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Balsillie still in the game

STEPHEN BRUNT

From Friday's Globe and Mail

Latest comment posted at 2:21 PM EDT 12/05/08

With the U.S. economy tanking, things looking up for billionaire businessman's dream of owning NHL team ...Read the full article

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  1. Gary Dare from Portland, Oregon, Canada, writes: Since the Buffalo Sabres have already paid territorial indemnity to the Leafs and (a little bit to) the Red Wings, this franchise should be free and clear to move within that area ... no? This is the team that Balsillie should have waited on, all along. I believe that the Sabres' lease at HSBC Arena lasts to 2011 or 2012.

    Given the a) financial distress of the Buffalo-Niagara region and b) small market concerns over Hamilton, this franchise could be more stable by splitting its season between two home rinks.
  2. Jasper the Black Lab from Vancouver and Elsewhere, Canada writes: Heck, with a downturn in the US, maybe Balsillie can buy two teams.
  3. Blair Faulkner from writes: If he does buy two teams, put one in Hamilton and the other in Kitchener-Waterloo...wouldn't that drive the Leafs' brass nuts...hell, get a third and throw it into Winterpeg, just for good measure...get rid of Bettman, too!
  4. Matt O from Canada writes: The story behind the story here, I believe, is the way that NHL owners have been cooking the books to make it look as if they are profitable enterprises.

    Eugene Melynk already admitted that the Senators will lose money this year because they didn't make it out of the first round of the playoffs. What does that say about all the clubs who play in half-filled arenas down in the States (which would be quarter-filled if it weren't for freebies), many of which didn't even make it into the playoffs? And no, the low Canadian dollar can't be used as an excuse here.

    The whole thing is hugely ironic. The NHL owners want to inflate the perceived value of their franchises, so they cook the books. Bettman then crows about how the league is making more money than ever. Meanwhile, the salary cap goes up because it's tied to these phoney revenue dollars. I'm willing to bet that more than a few owners have also made bad loans based on the values of their clubs. The whole sandcastle could come crashing down any day now.
  5. R Miller from Halifax, Canada writes: It's too bad that Balsillie wasn't allowed to bring a real NHL team into Hamilton.

    It's likely the only way that Southern Ontario might ever see a Stanley Cup in the forseeable future.

    Cheers.
  6. bagoverhead guy from South Delta, B.C., Canada writes: Matt O is correct about how much money these teams are making...the marginal markets will be awash in red ink now that the salary cap is moving much higher again, and with the economy in the U.S. and Canada softening, more empty seats, less revenue etc. The perfect bad storm, which in the U.S. includes the severe credit crunch.

    No major TV deal yet in the States...

    Canadian teams can pretty well be assured of full buildings, great TV revenue,and product sales, and in Toronto, a parent company selling thousands of condos on which they are making a killing. Same thing likely to take place in Vancouver soon.

    Gary D might be right...split the Sabres games between Buffalo/Hamilton...that's a combined market of about 3 million...should work, buildings will be full and TV revenue good.

    Go for it J.B....7 Canadian teams would be great, and just a start...Winnipeg needs about 3000 extra seats in its building for a chance.

    Oh Canada!!
  7. Globe Insider subscriber content
    TED DICKIE from LIVERPOOL NS, Canada writes: With a new NHL team in Hamilton;Ontario fans could watch "real NHL hockey!" Instead of that excuse for same in Toronto!
  8. Joseph Daniel from Oakville, Canada writes: as brunt says in his article, "trying to sell hockey to people who actually want to see it" what a novel idea! But hey hockey fans commish gary has our best interests at heart. Let the Laffs gouge southern ont. more and more. As for 'real hockey in ontario' well don't know if it will ever happen. Will have to wait and see I guess.
  9. Globe Insider subscriber content
    David Snider from Ottawa, Switzerland writes: I'm on Balsillie's side. Healthy competition. I'm a Sens fan but lament TML's woeful ways the past few years. Another franchise in Ontario is just what they need to light a fire under the collective behinds of MLSE.

    Go Sens, Go Balsillie.
  10. Verona Raven from United States writes: Basille should go after the Florida Panthers. Either Florida or Phoenix will be his best shot at a team.

    PS...Winnipeg will NOT get a team. Too small of building and the city doesnt have a corporate base. Hamilton/Kitchener will get one before Winnipeg.
  11. Dave Miller from Montreal, Canada writes: How about we drop Bettmen and let Balsille run the league.
  12. Larfing Outloud from Virgin Islands (British) writes: Dave Miller from Montreal, Canada writes: How about we drop Bettmen and let Balsille run the league.

    That would suit me but I think it would be far more entertaining (for us anyway) if Balsillie got a team and shoved it in Bettmans face. I'd pay to watch that action.
  13. Devil Bud from T.O., Canada writes: Balsillie's problem isn't "buying" a franchise, it's "relocating" the franchise. The NHL Board of Governors would NEVER willingly allow ANY NHL franchise to relocate into the holy-land (A.K.A. Toronto's market). There is a reason why each team has a territorial veto and it is not simply because of Toronto, or Buffalo, etc. It is because the NHL Constitution and By-Laws are designed to create a joint venture amongst NHL teams, that eliminates horizontal competition. This allows them to have a system in place that is the most efficient to generate revenues, as opposed to actually running their businesses efficiently. Don't be fooled by people like Melnyk, claiming he lost money this year either. The economic spin-offs for "Johnny Corporation" in owning an NHL team, or any professional sports team, is immeasurable. If it wasn't, then why would companies be lining up just to have their name used for an arena, sports stadium, etc. ? That was one of the key issues during the last lockout...the NHLPA needed a genius forensic accountant/a team of genius forensic accountants, to go through team by team to see the "actual" revenues generated by NHL franchises. End result...owners won, but only because the task of tying everything together is incredibly ridiculous. As for Balsillie getting "his" team in Southern Ontario...he better find a nice place that is 80 km. from Toronto's market border, or convince the Commissioner of Competition to get off of her behind and stop playing politics. There is definitely a legal solution to this problem via the Competition Bureau. The question, though, is whether Balsillie has the legal manpower to force this issue to the bitter end? Richard Rodier, are you listening? Time to beef up your Competition Law team and go for the full-court press. Either way, taking on the NHL is the least of Balsillie's problems in that regard. Oh well.
  14. bob tillman from Hamilton, Canada writes: Thats 2 articles in the Globe today on Balsille! Somethings up me thinks. Brunt has the inside scoop on something. I think Balsille is starting (again) a campaign to get a team and hopefully bring it to Canada. In the Hammer would be my preference. Im waiting by the phone to put my deposit down on tickets. Jim if your reading this, I have my deposit in hand. Oh and where can I send my resume?
  15. Gary Dare from Portland, Oregon, Canada, writes: Devil Bud writes, 'Balsillie's problem isn't "buying" a franchise, it's "relocating" the franchise.' The NHL was probably afraid that blocking a move to Hamilton/K-W would bring about not only Canadian regulators on the Combines Act but worse, the US on Anti-Trust. Also, I believe that the NHL prefers that franchises not move at all, giving impression of franchise instability (as if many empty seats doesn't!). That's why Paul Allen was left at the altar in 1999 when he offered to buy the Penguins out of bankruptcy and move them from Pittsburgh to Portland, Oregon (and a second time, when he went after the Coyotes the next year). In the Nashville case, Bettman didn't turn heaven and earth to find a local buyer probably because he felt the situation was hopeless and the Kansas City consortium included William 'Boots' Delbiaggio, who the league wants to get into their club.

    One final note on relocation is that moving a team to Canada could threaten US franchise values, or at least that's the belief in some quarters. Those chances may have gotten worse, not better, with the rising angst over (e.g.) Citibank getting bailed out by sovreign wealth funds (SWF's) from Dubai and Singapore.
  16. John Bladen from Canada writes: If I'm Balsillie, I do not even try to deal with the Leafs or the NHL 'veto' (which, they, for the record, claim doesn't exist).

    I buy my team, and if Gary wants to block this, he'd better find another buyer for Atlanta/Florida/Phoenix willing to pay the $100M premium JB (the other one) is... with revenues plummeting, cheap credit and "equity finance" no longer available, I'm guessing Golisano won't be the only one picking up a franchise for a song in the next few years.

    Then, with ownership resolved, I set about construction of my new arena ten feet from the accepted limit of the Leafs/Sabres/Wings (not an issue) territorial "circles". Balsillie is going to have to build a new arena anyway, why not put it at the edge of undisputed territory(ies)? You can call them Hamilton, London, K-W, Toronto or whatever you like, but they'll be just outside the NHL's existing defined areas in Southern Ontario.

    We've seen this movie before in pro sports, as Brunt says. Bill Daly can harp all he wants about modifications to the league's bylaws to prevent an Al Davis move. The fact is, the owner of any franchise can move his team where he wants, so long as it isn't within the T.A. of another sister franchise (then he may, or may not depending on whom you believe, need permission from the T.A. holder). The NHL cannot require an owner to stay in market which he deems unworkable. All they can do is offer 'incentives' for s/he to try and make the bad market work a little while longer... When the alternatives to Balsillie joining the 'club' is the league propping 8 teams up financially, or franchise contraction, he'll suddenly be welcomed into the fold...
  17. Will Hoaccio from Canada writes: Can anyone tell me the specifics about the territorial "veto"? I get the basic idea, but then how did the Islanders get created? Wouldn't the Rangers just have vetoed it? I've always though Toronto could use a suburb team (Mississauga?), I'm sure the Toronto market could support 2 franchises.
  18. John Bladen from Canada writes: Will:

    One of the reasons for the tremendous grudge between Islander and Ranger fans (along with Geography and Manhattan/other borough interests amongst others) is that the Islanders were required to indemnify the Rangers/MSG from losses associated with surrendering a part of their "territory". If I recall correctly, it was between $10-20M (1972 dollars) that they had to pay. The league, for it's part, says only that the Rangers "did not register an objection to expansion" to Long Island - meaning the league claims no role in the transaction, and may not even acknowledge that a financial accommodation was made/required.

    I understand something similar happened when the KC Scouts/Colorado Rockies moved to NJ in 1982 (?). Not sure if both the Islanders and Rangers were paid then, or just the Rangers (Isles play in Uniondale, or Hempstead, on L.I. and may be outside the zone... not sure about that). Similarly, when Anaheim swept into the league, McNall did not object (in fact, he lobbied Disney heavily to buy a team)... largely due to the fact that 50% of the expansion fee went directly to him (or his creditors, as it turns out).

    As for the Loafs, I simply can't imagine they'd even put a number on the price of their "consent". If so, expect it to be more than the cost of a new team/building combined...
  19. Devil Bud from T.O., Canada writes: John Bladden & Will: The price paid by the Islanders and Devils to the Rangers was a base of $4 million. As for territorial Vetoes...each NHL team has what is called a "territorial-veto" to anyone wishing to enter into their market. The "market" is defined as anything within 80 kms. of the metropolitan area. In essence, anyone wishing to purchase and relocate an NHL team must acquire 75% approval from the Board of Governors (each franchise has a member on the Board). As part of this 75%, where you are moving into an existing territory, you must also gain the consent of whoever has a territorial-veto. The most telling example of how these kinds of "consents" go in modern professional sports is that exhibited between the Washington Nationals and Baltimore Orioles. The Nationals pay Baltimore 2/3 of their broadcasting revenues each yr. as part of their deal. Put into real numbers, based on the MLB average in broadcasting revenues, you are looking at in excess of $26 million/yr. I have no idea how long this goes on for. No matter what scenario would play out with regard to Toronto/Hamilton, you can bank on a whapping base payment to MLSE a % of broadcasting revenues. Broadcasting revenues are about 22% of NHL franchise revenue, and the NHL as a whole makes around $120 million in such revenues. So, put into perspective, any deal made with Toronto would pretty much well make it a certainty that a Hamilton franchise would never turn a profit. This is why no one really talks about how much do you pay MLSE....the real issue is, is the Territorial-Veto contrary to the Competition Act by eliminating competition within the market? I would argue that it very much well is anti-competitive conduct, but the Competition Bureau does not agree with me. Haha...it's all politics on that one.
  20. Matt O from Canada writes: Okay, it's the time for the old standard: Hamilton will never get an NHL team, because then Toronto will want one, too.

    Sorry, I couldn't resist.
  21. Dave The Rave from Ottawa, Canada writes: This is all a smokescreen to disguise the fact that Balsillie is starting his own league. This news item just in: "Kitchener-Waterloo, May 9 (CP) The Canada First Hockey League is ready to announce its launch. Don Cherry, the league's new commissioner; Tie Domi, the CFHL's Senior Vice President and Director of Hockey Operations; and Pamela Anderson, Director of Public Relations, confirmed that the official colors and logos of the league's flagship franchises will be presented on July 1, Canada Day. 'It's our bloody game, eh,' Cherry noted. 'It's about time we took it back.'"
  22. Chris Michaels from Oakville, Canada writes: Atta boy, Jimmy!!
    Everyone in the Hammer is rootin' for ya!

    I really hope I see the day when NHL hockey has home at Copps Coliseum.
    Man, that would be so sweet.

    (And I'd laugh, then spit in the direction of MLSE --- whom I've just about run out of patience with.)
  23. Henry Allen from East Bank, Don River, Canada writes:
    I suspect one of the reasons this story about Balsillie is popping up at this time is because there is a rumour floating around that Buffalo Sabres owner Golisano and Balsillie have been talking. As the rumour goes, Golisano is interested in selling the Sabres but doesn't want the Sabres moved from Buffalo. This requirement by Golisano makes it very difficult to find any potential buyer, never mind getting a good price for the Sabres. Time is on Balsillie's side. He can afford to wait until the deal he wants comes along.
  24. Verona Raven from United States writes: The Islanders creation (courtesy of wikipedia....)

    "With the impending start of the World Hockey Association (WHA) in the fall of 1972, the upstart league had plans to place its New York team in the brand-new Nassau Veterans Memorial Coliseum in Nassau County. However, Nassau County officials did not consider the WHA a major league and wanted nothing to do with the upstart New York Raiders. The only legal way to keep the Raiders out of the Coliseum was to get an NHL team to play there, so William Shea, who had helped bring the New York Mets to the area a decade earlier, was pressed into service once again. Shea found a receptive ear in NHL president Clarence Campbell, who did not want the additional competition in the New York area. So, despite having expanded to 14 teams just two years before, the NHL hastily awarded a Long Island-based franchise to clothing manufacturer Roy Boe, owner of the American Basketball Association's New York Nets. A second expansion franchise was awarded to Atlanta (the Flames) at the same time to balance the schedule."
  25. Gary Dare from Portland, Oregon, Canada, writes: Henry Allen writes, "As the rumour goes, Golisano is interested in selling the Sabres but doesn't want the Sabres moved from Buffalo." The first talk of Golisano wanting out, was on a November 2007 episode of "Satellite Hot Stove", as I recall. Golisano's charity and good will seems to be going only as far as playing with the house's money, as costs are starting to bite and the Buffalo area economy has continued to slide (it was depressing enough to check in on the Buffalo News online during the Rigas scandal; going back recently, things have NOT gotten better!).
  26. Chris Mackie from Winnipeg, Canada writes: (Verona from USA writes: PS Wpg will NOT get a team. Too small of building and the city doesnt have a corporate base. Ham/Kit will get one before Wpg.) Excuse me! These sorts of statements about Winnipeg, its' new MTS Center and the Manitoba economy are totally unsubstantiated. I recently came across 3 sources of information that you might find valuable given that this topic appears fairly regularly in the media. http://www.theglobeandmail.com/v5/content/pdf/NHLweb.pdf - Private NHL financial data for all NHL teams Oct 06 to Jan 07. - The information is obtained by the Globe&Mail, not Forbes' estimates. - At a little over 50 USD (60 CAD) / ticket x 14,500 Winnipeg could do the same or better than half the teams in the league. (max cap'y is 15,100) - With higher prices for Luxury Boxes and Club Seats, the avg price of a ticket for the avg fan, could be much lower than $60 CAD and the team would still be in the top half of league revenues!! - An avg price of $60/seat can have a ticket price range from $20 and up, making it affordable for most people. Here’s an independent firm finding numbers virtually the same: http://teammarketing.com.ismmedia.com/ISM3/std-content/repos/Top/Fan%20Cost%20Index/NHL/nhl%20fci%2007-08.pdf The most detailed public assessment of a new Winnipeg team's business plan can be found here: http://www.jetsowner.com/howmuch.htm Winnipeg opened the MTS Center in '04. (See MTScentre.ca) - endorsed by the local prospective owners and the league itself (Gary Bettman) - A few have criticized its' size at 15,100, but with a limited number of seats a strong demand for tickets holds over the long term A local ownership group has been identified: - Mark Chipman et al, Feb '08 CBC “The National” With Gary Bettman’s continued endorsement of Winnipeg and his not-too-subtle statement of “righting a wrong”, all that Winnipeg's re-entry needs is a current NHL owner who is sick of losing money. Chris visit jetsowner.com
  27. Gary Dare from Portland, Oregon, Canada, writes: Thanks, Chris, for providing those sources. I might add that many NHL venues struggle to find 15,100 paying attendees and even struggle with free give-aways and package deals. Some franchises are propped up by public subsidies ... the Predators in a blatant way, the Penguins by a package that includes a special casino tax and public arena building funds that must survive the annual state budgeting process. (There was a brief panic last year when those funds were dropped by a committee and the governor, Ed Rendell, had to force them back in.)

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