Wednesday, August 26, 2009

Balsillie, Back Somewhat, Yet Again

In my somewhat lame efforts to follow the chances of Rim Jim Balsillie's quest to bring the Phoenix Coyotes to Hamilton, I pretty much folded the tents when I heard that Michael Dell's (of Dell computer fame, or infamy if you have owned several Dell products) investment company that owned a huge chunk of the Coyote's debt had switched to supporting Chicago sports magnate Jerry Reinsdorf's bid. I thought that with Dell on board for Reinsdorf's bid, Judge Redfield Baum would be more likely to side with Reinsdorf's bid. I did mention in my last post on Balsillie that things would get tricky for the NHL if Reinsdorf drops out. And lo and behold he has, forcing the NHL to make a bid for the team to try and counter Jim Balsillie.

This is actually quite amusing as the NHL is now down to their last gambits from preventing Balsillie from taking over the team. The NHL has tried pretty much everything they could to get the Balsillie bid rejected by the bankruptcy court (not that I blame them for these tactics, they just hoped something would work) and now seems to have failed. The NHL is still trying to get Balsillie's bid rejected by the court, via their 26-0 vote against accepting him as an owner, however the situation now, where the league is really the only other bidder it seems unlikely the court would now punt Balsillie from the process. The NHL now has to come up with around $212 million to outbid Balsillie, after already having covered probably $30 million in losses this year as a secured creditor, plus cover probably $60 million in losses next year before reselling the team. So since the $30 million in loses will sort of be recouped by their own money, that is $272 million for the bid and next year's losses, or almost $9 million per team. Plus, the NHL has probably spent untold millions on lawyers on this debacle. I am sure the NHL can come up with the money some how, however I do wonder at whoever lends them the funds (as I doubt they have over $200 million just lying around in a reserve fund) and what interest rate they will charge.

I believe Balsillie still has the option to raise his bid, which would put the NHL in an even tighter spot. Probably the most amusing thing that could come out of this would be if the NHL raises its bid, it would end up giving more money to Moyes, even though they have argued all along that the money Moyes lent the team should be counted as equity and thus not part of the creditor arrangement. So basically the NHL would be taking money from all the other owners to line Moyes pockets.

I will raise my Balsilliemeter to 30% from 27%. Still unlikely for Hamilton to get the team, but the NHL is very desperate and all their previous tactics have failed to derail Balsillie.

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