Tuesday, June 9, 2009

Everybody Has Their Price

Yesterday I suggested that no one really knew what to expect at today’s bankruptcy hearing. You knew, just knew that there was something, somewhere buried in the legal avalanche that would spice up the proceedings.

Well that something came in the form of a “relocation fee” that the NHL indicated it would charge should the franchise be moved to a different market.

After losing their attempt to stop the Raiders 1985 move to Los Angeles the NFL got a pound of flesh from the Raiders by charging a relocation fee. The NHL followed their lead and included in their brief to Judge Baum their intention to charge this fee if the franchise were moved. The dollar figure was blacked out in the legal documents that were provided to the press but a Balsillie lawyer blurted it out while addressing the court.

$100 Million Dollars.

Oh, and that is apparently only an estimate. The Balsillie camp says that’s an estimate that can be negotiated down. I wouldn’t bet on that. Estimates can also be negotiated up.

The NHL put this in part to reduce the amount of money that would be returned to creditors if the Balsillie offer is accepted. Think of it this way – Balsillie offers an inflated price for the asset because he knows a Southern Ontario franchise is worth more than a Phoenix franchise. The NHL counters by saying we are going to add a relocation fee to flatten (or even tilt) the playing field. It takes away any advantage Balsillie had gained by offering to overpay for the asset.
Judge Tom Baum (his friends call him Tom and how many people do you know go by Redfield?) seemed fixated on the relocation fee. Put a number on it. Negotiate it. See if Jim Balsillie wants to open up his wallet for another $100 million or so. It was your idea, NHL, now let’s talk about it.

Put a number out in the stratosphere and even your garden variety billionaire might pick up his pucks and go home.

This could prove to be the turd in the punch bowl that spoils the Moyes-Balsillie party. The relocation fee would be charged by the NHL. As a secured creditor, they go to the front of the line. It would potentially reduce or even eliminate the amount of money that would be available to pay Jerry Moyes. All of a sudden that lowball offer from Jerry Reinsdorf may start looking pretty good.

Conversely, there’s a real risk when you put a price on something. A few years ago Microsoft wanted to license the song “Start Me Up” to introduce their Windows product. Yeah right, said Mick Jagger. How about $12 million dollars Mr. Gates? Well, sure…what’s $12 million when you’re worth $50 billion? It’s all relative, isn’t it?

The optimist in me says that the NHL , in addition to the relocation fee, will likely remind everyone that should not be confused with a territorial rights fee that will undoubtedly by demanded by the Toronto Maple Leafs and Buffalo Sabres. That will run the tab even higher.

Of course, there’s another darker way to view all of this. There seems to be just a little less steely resolve coming from the NHL right now. Maybe they are just a little less committed to keeping the Coyotes in Phoenix. Once there’s a price on relocating the team, it’s possible other potential owners and locales may surface, For instance, Jerry Bruckheimer in Las Vegas.

There used to be a wrestler who went around saying everyone has their price. Through his schemes and tricks he ultimately proved, everyone did have their price.

That’s an ominous thought right now. Because if the NHL has their price, someone may just, just be willing to pay it.

(Be back with more later including a POV on Glendale’s impassioned plea for the team)

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