For the bullet summary, please go here. To contact your MP regarding the Veto issue, please go here. Click here to file your complaint about the Veto of the MLSE (Maple Leafs Sports and Entertainment) to the Canadian Competition Bureau (CCB).
We are very pleased to have seen Mr. Sandor’s comments in our posts, and Patrick was kind enough to edit these ideas into Mr. Sandor’s first post to our site. We certainly hope it will not be his last. Just when we reached our own ‘abyss’, Charles has tremendous insight to bring it home!
By: Charles Sandor
Everyone has gone on about the fact that Judge Baum either can’t or won’t set a precedent in the Coyotes BK issue. Well let’s look at why the judge should set a precedent.
The NHL Constitution
“The NHL doesn’t always follow what’s in the constitution, does it?”
Baum knows that the NHL Constitution is a flawed document because it is a “Constitution of Convenience”. Sometimes the NHL follows it and sometimes it doesn’t. A classic example is relocation fees. Sometimes the NHL charges one and sometimes it doesn’t.
Also the NHL Constitution contradicts itself further proving it is a very flawed document. Article IV 4.3 confirms the veto by declaring that “No franchise shall be granted for a home territory within the home territory of a member, without the written consent of such member.” However, Gary Bettman says that this clause has no standing and that in fact all that is required is a two thirds vote.
Further it is the position of the NHL that:
“While we respect that the Leafs may have a different interpretation (although it’s not even clear that they do at this point), at the end of the day, it is the Commissioner and the League that is ultimately charged with interpreting the NHL Constitution and by-laws.”
So what we have is an NHL Constitution that contradicts itself and therefore must be interpreted by the Commissioner.
Well we have seen just how much weight Bettman’s interpretation carries with the owners. Leipold in his deposition said he believed there was a veto. MLSE’s letter confirmed the veto and clearly indicated that they disagree with Bettman’s “interpretation. Finally, we have Eugene Melnyk confirming on public radio that he has a veto.
The fact that there is no consensus of opinion between Bettman and the owners on this important provision of the Constitution proves that the document is flawed. However, the important point made above is that the NHL’s Constitution is open to interpretation and if the Commissioner can interpret it, so can a judge since, regardless of what the NHL might think, the highest and last authority in the land is the courts, not a league commissioner.
Gary Bettman opened a door that he will regret opening and Baum will have no problem walking through that open door. Is the NHL’s Constitution enforceable if it is determined to be so badly flawed? The fact the NHL doesn’t always enforce their Constitution or they opt out of it at their whim would seem to indicated that holding others to the letter of their Constitution when they don’t always follow it themselves is highly prejudicial.
It should be noted that when Balsillie was rejected by the Board of Governors, it was on character. Relocation was never an issue. The NHL refused to even look at Balsillie’s relocation application on the grounds that there was no point since he hadn’t been approved as an owner. Therefore relo isn’t an issue, it’s all about character.
Many of us here have wondered why the NHL didn’t tie in the relocation issue with the rejection especially since many of us felt there might be some, although very limited merit to an argument that relocation to Hamilton would cause some financial pain to Buffalo. The NHL had that option and didn’t take it. Why?
Is it because the NHL doesn’t want that part of their Constitution dealing with relocation tested in court? Why not? Is it because the NHL themselves believes their Constitution as it deals with relocation would not survive any court challenge? Very likely that is true and if a part of your Constitution can’t survive a court challenge, it’s likely the document as a whole won’t survive a challenge.
It would seem the NHL itself realizes their Constitution is flawed and won’t hold up in court. Baum should have very little trouble working around or “interpreting” this very flawed Constitution and making it work so that the court can award Balsillie the team.
Oh, that Balsillie Is Quite The ‘Character”!
Now let’s take a look at the “rejection” of Balsillie on grounds of “character”
Quote from the CBC:
The NHL may have to justify its rejection of Balsillie to the court. Citing a 1986 case involving the Los Angeles Raiders and the NFL, Baum said in his mid-June ruling that the NHL needed to show good faith in assessing Balsillie, who was twice previously greeted with initial enthusiasm as a prospective owner before negotiations to buy the Pittsburgh Penguins and Nashville Predators broke down.
“Significant to the court here regarding the objection to the transfer of ownership of the Phoenix Coyotes is the fact that in 2006 the NHL approved PSE to become a member,” Baum wrote. “Absent some showing by the NHL that there have been material changes in PSE’s circumstances since 2006, it appears that the NHL can not object or withhold its consent to PSE becoming the controlling owner of the Phoenix Coyotes.”
So did the NHL show any material change in PSE’s circumstances? Well it is interesting here to note that Balsillie was never rejected on the grounds of relocation, merely on “character & integrity”. So what has changed with Balsillie from 2006 when he was approved and 2009 when he was rejected? The only change cited by the NHL was Balsillie’s SEC issue. Is that enough of a material change to warrant rejection? No, it is not. In fact, I am sure Baum will note that to reject Balsillie on this “material change” is high-handed, defamatory, discriminatory, prejudicial and most importantly, unreasonable. This is so because of the NHL’s own track record in the company the NHL ownership welcomes and keeps.
We do not need to go over the various past and present owners who have run afoul of the SEC and the law and even spent time in jail. Talk about the kettle calling the pot black. Baum will again see that the application of the flawed NHL Constitution to reject Balsillie by the Board of Governors was unreasonable and more so, the NHL has not shown any material change in PSE’s circumstances since approval in 2006 to merit the rejection.
You can’t reject Balsillie on the grounds of his SEC issue when your own membership is rife with problem individuals and you aren’t holding them to the same standard. Is the NHL kicking Samueli and Melnyk out of the league? No, so clearly running afoul of the SEC is not against the NHL Constitution and therefore no basis for rejecting a prospective owner.
Also rejecting Jim Balsillie on an SEC issue while turning a blind eye to your own members with their SEC issues is acting in bad faith towards Balsillie and Baum also said the NHL needed to show good faith in assessing Balsillie. They did not therefore the rejection must be invalidated by Baum.
Therefore Baum can rescind the rejection and run with Balsillie’s bid as an approved NHL owner and further, since the NHL never objected to relocation, they can’t be heard to reject now on relocation especially when they themselves now want to relo the Coyotes. Baum also will overturn or set aside the rejection of Balsillie on the grounds of a conflict of interest.
I Am Feeling Very Conflicted!
The judge again floated the idea that he might reject both bids, noting that a potential purchaser must satisfy several legal requirements.
“If you don’t both get there, it’s going to be hard to approve it,” he said.
The NHL simply cannot be both a bidder and the governing body who decides who gets to bid against them. This is an obvious conflict and goes against bankruptcy law. The NHL by discussing the option of placing the bid prior to their rejection of Balsillie and then actually rejecting him knowing they were going to bid means they deliberately and knowingly walked into a conflict of interest. The NHL can’t be rewarded for that. If they were, it would make Baum’s decision very easy to overturn and he doesn’t want that.
The NHL’s actions create the very real impression that “the fix is in”.
No judge can go along with a bid where there is even the slightest hint of impropriety. Here is another conflict for the judge to have to deal with. As mentioned earlier, Balsillie was rejected and the only material change cited was Balsillie’s SEC run in. Well, both the Ducks and Senators voted at the Board of Governors meeting to reject Balsillie. That is a conflict of interest right there. Both Samueli and Melnyk have had their own run in with the SEC and Board of Governors members be allowed to vote on a rejection whereby the only material fact cited was an SEC issue?
Melnyk and Samueli, with their own records can’t and should not have voted or been allowed to vote due to a clear conflict. More to the point, their votes are sheer hypocrisy in that they are rejecting Balsillie on the basis that Jim Balsillie did what they did?
Finally, the Board of Governors vote is tainted because of both the direct and implied threat by MLSE if the board voted in favor of Balsillie.PSE’s intent is to move the team to Hamilton which MLSE considers its territory. The MLSE letter makes it very plain that MLSE believes it has a veto over its territory and that they would take any and all legal means necessary to enforce their veto. Therefore the Board of Governors vote was held under duress to the other owners because of the direct and implied threat of litigation if the Board of Governors voted in favor of Balsillie.
A vote made under threat is an illegal vote and must be overturned. We will never know if all the voters voted with their conscience because every voter faced the threat of being hauled into court by MLSE if they voted in favor of Balsillie. Again, it’s so easy for Baum to overturn a decision from a vote made under a threat of litigation if you don’t vote a particular way. Sort of like the “free democratic” votes in the old Soviet Union. Everybody had a right to vote; but for the one single candidate running and selected by the ruling party.
Therefore the vote to reject is tainted by these conflicts of interest and therefore in the interests of justice, the rejection must be overturned. Baum will have probably his easiest time in rejecting the NHL bid on the conflict issue, but more importantly, will have an easy time overturning the NHL’s rejection and then running with Balsillie as an approved owner from 2006.
Aw, You’re Not Playin’ By The Rules!
The NHL and many posters here have stated Balsillie can’t or shouldn’t get in because either he has broken some NHL rules or because he will break some NHL rules and therefore the NHL can’t work with him. This point is pure crap.
First, what rules has Balsillie broken? None. How could he break any rules, he isn’t an NHL owner yet and therefore he isn’t bound by the NHL’s rules therefore he can’t have broken any.
Can anyone cite a rule that Jim Balsillie has broken? No, and neither has the NHL.
There is not a single rule the NHL has quoted that Balsillie supposedly broke. So let’s look at the NHL’s point that they presume Balsillie won’t follow the rules. Again, what proof do they have? None. Have they ever quoted a rule that Balsillie is expected to break? No, they can’t because you can’t prove a negative. Again, the presumption that Balsillie will break the rules will never fly in court.
There is no basis to reject anyone on the basis where you have no proof that they will do something, only a presumption that they might. The judge will see the hypocrisy of this point as well because you can’t charge someone for something you think they might do; you can only charge them for something they did.
This hypocrisy is emphasized by the acceptance of Jerry Reinsdorf as an approved owner. Reinsdorf has a history of going against his own leagues rules in MLB and in the NBA. It’s well documented, all one has to do is Google it.
So let’s see, Baum is supposed to respect the NHL’s rejection of Balsillie when there has been no significant material change since 2006 and also Baum should respect the NHL’s rejection of Jim Balsillie. because they think (not know) that he might be a bad boy as an owner and break their rules, however Baum should overlook the fact that the NHL approved an owner with a history of breaking the rules governing him in two other major sports leagues?
The NHL approved an owner with a track record of breaking the rules, but rejected an owner who they think might break the rules? That sounded stupid to me as I wrote it. Does it sound as stupid to you? It should. Again, overturning the NHL’s rejection of JB is about the easiest thing for Baum to do.
This Isn’t Very Sporting, You Know!
Some say a ruling for the NHL will have a negative impact on all the other sports leagues? Why?
Do the other leagues have a flawed Constitution that requires constant interpretation by the Commissioner?
- Do the other leagues have a history of opting out of their Constitutions at whim?
- Do the other leagues have a contradictory Constitution whereby one clause calls for one action and another clause contradicts it?
- Do the other leagues have a history of having their Commissioner step in and “interpret” their Constitution because the document is so badly written that it isn’t self explanatory?
- Do the other leagues haphazardly apply their rules such as sometimes charging a relocation and sometimes not charging?
The fact is that Judge Baum can write and set a precedent that impacts the NHL only. He merely cites that the NHL’s Constitution is badly written, requires judicial interpretation and also cites the fact that the NHL doesn’t always follow its own rules and if the NHL isn’t bound by its own Constitution, why should the court be bound by it?
This is such an important point, I will repeat it again. If the NHL isn’t bound by its own Constitution, then why should a court of law be bound by it? Can anyone answer that?
Judge Baum’s decision will clearly impact the NHL and the way it does business and it needs to be done. Running a business as an old boys club is no longer acceptable. It’s not acceptable to the public and it’s not acceptable to the courts and Baum will certainly show his displeasure with the NHL.
The fact is that the other leagues might have well written Constitutions which they follow to the letter and never opt out of. So why should a ruling against the NHL impact them?
So many people have said a victory by Balsillie will impact all sports leagues ability to pick their owners. Really. How? If Balsillie wins, how does that prevent the NBA from picking an owner they want for a franchise sale or expansion franchise?
Fact is, it doesn’t impact them. Where it impacts everybody is if you are going to be looking for owners and soliciting bids, be careful how you turn prospective buyers away. If you discriminate against particular buyers and treat then unfairly even though they meet all your criteria for ownership, then you should be in trouble as a league.
C’mon, Pick Me, Pick Me!
Sports leagues have a right to choose their owners. Yes they should. Everyone seems to be going on about the right of leagues to select their owner members. But is that was this case is about? I think not. I think it’s about whom these leagues can turn away and what is the basis for turning an owner away who matches all the required criteria for ownership.
Certainly, if there are multiple prospective bidders for a team, a league should select the best bidder of the group, the bidder that enhances the league the best. However, can a league turn away a potential owner who meets all the criteria for being an owner and is the only bidder? I think this is the real question here. It’s not who you let in, it’s who you turn away and why you turn them away.
Jim Balsillie under any ownership criteria you want to put forward would be the type of owner any sports league would covet. He has the money, he is smart and he is passionate about the sport. It just doesn’t get any better than that. So the question is, when you are looking for an owner, do you have a right to turn one away who does meet all your criteria?
In fact Balsillie is even superior to many of the NHL’s existing owners and if they do have that right, is it required to be a turn away that is reasonable? I would say yes, anyone can be turned away if it is found to be reasonable and those reasons would also hold up in court without being high handed, discriminatory, defamatory, and prejudicial. However any rejection that falls afoul of that must be overturned and the NHL’s rejection does indeed fall afoul of all those points and therefore it leaves Baum with no choice but to overturn the rejection.
Will The NHL Find Baum Appealing?
Everyone assumes that if Baum finds for Balsillie, an appeal is automatic. Not so.
It is easy to file an appeal, it is very hard to follow through, find judicial error and get an appeals court to agree with you. If Baum’s decision can show and outline the flaws of the NHL Constitution and show that the NHL itself doesn’t follow their own Constitution and opts out of it at whim, then how does the NHL appeal that? They can try, but they won’t win.
That the NHL doesn’t follow it, opts out at whim, has a Commissioner who interprets it because its contradictory and the owners dispute the Commissioners interpretation and the fact that it requires interpretation at all indicate a very flawed document that will never stand up to the scrutiny of the court and therefore will also NOT stand up to scrutiny in appeals court either.
Fact is, it’s the easiest thing in the world to threaten litigation hell if you lose, and it’s quite another thing to follow through on it.
- If Baum overturns the Balsillie rejection on the basis of conflict of interest, how does the NHL appeal that?
- If Baum overturns the Balsillie rejection on the basis of the direct and implied threat of litigation by MLSE if a favorable vote for Balsillie was rendered by the BoG, how does the NHL appeal that?
- If Baum overturns the Balsillie rejection on the basis that there has been no material change to PSE since 2006 to warrant a rejection, how does the NHL appeal that?
- If Baum overturns the Balsillie rejection on the basis that the rejection was done in bad faith, how does the NHL appeal that?
- If Baum backs up his decision by citing the contradictory nature of the Constitution as a contributing factor in his decision, how does the NHL appeal that?
- If Baum backs up his decision with the proven fact that the NHL itself doesn’t always follow its own Constitution how does the NHL appeal that?
- If Baum chooses to make his own interpretation of what the Constitution says or doesn’t say after Bettman confirmed the Constitution does need to be interpreted from time to time, how does the NHL appeal that?
- If Baum’s decision allows for a relocation to Hamilton and the NHL has never rejected a relocation move to Hamilton, how does the NHL appeal that?
- If Baum states in his decision that his court is not bound to follow the NHL Constitution since the NHL itself does not always follow its own Constitution, how does the NHL appeal that?
Fact is, Baum could easily render a decision in favor of Balsillie that can’t be appealed.