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Saving the Coyotes, and the NHL, from Jim Balsillie

First of all, I want to state that I have no idea if the situation in Phoenix can be salvaged. As detailed yesterday over at Bird Watchers Anonymous, the business challenges are severe whether you're talking about the real estate dealings or the physical location of the arena. I'm not a local, so I don't know if those obstacles can be overcome or not.

What I do know, however, is that NHL Commissioner Gary Bettman is right to make every effort to make things work in Phoenix, and if they ultimately can't, the process of relocation needs to be handled properly. Allowing Jim Balsillie to dictate the proceedings, as he is trying to do, would be madness, not only for the commish but for the owners of the other 29 NHL teams as well.

Some members of the Canadian media have pulled out the pom-poms and are actively cheering for the Blackberry Kid to topple the cold-hearted Bettman. The Hockey News' Adam Proteau even brings out the tired (and patently absurd) notion that Balsillie's move would "increase franchise values by wildly overpaying for another team". Apparently there's no economics requirement for Sports Journalism majors in college. Perhaps there should be...

Anyway, Toronto Star columnist Damien Cox (already unpopular with many Leafs fans) struck a blow for common sense this morning.  He may get run out of Canada by the teeming hordes of the "Make It Seven" campaign, but Cox brings up some sobering points:

For starters, the NHL has the right to the pursue business strategies of its choice under the laws of Canada and the United States. There is no moral imperative here.

Second, a successful franchise in Phoenix – something that hasn't yet been achieved because of awful ownership and management – is potentially worth more to the NHL than a successful second franchise in southern Ontario.

Third, franchises can flourish in the U.S. southwest and the Sun Belt. Look at Dallas, Anaheim and San Jose.

Finally, the NHL has a pretty good track record – not perfect, but pretty good – when it comes to turning bankrupt or failing franchises into profitable ones. Look at Pittsburgh and Washington. Look at Ottawa and Buffalo.

All these points are all dismissed or ignored by those who have drank deeply from Balsillie's Kool-Aid machine.

Not content with pointing out the business case for making a run at fixing the Phoenix situation, Cox then goes after the sacred cow of the Maple Syrup Mob, Jim Balsillie himself:

They want you to assume that Balsillie would be a terrific NHL owner even though he has no history in pro sports and appears to have utter disdain for the rules and constitution of the league he wants to join. Bruce McNall, Michael Eisner, Wayne Huizenga, Howard Baldwin, Rod Bryden, Norm Green, John Rigas – all were one-time NHL owners who initially appeared promising and turned out to be weak, wanting or crooked.

Some respond to questions about Balsillie with cries of "what about Boots Del Biaggio?" Del Biaggio is a crook who, with the assistance of his broker, deceived the NHL and a number of lenders with bogus account statements. That was a situation where the victims didn't know what they were getting into, but with Balsillie, we know up-front that there are problems. He clearly doesn't recognize the primacy of the league office, and has a history of stubborness that has directly impacted his business. It's simply reckless to blindly dismiss those concerns solely because he 1) is loaded 2) loves hockey and 3) wants to put a team in Southern Ontario.

After all, when considering at the tactics that Balsillie has engaged in to relocate a team to Hamilton, how could an NHL owner assume that he wouldn't be just as disruptive and disrespectful once he's inside the league? Just review the long saga of his company's patent infringement battle over the technology behind wireless email. He could have closed a case brought against his company, Research In Motion, by accepting a court judgment against RIM and paying $53 million. Instead, by battling through a number of (denied) appeals and (unsuccessful) legal tactics, RIM ended up paying a whopping $612.5 million in 2006 to settle the case. Balsillie's obstinance cost his shareholders hundreds of millions of dollars.

Now, his latest gambit is to argue that anything the NHL does to prevent his moving the Coyotes to Southern Ontario amounts to anti-competitive behaviour, and is a violation of anti-trust laws. If he's intent on going down that legal road, it's going to take a long time to sort that mess out, and what are the Coyotes supposed to do in the meantime?

What Balsillie has done well is tap into the emotional sting felt by many Canadians over the loss of the Winnipeg Jets and Quebec Nordiques, and the growth of the NHL throughout the southern U.S. It simply makes sense, many note, to put more teams back in Canada where they belong. Balsillie has positioned himself as a Canadian champion, opposed by a bland commissioner who's just a basketball guy at heart, after all.

But this isn't a personal battle, it's a business one. The NHL has a vested interest in not just defending its control over the location and ownership of teams, but also making a strong effort to live up to commitments in troubled markets. Professional sports teams increasingly rely on subsidies from local governments to enable their business model, and those subsidies (along with the support to build new arenas) will become much harder to obtain if teams are seen as flight risks. Franchises aren't like other businesses; they are seen as part of the cultural framework of the community within which they operate, and in exchange for subsidies, they commit to long-term arena leases.

Do I know for a fact that the Coyotes should stay in Phoenix? Of course not; there are serious issues with that situation which may ultimately force the team to move. But Bettman is right here to investigate every opportunity to keep them in place, and if relocation becomes inevitable, to manage it in the proper fashion. Balsillie's reckless tactics are disruptive to the league today, and would likely be even more of a headache were he to actually become an owner.