July 13, 2007

BALSILLIE’S ASTRONOMICAL BID USURPED BETTMAN’S DEALINGS

       There is much more international interest in the Nashville Predators this summer than there has been in their entire history in the National Hockey League.   When Ontario billionaire Jim Balsillie and Predator owner Jordan Leopold agreed upon a sale price earlier this year it began a maelstrom of activity that threw the franchise into a black hole and backed commissioner Gary Bettman into two very demanding corners. 

       Bettman’s predicament unfolded because of an existing deal he struck with L.A. Kings owner David Anschutz , a multi-billionaire ranked as the 31^st richest person in America.  One of Anschutz’s companies, he either owns or has major interests in more than 100, is AEG a sports and entertainment group that has purchased the management rights for the Sprint Center in Kansas City, a brand new arena--scheduled to open in October—that is in need of an anchor tenant.  In a deal, likely culled from the 2004 lockout, Bettman agreed that if any existing team were to move out of its existing location that he promised it would move into the Sprint Center.  And Philip Anschutz is a man used to getting his own way and is not likely the type of person who accepts no for an answer. 

       Bettman also has another existing deal with Maple Leaf Sports and Entertainment—one that ensures the rich Southern Ontario market remains the sole property of the Toronto Maple Leafs.  Bettman wouldn’t enjoy telling the Leafs board of directors that they were about to lose that sole propriety either.  So when Leopold agreed to sell the Predators to Balsillie it put Bettman in a position of possibly reneging on two previous deals.   

      Balsillie was well aware of these arrangements when he entered into negotiations to purchase the Predators.  The lesson was learned from last year’s failed attempt by Balsillie to buy the Pittsburgh Penguins.  Even though he came with the highest offer, it wasn’t substantially better, and it allowed Penguin ownership, led by Mario Lemieux, to sign a letter of intent to sell to real estate developer Sam Fingold whose first priority, he claimed, and they insisted, was to keep the team in Pittsburgh.  If Pittsburgh was unable to finalize a new arena deal, however, then Fingold would have the right to move the team to…wait for it…Kansas City.  With a new arena deal forthcoming and realizing that Fingold preferred to move the club Penguin ownership scuttled the deal.  Balsillie wasn’t nearly so coy this time around.  He knew that if he stood any chance at being an NHL club owner he had to blow Leopold right out of the water.   

      His offer was in excess of $40 million more than the next best offer and obviously had Leopold scrambling for his pen to sign the agreement.  Bettman knew Balsillie’s motive was to buy a franchise and move it into the Southern Ontario market.  The commissioner was quickly proven correct as the Research in Motion magnate quickly and boldly took his proposition to the city of Hamilton in order to acquire the proof needed for his claim that the team could be successful in that market.   For his part Bettman also needed to move quickly in order to slow down what was becoming a runaway train.  The commissioner delayed discussion on the matter of the sale thereby keeping Balsillie from attending the governors meetings, and possibly selling the other NHL owners on the idea of another team in Canada.  For now the governors remain quiet—content to wait out the situation and not make waves for either side until there is a resolution.

       It is now a battle between influence and money.  Anschutz and MLSE have the influence—Anschutz wants the Predators in the new market…a winning team would attract interest immediately.  He is pushing Bettman and the commissioner is pushing Leopold.  Balsillie has the money and has made his statement to Leopold, to the NHL governors, to the commissioner, and to hockey fans across the continent.  It is also likely that Bettman is subverting the process by trying to work some backroom deals with Leopold so that he can make good on his front room deals with Anschutz and the Leafs.  Leopold however, doesn’t give a damn about any other arrangements, and he certainly doesn’t care about Bettman’s problems.   He wants to sell to the highest bidder, and that person right now is Jim Balsillie.  But Leopold has to decide whom he can trust.  If he sides with Balsillie he needs to feel secure that the other NHL owners will approve the sale—for if they follow Bettman and keep Balsillie out then Leopold could be left without a buyer and forced to keep his money losing franchise. 

       So now Leopold is placating Bettman by holding off on selling his team to Balsillie, and giving the other two interested ownership groups an opportunity to match.  However, the first group, supported by Anschutz and fronted by minority San Jose Shark owner, Boots Del Biaggio, originally offered less than $190 million, a far cry from Balsillie’s offer, and is unlikely to be able to improve upon that figure.  The other group, a collection of Nashville businessmen trying to keep the team in their city, appears to be well in over their financial heads.

       It is possible that Balsillie and Leopold have concocted their own backroom deal—to exhaust the other interested parties and force the commissioner’s team, unable to raise enough capital and unwilling to pay that much more than market value, to finally surrender.  At that point the commissioner would have little choice but to approve the sale of the Predators to Balsillie. 

      At that point Bettman can honestly say, to both Anschutz and MLSE, that he gave it his best shot.  Some promises just can’t be kept.

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