenue sharing to hit the Targeted Team Player Compensation level now needs more money to hit the new, higher threshold. Money once paid to Phoenix will now be paid to other teams currently receiving money. Additionally, the team that was #15 in revenues slides to #16 and now [assuming it's not a large-market team] qualifies for revenue sharing payments - and it receives a payout.

There has been no real savings as of yet - there's only been a shifting of the buckets that the money is put into. The only way there is a "savings" is if the reallocation of money causes less to be required to be collected than before - but, with the additional burden on existing teams plus the new burden of the newly qualifying team, it's unlikely this will happen. In fact, because of the new disparity between the upper and lower ends, it's quite possible that even more money will have to be raised to meet the requirement set forth in #3.

8. The new Hamilton team reduces the burden on the 10 teams that were previously paying into the pot that is the minimum required payout; additionally, the #10 team no longer has to pay in [except via centrally generated league revenues and if it makes the playoffs].

But what if the required payout for revenue sharing in #7 is less than the minimum required contribution? Then the first $10 million gets sent to a joint marketing committee, and anything in excess gets sent back pro-rata to the contributing teams.

So ... for there to be "savings" wrt revenue sharing by moving Phoenix to Hamilton, the move would have to have minimal effect on the cap and/or the increased revenue generated by the new Hamilton franchise would be offset by increased revenues from recipient teams. Since neither scenario will occur, then there will be little or no savings wrt revenue sharing - and it's quite possible that there will be an increased required payout in the aggregate. There's only two other simple scenarios where revenue sharing payments will decrease:

1. Every team has the same level of revenues. In reality, this won't happen - so the alternative is a "pooled" revenue system where all teams contribute revenues into one pot and each team gets an equal share. No, this won't happen either - and it's in fact a revenue-sharing system of the truest form as all revenues are shared.

2. The disparity between teams on the high end and teams on the low end of the revenue list is small enough that required payments are minimal. This is unlikely because of the nature of markets and team fanbases; it would require all 30 markets to be reasonably similar in size and/or support such that variances in revenues were minimal and due to random fluctuations.

The bottom line: Revenue sharing is not designed to be a "... and we'll get our money back later" system. Unless you or anyone else can think of a method to guarantee that no team will ever require revenue sharing, then you're going to have to live with the fact that it's going to exist - and that given the current structure of Article 49, some teams will get it regardless of how you try to move teams around and prevent it.

 

[GC72]

Thanks, but I am quite familiar with the regs.

Insiders do not dispose of 10% of their holdings in a single filing "all the time" - on this planet, at least. If/when they do, the markets react, and they react negatively unless there is something else that is unrelated that counteracts the effect. It is regarded (correctly) as a negative vote of confidence by the insider, especially one like JB who has doggedly maintained his holdings and avoided all but the most minor diversification of his personal wealth.

JB is not deemed a 'control person' because he owns less than 20% of RIMM and therefore does not have to file before he sells stock - he is basically a minority shareholder (6%) who is the co-ceo - he is an insider and has to file 10 days AFTER a sale. All filings are public and published by info providers like Blooomberg or Reuters. I'll repeat for the last time, that JB could very easily and with anonymity sell 3M shares of RIMM without impacting the stock whatsoever. Obviously, insider selling is viewed negatively by the market, just as insider buying is viewed positively - insiders have much more company and industry specific information than the market does - it's smart, and commonplace, to mimic insider moves....this is academic because JB has already raised the required funds imo.

 

[CGG]

MoreOrr, at this point, JB has fired his gun. You cannot unfire it. JB has demonstrated that he would be ungovernable as an owner. He demonstrably wants to select which contractual obligations under the NHL constitution he will abide by.

Let's not forget that, unless for some reason Craig Leipold or the NHL decided to release potentially self-embarrassing email themselves, the evidence seems to indicate that JB or his representatives released private business emails of Leipold/NHL to ESPN during the course of the Nashville transaction.

From the NHL's point of view, how can he be trusted?

Nice of you to bring up Leipold, who, along with Anschuitz, lent money to Boots and didn't bother telling the league about it, violating at least a few league rules in the process. By your logic, doesn't that mean those two are ungovernable and should be tossed out? How can they be trused? They seem to be selective in what rules they want to follow, and they're already members of the BOG, no less members of the executive committee in charge of due diligence on new owners. Leipold was rewarded for his scandalous actions with a backroom deal to trade in Nashville for Minnesota.

 

[pepty]

From the National Post:

http://network.nationalpost.com/np/...afs-thrust-onto-stage-in-nhl-v-balsillie.aspx

Attorneys working for Canadian billionaire Jim Balsillie have trained their sights on the Toronto Maple Leafs, focusing on what they allege is the franchise’s monopolistic hold in southern Ontario.....

“Attorneys for Moyes included the NHL’s constitution among the filings. Rodier, vice president of PSE Sports & Entertainment, a Balsillie-owned company, argues in a declaration he filed Friday that the Leafs have “veto power.â€

“To the best of my knowledge, information and belief, the Toronto Maple Leafs do not agree that they do not have ‘veto power’ over any proposed franchise relocation to southern Ontario, and have so advised the commissioner’s office,†he wrote....

Bettman also attacked Balsillie’s advertised purchase price, arguing that the actual value for creditors is much lower than US$212.5-million. He lists deductions based on NHL advances (up to US$25-million) and payments to Wayne Gretzky (up to US$22.5-million), reducing the bid to US$165-million.....

According to Bettman, that bid “does not include (or apparently even contemplate) any payments that will be required to me made to the city of Glendale or to the NHL and/or its members for unilaterally usurping the Hamilton NHL franchise opporunity.â€

 

[GC72]

I certainly agree that JB would not dump 10% of his stock on a whim. But just so we are all clear. There is a plan for the orderly sale of Balsillie's RIM stock.

http://press.rim.com/release.jsp?id=2342

and

http://press.rim.com/release.jsp?id=1386

The two ASDP's include up to $195M for charitable purposes and up to $446 M in additional stock sales.

my point is that, if he chose to, he could sell the required stock easily - but as has been posted several times in this discussion he sells stock regularly through an ASDP - he has already raised the required funds through past selling or leverage i'm sure...posters keep questioning the level of liquidity in JB's holdings - I would state further, that he could sell his entire position fairly quickly and easily - he would hire a broker, that broker would market his 30M+ shares to the institutional community, and a book of buyers would be built and JB would sell his position to them....now a deal this size would be done at a material discount to the public market price - what discount? I don't know - would depend on demand - could be 10% - a haircut for sure, but could be done - these types of deals are done fairly regularly and by insiders

 

[Crazy_Ike]

Considering they've been right about so much in the Phoenix situation I would give them more credit. In particular the Globe and Mail.

No they haven't.

They are nothing more than Balsillie's propaganda machine.

Admit it - not a single one has called into question the hypocrisy of "make it seven" after trying to buy the SENATORS and move them.

Canadian sports media = joke.

 

[Ward Cornell]

If you think that the CEO of a public company can sell 10% of his holdings in one fell swoop and not affect the price of his stock, then I am nearly speechless. That doesn't happen, sorry.

He may not need to sell any stocks in RIM what-so-ever to get the money.
In a very much smaller scenerio, how many people purchase a house or car with cash or liquidating some of their assets? Wouldn't you think that JB has been in touch with financial institutions to work out some arrangements?
It's not like he's borrowing with zero collateral behind him.

 

[Crazy_Ike]

So, when Balsillie loses on Tuesday, does the league and the city of Glendale have legal standing to sue Balsillie for damages done to the profitability and value of the franchise by illegally causing this mess?

There can be no doubt that Moyes has severely sabotaged any further attempt to run the team in Phoenix.

 

[berklon]

So, when Balsillie loses on Tuesday, does the league and the city of Glendale have legal standing to sue Balsillie for damages done to the profitability and value of the franchise by illegally causing this mess?

There can be no doubt that Moyes has severely sabotaged any further attempt to run the team in Phoenix.

Illegal? Total nonsense.

"Damages done to the profitability and value of the franchise"?

That's like complaining that somoene's damaged the deck chairs on the Titanic after it started sinking.

 

[Crazy_Ike]

Total nonsense.

"Damages done to the profitability and value of the franchise"?

That's like complaining that somoene's damaged the deck chairs on the Titanic after it started sinking.

No, it's not. Because the franchise still had value and was drawing fans. No, it wasn't selling out, but it wasn't dead.

Any drop in revenues this season can be DIRECTLY attributed to what has happened this spring.

Ask the St. Louis Blues of '83 what a lame duck owner can do to damage a franchise. This is a case of someone outside of the owner doing most of it, especially if it gets proven this was instigated by Balsillie's lawyer.

 

[pepty]

Its interesting to look back now at what was being written around the time Balsillie made a play for the Predators.

I think the big difference this time is that there was a major PR campaign in which Balsillie is presented wrapped in the Canadian flag as a great hero and Betmman is villified.

Major deja vu but both times they seem to be following Rodier's blueprint for buying and moving a franchise out of bankruptcy and circumventing league regualations:

http://sportsbiznews.blogspot.com/2007/06/selling-sports-franchise-lot-like.html

If nothing else, when it comes to Jim Balsillie’s interest in purchasing the Nashville Predators; ... Balsillie has shown little, if any interest in respecting the process associated with buying a sports franchise. Balsillie is continuously putting the cart so far ahead of the horse, as SBN suggested last week, the cart is carooning out of control with the horse left behind in the barn. There may be plenty of blame to access (just ask the Canadian media who they’re blaming) but the fact(s) remain – if Jim Balsillie had paid more attention to the process he wouldn’t be on the outside looking in when it comes to buying the Nashville Predators...

"...the letter added. "As we have discussed, this 'Conditional Consent to the Transfer of Franchise Location' was not contemplated in the Term Sheet and was submitted by Mr. Balsillie without the club's prior review or approval."...

.... With numerous reports emanating from the center of the known hockey universe (Southern Ontario) that Jim Balsillie intent is to move the Predators and not respect any of the NHL bylaws, its easy to understand why Bettman is warning the NHL Board of Governors of what could take place.

Yes, if Jim Balsillie pays Craig Leipold an inflated $238 million for the Predators the financial valuation of every NHL team will increase dramatically, but at what greater cost. If Jim Balsillie follows through on the rumors that he’ll move the Predators to Hamilton with or without any due process, refuse to pay the Toronto Maple Leafs and Buffalo Sabres any relocation fees and has no interest in respecting the local television rights of the Maple Leafs and the Sabres (talk about a horrific triple play for the NHL to consider) Balsillie’s proposed purchase of the Predators is easier said than done.

If all suggestions Jim Balsillie is prepared to take the NHL and its 29 member franchises to court over the above matters if the NHL forces Balsillie to deal with those issues are true– when NHL owners are being forced to consider both sides of
the issue – and that might make more sense for NHL owners to reject Jim Balsillie or face millions of dollars in legal bills that could forever change the fabric of how the NHL conducts their business affairs?

... but consider the long-term implications if the NHL Board of Governors made it clear to Leipold that the biggest issue they have with his proposed sale of Jim Balsillie isn’t the proposed sale but the potential legal ramifications?... .


.... how Jim Balsillie has gone about this has been wrong from the beginning. He’s acted like an enraged King Kong looking for Fay Wray in a china shop. The examples are numerous but consider this one recent example [B]– why would anyone put tickets on sale for a proposed NHL franchise in Southern Ontario on the same day the NHL is hosting their awards ceremonies in the same geographical area[/B[B? Balsillie could and should have waited until July 9 (after the NHL awards, after the NHL draft and after the start of the NHL free agent season) before he made his very public move. Making it on the day Gary Bettman and the Lords of the Rink where center-stage in Toronto took away from the NHL awards night served to embarrass the NHL.

 

[Stanley Foobrick]

I guess I don't fully understand how this anti-trust issue works when you are dealing with a franchise system.

Let's say there is a Tim Horton's on the northwest corner of Main and Maple and a vacant lot on the sotheast corner.

Now, I know I can purchase that vacant lot and put up a Country Style or any other chain not called Tim Horton's and this shouldn't be an issue. If Tim Horton's tried to pressure me not to locate there then I understand that anti-trust issue come up as Tim Horton's would be trying to interfere with the competitive process and competitive nature of business.

On the other hand I purchase the lot and go to Tim Horton's head office and want to become a franchisee for that location.

If the franchisor, that being Tim Horton's tells me that they're sorry but they can not allow one of their franchise to locate on the southeast corner of Main and Maple because they already have a store on the northwest corner.
They then go on to show me in the companies constitution that all existing outlets have a 1/4 mile exclusive territory that the franchisor, Tim Horton's, has agreed not to give another potential franchisee access to.

Now how could this become an anti-trust issue. Tim Horton's is using it's territorial rights to further it's own business interests and protect it's existing franchisees. It's use of territorial rights does absolutely nothing to stop other brands of donut shops from competing with them it simple is in place so their own franchisees don't have to compete directly with each other.

Maybe I'm missing something, but the way I see it... when you purchase a franchise, you are simply the franchisee... you have to abide by the rules set forth by the franchisor.

 

[Fugu]

The June 2007 Letter to JB's attorneys that Bettman attached to his Declaration shows the league being very, very careful NOT to do anything that could be construed as encouraging the Predetors to break their lease:

"The league cannot condone or participate in a breach of the lease. Nor will the NHL interfere with the prospective advantage of Nashville and its efforts to cure any of the alleged defaults under the lease."

On the other hand, it looks like this is exactly what Rodier and Balsilie did here - offered Moyes a huge premium price above what the asset was actually worth to entice him to break the lease and try to get out of its onerous obligations through a discharge in bankruptcy.

In February 2009 when the NHL advance issue broke, however, Moyes was quoted in the AZ press saying bankrupcty was completely out of the question. Then Moyes' lawyer Earl Scudder attests in his affidavit (corrorborated by Bettman's infamous e-mail referencing Winnipeg) that on April 3, 2009 Bettman told him not to talk to buyers like JB looking to move the team because there was a binding lease agreement with Glendale. Guess Scudder didn't listen because next thing you know JB and Moyes have a deal in place before the May 5 bankrupcty filing and then run to the courthouse. Guess something (say a big premium of the purchase price) helped Moyes see the light at some date before May 5.

The Globe article today quotes Rodier:

"He hatched his plan in late 2002, with the Ottawa Senators heading toward bankruptcy and the Buffalo Sabres not far behind. A life-long hockey fan, Rodier says something clicked during a quiet moment in court. The bankruptcy process, he reasoned, could be the way to trump NHL bylaws on which league governors lean to restrict franchise movement - and thus keep a second team out of Southern Ontario..... "It's just the application of very general bankruptcy principles to sports," Rodier says. "The Senators and the Sabres were in the news [in 2002] and I'm sitting in a CCAA filing process, and you wonder, well, gee, how can you apply x to y? It's not more interesting than that."

Putting 2 and 2 together, sure looks like someone from Southern Ontario played some role in telling Moyes how he may be able to get rid of his little lease problem - and in providing the financial incentive to try to do it.

This could blow up and leave Balsilie, Rodier and PSE being subject to a lawsuit by the City of Glendale for those $500M in liquidated damages. Its hard to see how they didn't intice and encourage Moyes to breach the lease contract.

Let's just be clear here that it's you who is putting two and two together.

It's a heck of an insinuation.

 

[seanlinden]

I guess I don't fully understand how this anti-trust issue works when you are dealing with a franchise system.

Let's say there is a Tim Horton's on the northwest corner of Main and Maple and a vacant lot on the sotheast corner.

Now, I know I can purchase that vacant lot and put up a Country Style or any other chain not called Tim Horton's and this shouldn't be an issue. If Tim Horton's tried to pressure me not to locate there then I understand that anti-trust issue come up as Tim Horton's would be trying to interfere with the competitive process and competitive nature of business.

On the other hand I purchase the lot and go to Tim Horton's head office and want to become a franchisee for that location.

If the franchisor, that being Tim Horton's tells me that they're sorry but they can not allow one of their franchise to locate on the southeast corner of Main and Maple because they already have a store on the northwest corner.
They then go on to show me in the companies constitution that all existing outlets have a 1/4 mile exclusive territory that the franchisor, Tim Horton's, has agreed not to give another potential franchisee access to.

Now how could this become an anti-trust issue. Tim Horton's is using it's territorial rights to further it's own business interests and protect it's existing franchisees. It's use of territorial rights does absolutely nothing to stop other brands of donut shops from competing with them it simple is in place so their own franchisees don't have to compete directly with each other.

Maybe I'm missing something, but the way I see it... when you purchase a franchise, you are simply the franchisee... you have to abide by the rules set forth by the franchisor.

Its not even that complicated. Tim Hortons has the right to accept or reject any franchise owner for any reason except possibly discrimination. You apply for a franchise; and if they feel it is in the best interest for Tim Hortons to have a location there; then they sell you permission to brand yourself as a Tim Hortons; they don't need anything in their constitution because they are centrally run (wheras the NHL is run by 30 partners). Part of the franchise agreement you sign will say that you must apply for any change in location, and that the parent company reserves the right to withdraw the franchise if you relocate without approval, sell without approval, or fail to do what they tell you. This is no different than the NHL.

Its ridiculous to suggest that a judge is going to set a precedent whereby you must go into business with someone who you have no desire to and where there are clearly written contracts stating that you reserve that right.

Balsillie can buy the team without question. However, as soon as he purchases the team/moves it from Phoenix, it is no longer an NHL team. It is meerly a company called Coyotes Hockey LLC which held a broken franchise agreement and now holds assets like training equipment, sticks, etc.

Balsillie could then move the team to hamilton, but every NHL contract would be demeed invalid because they are no longer an NHL team and therefore would have nobody to play.

 

[Faltorvo]

Hopefully someone can help me with this one.

This is what i understand of the territorial radius.

XX amount of miles outside of the cities corporate limits?

Question #1 how many miles?

#2 what constitutes corporate city limits?

The way i see or interpret it, if corporate city limits vary from city to city in size does that not allow some teams to have a larger cover zone then others. And if so is there not some inequity to this?

 

[mouser]

If JB wins it's the start of a court battle the NHL doesn't really want from the Maple Leafs and probably the Buffalo Sabres thanks to Article 4.3

... as for the Canadian media being a joke.. well some of it is, when supposed unbias reports make reference to Bettman short stature in an article it shows a real lack of professionalism. As I've said before, it seems to me I've never read an article that refered to Balsillie as, "the follically challenged billionaire"

If Balsillie wins Tuesday the NHL has already indicated (and the Judge acknowledged) that they will immediately appeal.

 

[GSC2k2*]

Hopefully someone can help me with this one.

This is what i understand of the territorial radius.

XX amount of miles outside of the cities corporate limits?

Question #1 how many miles?

#2 what constitutes corporate city limits?

The way i see or interpret it, if corporate city limits vary from city to city in size does that not allow some teams to have a larger cover zone then others. And if so is there not some inequity to this?

1. 50.

2. Every city that is incorporated (which includes every one big enough to have a major league franchise) has specified boundaries.

It is no more or less "inequitable" than the fact that different franchises have larger, more populous markets.

 

[Jake16]

Illegal? Total nonsense.

"Damages done to the profitability and value of the franchise"?

That's like complaining that somoene's damaged the deck chairs on the Titanic after it started sinking.

It an interesting thought. I'm not sure if I see a legal claim against Moyes (...yet) but your suggestion that "That's like complaining that somoene's damaged the deck chairs on the Titanic after it started sink" is simply not credible. Its almost like Moyes and Balsilie conspired to put a ton of dynamite in the damaged boat to ensure it would sink immediately on May 5, before any rescue boats had a chance to even get to the site. Come on - what owner of any asset for sale comes out and disparages it to the level Moyes, Shumway et al have??? Due to their own self-interest, they completely changed their tune on May 5 and engaged in a campaign to kill the Coyotes as a going concern in Phoenix. Back in February when news of the NHL cash advances broke, Moyes assured everyone it was business as usual and bankrupcy wasn't a possibility - completely out of the question.

Moyes and Shumway sure weren't telling prospective bidderrs before May 5 that the franchise was such a complete, rotten lemon. No - they were rejecting offers to buy it for $130-140M (the Garvin Profit offer of $140 is admitted in the chart appended as Exh. 3 to Moyes' own filing on June 5) because they wanted more $ to cover the unsecured creditors (ie. Moyes). Now they want to say its essentially worth $0 unless its portable hoping to reap the windfall from selling rights they don't own to Balsillie.

I hope Jerry loses big time here and most everyone in AZ already knows that Shumway is a complete jerk and to quote the former Assistant GM "a bad guy."

 

[Stanley Foobrick]

Its unfortunate but truth is bettman comes off so out of touch with fans he sets himself up , he acts like he is the boss rememeber "cost certainty" his buzzword some years back and his aluding to the fact it would prevent any further losses or moves in stating his case for a lockout ,then was it the all star game when he said PHO was in fine shape going ahead hmm, ok short jokes may be nasty but liar does fit and that is why media are all over his oop "short" level of respect to fans

So GB should have said at the all-star break that Pho is in a mess, it's an absolute joke, they wouldn't be financially capable of finishing the season if it wasn't for cash from the NHL ?!?!?

GB has to answer that type of question in a way that is best for the league. Sometimes telling the truth isn't really an option.


Here's a little test for you or anyone who think Bettman should have told the truth at the all-star break. Next time you, your brothers and or sisters are all with your parents, ask them who their favourite child was/ is?
My bet is they would say they loved you all equally or something like that.... because it's the answer you're suppose to say.

 

[mouser]

Hopefully someone can help me with this one.

This is what i understand of the territorial radius.

XX amount of miles outside of the cities corporate limits?

Question #1 how many miles?

#2 what constitutes corporate city limits?

The way i see or interpret it, if corporate city limits vary from city to city in size does that not allow some teams to have a larger cover zone then others. And if so is there not some inequity to this?

One of the maps in the court filings on the Phoenix home territory suggests they may go by counties in the US. e.g. the complete area of all counties that have a portion within the 50 mile radius.

If so, not sure how this would translate to the Western Canadian provinces that don't use the county system.