NHL spills its secrets in court

Gretzky salary details, league's constitution among documents filed in ownership fight

Kevin McGran, The Toronto Star

Published: Sunday, June 07, 2009

When the closely guarded NHL constitution becomes a public document, hockey icon Wayne Gretzky becomes a target and even the Toronto Argonauts are drawn in, you know the gloves are off in the battle for the Phoenix Coyotes.

Head coach Wayne Gretzky of the Phoenix Coyotes.

Head coach Wayne Gretzky of the Phoenix Coyotes.

Photograph by : Montreal Gazette

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The increasingly messy business of saving or relocating the bankrupt team - which in some ways is overshadowing a highly entertaining Stanley Cup playoffs - has allowed an unprecedented look behind the scenes at the NHL.

The league's constitution has historically been kept hush-hush, but it's now available at thestar.com after the Coyotes' legal team filed a marked-up version of it yesterday as evidence.

The legality of that constitution - the backbone of the old boys' club which BlackBerry billionaire Jim Balsillie desperately wants to join - is at the heart of the conflict over whether the Coyotes can relocate to Hamilton.

Among the legal slings and arrows let fly in the cascade of documents filed yesterday:

* Argos co-owners David Cynamon and Howard Sokolowski are among four groups interested in buying the Coyotes.

* Coyotes' lawyers maintain the league constitution proves the Toronto Maple Leafs hold a veto - in violation of the Canadian Competition Act - that prevents another team from moving to Hamilton.

* According to the NHL, the $212.5 million (all figures U.S.) offer from Balsillie to buy the Coyotes is more like $165 million.

* The Phoenix suburb of Glendale, desperate not to lose the anchor tenant at the arena it went $200 million in debt to build, suggested Gretzky, the Coyotes' coach, is overpaid and should have his annual salary slashed by $6 million.

The NHL is threatening to charge a "substantial" fee if the Coyotes are moved to Hamilton.

Balsillie, NHL Commissioner Gary Bettman, Coyotes' owner Jerry Moyes, their lawyers and various other minions and allies filed dozens of documents - some as long as 100 pages - into the wee hours of yesterday in support of their respective causes.

Judge Redfield T. Baum has until Tuesday to go through the legal arguments on relocation and who actually controls the team. He'll make his decision shortly thereafter.

It will be the culmination of a months-long battle, which has turned into what almost seems a personal war between Bettman and Balsillie over whether Moyes is allowed to sell the insolvent team to an owner the NHL might not want and move it to another market against the NHL's wishes.

The NHL, which late last year advanced Moyes funds to keep the franchise afloat, argues it has final say. Balsillie calls that position an unreasonable restraint of trade.

The marked-up parts of the constitution filed yesterday are targeted for legal challenges, namely the veto rights, found at the bottom of article 4.3: "No franchise shall be granted for a home territory within the home territory of a member, without the written consent of such member."

IMPLORED TO IGNORE

Hamilton is considered part of the Leafs' territory since it's within a 50-mile (80-kilometre) radius of Toronto. Coyotes' lawyers say the Leafs have prevented relocations to Hamilton before - the last was an attempt by Ottawa - and aren't likely to approve this one. The Leafs refer all calls to the NHL.

Coyotes' lawyers say the NHL's constitution violates Canadian competition laws and U.S. antitrust laws and implored the judge to ignore it.

Till now, Gretzky - a minority owner and hockey deity - has been treated with kid gloves in these proceedings. Although the Great One is also a creditor in the bankruptcy, his name is rarely invoked. So it's quite a shock Glendale would take aim yesterday at the man who has been the face of the franchise.

The city says Gretzky is overpaid and should have his salary slashed by $6 million as part of a $15 million cost-saving measure. Glendale says that could turn the Coyotes into a money-making team, thus negating the need for relocation.

"Reduce compensation to Wayne Gretzky from $8 million to $2 million," concludes a report from Gerald Sheehan of Beacon Sports Capital Partners, hired by the city to go over the books.

Glendale, which is said to be willing to offer tax breaks to a new owner, says mismanagement by Moyes is the only reason the team is losing $30 million a year.

For his part, Bettman cited bylaw 35 of the NHL constitution, which says league rules require a seller to exhaust all avenues before considering relocation. He says the Coyotes haven't done that.

Bettman said Cynamon and Sokolowski are among four groups who've asked to be approved as owners in the bankruptcy auction, set for June 22. Both declined to comment, referring questions to the NHL. It's unclear whether they would keep the team in Glendale.

Bettman said others interested are Chicago sports magnate Jerry Reinsdorf, Coyotes' minority owner John Breslow and an anonymous Phoenix businessman. All would keep the team in Arizona.

Their interest and Glendale's willingness to help in restructuring "all indicate that relocation may well be unnecessary," Bettman wrote.

Balsillie reminded the judge his job is to get the best deal possible for creditors, and believes his $212.5 million offer will do just that.

Bettman thinks otherwise, and believes Balsillie's offer is more like $165 million.

As for how much Balsillie would have to pay as a relocation fee for moving into the Hamilton market, those numbers were confidential, but Bettman said it would be equal to the difference between the purchase of the Coyotes and the value of a team in southern Ontario.

Some have estimated that could be $100 million.

 
 
 
 
 

your comments
CAN8DN
Sun, Jun 7, 09 at 11:59 AM
I doubt whether a judge would interpret section 35 as meaning that "all avenues must be considered" before relocating. A more likely interpretation is that the judge would take into consideration the situation of the team and its ability to operate as a going concern in a particular market and then determine whether everything "reasonable" under the circumstances was undertaken to try and make the franchise viable. Of course, the Little Dictator Bettman will never give you the complete facts nor an accurate judicial interpretation of the provisions in his own Constitution. Time for the NHL's owners to take note.
Anti-trust laws sink NHL
Sun, Jun 7, 09 at 01:02 PM
How it will unfold Tuesday: Judge Baum will rule that legally Mr. Moyes can sell his interests in the team to whoever he likes...The NHL cannot block the sale...Mr. Balsillie or another buyer can keep the team in Phoenix or take it anywhere... The NHL can ask that Hamilton or Toronto area move would have to allow for compensation to the Toronto Male Leafs franchise to be equal to the compensation paid by the New York area teams to the New York Rangers, since that is a precedent...I believe the Rangers are getting 15 million a year from New Jersey and Long Island...the contract to rent the Phoenix arena would be null and void as the result of the bancruptcy acceptance...should the buyer move the team to an 'open area', no compensation would need to be paid...the NHL would have no rights to block anything since there is no written contract stating otherwise.The NHL contract, unlike the contracts in the NFL and NBL and ABL, which specifically state that no movements of a franchise can be made without league approval.Canadian ant-trust laws forbid monopolys to be allowed. In its efforts to exercise monopoly status, the NHL is invading the rights of Mr. Moyes to sell a business which is causing him to make no profit and using strong arm tactics to enforce their perceived monopoly on the fate of the business. In the end, Mr. Moyes owns the team and the NHL is merely a caretaker in the matter.
denial
Sun, Jun 7, 09 at 02:55 PM
Okay, since nobody else will do it...Gretzky's $8 million dollar salary is DISGUSTING. Deity or not, royalty or not, there is something very ugly about a guy sucking a team for $8m when he is easily -- blatantly -- an underperforming coach. I don't think even Mike Babcock makes $8m. I've lost a lot of respect for Gretzky.
Paad
Sun, Jun 7, 09 at 03:10 PM
I want another team in the GTA, I really do this is not the way to go about it though, but what is balsille to do after first, the nhl puts in 11th hour clauses, 2nd they select a criminal instead of him. this bid will likely be unsuccessful, (no way a judge will set this kind of precedent), but props to balsille for embarrassing the league like this.
tatti
Sun, Jun 7, 09 at 03:16 PM
also, this argument "why would we put hockey teams in the desert like Phoenix and Florida" is stupid. the goal of this concept was to get a large tv contract. NBA attendance figures and NHL attendance figures are more or less the same, the key difference between the 2 is tv revenues. that is why he put teams in tv markets like fla and phoenix. do you think americans want to tune into calgary vs detroit? they probably haven't even heard of calgary and probably can't even pronounce it. that being said, the way bettman executed this strategy was awful. why would he take put hockey on the oln? instead of espn? his vision made sense. execution of this strategy? horrible!
AL
Sun, Jun 7, 09 at 03:18 PM
Who ever is advising MLSE is an idiot.......I"m done as a LEAF fan! In all honsety I had no problem cheering (and spending my $$$)on both T.O & Hamilton. But this spitful hatred of Hamilton by MLSE & the NHL seals the deal for me!!!!!!!!!! Ask yoursleevs this.... if this was wany other city in N.A (other than Hamilton) would the NHL drag itself through the mud like this? Ballsille has a case and regardless of what happnes Tuesday - the NHL has a big fight on its hands!
Pissedoff leaffan
Sun, Jun 7, 09 at 03:30 PM
IM with Al, MLSE has screwed leaf fans since they took control, absolutely disgusting...we just want to watch hockey and MLSE doesnt care...they are a business, Bring on The Hamilton Coyotes!!!
TheAccountant
Sun, Jun 7, 09 at 06:52 PM
I see a problem with the plan to move the team to Hamilton; the bottom of this article claims that the NHL can demand a payment of the difference between the value of a team in Southern Ontario (aka. the Leafs) and the price paid for the coyotes of about $200 million. Well my friends, the Leafs are probably the most valuable hockey team in the NHL and do you think Balsillie is going to fork over hundreds of millions of dollars? Who is going to value the Leafs anyways? The NHL? I wouldn't be surprised of the NHL comes up with a value of a billion dollars which will stop Balsillie in his tracks. The NHL seems to operate under its own laws, but it makes me wonder, are sports leagues and teams allowed to operate outside the law? Are we just blind to it because of the mass adoration we place on the players and teams? ...
Denial Part II
Sun, Jun 7, 09 at 07:02 PM
You know, what never ceases to stun me about this whole thing -- I mean this WHOLE thing -- is that even if some expansion team or relocated team comes here, and even if it's wildly successful, ices an amazing team and even wins a cup, the bottom line is that a bunch of millionaires will be paid to skate around (which is kind of an absurd thing to do with your life, if you really look at it objectively), and the 'masses' -- that would be you good people -- will get...absolutely...nothing...out of it, except for a momentary ego boost that will distract you from the tedium of your life. So basically, you're all just begging for a diversion. SNAP OUT OF IT.
Re: Danial
Sun, Jun 7, 09 at 08:37 PM
Need you be informed that Mr. Gretzky is not merely the coach, but also part proprietor. Can't fault Mr. William Gates for pocketing his fair share of what Micro Soft earns each year, can we...
Hockey Love Dr.
Sun, Jun 7, 09 at 08:46 PM
I've got a solution to remedy the situation in the failing US hockey markets such as Phoenix and Florida. Just have president Obama attend a couple of games when visiting Canadian teams are in town. It would also be advantageous to have Mr. president speak positive of the game or better invite him to try a hand at skating with the Stanely Cup Champs (Wings or Pens). Problem solved as a new generation of US hockey fans will be born.
Re: Danial Part II
Sun, Jun 7, 09 at 09:03 PM
What differentiates the ego-boosting distraction of taking in a good ole game of hockey from say some of life's other pleasures such as having good sex, eating an extravagant meal, going on a vacation, drinking beers with your buddies under the star-lit sky with bonfire, attending a theatrical performance, hunting, fishing or even blogging on Faceoff.com? I'm electing to avoid "snapping out of it", thank you very much.
Mike
Mon, Jun 8, 09 at 08:31 AM
You know the team was/is completely missed managed when the coach is making $8 million. I'm glad Gretzky did his part to help the team succeed. What a joke!
Rob
Mon, Jun 8, 09 at 09:09 AM
So the difference in value between a team in Glendale and a team in southern Ontario is $100 million? So how can anyone argue that the team should stay in Arizona? This is ridiculous. Bettman's thinking is deeply flawed. He's got to go.
SkiDon
Mon, Jun 8, 09 at 12:08 PM
YES - he is overpaid based on lack of performance - more players and coaches should be paid half of what they typically make and earn the rest based on performance criteria which is fairly easy to agree on. Himself is overpaid regardless - as a coach.
AUSSIE DAN
Mon, Jun 8, 09 at 01:21 PM
LOOK TO THE PAST AS THE NHL FOLDED TEAMS AND THEN REBIRTHED THEM IN OTHER CITIES. DUMP THE WEAK TEAMS AND HELP OUT THE REST. THE ONLY REASON THERE ARE TEAMS IN ARIZ AND FLORIDA IS BECAUSE OF THE SNOWBIRDS WHO LOVE THEIR HOCKEY.BUT THEY NOW HAVE TV COVERAGE 24 /7 SO NOBODY MISSES OUT. KEEP HOCKEY IN THE STRONGEST MARKETS AND DUMP THE REST.
mlse
Mon, Jun 8, 09 at 05:34 PM
All six of Canadas teams are lucky to still have teams. Why spend money improving our teams up here, you come to the games anyways. We are happy, you get to see the sport you love, winning isnt everything. Dont rock the boat.
Phoenix Fan
Mon, Jun 8, 09 at 09:26 PM
I find it hilarious that someone who's actually seen the financials for the Coyotes says that the team can be PROFITABLE if they get rid of Gretzky and Moyes. Funny... because that's what we've been saying in Phoenix for years! If we get a real coach to go with the first GM we've ever had that approaches competence (Maloney), we might actually even make the playoffs. Imagine that!
james
Mon, Jun 8, 09 at 11:44 PM
The weakness in the balsille is in the ownership part. Anti trust may apply to moving it but nothing in there says the judge has the right to force ownership into its "club". No judge is going to make a ruling that will change the way ALL FRANCHISES are run. Another point.......to all of you that think Moyes lost 300 million......he mismanaged the club so bad we don't know how much should have been lost. He put expense from his other company on to the Coyotes. The Coyotes had the 2nd lowest payroll yet it had the 4th largest operating expenses. They also paid way above market rent for their corparate offices......guess who owned those offices? Moyes. He is a scam artist and a crook. This team lost money.........but no where near what Moyes is claiming. He doesn't deserve one penny from a BK because he is such a poor businessman.
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