Tuesday, September 1, 2009

Kerrzy's Notebook: Setting Precedents

Rap group Dead Prez is known for, among other things, a song that goes: "it's bigger than hip-hop" - well, the case in front of bankruptcy court Judge Redfield T. Baum is much, much bigger than the Phoenix Coyotes.

The precedent that will be set if Balsillie becomes the new owner of the Coyotes and is able to move the team to Hamilton without the NHL's approval will be huge. It'll mean professional sports leagues no longer have the control they once had over who owns the teams and where they play.

It has become a very tangled web, but what it comes down to is this:

If Judge Baum decides on Wednesday to allow Balsillie's bid in the September 10th auction for the team and he ends up winning, it will be just the beginning of a long court battle - unless the NHL is given a reason to be okay with it.

The judge is in a tough spot though - Balsillie's bid is about $72.5-million more than what the NHL is bidding and it seems, on the surface at least, to be a better deal for the creditors. The obvious reason that Balsillie went through bankruptcy court is because one of the main focuses of a bankruptcy judge is satisfying the creditors, as far as I know.

But, at the same time, can you let someone circumvent the normal process - especially when the league seems to really not want the guy as an owner?

I think the judge is going to have to get creative with this one if he wants a lasting solution. Lets review some of the facts:

-Last week, the NHL came out and said that if a lease deal couldn't be reached with the city of Glendale by the end of the year, they would look to an outside buyer to relocate the team. So, it's not like the league is against relocating the team.

-If Jim Balsillie wins the team at auction, he'll have less than a month to move the entire business to Hamilton and I don't think he's started the $150-million worth of upgrades to make Copps Coliseum NHL-ready. It would be a bad move to try and make that happen in such a short time and he won't make any friends with the league when they're forced to redo parts of the schedule.

-The National Post also notes that J-Bal has left the door open for the team to remain in Phoenix for the upcoming season, should he become the owner, before a move to Hamilton.

So here's what I think they should do:

Based on the premise that his bid is the best for the creditors, the judge should ask Jim Balsillie for a one-year commitment that would keep the team in Phoenix while he gets Copps Coliseum up to standard. Since the league is only guaranteeing one year in Glendale, I see this as an acceptable request.

It also ensures that there'll be ample time to prepare Hamilton for an NHL team without cutting corners.

The two parties would then have to agree on a relocation fee, and perhaps even a "membership" fee of sorts.

We all know that if he gets this team, Balsillie will have done so by cheating the system a bit, so he should be prepared to pay big bucks. He should see this as an act of good faith to the league and the other owners ("Sorry I've been such an idiot, I just really want an NHL team!").

What it all comes down to is, the league wants control of who owns any of its teams and what they do with them. I don't know how they would calculate the cost of a "membership" fee, but I think that is reasonable, given the circumstances.

Maybe once the price of the team, the condition that they'll stay in Phoenix for another year, the price of relocation and the price of membership are on the table, the league would see how badly this guy wants the team. They could even take it to another vote with the owners (if the league is getting paid the big bucks, I'm sure they'll be happy, and the owners would probably vote accordingly).

The thing is, it's obvious that Balsillie's going to hang around until he winds up with a team (since he's a billionaire), so I think they should just let him into the club now to save us all the future headaches - but don't let him in without making him pay a huge amount of money to get in.

If you made it this far into the blog, let me know if you think this is a dumb idea, or if you think I'm onto something!


Anonymous said...

Great minds think alike. I have been saying for months that J-Balls would get the team and that the NHL will get its pound of flesh to move to Hamilton. I think his "transfer fee" will be in the 150 million range and I think he will gladly pay it. After payment, a very public kiss and makeup session will occur as Bettman grimaces silently underneath a phoney smile with eyes closed.
Nice work Jim!

Kerrzy said...

Cheers Brian! I just wish Balsillie would come out and say "I'll give them one year in Phoenix, then I'm moving the team" - thats the kind of concession that'll gain him a little momentum I think. Talking about starting the season in Phoenix then moving the team mid-season is only making the situation worse I think haha