Showdown: Balsillie vs. Bettman

By now you've likely heard the news already: Coyotes owner Jerry Moyes unexpectedly filed for Chapter 11 bankrupty yesterday, and was even more unexpectedly offered $212.5 million US by Canadian entrepreneur Jim Balsillie on the condition that the franchise be moved to southern Ontario.

What we're witnessing is the opening salvo of a power struggle that will be fought in the media and decided in the courts. The real conflict isn't about the future of the Coyotes, who have been an unqualified failure in every respect, but about the future of the NHL and hockey in general. The combatants are the most powerful men in hockey, and each has a lot to lose.

Bettman was reportedly irate at the news of Balsillie's power play on the Phoenix franchise, and owners around the league were caught off-guard by media inquiries on the subject. Clearly, Balsillie feels that he can win this game without the support of the hockey "establishment". That might be a fatal mistake in an industry ruled by personal connections and backroom deals.

For his part, Balsillie has cast himself in the part of "populist hero" to Canadian fans, publicly setting himself against Bettman and his vision of a more American-ized league. This exposes a sharp divide in the hockey culture: those who believe in the viability of Sun Belt markets, and those who would rather see the league contract to its roots in the Northeast and Canada.

In the process of resolving the fate of the Coyotes franchise, we might see these tensions begin to pull at the fabric of the league. Bettman has close alliances throughout the league's power structure, and will play all of his cards if necessary to get rid of the relocation threat. Balsillie has clearly cultivated a partnership with Moyes, and is already courting other owners to back his acquisition.

More importantly, Balsillie is extending his campaign to the fans and media -- and if there's anyone who understands the power of new media, it's a Blackberry entrepreneur. His viral campaign uses phrases like: "We want those Canadian voices... to be heard throughout the North American NHL market". The euphemistic reference to a Canadian/American divide is obvious.

The coming weeks could be a time of momentous change for the NHL. If Bettman repels Balsillie, it's unlikely that another franchise owner would consider becoming the next Moyes. If Balsillie is able to force a sale and relocation through in spite of Bettman's opposition, it will likely signal a tidal change in the culture and operation of the league.

In the end, the hockey world isn't big enough for both of these men, or the conflicting ideas that they represent.

Warren Buffet, Preds fan.

"Be fearful when others are greedy. Be greedy when others are fearful." -- Warren Buffett, world's smartest investor.

Sign of the times: On Frozen Blog recounts the latest developments in the never-ending prattle over NHL relocation, expansion and/or contraction. As usual, pundits and "insiders" from the Great White North insist that any (or, in their best-case fantasies, every single one) of the Sunbelt franchises could make the decision to cut their financial losses and head northward to a "traditional" market. Presumably, this would involve renaming the team the "Jets" and signing Teemu Selanne.



In previous seasons, this cause celebre was bound up in a pointless mish-mash of discussion having to do with old-time rivalries, talent dilution and market demographics. The theory went something like this: hockey belongs in places where you might die of hypothermia.

But the market crash has blown this concept into epic proportions, with pundits coming out of the woodwork to speculate that it is now literally impossible for the NHL to sell its product in such hockey-wastelands as Atlanta and Miami. Here's the doomsday equation:
1) Hard-hit areas such as Florida cannot support a team with gate revenues.
2) Hard-hit ownership groups can no longer afford to wait on markets to develop.
3) The values of the American and Canadian dollars have changed drastically this decade.
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Quotes like the following:
The upside for Canadian fans is that those economic woes could mean another team north of the border as owners look to the game's hotbeds as an economic salve. -- Kevin McGran in the Toronto Star

It's not shocking to see this turn in the discussion, considering there's long been a conservative movement afoot among Canadian fans resentful of the Americanization of the NHL. The economic crisis provides the perfect combination of fear and greed to fuel an argument that the league should simply stop trying to survive in sunny locations, and retract back into its previous strategy of northern-market-saturation.

But let's take a step back from the hysteria and think about this rationally.
-In the past 15 years, two Canadian franchises have relocated (Winnipeg and Quebec) and three more (Ottawa, Calgary and Edmonton) have been on the death-watch for economic reasons.
-In the meantime, two teams in traditional American markets (Pittsburgh and Buffalo) have filed for bankruptcy, while another (Hartford) relocated.
-Furthermore, at least two others (the Islanders and Devils) are failing at the gate but being floated by lucrative dealings on the business side.

So let's not get too hasty about the game's "hotbeds" being a magic bullet for the NHL's revenue problems.

What we're seeing are short-term answers being proposed for a long-term solution.
Fifteen years ago it seemed like a slam-dunk investment to put a team in the southern United States; and in markets that boasted a competitive team, that investment was fruitful.
Five years ago it seemed that half of the Canadian franchises might be doomed; Finals runs by each of the aggreived franchises put those rumors to rest.
Today it's come full circle -- the Sun Belt is being characterized as barren ground, and Canadian cities as a sure bet, at least until the next market cycle proves all of those assumptions wrong.

"Be fearful when others are greedy. Be greedy when others are fearful."


Just as Bettman's expansion bonanza of the 1990s proved to be a case of too-much-too-soon, it makes little sense to simply slash-and-burn fifteen years of market cultivation in the name of hockey tradition. Atlanta, Phoenix, Tampa and Miami are in the top 16 television markets in the United States; Hamilton, the largest available Canadian market other than Quebec City, is smaller than any of these and shares its television market with Toronto and at-risk Buffalo. Where's the sense in swapping one risky market for another, at an enormous expense?

For once, let's learn from the past. Instead of pursuing the obvious, ill-fated strategy of tagging along behind market predictors and putting teams in today's hot markets, the NHL should take a step back from the current depression and think about where it would like to stand in 20 years. In that time, franchises like Atlanta and Phoenix will surely figure out how to ice a team worth paying for (Step 1: Fire Waddell) and in the meantime they will cultivate a full generation of born-and-bred fans. They might still be the least-dependable American markets, but they'll give the NHL continued national recognition and television coverage instead of allowing it to regress back to a provincial B-sport akin to golf and figure skating.