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Balsillie submitted his application to buy the bankrupt Phoenix Coyotes and move the franchise to Hamilton, Ontario, to the NHL and its Board of Governors this past week. And it was to nobody's surprise that Balsillie, who has fought with the league in his pursuits of the Pittsburgh Penguins and the Coyotes, was rejected. Meanwhile, the NHL's hand-picked owner, Jerry Reinsdorf, was approved by the board. "Mr. Reinsdorf's application was unanimously approved by all those board members present and voting, subject to the league's completion of its due diligence and review of the final transaction," NHL commissioner Gary Bettman said in a statement. "In Mr. Balsillie's case, it was the unanimous vote of all members present and voting that his application not be approved." Just what did the board base its decision on? Certainly not the magnitude of the offer, given that Balsillie's bid is a full $64.5 million higher than Reinsdorf's offer and $62.5 million greater than the prospective bid of another rival suitor, Ice Edge Holdings LLC. Instead, according to a report in the Globe and Mail, it appears the board is quite the old boys' club and that Balsillie is paying for something other than what his offer promises the Coyotes. The Toronto Globe and Mail reported that Balsillie's deal was "rejected under bylaw 35" of the NHL's constitution, which says that the league can shoot down a potential team bid if it doesn't think the prospective owner is of "good character and integrity" or for financial reasons. To be fair, the league's deputy commissioner declined to tell the Globe and Mail specifically why Balsillie was rejected, but the paper did claim that a source cited the way Balsillie had interacted with other clubs and that the other owners even "verbally pound[ed]" him. One instance cited, for example, was when Balsillie told a reporter that the Montreal Canadiens were for sale in November. Canadiens owner George Gillett claimed the fallout from that incident crippled the team's season, the Globe and Mail wrote. Even so, an undaunted Balsillie will reportedly submit an official bid within the next few days, hoping that it will be allowed by Judge Redfield Baum of the U.S. Bankruptcy Court for the District of Arizona in Phoenix in the event that the Coyotes get to a second auction (which will include only bids to move the franchise). Baum has already said in a court order that, "absent some showing by the NHL that there have been material changes in [the Balsillie group's] circumstances" since 2006, when the league itself approved Balsillie as an owner of the Penguins, the league couldn't now do an about-face and reject him as an owner. Could this lead to a showdown among Baum, the NHL and the rest of its owners? It all depends on whether Balsillie will get his shot at the team. The NHL is seeking to push back the Aug. 5 auction, which is only for bidders looking to keep the team in Arizona, to Sept. 10 (the date scheduled for the second auction) so that Ice Edge can finish its due diligence and compete with Reinsdorf. With the clock ticking towards a new NHL season and the best interest of creditors the most important mandate in bankruptcy law, it's not a given that the league will succeed. - Ben Fidler
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If anyone was wondering whether the National Hockey League's board of governors was peeved at Jim Balsillie's methods for pursuing a pro hockey team, it would appear they have their answer.
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The league is right to keep out owners that don’t play nice with others. The sport is dysfunctional enough without introducing disruptive personalities into the mix. I hope the courts stay out of it.
A Similar drama is taking place with the Tampa Bay Lightning franchise. Although they are not (yet) bankrupt they are a financial and management mess.