((HT: GlobeSports/Shoalts, Waldie))
The level of hostility from the NHL’s board of governors caught Jim Balsillie ((pictured, thanks GlobeSports file)) by surprise, but the rejection of his bid for the Phoenix Coyotes did not.
Even though the NHL announced yesterday that its governors unanimously rejected Mr. Balsillie as a potential owner and approved a bid for the Coyotes from Chicago White Sox and Chicago Bulls owner Jerry Reinsdorf, the co-CEO of Research In Motion Ltd. vowed to press on.
Balsillie’s spokesman, Bill Walker, said a new version of his $212.5-million (all currency U.S.) offer for the team will be filed with the U.S. Bankruptcy Court in a few days.
“We’re moving full steam ahead,” Walker said. “We don’t believe that Jim Balsillie’s qualification to be an NHL owner is an issue at all.”
The committee gave a welcome reception to a proposal by Ice Edge Holdings, a group made up of Canadian and American investors.
“We didn’t hear anything that would stop us,” said Daryl Jones, a partner in Ice Edge. “We’re still in the game.”
Like Reinsdorf, Ice Edge wants to keep the Coyotes in the Phoenix suburb of Glendale, but it has not submitted its bid to the court – which will hold the first of two possible auctions for the team on Aug. 5 – because it has yet to line up all of its financing and arrange a new arena lease. The governors deferred a decision on the offer, and now the group says it plans to press ahead with a bid.
NHL deputy commissioner Bill Daly said in an e-mail message that Mr. Balsillie was rejected under bylaw 35 of the league’s constitution. That section says the league can reject potential owners if it does not believe they are of “good character and integrity,” as well as for financial reasons. Daly declined to comment when asked to be more specific.
Walker declined to comment on details of the meeting with the governors’ executive committee or on why the league rejected Balsillie.
A source familiar with the meeting said NHL commissioner Gary Bettman called Balsillie shortly after the gathering to tell him why the league was rejecting him as an owner. According to the source, Bettman cited the way Balsillie “had interacted with other member clubs.”
The meeting, held in a Chicago airport hotel, was tense. For more than an hour, members of the executive committee took turns verbally pounding Balsillie. According to sources familiar with the proceedings, Montreal Canadiens owner George Gillett and Minnesota Wild owner Craig Leipold led the charge.
Gillett was embarrassed last November when Balsillie told a reporter the Canadiens were for sale. It was denied at the time but later proved to be true. Leipold was the owner of the Predators in 2007 when Balsillie’s bid for the team was first accepted and then rejected.
The source said Gillett claimed the fallout from Balsillie’s comments on the impending sale destroyed the Canadiens’ season.
“It was not gentle,” the source said.
However, the NHL’s rejection of Balsillie as an owner may not stand up in bankruptcy court.
During a hearing in June, Judge Redfield T. Baum told the NHL that because it approved him as an owner when he tried to buy the Pittsburgh Penguins in 2006, it could only reject Balsillie as an owner if there was a “material change” in PSE Sports & Entertainment, the company Balsillie formed to handle the Penguins and Coyotes bids.
“We do not think that Jim Balsillie’s qualification to be an NHL owner is an issue in this case, given his 2006 approval as an NHL owner,” Walker said.
“Presumably the onus will be on the NHL to demonstrate a material change in PSE’s circumstances, although no such change was raised with us,” he said. “Beyond that, we have confidence in, and respect for, Judge Baum and the legal process as this case unfolds.”
Daly responded by denying Balsillie had been approved as an owner in 2006 and refuting Walker's comments.
"Mr. Walker must have been at a different meeting than the rest of the Executive Committee," Daly said via email Wednesday night. "Beyond the fact that Mr. Balsillie was never approved by the Board of Governors in 2006, his entire interview today was spent answering questions on the things he has done since 2006 that call into question his bona fides to be an NHL owner. Obviously, the board was not comfortable with approving him as a business partner, as is their absolute perogative."
Sources say the Balsillie camp believes the NHL wanted to reject him as an owner in advance of the Aug. 5 auction sale of the Coyotes, which is restricted to bidders willing to keep the team in Glendale. If Judge Baum declines to accept the bid from Reinsdorf, who is the only person to file one so far, then an auction for bidders like Balsillie, who wants to move the Coyotes to Hamilton, will be held on Sept. 10.
Balsillie is hoping Judge Baum will accept his bid because it offers $64.5-million more than Reinsdorf’s bid. The Reinsdorf bid is for $148-million and is largely based on the assumption of debt. It is also conditional on working out a new lease and revenue concessions from the City of Glendale, plus concessions from the major creditors.
Walker said by almost any measure Balsillie’s offer is far better than Reinsdorf’s. For example, he said, Balsillie has arranged a 32-year lease for the Copps Coliseum in Hamilton, whereas Reinsdorf has yet to reach agreement with Glendale for Jobing.com Arena.
The Ice Edge group has only submitted a letter of intent so far, offering up to $150-million, and it still has to pull together a final offer. The NHL committee spent most of the meeting asking the group, which wants to have the Coyotes play five regular-season games in Saskatoon, about its background and financial assumptions.
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