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Saturday, May 26, 2007

Shifty Canadian Billionaire Wants Back In

Remember the name Jim Balsillie? If you're a Penguins fan you might. Balsillie is the Canadian billionaire bringer of the Blackberry to society super guy that swooped in with a bid that would save Pittsburgh.

In fact, here's how the conversation went in Commissioner Gary Bettman's office in New York City:

Balsillie: Commissioner Bettman, I would like to buy the Pittsburgh Penguins...

Bettman: YES! Oh thank God, I'm so happy you're here, let me get my papers out and you can sign here on the dotted line and complete the sale...

Balsillie: You didn't let me finish my statement...

Bettman: Oh, who needs to talk these days? I don't talk to any of my cronies out there in the office and I only talk to TV people that ask me softball questions. It's fine. Now here's a pen, just put your signature...

Balsillie: No, see, I want to buy the Penguins and then move them closer to my home in Hamilton, Ontario. Now I know that this may be an issue in proximity for the Sabres and Maple Leafs and even the Senators. After all, who ever heard of having three teams in one Canadian province before!

Bettman: Now see, Jim, you had to go and ruin my mood like that didn't you? In case you haven't heard, we're trying to cut Canada out of the equation here. After all, the NBA couldn't keep a team in Vancouver - so why should we care about Canada? Here in the NHL, we're all about riding the coattails of the league that we're in direct competition with for American dollars. You hear that Jim? AMERICAN DOLLARS. The only people who like Canada are Canadians, and they're only like three-quarters worth of an American, money-wise. Besides, our fans in Pittsburgh are great fans and they buy a lot of tickets to see this great, young team full of future superstars even in a dump arena like the Igloo. I could never dream of leaving that city high and dry when they've been so good to the NHL.

Balsillie: Uh...Well, OK. How about if I decide to move the team to Kansas City then? They've got a new arena there built and everything and are willing to do what it takes to get a new franchise there. Just think, the NBA isn't even there - we could make a mint!

Bettman: Done deal, let's get this over with.

See, this didn't work out so well however since Balsillie went back and thought about things and thought that he really, really wanted to bring the team closer to his base of operations in Ontario. Since that wish wasn't about to be granted, he gave up completely on his agreement to buy the Pens. He gave up since the league stopped bending over for him eager to get a cut of the Blackberry Billions because the last thing the NHL needs right now is a PR nightmare. And boy, what kind of PR nightmare would there be taking the team with the league's biggest superstar out of a city that indeed was supporting the team and taking them to another sun belt non-traditional market or to Canada? The word "epic" doesn't even come off strong enough. Just remember, if anyone cared about Canada and most pointedly Quebec, this story we've already seen once before with the Nordiques moving to Colorado. Remember, in the Avalanche's first season in Denver - they won the Stanley Cup.

In essence: Up Yours, Canada!

That coupled with the groundswell of even more support from the fans in Pittsburgh and despite the fumblings on behalf of the Pennsylvania governor Ed Rendell - Mario Lemieux did what he's always done since he's come to Pittsburgh: He's saved the Penguins. The Pens now have a deal in place for a new arena and it appears that they're there to stay.

This, of course, hasn't stopped Jim Balsillie. His dreams of owning and running the next coming of the 1980s Edmonton Oilers aside, he's pushed on and he dialed up on his Blackberry to find out who else in the NHL has a viable winning franchise that also happens to be stuck in an area where finances are hard to come by. Cue up the Nashville Predators.

So now Balsillie has his sights set on a team that he knows for damn sure that he'll be able to do whatever he pleases with since he knows that the NHL won't do anything to step in to help the Nashville market out in support. Poor ticket sales, failure to get a real toe-hold on the city and the area and only recent success (apparently if you're an expansion team in the NHL now, you have to win immediately to impress anyone - sheesh).

While the story from TSN says that this deal may be weeks away from being approved, folks in the Predators organization seem to think this is a foregone conclusion that not only are their days numbered in the front office, but if you read between the lines in this letter sent out to season ticket holders of the Predators, you'll see that this team's days in Nashville are just about up:

Craig Leipold
Nashville Predators
501 BroadwayNashville, TN 37203
May 24,

Dear Predators' Season
Ticket Holders:

June 25, 2007 will mark the 10-year anniversary of the awarding of the NHL franchise to
Nashville that became your Nashville Predators. It's been an incredible 10-year
journey for me. I can't tell you enough how much I appreciate your strong
emotional and financial support of the Nashville Predators. You are a big part
of the team's on-ice success. On behalf of the entire franchise, I thank

Ten years ago, I couldn't call myself a hockey expert. Today, my family and I are as passionate and competitive about the game as the most hardcore fans.

When the franchise began, I said we would run it as a business in order to be successful. We developed a game plan both on and off the ice. We became an integral part of the community, especially downtown Nashville. We made sure we had some fun. And, we indicated that making a huge profit was not a top priority – but we certainly didn't make plans to lose a
significant amount either.

As part of those plans we developed a loyal fan base – every team should be
fortunate enough to have a Cell Block 303 and the loudest arena in the league.
We built a team that the community could be proud of on and off the ice. We grew
our hockey skills exactly as general manager David Poile outlined, using the
draft as a foundation and then supplementing at the appropriate times with
trades and free agents. We gave back to the community – well over $2 million in
grants and in-kind donations through the Nashville Predators Foundation. We
created an entertaining in-arena atmosphere for every game night. And, we did it
all while keeping our ticket prices near the bottom of the league.

Unfortunately, the success on the ice has not translated to success for me as business owner.

Here are just a few facts as to why:

* The Nashville Predators tallied up 216 points in the last two seasons, fifth most in the NHL, yet because of below-average attendance, the team will still have a real cash loss of $27
million during that time. Additionally, that loss is despite receiving the most
money in the league from revenue sharing. Over the last five years, the team has
lost over $60 million.

* We've invested heavily in sales and marketing efforts, spending over $50 million in 10
years, most of that with locally-based businesses.

* Our average regular season attendance this past season was 13,589, up from the year before, but still 2,000 below the NHL average. A low turnout, combined with a low ticket price results in a poor financial situation.

* The new NHL Collective Bargaining Agreement with revenue sharing is not a cure-all. Each
local market must still support its local team. In addition, this attendance
does not qualify us for our full revenue sharing allocation under the collective
bargaining agreement.

* While individual fan support has always been strong, we've worked aggressively to
increase our local business support since Season Four. We've tried a variety of
approaches with minimal success. Our records show today that corporate support
for the Nashville Predators makes up about 35% of our season ticket base. The
average in other markets is around 60%. During our first two years,
approximately 4,000 businesses owned season tickets. Today, only 1,800
businesses have season tickets.

While my heart and my love of the game tell me we can still be
successful, the facts outlined above suggest otherwise. I've reached the only
possible conclusion and it's one of the most difficult decisions of my personal
and professional life.

Later today, I am announcing an agreement to sell the Nashville Predators franchise
and Powers Management to Jim Balsillie. We plan for the sale to be final in
early July after a short period of due diligence and approval from the NHL Board
of Governors.

I've carried the franchise as far as it can go from a business standpoint. It has been
well-reported that we have attempted to attract local ownership since 2002. The
truth is, we had only one serious inquiry in that time from someone who was
interested in a small minority share of the team. Jim Balsillie is interested in
full ownership.

It's time to give someone else a chance to take the Nashville Predators to the next level in
terms of local business support. Last week's announcement that the Sommet Group
has signed on as a naming rights partner for the arena is a strong first step in
the right direction. The new energy and leadership of Jim Balsillie will be

Jim Balsillie is co-CEO of Research in Motion, the company which developed the Blackberry device. He is an avid hockey fan who still plays recreationally. I know he is dedicated to
putting a great team on the ice.

The past 10 years have laid a foundation, but there's still much to be
done to both build corporate support and to win a Stanley Cup. I know Jim shares
my passion for the game and my commitment to a strong franchise to pursue the
greatest trophy in sports.

Despite the financial challenges we faced, owning this franchise has been
the thrill of a lifetime. I've made many friendships here in Nashville. It's
been an exciting 10 years, and as I move on from the ranks of team ownership,
I'll always remain a fan.

Now while this all seems well and good for all parties involved (except for the fans, they're always on the short end when it comes to the NHL) - my question here is: Why should the NHL trust Jim Balsillie?

Balsillie swooped in and made like he was King of Pittsburgh, accepting the adulation and the standing ovations from the fans in the Steel City. When things started to turn the other way, when the NHL showed some backbone for once and asked Balsillie to find any and all conceivable ways to keep the team in Pittsburgh, he bailed out - fast. Even with a team like the Penguins, with all the young superstars ready to bloom - he walked away when the casino deal for a new arena wasn't approved. Balsillie wanted no part in building a new arena in Pittsburgh and had no wishes to try and negotiate for it either. In essence, this guy said, "We play by my rules, or I take my puck and go home."

And home is where he went while Bettman, Mario Lemieux and Governor Rendell plugged away to get something done for a new arena in Pittsburgh. And wouldn't you know it, they did get it done. The team is staying and now Mario becomes even more of a folk hero for the city. He brings them the Stanley Cup and now he keeps the team that will certainly be challenging for another one or more in town.

Meanwhile, Balsillie got and earned any and all bad press from folks in the NHL and from Pittsburgh that he'd gotten. He tucked tail and ran away when things got a little bit tough. Is this going to be his M.O. as an owner? Say the team has a bad year and ticket sales drop off and he has to eat a financial loss for the year - does he make like Jeffrey Loria, turncoat owner of MLBs Florida Marlins and man responsible for nuking the Montreal Expos? When things get a little bit rough and people don't give you what you want - you back out and run away?

Right now, Balsillie's NHL history is rather dubious and the NHL should think very long and very hard about what they do with his offer to buy the Predators. Yes, the Predators are in a rough spot in Nashville and I'm sure new ownership will help them out - new life invigorated into a franchise will always do that. If Jim Balsillie doesn't have the stones to be in it for the long haul though... is the league ready to deal with an owner always looking for the easy way out?


Matt P. said...

If Balsillie is such a fine businessman, and it appears he is, why would he keep the team in Nashville?

This sage makes me wonder why the NHL exmpanded into markets like Nashville, where county music and college football rule. About 10th on the list of things to do must be an NHL franchise.

Hockey Joe said...

See, that right there is the rub. I don't think this team is staying in Nashville at all. I see him packing it up and going to Kansas City to take residence at the new 18,000 seat arena they've built/are just finishing building there now. KC hasn't had a team since the Scouts in the 1970s and chances are no one remembers them and by all accounts, the new building is certainly state of the art with plenty of luxury boxes.

Add to that that the NHL has no care about Nashville and wouldn't mind seeing a team go to KC to see if that makes them into a thriving hockey market, the same way Dallas became when Norm Green uprooted the North Stars from Bloomington, MN. The only way this team doesn't end up somewhere else is if the NHL steps in, and I really don't forsee that happening with the Predators.