NHL Bailouts are Nothing New

by Bob Wage on Aug 28, 2009 7:00 AM EDT

Many hockey fans are keeping a weary eye on the fiasco in Phoenix. After months of back and forth between possible owners, the court, and the league, it's finally come down to this. Should the NHL be allowed to purchase the Coyotes for a lower price than what mogul Jim Balsillie has offered? That's up to a judge to decide.

As Greg Wyshynski pointed out in an article on Puck Daddy yesterday, some hockey journalists are writing articles filled with contempt for the league regarding the proposed purchase offer. And of course a lot of criticism is coming from north of the border. While Wyshynski aptly points out positive reasoning for this specific offer, some journalists seem to have short memories regarding NHL bailouts.

Back in 2003, the NHL stepped in with millions to keep the Buffalo franchise running. The Sabres ownership group eventually declared bankruptcy as reported by CBCNEWS.com.

Before that, the NHL coughed up millions to keep the Ottawa Senators franchise afloat. Here is a quote from then owner Rod Bryden venting his frustration as stated on CBCNEWS.com.

Owner Rod Bryden said he hopes the team will be able to stay in the city. But he warned that one of the deciding factors will be whether fans buy tickets. If the seats can't be filled now, while the Senators are in or near first place in the league, investors will be scared away.

"This isn't the big bad banks chasing us out of town," Bryden told a news conference. Investors simply want a fair return, and are quite willing to keep the team where it is as long as they can make a profit, he said.

The Sens also declared bankruptcy.

The NHL got heavily involved with the Pittsburgh Penguins financial troubles and bankruptcy as well. Apparently, several ownership groups made offers, or wanted to make offers for the franchise, but the NHL more or less dictated to the bankruptcy court that they wanted Mario Lemieux to be owner and they wanted to keep the Pens in Pittsburgh. Does this sound familiar?

Jim Kelley of Sports Illustrated calls the offer an ugly bid and apparently feels that financial troubles are relegated to only southern teams, including Carolina. (glove tap to Vince for the link)

If Balsillie loses his bid in Phoenix and the NHL "wins" the right to absorb the debt of a failed franchise and sell it at a price likely to drive down the value of other teams, is there any reason to believe that he won't try again with another troubled franchise, say in Tampa Bay, South Florida, Carolina, Atlanta or someplace else?

Where is that coming from?

Each case is different and decisions need to be made based upon their own merits, but the concept that the NHL is making a major financial bid to keep a troubled franchise in it's current location is nothing new. It's even happened before in Canada.

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Comments

This particular deal also may be a product of the times. Since securing financing for any venture is difficult now, something as uncertain as the financial viability of the Coyotes is diminishing the available options.

As I read the NHL offer, they are intending to hold the franchise for no more than 2 years and then sell when the market is better (we hope). Specifically, this gives them time to demonstrate the stability of the franchise with good management, and also to allow potential buyers (and their lenders) to build up the capital required to invest in such follies (albeit one both fun and noble) as hockey in Phoenix.

Let's go Canes!
Hakkaa Paalle!

by Carolyn Christians on Aug 28, 2009 10:11 AM EDT reply actions

The idea that the NHL is trying to lower the value of other teams is nonsense. I think some are forgetting that Basillie’s offer was inflated in the first place. I really feel for Yotes fans. The whole situation must leave them feeling as unwanted as a snake in a picnic basket.

It’s cute that Kelly thinks Carolina is a troubled franchise. We may have to make the playoffs to turn a profit, but PK and JR keep a good ship running given the circumstances.

And Bubba, I thank you for beginning a sentence with the word “And”. I can’t tell you how many times I’ve had to tell my coworkers that it’s not that big deal – I am vindicated.

by Caniac1026 on Aug 28, 2009 10:46 AM EDT reply actions

And

Don’t use me as an authority. But I figure if Cory can do it, so can I. He’s the journalism major!

GM of CanesCountry.com

by Bob Wage on Aug 28, 2009 11:09 AM EDT up reply actions

:-D

by Caniac1026 on Aug 28, 2009 5:04 PM EDT up reply actions

Most teams Need the playoffs to make $$

1) Almost half (if not more) of the teams in the NHL can make the statement that they have to make the playoffs to have any chance to turn a profit. While we aren’t so sure this is true (as accountants can be very creative) its not unique to the Carolina franchise.
2) In fact if memory is accurate we recall the washington capitals owner Ted Leonsis state he will still LOSE money despite sellig out most games and playing in 2 playoff rounds.

I find sometimes it's easy to be myself
sometimes I find it's better to be somebody else

by Fauxrumors on Aug 28, 2009 12:24 PM EDT up reply actions

i didnt know carolina was a troubled franchise.
aparently south east equals troubled franchise.

by chrisj on Aug 28, 2009 2:28 PM EDT reply actions

The Sabres, Sens and Pens mainly had issues with underfunded ownership groups. None of those teams were losing close to what the Coyotes have the past four years (with revenue sharing!).

I understand the point, but just because a team’s in bankruptcy doesn’t mean it should relocate. Other factors such as the size of the losses and the ability to find other owners come into play.

Blogging on hockey at fromtherink.com

by James Mirtle on Aug 28, 2009 2:37 PM EDT reply actions

I agree James, hence my disclaimer-

Each case is different and decisions need to be made based upon their own merits

My primary point was that there is some precedence for what they are doing. Although, I don’t recall the same backlash back then.

GM of CanesCountry.com

by Bob Wage on Aug 28, 2009 3:18 PM EDT up reply actions

great article, Bubba. I was sent here by PuckDaddy.

The Sabres bankruptcy was due to the owners embezzling money (and they are in prison) and Golisano bought the team, effectively saving it.

It isn’t the bailout that bothers me. i’m not even bothered by Balsillie owning a team. it’s where they will relocate to. That’s Sabres and Leafs territory. Rivalries are fun (as our teams know), but a portion of our profits and fanbase is in Southern Ontario.

Anywho, great article and a lot to think about.

by Shea E on Aug 28, 2009 5:01 PM EDT reply actions

Shea, you are absolutely correct about Buffalo’s troubles. It would be hard for any franchise to make it when ownership is co-mingling and embezzling funds.

Thanks for the comment and for dropping by.

GM of CanesCountry.com

by Bob Wage on Aug 28, 2009 6:46 PM EDT up reply actions

no worries. i’ll be stopping by more often! thanks!

by Shea E on Aug 28, 2009 8:48 PM EDT reply actions

Props for Canes Country and the SBNation bloggers

From On the Rink yesterday

Remembering that this is only the 2nd season of SBNation hockey blogging. Nice comments for Canes Country and other bloggers from James Mirtle

Thankfully, with a lot of smart people behind the scenes and many more signing on, things have turned out quite well. It’s incredibly satisfying to now see sites like Pension Plan Puppets and PensBurgh with audiences 10 or 20 times larger than what they were only eight or nine months ago. Other established sites like Japers’ Rink, Canes Country, On The Forecheck and St. Louis Game Time — several of which are credentialed to cover their teams — joined early on, and the rest was easy.

Good times ahead, I’d say.

Bubba – is it proper to ask you to quantify how much your traffic has increased in the last 10-12 months?

Let's go Canes!
Hakkaa Paalle!

by Carolyn Christians on Aug 29, 2009 11:51 AM EDT reply actions

It’s entirely improper and inappropriate.

No, our biggest traffic spike was obviously during the playoffs. We might have had double the traffic or a bit more than double, before the move, compared to regular season traffic. Right now, we are seeing a 50-60% increase over the offseason last year.

Some of the newer blogs have really exploded since they came to SBN, but we did come here with a pretty good base so our growth percentage is not as high as some, but we are a busy site and we do very well.

We still have not matched our busiest day ever, which was before the move. Cory wrote a not so flattering article about “Jesus” Price which was linked to by several Habs blogs and even one Montreal newspaper. Apparently half the city of Montreal came here to read it. But much like my Aaron Ward prediction, Cory was right.

http://www.canescountry.com/2008/11/18/carey-price-%E2%80%94-dont-believe-the-hype/

GM of CanesCountry.com

by Bob Wage on Aug 29, 2009 12:21 PM EDT reply actions

I remember that episode.

If Cory had just waited a little while he would’ve had plenty of Habs fans agreeing with him

by Iggy Reilly on Aug 29, 2009 12:57 PM EDT up reply actions

Hey thanks. In retrospect, I guess if the photo of Malkin’s almost bare “significant other” prancing through the waves didn’t get deleted as inappropriate, this Q was probably okay (I wonder if that image raised the the sites’ views).

That is funny about Cory’s Carey Price story and how the season panned out between him and the Habs’ fans (he who laughs last…). What a horrible place to be a hockey player. Interesting that that was what spiked your site visitors. Ties in well to why the Wild moron with the “fan ratings” does his piece.

Speaking of who laughs last, when are Cory and you going to compare your pre-season predictions for last year – 08/09 – to how the teams actually finished? From what I remember, Cory showed some pretty strong hockey sense there too. (Bubba, not so much)

Let's go Canes!
Hakkaa Paalle!

by Carolyn Christians on Aug 29, 2009 1:01 PM EDT up reply actions

We will do that when we make this year’s picks. (Bubba, not so much?) Seems like I got a lot of grief and was even called crazy when I picked St. Louis to finish above Nashville. check the standings. :-)

I think Cory did beat me overall though. We will find out.

GM of CanesCountry.com

by Bob Wage on Aug 29, 2009 2:38 PM EDT up reply actions