The NHL's Second In Command, Bill Daly, May Have Most To Gain, If Bettman Loses to Balsillie

Well the NHL’s not at all as rosy as the Commissioner has said. Hindsight now shows his numerous claims last fall and winter to be false or uninformed at best and truth stretching at worst. Clearly the Coyotes were near death’s door back in August when routine payments weren’t being made to the City of Glendale and the NHL had to step in. The Coyotes were apparently only looking for new additional investors in the fall (meanwhile the truth was much more dire). This sounds exactly how Craig Leipold started his get-out-of-town-quick plan and similarly this same week Tampa Bay announced it is seeking “new investors”. Please no more pig and lipstick shows!

But one would be Offside for not taking a large dose of salt with the Commissioners’ words anymore.

So today let’s look at two things; the first is the situation the NHL finds itself with the Coyotes and Balsillie and the second is much more important as we look at the wider ramifications to the NHL.

Desert Dogfight: NHL Versus Former Owner Moyes

If the NHL wins the case against Jerry Moyes to see who controlled the team before it was put into bankruptcy, the NHL is still not out of the hot water. This will take us to June either way. And an appeal by either side could last for another 6 months to a year. The Coyotes will be most likely granted an injunction to keep the team where it is as long as the court case is ongoing. Cue the first lame duck season.

If the NHL wins this case, they block Moyes and Balsillie (for a third time).

Desert Storm: NHL Versus New Owner Balsillie

If the NHL loses the case against Moyes, this is where the NHL constitution could unravel. Or at least be worked around by other owners in the future. More on this later.

Following that court decision, the bankruptcy court then sells the asset to the highest sealed bidder (which is exactly its' role to maximize what value is left for creditors), Balsillie might become the new owner, assuming no bigger village . . .renegade . . . offers more than $213 million US and beats his bid.

And with anti-trust laws in the US, Balsillie can move it whereever he wants to in the US so long as it doesn't encroach on another NHL team’s territory. (Then the NHL would win in court, if he did that.) But in Canada it's been already stated that the NHL has final say as an internal matter to decide where clubs can be moved. Maybe Balsillie would stay in Phoenix but probably not more than one season.

The Next Battle Comes To Canada

At the very least, Balsillie would need to win another court decision this time in Canada in order to move the team to a Canadian city. The NHL could trot out its' constitution saying a vote of two-thirds majority is required to relocate a team anywhere. This could take another year to complete. Add another 6 months to a year for any appeal process.

And with the stakes so high you can be sure the best of the best lawyers on both sides will find grounds for an appeal in any of these court cases and that party will move ahead with the appeal with no hesitation.

Talk about costly and wasting years of time in the process where the team will be lame duck for more than one season. Can you imagine the bad press the NHL will get for a team that plays to empty houses?? Can you imagine Balsillie having egg on his face for a third time? Maybe there’s room for a settlement with the high stakes for both sides?

Bigger Picture: Even More Stormy?

Now let's see the bigger picture. There is a huge danger here for the NHL. Following the Coyotes’ lead and without similar NHL involvement, another existing owner could at any time declare his team bankrupt (and many of them could months ago), essentially flip the team to new owner through bankruptcy court, then use the anti-trust law in the US to pick up and move a team anywhere in the US that isn’t within 50 miles of an existing NHL team. Then fight just one court case in Canada to see if the new owner or the NHL decides where teams can be moved to within the Great White North. If Balsillie wins, this becomes precendent which opens the flood gates to more teams moving northward.

NHL Constitution and Commissioner Powerless

Once one team declares bankruptcy then the spectre of fear is lessened for all others to come after. The power of bankruptcy is that it severs all contracts and obligations to most creditors and all contracts including leases to that city’s rink. In a sense, this is very similar to an expansion team with no owner chosen yet. And the judge, not the NHL, decides who becomes the next legal owner. This makes the team portable and therefore desirable unlike their pre-bankruptcy condition. It also makes the leader of the NHL weak in controlling his teams’ ownership transfers and where they are to be located should the NHL owners decide to fend for themselves.

You have to think that Islanders’ owner Charles Wang, Oren Koules in Tampa Bay, the Atlanta Spirit group which holds the Atlanta Thrashers, Alan Cohen and his Panthers and maybe other owners, we don’t even know about yet, are all watching this closely. They may have reached a point where they are in such a tough spot that almost every option including bankruptcy is conceivably more desirable than where they stand today.

A New Beginning Emerges?

With more bankruptcies to potentially handle, the ‘Southern Experiment’ now so clearly in ruins in Arizona and many other locales, the NHL might just ask Mr. Bettman to become the scapegoat, so that they can begin a new chapter, free and clear of baggage.

And that’s why these upcoming court challenges may be the biggest lawsuits the NHL will ever be involved in. And that’s why Gary Bettman may be fighting for his career and his very legacy when he starts to box with Jim Balsillie in the ring this week.

Notes: For supporters of the return of the NHL to Manitoba, based on how many court challenges could be involved here it’s possible that a team relocates with NHL permission to Winnipeg before Balsillie ever gets to watch his team play at home in Canada. And that might be cosmic justice for Winnipeg’s “play-it-by-the-NHL’s-rules” and low key approach.

Don’t agree? Throw us your opposing view on the Manitoba Mythbuster Forum!

Chris
Chair, Manitoba Mythbusters
www. ManitobaMythbusters.com
~ The Reality May Surprise You, Excite You! ~