The Coyotes Bankruptcy: A Retrospective Part II: Meet Jim Balsillie

Christian Petersen

The second part of our series on the Coyotes bankruptcy process introduces former CEO of Research in Motion, Jim Balsillie.

Jim Balsillie and the NHL go way back.

Balsillie made a play for another southern franchise, the Nashville Predators, while they were in significant financial distress and faced a daunting challenge revitalizing a fanbase that had been largely deprived of playoff success since the team’s arrival in the Music City.

Sound familiar?

The one-time CEO of Research in Motion, the company behind the Blackberry device, had money to burn; it was estimated that his net worth in 2008 was approximately $3.4 billion USD. Such a fortune would make the purchase and relocation of a team like Nashville of little more consequence than a person shopping for a new sofa.

But for Balsillie, money wasn't the problem. Location was.

Balsillie’s dream was to have a hockey franchise in Hamilton, a suburb of Toronto. It had a venue, the Copps Coliseum, which while dilapidated, could be fairly easily refurbished into a modern facility. It had ravenous hockey fans who found themselves shut out of the Toronto Maple Leafs by both playoff futility and sticker shock from some of the highest ticket prices in the NHL.

Hamilton also carried a significant amount of baggage though. This part of Canada was surrounded on all sides by the United States. While that wouldn’t normally be a problem, the fact that the major US cities in those parts of America were Detroit, Buffalo, and to a further degree, Columbus, was a major concern. In a league where television rights continued to make a sizable chunk of money for the NHL (as evidenced by NBC’s $2 billion American rights deal and Rogers’ $5.2 billion Canadian rights deal), the possibility of five NHL franchises within that area could drag down ratings if viewers and networks were forced to choose which station to prefer. Relocation from Nashville would also strike a blow to the possibility of expansion into Southern markets, and both for the sake of future revenues and Gary Bettman’s legacy (the former being substantially more important than the latter), keeping the Predators away from Hamilton would become a league priority.

Naturally, that didn't make Balsillie particularly happy and his unhappiness would also spell his demise as a would-be NHL owner.

If there’s one thing Commissioner Bettman cares about with regard to NHL ownership, it’s that they do things under the radar. Imposing large fines on owners who spoke to the media during the lockout is one such example of the league’s desire to control its own media narrative. So if someone wanted to purchase a team, they were expected to work things out quietly with the NHL and allow the Board of Governors to do its work.

Balsillie would have none of that. His desire to own an NHL team and move it to Canada was so powerful that he gave interview after interview to Canadian media outlets in the hope that such outspoken statements would put pressure on the league to satiate a country whose fans have for decades believed that they are a neglected entity in Bettman’s NHL. But he forgot one very important thing: it’s Gary Bettman’s NHL, we all just live in it.

The fact that Predators owner Craig Leipold refused to agree to Balsillie’s $220M offer is of little surprise considering how much Bettman prefers message control. It is even less surprising considering that Balsillie was denied the chance to own the Pittsburgh Penguins just a few years earlier for reasons similar to those he encountered in Nashville. What is more surprising is that Balsillie attempted to make a third go at NHL ownership three years later with the then bankrupt Phoenix Coyotes.

It was a clever plan in hindsight. Former Coyotes’ owner Jerry Moyes would place the team in bankruptcy protection, which would provide a window for Balsillie to make a purchase offer. Balsillie would bid higher than any other would-be suitor, which would appeal to Moyes’ creditors who wanted to recoup as much of their loans as they possibly could. At that point, Balsillie would have legal ownership of the franchise without the NHL’s input, and in theory could move his asset wherever he wished.

Unsurprisingly, Bettman and the NHL disagreed. From their perspective, Moyes had already relinquished control of the Coyotes to them in 2008 when he had formally declared to the Board of Governors that the team was insolvent. Therefore, Moyes did not have the right to dictate the terms of sale of the Coyotes to Balsillie or anybody else for that matter.

Though the franchise that Balsillie sought to acquire had changed, the two major issues remained the same. Hamilton remained in a highly over-saturated part of North America; even the NHL’s rumored interest in the Toronto suburb of Markham as an expansion destination would be preferable because Markham was a northern suburb as opposed to Hamilton, which was south of Toronto.

And Balsillie had seemingly not learned from his aborted attempt to purchase the Predators. He had started a "Make It Seven" promotion to sell enough season tickets to prove to the league that Hamilton was a viable market. But once again, such outspoken efforts to build support for a team in Hamilton ran contrary to the way the league conducted its business. Above all, the NHL was going to decide where its franchises were going to be located, no matter what the public said and if Balsillie or anybody wanted to contest that notion, they would have to do in the courts.

Which is precisely what happened.

In the next edition of this series, we will dive into the complex legal process that led to the NHL formally assuming ownership of the Coyotes.

Author's Note: I had previously made the decision to focus primarily on Balsillie's attempt to purchase the Nashville Predators because of the similar circumstances surrounding that club and the Phoenix Coyotes. I did not mention Balsillie's first attempt to purchase the Pittsburgh Penguins. I have subsequently edited the story to make reference to that attempt, and apologize if I appeared to be intentionally ignoring the Penguins.

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