They’re coming for your hockey team again, Atlanta Thrashers fans. You know who I am talking about, those folks from Winnipeg, Quebec City and fill-in-the-blank Canada that are grinning from ear-to-ear after Thrashers co-owner Michael Gearon said the following to the AJC’s Chris Vivlamore.
“If we are faced with (relocating the team) as the only alternative, that’s what’s going to happen,” Gearon told The Atlanta Journal-Constitution. “I don’t think there is an ability to stomach another $20 million in (yearly) losses. We just can’t do it. The reality is we need fans showing up and we need investors or a primary investor.”
You could hear the jubilation throughout Canada as the word spread of the Thrashers’ demise. As that great American President Ronald Reagan once quipped: “There you go again.”
However, as another great orator and philosopher Sir Edmund Burke once said, “Those who don’t know history are destined to repeat it.”
For those of you sitting on your couch in Winnipeg rooting for this Atlanta hockey franchise to go down in Flames and head north to Canada like that other team in Atlanta did back in 1980, bear with me for a few minutes, read through this and truly put your thinking cap on.
For those of you writing in newspapers and blogs in both print and on the Internet, who haven’t bothered to even look at the litigation surrounding the Phoenix, I suggest you use caution before you blurt to the world that a relocation decision could be made to move the Thrashers in six-to-eight weeks.
As far as that history part goes. Remember the tale of the Phoenix Coyotes. Everyone in the hockey community that knows what happened to them, can skip a paragraph. As for the casual NHL fan, here are the Cliff’s Notes.
Jerry Moyes, who owned the Coyotes, gets into financial trouble. NHL secretly runs team. Moyes tries to sell to Canadian investor named Jim Balsillie (he helped invent the BlackBerry, but the NHL doesn’t like him very much). Balsillie wants to move the team to Hamilton, Ontario, Canada. To get around stringent relocation rules, Moyes’ team declares bankruptcy. Court slaps him down. NHL buys team out of bankruptcy. NHL closes deal to keep team in Phoenix. Hamilton gets no hockey team.
Sorry, my Canadian friends, but any visions of relocating Atlanta’s hockey franchise will not happen until the 2012-13 season at best. And more likely than not, the Thrashers are not going anywhere in at least the next two-to-three years. They are going absolutely nowhere if NHL Commissioner Gary Bettman gets his way and finds new ownership or an investor to buy or take a share in Atlanta’s hockey team.
Ok. That sort of prediction is bound to have you Thrashers fans breathing a sigh of relief and draw the ire of many a Canadian. However, before you go to the bottom of this article and write a comment about how much of a stupid ignoramus I am and that I should be flipping burgers at McDonalds, please carefully read the rest of the article.
1) The Thrashers owners cannot even discuss selling the team with ownership outside of Atlanta right now.
There has been a lot of folklore bandied around the Internet about how Bettman and his clan of 10 bodyguards and some of Atlanta’s owners were in Winnipeg last season, discussing the imminent sale and relocation of the Thrashers franchise.
There has also been a bit of scuttlebutt about how the Thrashers owners have a seven-year itch non-relocation clause inserted into the “Consent Agreement” that the Thrashers owners and the league signed when ownership of the team was transferred to them somewhere near the end of March 2004.
(From my research, the Atlanta Spirit (the legal name for the Thrashers owners) took title to the Thrashers, Atlanta Hawks and the operating rights of Philips Arena on March 31, 2004. It is presumed that the league gave its approval to the sale at a Board of Governors meeting sometime earlier that month. I had to jog my memory on the date. I was covering the event for another media outlet when the teams were sold).
Members of the press are citing “league sources” for this clause, but one has a feeling that this rumor was aided by a reporter digging through the filings in the Phoenix bankruptcy case (some of which were diligently preserved by Canada’s flagship newspaper, The Globe and Mail) where Moyes, as a new owner of the Coyotes, had a similar clause inserted into his “Consent Agreement” with the league. The assumption of course is that the Thrashers’ owners were saddled with a similar clause.
While that’s entirely possible, that may not be the case.
The Thrashers were an expansion team for the 1999-00 season. As an expansion team, the covenant against relocation from Day One of the franchise was thought to be for a longer term or duration (possibly as long as 15 years). When the Thrashers owners bought the team, more likely than not, they adopted that covenant and not a seven-year one as otherwise claimed.
In any event, even assuming that these unnamed “league sources” are accurate, the seven-year itch period has not passed. It does not pass until sometime in March.
The Thrashers ownership cannot even discuss selling the team to interested outside parties until the middle or end of March, which is probably why when asked about whether the team can be relocated by the AP’s Charles Odum, Gearon responded, “That’s a Gary Bettman question.”
2) Even if a Winnipeg Buyer Swoops In, the Thrashers Are Probably Not Moving Right Away, if at All. (See NHL Bylaw 36).
Let’s say that the seven-year non-relocation period is accurate, that time expires and True North Sports and Entertainment, Ltd.’s billionaire “quiet minority investor” David Thompson of Thompson-Reuters fame, knocks on the Thrashers owners’ doors on April 1 and tells him, “I’m going help you out, but. Here’s $200 million for your hockey team, but we’re going to wonderful Winnipeg. Get the moving trucks ready in two weeks once your season is over.”
April Fools, folks. You can’t quite pull a Jim Irsay and move the Baltimore Colts to Indianapolis in the middle of the night in the NHL. Just like there’s an app for every whim and desire on your tricked out iPhone, there are strict and stringent rules regarding NHL relocation.
Don’t believe me? Take a look at NHL Bylaw 36.
These items would not normally be readily available online. But, as you remember, the NHL got involved in that Phoenix ownership dispute and produced these documents in the course of that litigation. Again, The Globe and Mail kept them for posterity. (An assist is given to Google and the wonderful hockey resource HFboards.com, which helped me find this nugget).
Here’s the long and short of it. In order to move a franchise (that is if you are even allowed to move a franchise in the first place under the NHL Constitution – we’ll get to that later), you have to first apply to relocate it.
The lead time to move a team is “no later than January 1 of the year prior to the year” that the owners are looking to move the team. This requirement can only be waived by a majority of the Board of Governors. Once the application is poured over, dissected, discussed, etc. it takes a vote of majority the NHL’s Board of Governors and a boatload of cash to allow the move to happen.
January 1, 2011 has come and gone. For all intents and purposes under this Bylaw, the application would be filed in time for the calendar year 2012.
Even if a relocation application is submitted by, let’s say – the dreaded U.S. Tax Day April 15, 2011 – if the league’s Governors ignore the NHL Constitution, abandon the Bettman doctrine of hockey in the South and let the Thrashers leave – the earliest the Thrashers could likely move to Winnipeg would be the 2012-13 season at earliest. (Although, the language of Bylaw 36 does seem a bit convoluted and a relocation for the 2013-14 season may also be the earliest outcome).
However, the bottom line is that this Thrashers team will not be going anywhere next season.
Unless, of course, the Thrashers owners cried poverty, desperation, depression and downright homelessness and proved their shock claim that they were “losing” $20 million a season and the league was in cohoots to secretly sell this team to the highest bidder as soon as possible.
Then the Board of Governors could waive this requirement and expedite the application process, but somehow I think the Governors speeding things up is as likely to happen as the Thrashers’ ownership is likely to be forthcoming with the books of the entire organization (e.g. the immense profits made on the arena operations, instead of just focusing on the $20 million a year paper loss by the Thrashers part of the operation).
3) Even if the Thrashers get through the Application process, the NHL Constitution frowns upon relocation. (See NHL Constitution Article 4.2 and that pesky Bylaw 36, again).
Another wonderful nugget saved for posterity in the Coyotes bankruptcy fiasco was a copy of the NHL Constitution. That document governs where each team has an exclusive territory (50 miles or 80 kilometers from a city’s corporate limits, for those keeping score) and dictates whether a team can move into another city whether it’s occupied by another NHL team or not.
Article 4.2 of the Constitution says that a team cannot move. However, Bylaw 36 gives the criteria for relocation in the event that Article 4.2 is found to violate the antitrust laws and could govern any Thrashers relocation.
Ever wonder where Gary Bettman’s mantra concerning relocation came from? If you said Bylaw 36, you win a prize. Tell me if the words below sound familiar.
Atlanta’s application for transfer would be judged on the following criteria:
- Are the Thrashers financially viable in Atlanta?
- Can the Thrashers become financially viable in Atlanta with present or new ownership?
- Have fans have come out to Thrashers games?
- Are the Thrashers’ profitable?
- Did the Thrashers owners made a good-faith effort to sell to prospective purchasers to operate the club in Atlanta?
- Is there is a new owner that will run the team in Atlanta and absorb losses for a few years?
- Can the Thrashers be operated in Atlanta cheaper or more effectively?
- Is there a way the Thrashers can increase their revenue stream in Atlanta?
- Will the city of Atlanta help reduce the operating costs of the club, by granting tax relief or otherwise?
- Will the city of Atlanta Fulton County Recreation Authority (the ultimate owners of Philips Arena) or the Atlanta Spirit (the owners of the operating rights to the arena and the Thrashers) do something to lower the rent on the arena or increase the team’s revenue at Philips Arena?
- Will the concession companies, parking companies, etc. via the Recreation Authority or the Atlanta Spirit offer a giveback to the Thrashers to keep them here?
- How adequate is Philips Arena and will the Recreation Authority or the Atlanta Spirit fix any deficiencies in the place?
That’s just the analysis to allow the team to move. The Board of Governors must also go through another 15-18 points that involve the new owners, the new city and any “cover your butt” liability that the league may incur before approving a move.
The league then charges a hefty relocation fee and theoretically allows the relocation to happen.
That doesn’t exactly look like a process that will get wrapped up before September 2011, even if you hire every “competent” white-shoe attorney from here to Winnipeg. (Minus the esteemed Atlanta firm of King & Spalding – I said “competent,” and the ever-litigious Thrashers owners cleary don’t think that one of Atlanta’s best law firms are “competent.” The Thrashers owners are suing them, too).
With the first lawsuit settled between the Thrashers owners and their rogue partner Steve Belkin finally settled in December 2010, what you are seeing right now is the beginning of a process – a very lengthy process – where the Thrashers owners are finally in good-faith seeking an Atlanta buyer for all or part of the team.
Of course, my Canadian detractors and the Thrashers owners will say, but, but, but they’ve been acting in “good faith” trying to find a buyer for five years.
That’s utter nonsense.
I have a feeling the league would be hard pressed to find that the Thrashers ownership could have acted in “good faith” to find a purchaser for Atlanta’s hockey club while title to (i.e. ownership of) the Thrashers’ organization was in doubt while the litigation between Belkin and the rest of the Thrashers owners were ongoing. Who exactly wants to buy a percentage of a team that you may not even have “legal title” to? No one. Not even those boobs that briefly owned the Tampa Bay Lightning before Jeff Vinik took over.
This “good faith” process in Atlanta has just begun and is going to take a while.
Even if no buyers are found to keep the team in Atlanta (and “680 The Fan’s” John Kincade tweeted early Monday that there was at least one serious unnamed potential investor) and the Thrashers owners find a willing out-of-town investor, they have to go through a bunch of hoops to get any relocation approved by the league.
That’s going to take even longer.
Sorry Winnipeg. Sorry Quebec City. Sorry Hamilton. An imminent move is just not happening. Lose those visions of a convoy of moving trucks headed north of the border come May.
But come back next year, ya hear? It might be an entirely different story.
For updates whenever a new article is posted, please follow me either on Twitter @PJFoleyExaminer or Google Buzz.