Thursday, August 20, 2009

Jim Balsillie and Groucho Marx

Jim Balsillie and Groucho Marx

By Evan Weiner

August 20, 2009

11:30 AM EDT

(New York, N. Y.) -- The gloves have come off and now the battle between the man who wants a National Hockey League team in Hamilton, Ontario, Jim Balsillie, and the very league he is trying to enter has become rather personal. The NHL has accused Balsillie of concocting a "self-serving scheme" by "co-opting" Phoenix Coyotes owner Jerry Moyes to put the business into bankruptcy and somehow insider’s information about the Jerry Reinsdorf bid to buy the business and the Reinsdorf's group negotiations to get a better deal from the city of Glendale to use the municipally built arena for the hockey team was leaked to the conservative, government watchdog group, the Goldwater Institute.

If Balsillie wants to come across as saying the Glendale/Phoenix, Arizona is not a financially solvent hockey market that is fine. But if Balsillie is hiding behind the Goldwater Institute to unmask subsidies that Reinsdorf wants and Glendale is willing to give him to keep the arena occupied then there is something very disingenuous about the strategy. Balsillie’s company Research in Motion was heavily subsidized by the Canadian government in developing BlackBerry technology and Balsillie himself has demanded and received hundreds of millions of Canadian dollars to bring the Hamilton arena up to NHL standards should he get the franchise and move it to the Ontario city.

Balsillie wants to put a team in a city, Hamilton, that has one of the highest rates of unemployment in Canada according to Statistic Canada. The unemployment rate in Ontario in July according to Statistics Canada was 9.3 percent; Hamilton’s unemployment rate is 8.2 percent. Ontario has been crushed by the downsizing of General Motors and Chrysler.

The Goldwater Institute filed a lawsuit to become a party to the bankruptcy proceedings which are continuing. The bankruptcy judge has refused the conservative group's request to join the courtroom battle. Oddly enough the Goldwater Institute was not that critical of the construction of the Glendale football stadium that is home to the Arizona Cardinals in a February 2008 article published by the New York Times.

Balsillie and his lawyer Richard Rodier have fired back and in court papers have said that the NHL has accepted convicted criminals in their ranks to counter the NHL's contention that Balsillie was rejected from being an NHL because of the perception that Balsillie did not "good character and integrity."

Balsillie's lawyer in the court filing went after Reinsdorf because he sued the National Basketball Association in 1990 when the league decided that having Reinsdorf's Chicago Bulls games on United States superstation WGN as Bulls star Michael Jordan was hitting his peak on court was cannibalizing American national cable and broadcast TV rights -- Reinsdorf's team and the Atlanta Hawks games on superstation WTBS were a problem for the NBA in those days -- and New York Rangers owner James Dolan who was upset that the league, not his team, was controlling team websites.

Rodier also went after Bruce McNall, who owned the Los Angeles Kings and ultimately plead guilty to defrauding banks of $236 million, Ottawa Senators owner Eugene Melnyk for violations of Canada's Security Act and one time Nashville co-owner William "Boots" Del Biaggio III who last February pleaded guilty to security fraud in trying to get $100 million in loans by falsifying documents.

Rodier somehow missed John Spano, George Steinbrenner, Harold Ballard, William Cox, Dennis Kozlowski, Eddie DeBartolo, Paul Greenwood and Stephen Walsh in naming a few more sports owners miscreants.

If the co-CEO of Research in Motion, Balsillie, wants to make friends in the National Hockey League and sports, he is sure going about his business the wrong way. Whether people want to admit this or not about sports, whether it is the National Hockey League, Major League Baseball, the National Football League, the National Basketball Association, the International Olympic Committee, the English Premier League or other sports organizations, it is a private club. Owners can say yes to someone or reject them without just cause.

Balsillie has become the anti-Groucho Marx. Julius Henry Marx, better known as Groucho once quipped "I refuse to join any club that would have me as a member." Groucho could not get into any Los Angeles area country clubs because of anti-Semitism in the 1930s. Balsillie cannot get into the NHL private club because of the way he has conducted himself in the past when trying to buy NHL properties in Pittsburgh and in Nashville.

It was the Nashville experience that soured the NHL as Balsillie purchased the franchise from Craig Leipold in June 2007 and immediately began selling tickets to Hamilton Predators games in 2008-09. Balsillie soon lost his chance to buy the Nashville team.

Here is a free history lesson for Balsillie that perhaps Rodier can use. Owners reject potential owners for various reasons or just reject them. In Major League Baseball history, there are plenty of examples of that and in fact, Major League Baseball enjoys an anti-trust exemption from a lawsuit filed by the owners of the Federal League's Baltimore Terrapins. Terrapins ownership was left out of the agreement when the American and National Leagues reached a deal to pay off the Federal League to go away in 1915.

The Terrapins owners sued and eventually the Supreme Court of the United States heard the case and ruled against the Baltimore club and added baseball was a sport not an interstate business in 1922. In the 1980s, Major League Baseball twice rejected a bid by Edward L. Gaylord to buy the Texas Rangers from Eddie Chiles.

The reason?

Gaylord owned a TV station in Dallas that was a "superstation" that was picked up by 400 or so cable systems in the United States southwest. Major League Baseball saw Gaylord's purchase of the Rangers as a threat to national television contracts. Ironically the Chicago White Sox’s Reinsdorf was one of the owners who said no Gaylord. Texas was eventually sold to a group that included the son of the sitting President of the United States, George Bush. The son was George W. Bush. Gaylord would eventually own a piece of the Rangers beginning in 1995.

Major League Baseball also turned down repeated attempts by Frank Morsani to put a team in Tampa, Florida. Eventually Morsani and Major League Baseball reached a settlement after Morsani filed suit against the baseball that shut him out.

The National Football League said no to John Bassett and his Memphis team along with the owners of the Birmingham franchise in the World Football League asked to be included in the NFL after the two year old WFL folded in 1975. A court agreed with the NFL.

The National Basketball Association said no to Bob Arum in 1994 after his group bought the financially troubled Minnesota Timberwolves and planned to move the franchise to New Orleans. In the end, the NBA found a local buyer and Arum walked away.

It is a private club; the owners can pick and choose their partners. Balsillie is not one of them and his actions have offended club members. But Balsillie is continuing his fight and the referee in this case, Judge Redfield T. Baum is letting the fight go on although Judge Baum has ruled that the NHL is a private club and one of the biggest creditors in the bankruptcy proceedings, the computer magnate Michael Dell has endorsed Reinsdorf’s bid.

Balsillie has won no friends in this fight except maybe the Goldwater Institute and Balsillie has been lucky that he has a bunch of lapdogs in the Toronto sports media who are on his side no matter what. But the fight will go on and now it is getting down and dirty.

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