Tuesday, June 2, 2009


You need to appreciate the irony of NHL Commish Gary Bettman invoking the right of fast food chains to decide where its restaurants are located in a vain attempt to justify excluding Jimmy Balsille from his ownership cabal. Is the NHL now on par with Burger King? The key difference between the fast food industry and the NHL is that one is a highly competitive market, the other is a monopolistic oligarchy. Fast food restaurants are distributed efficiently such that supply satisfies demand. You don’t hear MacDonalds saying “we’ll put only one franchise in Toronto because everyone there loves our food and we can charge $100 per burger and people will sit on a waiting list for a lifetime for the right to pay it; so instead we’ll put a franchise in the middle of the desert where nobody eats meat.” It is lunacy of the highest order.

The inconvenient truth that you won’t hear in a Bettman “state of the union” address is that his job is potentially on the line. He is an employee of the NHL owners, and his ability to maintain his employment is based on a delicate balance of confidence votes. If his arch nemesis is successful in his bid to get a team that tips the balance in the other direction. If he is able to replace Moyes with a hand picked candidate, he increases his job security. It is a conflict of interest. Past confidence votes show that the “pro-Bettman” crowd in the ownership cabal is a very slim majority. What has me befuddled is why more owners are not pushing Gary to shift franchises to markets where people actually want to consume the product. This insistence that Gary continuously advocates that hockey can work in these non hockey markets is like watching Alice in Wonderland. How many hundreds of millions can you drop down the rabbit hole before you snap out of the hypnosis?

The list of failed Bettman experiments seems to be growing larger by the day. Phoenix is reportedly worth a mere 67 million dollars as is, and owes 240 million in debts. The Florida Panthers are now officially for sale. He wants $220 million for team and stadium (the list of potential buyers is one). If Jimmy doesn’t get the Coyotes next week, he has other options. Do you think that the Florida owner will appreciate Gary telling that he needs to take a $110 million dollar bath for no good reason? The Nashville owner received a sweetheart deal to join the Minnesota ownership group for accepting less for the Predators. Quid pro quo. The Columbus Bluejackets were recently found to have lost over $80 million dollars in the past 6 years. The Dallas Stars defaulted on their expense payments last season. They could not pay their employees and needed help from the league. The owner of the New York Islanders recently admitted that it was a terrible mistake to buy the team. The list of “have nots” is growing and eventually these guys are going to want to sell. Who will want to buy a team that loses millions annually on the precondition that it has to stay in the very city where it is failing? Then the rich teams will be forced to bail out the operating loses of Bettman’s failures. It is bad business. Meanwhile the revenue produced by the six Canadian teams are a cash cow for the league.

On the matter of territorial rights, it is murky from a legal perspective. It is not exactly something written into the Charter of Rights and Freedoms, but rather the NHL rulebook. There is precedence favourable to Hamilton, such as the Devils, Islanders, and Mighty Ducks. It is unclear whether the NHL can legally block a transfer on the basis of “territorial rights”, but at the least they can charge an entry fee. The catch is that the NHL cannot come out and openly cite competition as their legal justification for cock blocking Jimmy. If they cite competition, then Jimmy has an anti-trust case. Most insiders believe that competition is at the heart of the NHL opposition, but Gary has no choice but to say making it work in the desert is why Jimmy can’t move the team. So while Gary is wandering through wonderland, the people of southern Ontario are being deprived of a product that they want to spend money to consume.


  1. I'm more interested in learning more about Franchise law and how the AZ judge will rule. Exactly how much controle does the Franchiser have over the Franchisee. Ironically, Burger King has experienced recent class action over control in soft drinks in their franchise locations.

  2. If you want a clear view of the current picture in AZ bankruptcy court, consider this:

    If it was as big a slam dunk as Bettman claims, the NHL would have would not have been ordered to arbitration, and would have won at the first court date.