Reinsdorf Offer

They tell us we’re going to have an offer by Friday. First off you have to love the timing of this. On Friday the NHL has their annual draft and now the Reinsdorf offer is scheduled for the same day. At first blush this seems like the league is again pre-empting its own big show by having both events occur on the same day. However, when you think about this, it really is not a bad idea. About the only market that cares about the Coyote story is the Toronto area and on Saturday morning you know that our media will be all over the draft and the Leafs. So Friday is a perfect day for the offer to be made if you want to minimize media scrutiny.

So instead of spoiling my Saturday by trying to deal with both issues, let’s get the Reinsdorf offer out of the way first. The most important thing to watch in this offer is what the new lease deal is with Glendale. Balsillie’s legal team will be all over this, and if the details of the new lease deal are not spelled out up front you can bet that they will be after the courts to make this public knowledge.

I do not think that you will find large subsidies in this lease. Arizona law prohibits such subsidies to private companies, and politically such subsidies would not be palatable to the taxpayers of Glendale in this economic climate. Realizing that no money would come to Glendale by forcing the Coyotes to fold, I believe that the new lease will contain a buyout clause where Reinsdorf would be able to break the lease if certain attendance figures are not met. Should such a clause be exercised down the road, Reinsdorf may well have an understanding with the NHL that he will be able to deduct the cost of breaking the lease from any relocation fee.

Once all this is all out in the open I believe that Balsillie’s lawyers will demand to have the opportunity to make a bid based on the same Glendale lease concessions. If they are smart, and patient, they will be willing to make a new bid without the stipulation of being able to move the franchise. A buyout clause in the lease would already make the Coyotes a moveable franchise. Remember, Balsillie was willing to buy the Penguins without a guarantee that he could move them to Ontario. He was willing to keep the team in Pittsburgh if a new arena deal was reached. What broke that deal was the late NHL demand that he sign an amendment to the purchase agreement promising that he would not move the team even if a new arena was not built.

In Nashville, he again was willing to buy the team and move it once attendance figures were not reached and the lease could be broken. His problem there was that his excitement got the better of him and he began selling seasons tickets in Hamilton for a team that he did not yet own, in a market that was not yet approved.

While Balsillie’s behavior has poisoned his reputation with the NHL governors, what he has going for him here is that the judge will be the final one to approve the sale of the Coyotes. If Balsillie’s deal is identical to Reinsdorf’s in regards to terms and conditions, it will be difficult for the NHL not to approve both deals in principle without showing malice towards Balsillie.

This would put the decision in the hands of the judge and that is where Balsillie needs it to be. The big question is whether Balsillie can stomach playing this game and stop proclaiming what he intends to do. If he can keep his mouth shut, I think he has a play to make here. Once he owns the team, and once the attendance figures are not met in Glendale, he can then buy out the lease and make his case for his new market.

Balsillie’s exposure with this strategy is that prior to the lease in Glendale being bought out the NHL could fast track expansion to southern Ontario. What the NHL has to be careful with is to be above board in its dealings with Reinsdorf. Balsillie’s lawyers will be all over the details and all documents that pertain to the sale must be filed with the court. Balsillie’s one big advantage is that this sale will be settled in the courtroom, not the boardroom. The question is, will he be willing to play the game?