Balsillie puts in $212.5 mil offer for the Coyotes

[Brodie]

Two hours until it hits the fan, gentleman... this is going to be fascinating.

 

[CapsWolverinesUSA]

That's my understanding as welll... If the judge can truly overrule the NHL on relocation (WITHOUT a BOG vote) at the sametime as awarding the franchise to JB, then it becomes clear why JB put the conditional offer based on relocation as well.

It should be very interesting to see what happens. If JB is sucessful I wouldn't be surprised to see this happen again with other teams. LOL

As I understand it, the judge wouldn't be "overruling" the NHL and/or a vote from the Board of Governors, so much as he would be saying: "It is illegal for you to say Balsillie can't move the team, so there's no point for you even to vote on it. You can't stop the relocation, so you have no standing to object to the court considering Balsille's bid."

That may seem like semantics, but it's a hugely relevant distinction from a legal perspective because nobody is disputing the fact that, absent a finding of anti-trust violations with regard to the NHL's blocking a franchise move, the bankruptcy court has no authority to compel the Board of Governors to vote a particular way, or to bypass the BOG entirely.

Hopefully that's not totally incomprehensible.

 

[Jarnberg]

Talk about revision, propaganda much? At no point did Balsillie remove his deal from the table. He was fully prepared for the team to remain in Nashville for the short term and to fight it out with BoG, legally if he had to. Leopold was forced to take the lesser deal from the Freeman group backed by 'Boots'. If the NHL actually played by there own rules, the Freeman group would never have been accepted as NHL owners because 'Boots' would never have passed the due dilligence process. Of course Bettman was behind it, the BoG only meet once a month, and they never dealt with the Nashville issue until after Leopold took his haircut.

Then surprise, surprise, Leopold ends up as owner of the Wild.

I call shenanigans.....

Notice that I didn't say that Balsillie removed his deal. His offer expired after he failed to put more money down on the deal. After that, Leipold moved on to the local group. It is quite simple really.

Are you telling me Bettman FORCED Balsillie to not put down more money?

 

[Fugu]

Very interesting. Essentially the point he is making is that the court will cut through the two-tiered process and deal with both levels of the dispute at once. In other words, instead of (1) dealing the the bids, making an award of the franchise based on the best viable bid, and only then (2) having the owner sue for the right to relocate in a new (antitrust-based) legal action, the judge would consider all the issues simultaneously.

I can see why a judge would do this for judicial economy purposes, but it seems to me that he'd be doing it at the expense of basic common law principles. Maybe the trumping factor is that the best interest of the creditors is to determine the anti-trust issues up front, because if they are NOT a hurdle, the creditors would be better off with Balsillie's $212.5m bid over whatever lower unconditional bid would be accepted (from Reinsdorf, Balsillie or whomever).

In practical effect, it's not much different than Balsillie removing his condition, lowering his bid, and then fighting the NHL to move the team after the purchase goes through. His chances of winning that relocation dispute are no better or worse depending on the stage at which those arguments are heard. The bonus of doing it this way -- and this would explain WHY he's doing what he is doing now -- is that he can get the merits of his anti-trust claim decided before he commits to buying the team. So, while he could potentially buy the team condition-free for $50-70m less than his current offer and move them after winning in court, if he were to lose, he'd be stuck having paid $140-160 million for a dying franchise he doesn't want to own.

Essentially, he is willing to sacrifice the potential savings of $50-70m in order to learn the fate of his anti-trust claims before he goes through with the purchase. Considering his $212.5m price is still well less than the estimated value of a Canadian NHL franchise, this makes good business sense. The moment he wins, his value of his investment increases something like 50%. And if he loses, all he has wasted is legal fees and he can walk away from the Coyotes with his $212.5 million safe and secure.

Or the purported cost of an expansion team, ~$350 million, it's really smart.

 

[Brodie]

Notice that I didn't say that Balsillie removed his deal. His offer expired after he failed to put more money down on the deal. After that, Leipold moved on to the local group. It is quite simple really.

Are you telling me Bettman FORCED Balsillie to not put down more money?

He forced him into a corner where he couldn't move the team for 7 years, which was essentially a move to destroy his interest in making the purchase. Then they allowed Boots the ability to move it within 3, which should make things a bit obvious.

 

[SoCalPredFan]

This is 100% right. The bankruptcy court has no authority or jurisdiction to order the NHL to allow a franchise to be relocated. Because relocation is a condition of the Balsillie offer, the offer can't even be accepted by the bankruptcy court. Any attempt to accept a conditional offer minus the condition is viewed as nothing more or less than a counter-offer, which Balsillie won't agree to.

Balsillie's only real option is to either convince the NHL to agree prior to the sale (fat chance) or reduce his bid, buy the team as-is, and then fight for relocation once he owns the team. Like Al Davis has done in the past, going to court to try and move a team you already own has a much higher probability of success than trying to get a court to order the NHL to allow you to move it as a condition of purchase.

Very interesting. Essentially the point he is making is that the court will cut through the two-tiered process and deal with both levels of the dispute at once. In other words, instead of (1) dealing the the bids, making an award of the franchise based on the best viable bid, and only then (2) having the owner sue for the right to relocate in a new (antitrust-based) legal action, the judge would consider all the issues simultaneously.

I can see why a judge would do this for judicial economy purposes, but it seems to me that he'd be doing it at the expense of basic common law principles. Maybe the trumping factor is that the best interest of the creditors is to determine the anti-trust issues up front, because if they are NOT a hurdle, the creditors would be better off with Balsillie's $212.5m bid over whatever lower unconditional bid would be accepted (from Reinsdorf, Balsillie or whomever).

In practical effect, it's not much different than Balsillie removing his condition, lowering his bid, and then fighting the NHL to move the team after the purchase goes through. His chances of winning that relocation dispute are no better or worse depending on the stage at which those arguments are heard. The bonus of doing it this way -- and this would explain WHY he's doing what he is doing now -- is that he can get the merits of his anti-trust claim decided before he commits to buying the team. So, while he could potentially buy the team condition-free for $50-70m less than his current offer and move them after winning in court, if he were to lose, he'd be stuck having paid $140-160 million for a dying franchise he doesn't want to own.

Essentially, he is willing to sacrifice the potential savings of $50-70m in order to learn the fate of his anti-trust claims before he goes through with the purchase. Considering his $212.5m price is still well less than the estimated value of a Canadian NHL franchise, this makes good business sense. The moment he wins, his value of his investment increases something like 50%. And if he loses, all he has wasted is legal fees and he can walk away from the Coyotes with his $212.5 million safe and secure.

Makes sense. Though, two thoughts to go with this:

1. If the judge does rule in JB's favor re: anti-trust, I would assume several other competing bids could come into play. JB can't possibly be the only party interested in owning a team in the most lucrative available market. JB could then potentially get out-bid.

2. Wouldn't the market infringement penalties to Leafs & Sabres still be payable? He shouldn't have a case to be able to avoid those, or what GSCarpenter mentioned could run-rampant (other franchises packing their bags and waltzing in to lucrative other markets where other teams already exist).

 

[MayDay]

Makes sense. Though, two thoughts to go with this:

1. If the judge does rule in JB's favor re: anti-trust, I would assume several other competing bids could come into play. JB can't possibly be the only party interested in owning a team in the most lucrative available market. JB could then potentially get out-bid..

You know, I would LMAO if the bankruptcy court finds for Balsillie on every single point, and breaks the Coyotes arena lease, only to have Jerry Bruckheimer swoop in with a better bid and move the team to Vegas instead.

Just because I know that a certain contingent on these boards would absolutely explode with rage and indignation.

 

[rj]

1. If the judge does rule in JB's favor re: anti-trust, I would assume several other competing bids could come into play. JB can't possibly be the only party interested in owning a team in the most lucrative available market. JB could then potentially get out-bid.

Good point. Although money's a bit dry out there right now due to the economy. So there's not as many potential bidders as there would be in a normal market. And Balsillie was well prepared while others would be coming up with the money short-term.

2. Wouldn't the market infringement penalties to Leafs & Sabres still be payable? He shouldn't have a case to be able to avoid those, or what GSCarpenter mentioned could run-rampant (other franchises packing their bags and waltzing in to lucrative other markets where other teams already exist).

What did the Devils do in the early '80s when they moved from Denver?

 

[Hounsy]

You know, I would LMAO if the bankruptcy court finds for Balsillie on every single point, and breaks the Coyotes arena lease, only to have Jerry Bruckheimer swoop in with a better bid and move the team to Vegas instead.

Just because I know that a certain contingent on these boards would absolutely explode with rage and indignation.

Bruckheimer does not have the enough of his own money to win in an overbidding war.

 

[Stronso]

What did the Devils do in the early '80s when they moved from Denver?

Looked at Wikipedia and all it said was the Devils compensated NYR, NYI, and PHILA for invading NJ. No $$ amounts were listed

 

[SoCalPredFan]

What did the Devils do in the early '80s when they moved from Denver?

Exactly. They had to PAY Philly, NYI, and NYR!

JB has a clause in his purported sale to NOT have to pay any infringement fees.

-t

 

[BogsDiamond]

20% of revenue. The actual percentage of tickets sold in the course of a season is less.

The disparity arises from the fact that a good chunk of Canadian ticket purchases at HSBC Arena are the eight times a year the Sabres host the Leafs and the Habs, which tend to be platinum or gold-level (i.e. high-revenue) games.

I imagine if the team moved to Hamilton this team would be considered a 'premium' game as well.
Buffalo would probably fair pretty well by this.
I don't see them losing a lot of their fanbase.

I'm a Wings fan and I know if Windsor, ON were to get a team, I'd still support the Wings over the new, closer franchise.

Or the purported cost of an expansion team, ~$350 million, it's really smart.

In my view, it's the only thing Ballsillie could have done.
If he goes through the traditional route he would still have to declare Chapter 11 or Chapter 7 bankruptcy in order to void the lease agreement. That would mean anyone could swoop in and take the team from him. He would potentially lose money AND his team if the went this route.

 

[Stronso]

Exactly. They had to PAY Philly, NYI, and NYR!

JB has a clause in his purported sale to NOT have to pay any infringement fees.

-t

There is no way TML and BS are going to like that if it comes to pass

 

[kdb209]

2. Wouldn't the market infringement penalties to Leafs & Sabres still be payable? He shouldn't have a case to be able to avoid those, or what GSCarpenter mentioned could run-rampant (other franchises packing their bags and waltzing in to lucrative other markets where other teams already exist).

Mouser posted an extract from JB's bankruptcy court filings which show that his requested Sales Approval Order - he is asking for a court order that no territorial indemnification fees can be required.

Mouser - is there anything in his filings that would act as an injunction against the league revoking the franchise (if things came to that)?

 

[Jarnberg]

He forced him into a corner where he couldn't move the team for 7 years, which was essentially a move to destroy his interest in making the purchase. Then they allowed Boots the ability to move it within 3, which should make things a bit obvious.

Again, Bettman didn't FORCE Balsillie not to move forward with the deal. Balsillie choose not to go forward with the deal.

As for Boots, Bettman did not allow him to have a clause to move the team after 3 years. The local ownership group had a lease with the city which had clauses in it, which allowed the lease to be broken on various conditions. And the local owners had various terms with Boots as to how long he had before he had to absorb losses and other various clauses like change in ownership. Bettman did not give Boots the ok to move the team after 3 years.

You can try to cook up all kinds of conspiracy theories, but Bettman did not give an okay to the ownership group to move the team after 3 years.

 

[LadyStanley]

http://www.thestar.com/article/630339
Cox trying to calm the waters

This is about a business, the NHL, that sells professional hockey. So let's get a few facts straight.

For starters, the NHL has the right to the pursue business strategies of its choice under the laws of Canada and the United States. There is no moral imperative here.

Second, a successful franchise in Phoenix – something that hasn't yet been achieved because of awful ownership and management – is potentially worth more to the NHL than a successful second franchise in southern Ontario.

Third, franchises can flourish in the U.S. southwest and the Sun Belt. Look at Dallas, Anaheim and San Jose.

Finally, the NHL has a pretty good track record – not perfect, but pretty good – when it comes to turning bankrupt or failing franchises into profitable ones. Look at Pittsburgh and Washington. Look at Ottawa and Buffalo.

All these points are all dismissed or ignored by those who have drank deeply from Balsillie's Kool-Aid machine.

 

[mouser]

Mouser posted an extract from JB's bankruptcy court filings which show that his requested Sales Approval Order - he is asking for a court order that no territorial indemnification fees can be required.

Mouser - is there anything in his filings that would act as an injunction against the league revoking the franchise (if things came to that)?

I specifically looked for that and didn't catch anything that appeared to address the topic. Obviously I could have missed something, there's a good amount of content there.

 

[LadyStanley]

http://www.thestar.com/article/630392

In making his third attempt to buy an NHL team, Balsillie has been working the phones, and rumours swirl that he is ready to offer Gretzky anything – part ownership, naming the relocated Coyotes' arena after Wayne's dad Walter – to get him on board.

"It is purely speculation at this point," said Balsillie spokesperson Bill Walker. "Mr. Balsillie has immense respect for Wayne Gretzky and his family. We're going to keep any discussions the two of them are having private, until we have something to say."

Balsillie was said to have been on the phone to governors last night, attempting to drum up support.

"We won't be able to gauge the level of support until he's had a chance to speak to all of them," said Walker.

 

[Stronso]

and Cox is getting ripped by the readers

 

[BogsDiamond]

http://www.thestar.com/article/630339
Cox trying to calm the waters

Thanks for posting that link. Cox makes some excellent points.

But as unfair as it might sound, all those clubs (maybe minus Washington) have a history of good attendance records.

They've proven in the past to be good hockey markets capable of turning a profit.
With the revenue sharing program teams like Buffalo can and will make money despite having a very low average ticket price.

With Phoenix, it's at the bottom for every category: Corporate support, fan support, gate revenue, local interest.
It's been a struggle since day one, and it sounds like it hasn't helped that the team has been poorly managed and decided to move to a location that cut half of the fans off from an easy commute to the games.

The only thing that could save this franchise is if it were to draft the next Crosby or Ovechkin. Heck, it might need both of them.

 

[ZenBaja]

Bankruptcy

I'm certainly no expert, but I don't think this contingency bid is going to hold up. A US Federal Judge has no jurisdiction to force something upon a Canadian city. So unless the relocation can be approved first, this bid is not going to count.

-Zen

 

[Dark4ng3l]

I'm certainly no expert, but I don't think this contingency bid is going to hold up. A US Federal Judge has no jurisdiction to force something upon a Canadian city. So unless the relocation can be approved first, this bid is not going to count.

-Zen

The court can't force relocation nor does it need to. The only thing he wants if for the court to remove the lease and then rule that he can put the team wherever he wants. That can be done. Now of course if Hamilton or wherever he wants to put the team refuses to let him move the team to their city then the court can't do anything about that but that won't happen.

 

[Agalloch]

and Cox is getting ripped by the readers

Because they don't understand at all... and its pro canadian blabla. I'm québécois and for me it's annoying. How can someone wants others to lose their team ? I would be crush if it happens to me.

 

[ZenBaja]

The court can't force relocation nor does it need to. The only thing he wants if for the court to remove the lease and then rule that he can put the team wherever he wants. That can be done. Now of course if Hamilton or wherever he wants to put the team refuses to let him move the team to their city then the court can't do anything about that but that won't happen.

But the bid is contingent on moving to Southern Ontario. So Basillie is going to need to get leases, league approvals lined up - or his bid isn't real and cannot be accepted. It is a chicken egg thing. He's going to have to change his bid or pull a rabbit out of the hat and get the move finalized before the sale.

 

[Fugu]

http://www.thestar.com/sports/article/630641

Some excerpts from the McGrath article:

The court documents argue such a move "unreasonably restrains competition in violation of the antitrust laws."

The filings also argue the denial of moving the team to Hamilton would result in "significant anticompetitive effects... Because there are no other viable purchasers or other investors for the Phoenix Coyotes."

The NHL may take issue with that statement, with it now widely believed that White Sox owner Jerry Reinsdorf was ready to step in and keep the Coyotes in Phoenix.

The documents say that ticket revenue — which is 50 per cent of total revenues for a typical NHL team — was hovering between 40 per cent and 43 per cent over the last three years for the Coyotes, "which suggests that the tickets are currently underpriced or the number sold is inadequate. The average ticket price for the Phoenix Coyotes was $37.45, which is $12.21 below the NHL average."

The Coyotes generated $54 million in revenue and $76 million in expenses for the 2005-06 fiscal year, a loss of nearly $22 million They generated $59 million in 06-07, but ran expenses of $89 million, a loss of $30 million.

In 07-08, the team generated $56.5 million, spent $85.3 million, losing of $21.7 million.

The documents argue a team in Hamilton would be "pro" competition in that it would compete with the Sabres and Leafs for broadcast rights, media contracts, team merchandise and fan support "all of which would lower prices for such goods and services and directly and indirectly benefit consumers. Higher prices and lower output — the direct result of what is likely to be sought by the NHL — are the hallmarks of anticompetitive behaviour."

Bolded part to address earlier debates about team losses.