THE FAILED REIGN OF GARY BETTMAN (PART I)

By guest writer Howard Roark,

In the annals of professional sports in this country, one would have to search long and hard to find a steward in the vital role of Commissioner who has done more damage to their sport than Commissioner Gary Bettman has done to the National Hockey League.  Case in point is the loss of the entire 2004-2005 season, the only time in history that an entire season in any sport was cancelled due to labor strife.  While Bettman is not solely responsible for this, Bettman’s  pugnacious, belligerent and confrontational personal style that leads to rancor instead of good will and to feuding as opposed to compromise was perhaps the major contributor.  All of these personality traits and Bettman’s failed leadership have been on display for all to see in the saga of the Phoenix Coyotes and the despicable treatment of Jerry Moyes.

Moyes is one of those people who prove the United States can still be a great country.  From humble roots in Plain City, Utah, Moyes started a trucking operation that eventually became Swift Transportation, the largest public truckload carrier in the country.  Unlike Gary Bettman who rode David Stern’s coattails into prominence, Moyes built his business with his own skill, foresight and willingness to assume risk.  In addition to his business acumen, Moyes has been a pillar of the community, contributing to various children’s charities, funding college scholarships for deserving students and investing in the Arizona Diamondbacks and Phoenix Suns.  Unfortunately for Moyes, his passion for professional sports has led to his financial downfall.  Moyes made the mistake of becoming involved in the NHL and Gary Bettman’s failed dream of creating a national footprint for what has always been a regional sport.

The Phoenix Coyotes are a testament to what can be called the Greater Fool theory.  In other words, no matter how much money the previous owner has lost, there is always another guy willing to step in and lose even more money.   Moving from Winnipeg in 1996, the Coyotes started play in an arena unsuited to hockey in a city which had little previous exposure to the sport.  Without the dollars from a national television contract which Bettman has continually promised ownership yet failed to deliver, the Coyotes, like most of the teams in the new Sunbelt markets, have been a money pit, losing hundreds of millions of dollars over its existence.  Jerry Moyes and the various other owners of the team are businessmen.  No one can argue that they deserve to lose money if they make poor business decisions.  But this ship didn’t sail into an iceberg alone.  Gary Bettman steered it there.  Rapid expansion into new markets with immature fan bases, lack of talent to properly staff thirty teams and the poor ratings that cost the League a true national television deal are mistakes that can be laid squarely at the feet of the Commissioner.  Gary Bettman’s strategy of garnering national advertisers by having a presence in all the major television markets has clearly failed, and as I will discuss in future articles, the symptoms of this failure can no longer be hidden.

Moyes entered this story in 2001 as a minority owner of the Coyotes.  Gradually, he assumed control by guaranteeing the team’s numerous debts in an effort to keep the Coyotes afloat and in Phoenix.  As he tells it in a recent letter to the Arizona Republic, Moyes became a somewhat accidental owner of the team whose losses quickly escalated beyond his ability to sustain them.  I am not here to shed any tears, crocodile or otherwise, for Jerry Moyes.  He is a savvy businessman who did not do his homework and became involved in a business with a fatally flawed economic model.  Shame on him even if his motives were as altruistic as he claims.  It is what happened when he wanted out and declared bankruptcy where the story becomes more murky and disturbing for people who believe in basic fairness and decency.

I, like most Americans who value hard work and sweat equity, am a big believer in the free enterprise system.  For it to work correctly and generate the most wealth for society, investors who possess that most scarce asset, capital, must be assured that they can obtain the highest possible return for it.  Investment entails risks, and returns are what mitigate and reward those risks.  Enter Jim Balsillie (pictured left) who presented a way for the creditors of the ailing franchise to be paid in full and for Moyes to exit his investment with minimal losses.  This is not the time to comment on Balsillie’s previous attempts to own a franchise, which is for another article, but the reality is that he put a bona fide $212.5 mm offer on the table.  Let me repeat – $212.5 million dollars, cash.   Balsillie made it clear he would move the team north and of course, that begs the question, so what?  His offer was and is significantly higher than what any of the groups, including the NHL, were willing to tender to keep the Coyotes in Arizona.  When was the last time someone selling an asset was not allowed to accept the highest and most liquid bid?

Did Bettman think about Moyes, one of his employers, before he responded?  Did he do his job and evaluate the situation objectively for the benefit of the league he represents with the words he spoke and the actions he dictated?  Did he take responsibility, even partial, for what had occurred?  The answers to these questions are clearly no.  When Moyes argued that he should be able to pay off his creditors and recoup part of his investment, the NHL, read Bettman, said that Moyes should not get anything because it was his own fault that he lost the money in trying to make the team successful.  Oh, really?  Is it Jerry Moyes’ fault that the franchise was placed in an unviable market to begin with?  Can you blame Moyes for the lack of significant television dollars like the other pro sports enjoy?  No, these are problems that were created by Gary Bettman’s ‘Southern Strategy’ which has failed abysmally.

Furthermore, here you have a guy who invested millions of his own dollars in an attempt to validate the strategy to prove Phoenix is a feasible market for Hockey.  Why is he, in effect, being told to go to H-E-Double Hockey Sticks?

The fact that Moyes may have been a sucker to buy into the NHL in the first place does not negate the fact that the reason the franchise is in bankruptcy is due mostly to the policies of the Commissioner.  For Bettman to argue that Moyes should have to take the entire financial hit because the League does not want to admit its strategy is flawed borders on obscene.  It is every bit as deluded as the rapid expansion that created the NHL’s financial problems to begin with.   No one, not even the monarch in practice Gary Bettman, has the right to tell an investor that he should be out his entire outlay when a legitimate offer is on the table.  Not only is this in extremely poor taste, but forcing Moyes to swallow his losses without any compensation will discourage badly needed fresh capital from coming into the NHL.  The NHL should be trying to make sure investors do not lose everything if they purchase a franchise, not the opposite.  Unfortunately, in this tragic tale, Bettman seems to care more about saving face.  Ironically, the fate of Jerry Moyes and the Coyotes appears irrelevant. Is it any wonder that Bettman is almost universally booed whenever he steps on the ice?

Howard Roarke, a fun little alias of course, is a guest writer at lakingsnews.com. In addition to being a passionate Kings fan, he is a successful businessman and a close observer of economic and financial news and issues including those of the NHL. As you can read, he does not mince words when expressing his opinion especially with a subject as near and dear to his heart as the economic health of the NHL. I hope you enjoy his article. The opinions expressed herein are not necessarily those of lakingsnews.com or its writers.



Categories: L.A. Kings News

6 replies

  1. An abysmal article. Nothing but regurgitated hate material from other sources with no insight whatsoever into any of the issues brought up.

    Author is encouraged to actually educate himself on those issues before writing on them in the future. Maybe try something those of us on the educated side of things call "looking at both sides, not just the one you've adopted as your own".

  2. Who wrote this garbage? This is a sophomoric, pedantic poorly written and unsupported amateurish attempt.

    Good luck to your blog. If this is indicative of the quality of the postings, you won't keep many readers.

  3. Conveniently left out of the article is the collateral damages done to the city of Glendale who built the new arena if Moyes can up and break his lease.

    Do you think the NHL has a vested self-interest in honoring commitments to cities that build the very expensive arenas for their teams to play in? If teams are allowed to ditch leases you'll see an inevitable future drop in publicly financed arenas.

  4. the truth exposed. Bettman is terrible. He locked the players out, and now wants save face for his southern strategy.

  5. You know, no one is asking you to agree with the author.

    But instead of throwing ad hominem at the writer, how about giving a real opinion on the subject at hand?

    Truth,

    If you want both sides of an argument, why don't you present us with the other? Make a real discussion out of it.

    Anonymous,

    I'm not an expert on these issues by any means, but it was my understanding that Balsillie's offer included a large relocation fee for the City of Glendale (something in the ~50 million range???).

    I understand your point about ditching leases willy-nilly as a slippery slope, but are there not exceptions? It would seem to me that the Coyote's situation falls under extenuating circumstances. Its not a simple matter, and to me, there are larger things at risk than the money the city of Glendale poured into the arena. I would think the city can recover from losing the Coyotes better than the NHL can from a failing franchise and strategy.

    I don't really know, and am not taking sides here, because I do not have all the facts, or a business/litigious brain. Just asking questions.

    Look at it this way, without the Coyotes, that's 41 more Hannah Montana concerts they can have there :)

  6. To Anonymous #1,

    Actually, the city of Glendale has no say about a broken lease, because Moyes and his organization declared Bankruptcy. In that situation, a debtor can be allowerd to walk away, with its remaining assets being sold off to the highest bidder so that the bankrupt debtor's creditors get the most money back from the debts they are owed.

    to Truth and Newqit,
    Whatever you think of the article, or the writer, (and no one here who has disagreed seems to want to offer anything other than attacks on the writer or his viewpoint), the fact remains that the best offer from the creditors standpoint is the one which pays them, the people Moyes owes money to, the most amount of money, and that is clearly Balsillie's offer. All of Bettman's arguments why the Bankruptcy court should not accept the highest offer all overlook that fact, and, truth be toild, they are merely a thin guise for his persoanl hatred of Balsillie.

    In a country of laws, which we are, just because you run a sports organization, and your ego is far larger than your physical stature, doesnt mean you can ignore the laws designed to support our financial system. Bettman, as a lawyer knows that, but he figures, like the old adage about the squeaky wheel getting the grease, that the louder he yells the more people will listen to him. While that may work for a child to get his way from his parents, just so he'll be quiet, it doesn't work for adults, and it wont work for Bettman.

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