Saturday, December 16, 2006

Potential Penguins Owner Withdraws

Jim Balsillie had made a had offered to buy the Pittsburgh Penguions for $175 million. He is the second potential owner to make an offer after Howard Fingold in July. Balsillie has withdrawn his offer. It appears that Balsillie wanted the option to move the Penguins if the Isle of Capri slots deal to finance a new Penguins arena fell through and the NHL was dictating that he sign an agreement to keep the Penguins in Pittsburgh under any circumstances. Balsillie balked at this agreement. He isn't investing $175 million in an NHL franchise only to have the NHL tie his hands in event that Plan A does not work out.

This is the NHL's "negotiation" tactic. They successfully dictated a new CBA to the players. They are trying to dictate a player transfer deal with the Russians and they are trying to dictate terms to any new owners. This is problematic because nobody wants to be dictated to. It leads to fights. It leads to good people (like Balsillie) deciding there is no point playing ball with the NHL.

Where this leaves the Penguins is an interesting question. They have wanted local government to buy them a new arena. They have been offered development rights to the Mellon Arena site if they can come up with the money to buy a new arena. The plan to generate this money comes from the Isle of Capri casino licence being passed and its revenues being used to finance the building of the new arena. However, given the uncertainty in the Penguins ownership, there is a reduced liklihood of this casino licence being passed.

Should Pittsburgh wind up moving, Kansas City wants them. Balsillie made the option of a move to Southern Ontario seem likely. There are a few other possibilities as well (Houston, Portland, Winnipeg etc). The NHL does not want their claim that the new CBA would bring stability to the NHL franchises exposed as a lie by seeing the Penguins move. This would be a high profile move because the Penguins are a dynamic young team built around future (and current) stars Sidney Crosby and Evgeni Malkin. However, if they keep driving away potential Penguins owners by dictating to them, the NHL might force such a move. Pittsburgh cannot keep a team without committed ownership regardless of how strong the market is. With the second potential Penguins owner's withdrawal, its unclear what the future holds for the Pens. They have a good young team. They have a solid market. They need a new arena. They cannot attract willing ownership. The future does not look bright. The positive is that Balsillie may re-emerge as a potential Penguins owner if the NHL withdraws its demands.

Here is TSN's story on the Penguins ownership situation.

NOTE: In what seems to be an admission that the Pittsburgh Penguns chances in the Isle of Capri announcement this Wednesday require an owner (or at least a potential owner) who is committed to keeping the Penguins in Pittsburgh, the NHL-run media (like TSN is trotting out Frank D'Angelo as a potential Penguins owner. The story making rounds is that he is "thinking about buying them". Since when has it been news that somebody is thinking about buying a team? Was it news when Balsillie was thinking about buying the Penguins? Was it news when Francesco Aquilini was thinking about buying out John McCaw in Vancouver? Its only news when it happens. I wouldn't be suprised if D'Angelo never does attempt to buy the Penguins, but he is somebody that can be trotted out before the media when they need a potential owner in place to say the right things. And he says the right things:

We have absolutely no intention of moving the team. We want to keep the team where it's been for the past 40 years and that has produced players like the great Mario Lemieux, Jaromir Jagr and now has Sidney Crosby.

I think this is a desperation move by the NHL. They need some kind of owner in place and a potential owner who is thinking about it is better than nothing. They were suprised to find out they couldn't strongarm Balsillie into agreeing to all their demands.

ANOTHER NOTE: In a sign that the Pittburgh Penguins are very upset with Jim Balsilie for pulling out of the deal days before the Isle of Capri announcement, Mario Lemieux is bashing Balsillie on the record.

We were shocked and offended that Mr. Balsillie would back out of such an important deal at the last minute - and less than a week before a decision on the funding of a new arena that will have far-reaching implications on our franchise, our city and our region. As a result, we intend to retain Mr. Balsillie's deposit because we believe him to be in breach of our agreement. We can say unequivocally that the deal with Mr. Balsillie is dead.

We are not going to deal with him but we will keep his money. That's the gist of it. Balsillie didn't breach the agreement. He balked at further conditions that the NHL tried to impose in the eleventh hour of negotiation. Mre than likely, some kind of arbitration/court battle will fought over the deposit (believed to be about $10 million). When the NHL loses or reaches a settlement (which is the most likely scenario), it will be a footnote hidden away in the bottom of an obscure article in the back of the sports section, but today it is still big news when Lemieux tells us how bad Balsillie is.

Here is TSN's latest story on this mess.

Balsilie may also be thinking about the fact that the arena / casino complex would take three years to build and Sidney Crosby becomes a free agent two years later.

Balsillie, oddly, watched tonight Pens game in Habs owner George Gillett's suite.

He is still interested I think, but doesn't want to be cornered by Bettman's conditions.
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