May 06 2009 10:28AM
If you are just waking from a 24 hour doctor-induced coma, you will be surprised to learn that Research in Motion Founder Jim Balsillie has continued in his quest to bring an NHL team to Canada – this time making an offer for the Phoenix Coyotes.
Jim Balsillie confirmed Tuesday that he has offered to pay $212.5 million US to purchase the Phoenix Coyotes on the condition that the bankrupt team relocate to southern Ontario. Balsillie, 48, made the offer to Coyotes majority owner Jerry Moyes, consenting to buy it if he can move it, presumably to Hamilton or the Kitchener-Waterloo region, where he runs Research In Motion Ltd., maker of the popular BlackBerry mobile device. Balsillie also agreed to provide $17 million US in bridge financing to keep the Coyotes operating in advance of the proposed sale.
Before we start laying our thoughts down on this matter, did anyone watch the Balsillie press conference? Why exactly is he wearing a tuxedo? Is that how you roll when you crack the top 700 richest people in the world? Does someone show up at your door and inform you that “You have done well for yourself, sir. Here is your gold set of testicles and from now on we are going to insist you wear a tuxedo at all times. You know, to keep up appearances.”
And could he have looked more nervous?
"Er, um well I had a GIC come due last month and I got a refund on my taxes, so yeah I made a $212.5 million dollar offer for the Phoenix Coyotes. Frankly I am surprised that's a news story and all of you reporters showed up at this event to interview me. Luckily I wear a tuxedo at all times."
When we have enough loot kicking around to write a $212.5 million offer on something the last emotion we will display will be nerves. We would have our press conference buck naked without the use of a podium, holding a foam Coyotes #1 finger in one hand and a half empty bottle of Jack Daniels in the other. Most of our "press conference" would consist of telling stories about how we could have anyone in the room murdered by Hells Angels for $5,000. Rich guy nerves or not, two things remain crystal clear: 1) Jim Balsillie is rich as all hell, and 2) He seems to want to watch an NHL game in Hamilton-Kitchener-Waterloo-Leaf Country.
Just how rich is this Jim Balsillie anyways?
If you haven't heard of Jim Balsillie before you have most likely heard of his little company Research in Motion. In a business world where Canadian Tech companies aren't exactly renowned for their economic might, RIM is a homegrown tech darling able to earn actual "revenues" and over the past 15 years has become a Global economic juggernaut all the while headquartering in the Kitchener-Waterloo region. RIM co-chief executive officers James Balsillie and Mike Lazaridis are by accounts good ol' Canadian boys who just so happen to run a company with a market capitalization of over $50.59 billion as of 9:37 AM this morning.
Before all of the recent financial hullabaloo Balsillie had turned a world wide addiction to BrickBreaker into the #618th largest personal fortune on Earth with a 2007 net worth of slightly north of $1.8 billion dollars. While certainly ballin', we must take this opportunity to note that Balsillie is no Daryl Katz who posted up on the same Forbes list of richest people on Earth at #538 with a net worth of $1.9 billion. But we will pretend for a moment that $1.8 billion is a sufficient checking account to go shopping for an NHL team.
We suppose the next question is:
Why is the NHL spurning his efforts?
In 2006, Balsillie took a run at buying the Pittsburgh Penguins for $170 million but eventually terminated his offer on the basis “it wasn’t going to be accepted.” The Penguins were able to hold the buy-us-an-arena-or-we-are-so-outta-here gun to the heads of local government and it seems they are due to remain in Pittsburgh for the foreseeable future. After a prolonged courting process, Pittsburgh ended up sending the nice rich Canadian man packing in favor of the nice rich Canadian man they already had in the owner’s suite.
Not easily discouraged, in 2007 Balsillie offered Craig Leipold $238 million for the Nashville Predators in a move that seemed so certain to succeed that the Globe and Mail ran a story titled “Predators sold to Balsillie” That bid also fell short when Leipold went the other route, selling to William (Boots) DelBiaggio who followed the path blazed by many an NHL owner now and is now under investigation by the Feds for financial er, indiscretions. Incredibly these two experiences didn't sour Balsillie and send him shopping for an Iranian Jai Alai squad and he remains interested in an NHL team.
We will ask our own question again:
Why is the NHL spurning his efforts?
It has been rumored that one of the issues Bettman has with Balsillie is that he isn’t respecting the G code of NHL ownership which apparently means “Ask Gary if you can do something. If he says no, you don’t do it.” Balsillie has the temerity to go around NHL head office in NYC and tries to strike deals with team owners directly. This refusal to play political softball with NHL big wigs has been one of the reasons touted for his inability to land a team to date. Side note: What does that idiot owner in Tampa Bay who made all the Saw movies have that Balsillie does not?
It has also been widely theorized that there are some in the NHL head offices that believe moving what was once the Winnipeg Jets back to Canada would amount to an admission that the experiment of bringing the NHL to the American Sun Belt is over. Leaving aside the fact that "experiment of bringing the NHL to the American Sun Belt is actually over" one must also recall that the American Sun Belt is basically bankrupt at the moment and that the troubles faced by the Coyotes have little to do with the NHL refusing to run an interesting marketing campaign in the past decade, the failure to promote fighting in the game to a blood-thirsty American audience or secure a national American TV deal. Yep, the NHL could easily use the Global Recession to allow the Jets to come home to Canada with little worry that the thousands of American Billionaires looking to locate another team in the US would scuttle their plans.
That reminds us - speaking of NHL owners - how about them
Crazy inflated team values
Lest we forget, Nation, that the Anaheim Mighty Ducks sold for a piddling $75 million in 2005. Then the Oilers were sold at a mind shattering $200 million and suddenly the floor value of a franchise roughly tripled overnight. If and when Balsillie ultimately picks off one of the weaker members of the NHL herd and drags it up to Hamilton, he will have grossly overpaid for the purchase thus reinforcing the inflated value of an NHL franchise. Pretend you are selling chocolate bars for a buck. If someone walked into your store and offered you $5 for this very same bar you would most likely throw that money in the till as fast as you could laughing heartily at the sucker who overpaid $4 for a $1 chocolate bar. But if the next person is willing to pay $5, and the next and the next - sooner or later you are in the business of selling $5 chocolate bars.
Same goes for the NHL - a league without a major TV deal operating in a business climate where most of the teams are losing money hand over fist. When Katz bought the Oilers for $200 million the EIG and some other owners in the league must have thought they had misread the purchase price. This was a team that was valued between $65-$90 million by most publications. NHL owners would probably have split into two camps - those who believed that this was a one time price spike and others who truly believed that their team - which has lost tens of millions of dollars per year for a great many years - suddenly also tripled in value. If this Balsillie transaction goes through, they might be closer to realizing their hilarious dream than they can dream in this economic climate.
For this reason alone Bettman should allow Balsillie to buy the Coyotes. It will further inflate franchise values in a market where teams should be doing nothing more than shedding market value. Axing this deal is not only a disservice to Jerry Moyes, but to the other 28 NHL owners (Katz excluded) who must be watching this transaction with giddy anticipation of their own franchise value going through the roof.
Does Gretzky come with the deal?
IF the Coyotes are sold and IF Balsillie moves them to Hamilton – what of the Head Coach? Will he take his share of the sale and sail quietly into the sunset? Will he seek to continue with the team as Head Coach or in some other capacity? If Gretzky is willing to relocate north of the border for hockey related business stuff, we know of another Canadian Billionaire who recently bought an NHL franchise who is also looking for a new Head Coach who may want to go have a chat with #99. If you want to roll with the Boys on the Bus, why not roll with THE boy on the bus?
Canadian Billionaires bossing around Bettman and making moves without his consent. Kinda makes you feel nice doesn’t it?