Sunday, May 31, 2009

Why Jim Balsillie should scare local politicians across the United States as well as newspaper executives

Why Jim Balsillie should scare local politicians across the United States as well as newspaper executives

(New York, N. Y.) -- The guy who was generously helped by Canadian taxpayers in becoming a billionaire named Jim Balsillie should be scaring all of those local and state politicians who pushed for publicly funded sports facilities along with newspaper executives who are ignoring a developing story that could have political implications across the United States.

Balsillie is pursing a scorched earth policy in trying to purchase the National Hockey League's Glendale, Arizona-based Phoenix Coyotes. The hockey team's owner Jerry Moyes declared bankruptcy and Basille has decided to overpay for a fiscally distressed business and now the whole dispute is paying out in a bankruptcy court. While newspapers executives met in Chicago on Thursday discreetly in a session that might have violated American antitrust laws to discuss a plan to save themselves by charging for newspaper content on the web, their papers are missing the opportunity to report on what is the sports industry's biggest story since the 2004-05 National Hockey League lockout. The newspaper and media industry under reported that story, no wonder why newspapers are suffering.

Here is the story the media is missing. If Jerry Moyes is successful in unloading his team and break a multi-decade lease with Glendale, taxpayers are left holding the bills to pay off a building that will become a white elephant. If Moyes is successful, what would stop Charlotte Bobcats owner Bob Johnson, who has announced his intentions to sell the five year old franchise playing in a municipally funded new arena from doing the same thing? Johnson could theoretically sell the team to Chinese interests who could move the team to Beijing in a bankruptcy proceeding and until the question of whether a league has the right to approve territories is resolved, there is nothing taxpayers, municipalities or leagues can do but watch.

Balsillie, whose Research in Motion company came up with BlackBerry, has gotten Hamilton, Ontario elected officials to pony up more than one hundred million dollars, Canadian, to renovate the city's arena should he be successful in getting the Coyotes franchise and is able to move the team to the city. Hamilton elected officials will soon find out that the actual bill when the debt is factored in will not be the figure that they think it is. Balsillie, the white knight of Canada, has the Canadian sports media waving red and white pom poms and cheering make it seven, as in a seventh Canadian National Hockey league franchise. There has been no due diligence about Balsillie and how he made his money in the back of Canadian taxpayers.

That would ruin the narrative of the white knight rescuing Canadian hockey from the evil American Sun Belt cities. It would also require some work on the part of writers who cover hockey in the Toronto area although this New York-based writer knows the Research in Motion subsidy story.

A newspaper editor curiosity should take hold and someone should have been assigned to see just how Balsillie made his money but the thought of Hamilton getting an NHL team is enough.

The newspaper executives who met in Chicago are missing an opportunity to talk to the two New York senators about their support for the NHL by laws which give the league's owners the right to assign territories and how the courts and possibly Congress may have to get involved in the business of sports to protect taxpayers who have put up billions upon billions of dollars for major and minor league sports facilities around the country.

The Charlotte Bobcats story is simple right now. Johnson is looking for a buying and has not threatened bankruptcy. Charlotte has had a mixed history of success in the NBA. The original Charlotte Hornets franchise was a major success. George Shinn's Hornets began in 1988 and at one time sold old the Charlotte Arena for 358 consecutive home games or almost nine seasons but off court activities including the death of a player and sordid details of Shinn's personal life turned people away from the arena and eventually Shinn asked for a new, publicly-funded, arena complete with numerous luxury boxes and club seats to replace the Charlotte Arena which opened in 1988. Charlotte voters said no to a new arena by a 2 to 1 margin in 2001.

Shinn moved to New Orleans in 2002 but city leaders and NBA Commissioner David Stern didn't believe the results of the referendum were totally reflective of the feelings of Charlotte residents. After Shinn left, the city's mayor Pat McCrory set out to build an arena with taxpayer’s dollars without going to the voters to ask them if they wanted a new arena. McCrory and Stern worked out a deal and the city promised it would build an arena if the NBA would return. Johnson bid for the franchise and won spending about $300 million for the right to run the franchise.

The return of the NBA to Charlotte has not been as warmly received as the original Hornets franchise was back in 1988.

Charlotte is not the only financially distressed NBA franchise. Memphis has been struggling since Michael Heisley moved his Vancouver Grizzlies to the city in 2001. Despite playing in a new, taxpayers funded, arena, Heisley has not been fiscally successful. There are other NBA franchises looking for new arenas in Sacramento and Milwaukee. If Balsillie is successful in his bid to take over the Coyotes, what would stop other owners from going Chapter 11 if there is someone willing to take a debt ridden team off there hands in a bankruptcy proceeding.

Could New York Islanders owner Charles Wang, who admitted that he regrets buying the money losing franchise, do the same thing if he doesn’t get his Lighthouse Project approved? The Moyes/Balsillie tactics could echo from community to community that put out public money for sports facilities both on the major and minor league level.

Glendale, Arizona, on behalf of taxpayers, should unleash a super lawsuit against Moyes for breaking his lease and when that happens, taxpayers will learn whether a lease agreement signed between a franchise holder and the municipality is worth the paper it is written on. Moyes broke the lease. Balsillie's legal team is promising an antitrust lawsuit against the NHL if the league says no to his bid. The NHL, NBA and National Football League do not have antitrust protection, Major League Baseball does and that is keeping the Oakland A's owner Lewis Wolff from moving his team to San Jose and it is why the New York City market has not has three teams since 1957. National League baseball owners in 1957 scoffed at the idea of Cincinnati and Pittsburgh from relocating to New York for the 1958 season.

It is a shame newspaper executives continue to miss stories and maybe they should start examine why they have become so inept and why people have turned away from the industry. Senior citizens are the last generation who are still wedded to newspapers for information. Newspaper execs have lived in a bubble forever and are in denial. Perhaps if they followed the Balsille/Coyotes/NHL saga and explained the implications to taxpayers who are paying extra fees for hotel and motel rooms, for car rentals, for restaurants, for alcohol, for cigarettes, for sewer and water and general sales taxes for these facilities, they would get more readers.

Balsillie's scorched earth policy should scare the living daylights out of elected officials who pushed for stadium/arena building as an economic engine and for newspaper executives whose papers are missing a huge story. Instead, the newspapers are asleep at the wheel saying woe is me. New York's two senators are not fighting for the Phoenix Coyotes but they want to keep Balsillie out of Hamilton because it might hurt the Buffalo Sabres franchise. Strangely quiet on the issue is Arizona's two Senators, John McCain and John Kyl. Perhaps Arizona's newspapers ought to make a call and ask what the two senators are thinking. But that might be wishful thinking asking newspapers to do more than some crime stories, some fluff entertainment stories and some mayhem stories.

No comments: