In a declaration filed yesterday in the United States Bankruptcy Court for the District of Arizona, deputy commissioner of the National Hockey League Bill Daly has unloaded on former Nashville Predators suitor Jim Balsillie.
The founder of the Canadian company Research in Motion (makers of the Blackberry devices), Balsillie has in recent years tried to buy the Nashville Predators and Pittsburgh Penguins hockey teams. These days, he is attempting to purchase the Phoenix Coyotes out of bankruptcy, but has been denied ownership in the league by the NHL Board of Governors.
In bankruptcy court yesterday morning, Daly accused Balsillie of actively working to devalue teams and then purchase them from beleaguered owners. Balsillie, along with his attorney Richard Rodier, are also accused by former Nashville Predators owner Craig Leipold, now the owner of the Minnesota Wild, of causing a deterioration in the relationship between the Predators and officials with the city of Nashville.
In the court documents, Daly states:
"Mr. Leipold and others also questioned Mr. Balsillie at length regarding his actions in 2007, which appeared to have been taken with the purpose and effect of destabilizing the Predators franchise in Nashville.
Issues that were discussed included the facts that in June 2007: without the consent of Mr. Leipold and against the express direction of Commissioner Bettman, Mr. Balsillie began soliciting "Hamilton Predators" ticket orders in Hamilton, Ontario using the Predators' intellectual property; Mr. Balsillie had publicly announced lease negotiations with the arena in Hamilton; and he had submitted a "conditional relocation application" to the League.
Mr. Leipold, Mr. Gillett, Mr. Ed Snider, Mr. Ted Leonsis and [Daly] all questioned Mr. Balsillie about his conduct relating to these activities and his answers were wholly unsatisfactory. Mr. Balsillie actually suggested that his unauthorized activities somehow "helped" Mr. Leipold by leading to a resurgence of interest in the team in Nashville."
Also entered into court records is a statement that had been read by Leipold to the Executive Committee of the NHL.
Leipold starts by telling the committee that Balsillie can't be trusted, stating "To be blunt, I plan on voting against Jim as a potential owner, and it has nothing to do with the Phoenix Coyotes or Jim's desire to move an NHL franchise to Hamilton, Ontario. Rather, I simply don't trust Jim, and don't believe he would be a good partner in the NHL or owner of an NHL franchise."
He then goes on to lay out his detailed case against Balsillie's membership in the NHL and accuses him of drumming up problems between the team and then Mayor Bill Purcell's finance director, David Manning.
"A. On February 23, 2005, February 25, 2005, and March 7, 2005 (which is prior to any contact betwen Mr. Balsillie and me regarding the Predators), Richard Rodier, the attorney for Mr. Balsillie, contacted the Director of Finance for Nashville inquiring about the terms of the lease between the Predators and Nashville and the Predators compliance with the lease.
I have copies of these emails, and it is my understanding that Mr. Rodier also had telephone conversations with the Director of Finance and, potentially, other members of the Nashville administration.
Specifically, Mr. Rodier inquired as to whether the Predators had met the net worth requirements of the lease, and suggested to the Finance Director that the Predators could be in default of their lease due to the unclear language in the lease regarding a net worth provision.
B. Prior to Rodier, The City of Nashville had never inquired about the Predators' net worth or the requirements.
C. On March 9, (two days after his last e-mail) Mr. Rodier forwarded me a letter introducing himself and inquiring about purchasing the Predators.
D. Over the next 10 days, three articles in the Toronto Globe and Mail regarding the financial difficulties of the Predators. These articles were printed on March 10 (the day after Mr. Rodier approached me), March 16, and March 18. The March 18 article specifically referenced the fact that the Predators might not meet the net worth requirement under their existing lease with the City of Nashville. I should note that I have learned from subsequent conversations with Nashville officials that they never disclosed to Mr. Rodier that the Predators did not meet the net worth requirement. In fact, the city had absolutely no documentation regarding the Predators' net worth, nor had they even requested this information prior to Rodier's requests.
E. Beginning in May of 2005, (and only after the Nashville Media became aware of the Globe and Mail articles) the Nashville administration began to publicly question whether the Predators were in compliance with the terms of the lease, because of our refusal to turn over confidential financial records.
Unfortunately, the Nashville administration took an extreme position and argued that only physical assets (hockey pucks) could be used in calculating net worth under the terms of the lease. We believe this was the position being espoused by Rodier.
For the next two years, our lawyers had to argue with the administration whether we were in breach or not, and the Nashville administration used this alleged breach to withhold large sums of money from the Predators and the arena manager.
F. To summarize, the City of Nashville had never raised the net worth requirements of the lease with me or the Predators for 8 years, until Mr. Rodier brought the provision to their attention. Mr. Rodier contacted Nashville officials prior to contacting me regarding the potential sale of the team.
From the point Mr. Rodier e-mailed the city's Director of Financial and the subsequent public media attention from the Globe and Mail, our relationship with the city deteriorated greatly because the city was emboldened to argue that we were in breach of the lease. The episode ultimately cost the team thousands and thousands of dollars in legal fees and made the sale of the Predators far more difficult.
G. I only learned of Mr. Rodier's emails with the City Finance Director after I broke off negotiations with Mr. Balsillie in the summer of 2007, at which time certain administration officials advised me of the Rodier emails and inquiries of 2005."
Detailing the failed negotiations with Balsillie, Leipold says that Rodier tried to get him to agree to terms that would force the team to move to Canada and he was to obtain NHL consent for the move. Leipold balked and said that it would be a violation of the NHL Constitution and the lease with the city of Nashville.
Leipold goes on to state:
"Then on May 15, after meeting with Gary [Bettman] in New York, I met with Balsillie and Rodier in Balsillie's offices (with my attorney taking notes over the telephone). In this meeting, I made it abundantly clear, on numerous occasions, that Mr. Balsillie was buying the Predators 'Where Is, As Is' and that there would be no discussions of relocating the Predators until after his acquisition and until it became clear that he was buying the Nashville Predators and would be required to attempt to make the franchise work in Nashville.
He also made it clear that he understood that he would be accepting any and all risk that he could not relocate the franchise."
Here is the kicker from Leipold regarding Balsillie's actions after NashvillePost.com broke the story of the sale and the subsequent press conference confirming the transaction:
"From that point forward, Balsillie never abided by the terms we had negotiated in the Term Sheet: 1. He refused to make the Term Sheet binding; 2. He refused to put $10,000,000 in escrow; 3. He forwarded a Purchase Agreement, which was not in keeping with the Term Sheet and shifted all risk back to me regarding the Nashville lease or the failure to relocate; 4. In Balsillie's presence, Rodier advised that the Predators should sue the City of Nashville for "bad faith" to create the color of litigation prior to closing; 5. In Balsilile's presence, Rodier advised that after the June 30 closing, Balsillie would move the franchise in the dead of night using the litigation as cover."
Reached by NashvillePost.com in Wisconsin, Leipold declined to comment any further on the matter and said that his "statement speaks for itself."
Current Nashville Predators owner David Freeman told NashvillePost.com that he would prefer not to discuss the Phoenix Coyotes, Jim Balsillie, or Board of Governors discussions. Freeman did confirm that in July the Predators were among the 26 clubs that voted against Balsillie's bid to become a future owner in the league. Balsillie did not receive any affirming votes in the process.
Manning told NashvillePost.com that he recalled sharing the e-mails in question from Balsillie and Rodier with the Predators organization.
According to Manning:
"The assertion that Rodier made us aware of value and lease issues is incorrect, but there were e-mails that he sent us. I didn't know who he was when he first contacted me. There was also a Canadian reporter that started calling me at the time who told me who he was. We did have a few contacts with them in which they forwarded us information, of which we already had. Our replies were acknowledging receipt and really nothing more."