Behind the BlackBerry Boss's Hockey Brawl

Like many Canadians, Research In Motion (RIMM) co-CEO Jim Balsillie is a tad obsessed with hockey. He plays right wing in a pickup league and named all the conference rooms in his office building at RIM's Waterloo (Ont.) headquarters after the game's greats.

Now, Balsillie is brawling with the National Hockey League over whether he can acquire an NHL team. Worth about $2.5 billion from his stock in RIM, he's offered $213 million to buy the Phoenix Coyotes out of bankruptcy and move the team to Hamilton, Ont., a city of 500,000 about an hour from the BlackBerry maker's offices. But the NHL doesn't want another team squeezed between those in Toronto, Buffalo, and Detroit, and it says Balsillie lacks the "good character and integrity" to be an NHL owner.

Them's fighting words for Balsillie. In a bankruptcy court filing, he says any character flaws he has pale in comparison with those of others in a league that "has long tolerated indicted and even convicted criminals among its ranks." He also thinks Hamilton is the ideal market for a hockey franchise, given the region's enthusiastic fans. "It's the largest unserved hockey market in North America," he says in a phone interview.

The NHL in Phoenix: $300 Million Lost The franchise's move to Arizona certainly hasn't worked out financially. Once the Winnipeg Jets, the team left for Phoenix in 1996 as part of NHL Commissioner Gary Bettman's strategy to broaden hockey's appeal. But the team has lost $300 million since the move, in the face of tepid fan support. The Coyotes' attendance averages 76% of capacity, well below the league's average.

Although Hamilton is only an hour south of Toronto, Balsillie says there are plenty of fans for two teams. He points out the wait for the Toronto Maple Leafs' season tickets can stretch more than a decade, and they go for tens of thousands of dollars. He also argues that if the New York metropolitan area can support three teams—the Islanders, the Rangers, and the New Jersey Devils—then southern Ontario should be able to support two. "I think I have an approach here that will create a lot of value for the franchise, the league, and for the fans," he says.

The Coyotes' owner, trucking magnate Jerry Moyes, favors selling to Balsillie. But the NHL is taking the unusual step of offering to buy the team itself for $140 million, with plans to resell it to another owner in the future. (The league had originally backed a $148 million offer from a group led by Chicago Bulls owner Jerry Reinsdorf, but that bid was pulled on Aug. 25.)

Balsillie Bid for a Team Twice Before The NHL's board of governors, which has the final say over who can become a team owner, has several reasons for opposing Balsillie. The league is wary because he came close to acquiring the Pittsburgh Penguins in 2006 and the Nashville Predators in 2007 but backed out late in the process both times. League governors also don't like that Moyes and Balsillie negotiated a deal under the cover of a bankruptcy proceeding without consulting them. The NHL not only is supposed to have authority over such transactions but also gave Moyes cash advances and loans to get him through last season.

The biggest dispute is over the franchise's location. The league may be reluctant to undermine the health of the existing franchises around Hamilton to accommodate a newcomer. The NHL also says Phoenix has the potential to evolve into a viable market with new management and more success on the ice.

The next step in the process will be a hearing in bankruptcy court on Sept. 2 over whether Balsillie's bid can proceed. After that, the team is expected to be auctioned on Sept. 10. Even if Balsillie comes up short this time, the league is likely to hear from him again soon. "It's no secret that there are other financially troubled teams out there," he says. "And I've certainly been approached by other owners."

    Before it's here, it's on the Bloomberg Terminal.