Wednesday, June 18, 2008

As the Predators turn

I took a 10-day hiatus from following Boots-gate, but the unfortunate tale of the Predators minority owner has continued unabated ever since we learned that one of his main creditors was AEG, the owner of the Los Angeles Kings:
And the search is on in Tennessee to try and find a replacement for his 27-per-cent stake in the team.

The situation has put the team's local partners, led by David Freeman, in an awful predicament. The Predators have an agreement with the city where $50-million is guaranteed in the event of a relocation, but Boots was on the hook for close to $10-million of that.

With that money no longer in play, the team's plum deal is in jeopardy.

Which comes back to this:
Vanderbilt economist John Vrooman, who specializes in the business of sports, said the NHL is "behind the other leagues" when it comes to checking the backgrounds and financial status of its owners.
You don't say?

Freeman has said all of the right things in the interim, but this is a headache he and his local partners didn't deserve. And I guarantee they've been rethinking their "partnership" with the NHL.

In the meantime, we've heard very little (re: nothing) regarding the fact AEG had essentially purchased a share in the Predators via Boots, a situation that likely was legal under the NHL constitution only because the amount was so small (i.e. under 5 per cent).

If that is the case, one would expect clarification from the league to be forthcoming.


Del Biaggio criminal probe looks at NHL deal
San Jose Mercury News

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9 Comments:

At 10:20 AM, June 18, 2008, Anonymous Danny Tolensky said...

I can't understand why the AEG connection hasn't been prominently mentioned with this story.

Last week there was a CP story picked up by TSN where they chose for some reason to not even mention AEG's name:

"Included in that are $10 million owed to Modern Bank in New York that Del Biaggio used to help buy his share in the Predators, $10 million owed to Leipold and $7 million owed to another company that helped del Biaggio purchase the team."

It's bizarre..

Also, we don't know what Del Biaggio's share was in the Sharks but we do know that he had to sell before he was able to purchase a stake in another team:

http://www.sfgate.com/cgi...1D6S6B1.DTL&type=business

"If he acquires the Penguins, Del Biaggio will have to sell his stake in the Sharks because of league rules governing dual ownership in competing teams, Brown said.

Neither he nor the Sharks would provide a figure for Del Biaggio's stake in the team, but Sharks spokesman Scott Emmert said it's small enough to be absorbed by other investors."

 
At 10:22 AM, June 18, 2008, Anonymous Danny Tolensky said...

Sorry I don't think that link worked:

http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2005/06/11/BUG41D6S6B1.DTL&type=business

 
At 11:18 AM, June 18, 2008, Blogger poploser said...

I would be surprised to see the NHL make any comment on this, unless really pressed by the media. The last thing this NHL administration wants to do is draw more attention to its ownership woes - especially when it involves a franchise that it worked so hard to keep in its current location.

 
At 2:39 PM, June 18, 2008, Blogger Art Vandelay said...

We don't see anything wrong with owners being cross-pollinated among different teams.

Sincerely,
The Norris Family
The Wirtz Family
Clarence Campbell

 
At 5:57 PM, June 18, 2008, Anonymous Gerald said...

In the meantime, we've heard very little (re: nothing) regarding the fact AEG had essentially purchased a share in the Predators via Boots, a situation that likely was legal under the NHL constitution only because the amount was so small (i.e. under 5 per cent).

James, I realize you are neither a lawyer nor a businessman, but that is a severe misstatement on your part.

AEG loaned Del Biaggio money. That money was secured NOT by Del Biaggio's interest in the Preds, but by other assets pledged by Del Biaggio in the investment accounts which evidently turned out to be not his.

The "situation" was "legal", not because of the small size of any acquisition, but because AEG DID NOT have any ownership interest in Del Biaggio's shareholdings in the Preds. None.

In short, lending money to someone to acquire anything does not give the borrower an interest in the acquired asset unless the lender takes a security interest in the acquired asset. That applies to real estate, cars, shares in hockey clubs, you name it.

I will turn you into a lay lawyer yet, mark my words.

 
At 6:25 PM, June 18, 2008, Blogger Richard-Steven Williams said...

Try as they might, eventually Balsillie is going to ride in on his white horse on this one, I frankly can't see who else is going to so readily plow his money into the deal vacuum when the franchise has had its ownership problems smeared across the papers. I don't think the NHL is going to be able to keep ignoring Balsillie because so few will readily invest in the current climate.

 
At 6:38 PM, June 18, 2008, Blogger James Mirtle said...

Gerald, I'm talking about being legal under the league constitution, which I believe has portions related to owners lending money to one another.

 
At 1:32 AM, June 19, 2008, Blogger J. Michael Neal said...

Gerald, I'm talking about being legal under the league constitution, which I believe has portions related to owners lending money to one another.

If it doesn't, it should. From the perspective of what a sports league is worried about, ownership of debt in another team is almost as bad as ownership of equity. MLB got up to all sorts of shenanigans related to Carl Pohlad's loans to Bud Selig, while Selig was both commissioner and owner of the Brewers.

 
At 6:13 PM, June 19, 2008, Anonymous Gerald said...

Gerald, I'm talking about being legal under the league constitution, which I believe has portions related to owners lending money to one another.

James, I'm talking about your statement that he had effectively acquired an interest in the Preds. Perhaps I should have focussed my comment more tightly.

Regarding the constitution, it sounds like you are listening to that moron McCown. He has no clue what he is talking about, james.

It would not surprise me that the constitution would have restrictions on loaning money between "members" of the league, but a dullard like McCown (even if he were to somehow acquire a copy of the constitution) would not appreciate that the term "member" (assuming that he is at least correct in the idea that this is the term being used) is almost surely a defined term in the agreement which would refer to the entity owing the club itself and/or to the entity that would own a controlling interest in the clubs. There is nothing problematic about an owner loaning money to a minority owner of another club so long as that minority owner does not hold a "control block" in the club.

 

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