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Posted: Thursday June 4, 2009 5:32PM; Updated: Friday June 5, 2009 1:11PM
Jim Kelley Jim Kelley >
INSIDE THE NHL

Maple Leafs are real power behind farcical war over Coyotes

Story Highlights

Maple Leafs are threatening to sue the NHL if the Coyotes move to their market

Lawsuit threat is a big reason why NHL is fighting to keep the team in Phoenix

Irony is Jim Balsillie is an improvement over NHL's long line of shady owners

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In a normal world, the NHL would welcome BlackBerry baron Jim Balsillie with open arms to the ownership ranks.
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The best way to define the fight between NHL Commissioner Gary Bettman and Canadian billionaire and owner-wannabe Jim Balsillie is to define what the fight isn't about.

Despite what the Commissioner says, it is not about Phoenix, not about "not running out on cities" (quite frankly this league has been there and done that too many times to mention). It's not about keeping the NHL's southern market strategy and US national TV footprint in place. It's not about propping up an owner who is undergoing difficult times. It's definitely not about finding a new owner in order to buy time to allow hockey to flower in the desert. In some ways it's not even about Balsillie -- though you wouldn't know it by the amount of negative rhetoric that has been spewed.

The fight is about bringing a hockey franchise, any franchise Balsillie can get his hands on, into arguably the most underserved but lucrative market in North America, one that just happens to be the backyard of the Toronto Maple Leafs, one of the most profitable enterprises in all of sport.

Simply put, it's all about the Leafs, and despite their persistent refusal to discuss any aspects of this matter, a source tells SI.com the Leafs are one thousand percent against having another team in what they perceive as their marketplace. They are so against it that the source says they have informally notified the NHL they intend to sue should Balsillie prevail in his attempt to bring a team to Southern Ontario. They are also prepared to sue all 28 other franchises should they travel into Toronto's marketplace to play Balsillie's team.

Faced with that kind of resistance, Bettman has little choice but to battle Balsillie on every front. If Balsillie gains control of the Coyotes in the federal bankruptcy proceeding in Phoenix, the commissioner will have not only opened the door to a territorial rights free-for-all in the big four pro sports leagues, he will have a multimillion dollar lawsuit within his own house, a threat to his very existence as commissioner.

By way of background, Toronto is Canada's financial capital. The country's largest city is centered in one of the most populous, economically prosperous regions in all of North America. It has one NHL franchise, which for much of its existence post-Original Six, has been perhaps the most mismanaged yet wildly profitable enterprise in the history of sport.

The Leafs' profit margin is the envy of every owner in the game. The overall value of the franchise, never released but guesstimated by Forbes magazine to be around $450 million, tops even the New York Rangers. The Leafs, who haven't made the playoffs in four seasons or won a Stanley Cup since before many of their fans were even born, are said to generate revenue of $160 million per season. As part of parent company Maple Leaf Sport and Entertainment, the Leafs brand extends to its arena (the Air Canada Centre), sports properties that include the AHL Toronto Marlies, Toronto F.C. (soccer team) and the NBA's Raptors, a TV network and even a multi-towered condo project. Aside from Major League Baseball's Blue Jays, the Leafs own Toronto's pro sports marketplace and profit handsomely from it.

Balsillie, given his wealth and status in Canada, would normally be welcomed into the NHL with a red carpet and tickertape parade. But he wants to set up his franchise right under Toronto's nose in nearby Hamilton, Ontario. He says he picked that place because it has an arena (the aged but serviceable Copps Coliseum) and it's his wife's hometown, a region that could use the economic boost a team would bring.

On June 9, the Balsillie group will challenge the NHL constitution over whether the commissioner has the right to determine if teams can be moved into existing marketplaces or if an individual team has veto power. Make no mistake about it. This fight, with denials from Bettman and Balsillie that it has become personal, is really about money and territory and who gets to control them.

That it is playing out in a bankruptcy court in Phoenix is a bit of a surprise to many, but that's on Balsillie. He and his lead attorney, Richard Rodier, chose that venue because it was available and it gives them a forum to challenge the league's somewhat gray bylaws regarding relocation. Balsillie is on record as saying he intends to conform to all NHL rules and regulations. What he doesn't say, but what's essential to his case, is that the NHL doesn't always play by its own rules, and even if it did, the rules are not 100 percent clear and have never been upheld in court.

Balsillie and Rodier apparently were approached by Coyotes owner Jerry Moyes to be the primary investor in his taking the team into bankruptcy. Bettman argues that he was just hours away from bringing in a new buyer when Moyes (by implication, at least) betrayed him and put the franchise into the courtroom with Balsillie as lead bidder. Moyes, according to several sources, apparently felt Bettman was about to betray him by selling the team for next to nothing on the dollar to an investor who would keep it in Phoenix but leave Moyes taking losses he estimates to be upward of $300 million.

Balsillie and Rodier now have the NHL in a box with the franchise in bankruptcy and embracing a deal for a reported $212.5 million that would settle virtually all debts as long as the duo is allowed to move the team to Ontario. No one is exactly certain if a bankruptcy judge has the right to determine that, as a condition of the proceeding, the team can be relocated into another team's market, but there is legal precedent that says the judge has an obligation to take the best offer for creditors, and if that means allowing the team to be moved, then so be it.

That issue has yet to be decided, but Balsillie's argument has survived several challenges from the NHL. His camp is betting that if it does get control of the team, it can move the Coyotes and that any objection, especially by the Leafs, will be defeated via anti-trust regulations. The NHL, of course, disputes that and has the backing of the NFL, Major League Baseball, and NBA.

The almost comical irony is that the NHL is sweating blood to deny a capable, hockey-loving owner with ample means. But this, of course, is a league that has had a long list of operators who've spent time under the scrutiny of the judicial system, often for being a little short or less than truthful in the financial department.

Former Los Angeles Kings owner Bruce McNall did time in prison for an attempt to swindle banks, a securities firm and his own team out of more than $236 million.

Henry Samueli, current owner of the Anaheim Ducks -- a franchise that under different ownership paid $50 million (some $25 million of which went directly to McNall) in entry fees -- has pleaded guilty in a stock fraud case and is battling to stay out of jail after a plea-arrangement was rejected by a federal judge.

Former co-owner Sanjay Kumar and former prospective owner John Spano of the New York Islanders have seen jailhouse accomodations -- Kumar for conspiracy, fraud and obstruction of justice in an accouting fraud case; Spano for kiting checks and falsely claiming to be worth $230 million while trying to buy the team.

Two other former minority investors in the Islanders -- Paul Greenwood and Stephen Walsh -- were hit with federal fraud charges in February for allegedly swiping $553 million from charities and pension plans to spend on horses, mohair teddy bears and a pricey house.

John and Tim Rigas, former owners of the Buffalo Sabres, are currently incarcerated in a federal jug for their roles in a corporate fraud case.

Former New Jersey Devils minority owner Dennis Kozlowski is cooling his heels in the pen for fraud and grand larceny.

Former Maple Leafs majority owner Harold Ballard did time for fraud, and former commissioner Clarence Campbell was fined $25,000 for influence peddling.

Most recently under Bettman's watch, William "Boots" Del Biaggio, a former minority owner of the San Jose Sharks and close friend of Penguins owner Mario Lemieux and ex-Kings great Luc Robitaille, was indicted by a federal grand jury for securities fraud after Bettman brought him to the table as a part owner of the Predators in a move many perceived as an action to keep Balsillie from gaining control of that team.

Balsillie himself ran afoul of the Ontario Securities and Exchange Commission regarding a stock options case. While no criminal wrongdoing was charged, he and other company executives were fined after a settlement was reached.

But that has nothing to do with Balsillie's ability to fund a team, something the NHL voted unanimously in favor of when he agreed to buy the Penguins. The deal only went south when Bettman added clauses that would have bound the franchise to Pittsburgh for years whether or not it achieved funding for a new building. It did. Those clauses caused Balsillie to back away from the deal.

Where it all goes from here is likely to be determined via the legal process and not just bankruptcy court in Phoenix. In the end, it'll be a fight to the financial finish in a three-way battle between Balsillie, the NHL as a corporation, and the Maple Leafs as an entity -- a fight settled in the one arena all parties seem most familiar with: a courtroom.

For some reason, this just feels like business as usual.

 
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