It turns out that the executive committee had a much different recollection. According to numerous statements filed in court, Balsillie promised during the interview to agree to a long list of provisions, including a promise to allow Bettman to take charge of negotiations with local politicians if arena talks stalled. Balsillie, the owners say, also agreed to give the league the option to buy the Penguins back if he ever threatened to relocate. The kicker? When the NHL subsequently forwarded Balsillie’s lawyers a draft of the consent agreement, it also included the infamous seven-year clause.
Balsillie now says he agreed to none of those clauses. “Shock and surprise is an understatement,” he later testified. “I pride myself in being a clear communicator and a consistent person in my business dealings, and I just can’t see how I gave people representations that I was going to materially change my deal at the 11th hour for unnecessary reasons.”
The league offered a compromise: it agreed to cut and paste the contentious clauses into a confidential side letter—and not the publicly available agreement—ensuring that Balsillie would maintain his negotiating leverage for a new arena. During an emergency conference call on Dec. 11, Bettman also asked an aggravated Balsillie to wait until the state ruled on the slots licence. (Remember, if the Isle of Capri came out on top, the arena problem would be solved and the legal wrangling over relocation clauses would be moot.)
But a few days after that phone call, Balsillie lost his patience. Convinced that the owners had tried to sneak in a slew of last-minute conditions, he pulled his offer for the Pittsburgh Penguins. “I deal with leaders of companies around the world,” he would later testify. “And I have never in my business career had any experience remotely close to this where I had such a misunderstanding.” In the words of one of his lawyers, the side letter was “insulting and unnecessary.”
Mario Lemieux was equally appalled—“shocked and offended that Mr. Balsillie would back out of such an important deal.” His fellow owners were just as livid, furious that he refused to put his promises to paper.
One person, though, was anything but shocked: Gary Bettman. “The fact that he wouldn’t [sign on] to the various things he had agreed to with the executive committee told me two things,” the commissioner testified this summer. “One: our suspicions that he had no intention of trying to keep the team in Pittsburgh had foundation to them. And two: once again he was saying things that were untrue. He wasn’t standing behind his word.”
Anyone who figured the Pittsburgh experience had crushed Balsillie’s NHL dreams—and plenty of informed observers did—underestimated how long the RIM boss had been casing the league’s lame-duck franchises. Or the lengths he was willing to go to get one. In March 2005, more than a year before he made his offer for the Penguins, city finance officials in Nashville had received a mysterious call from a man identifying himself as Balsillie’s lawyer and making inquiries about the team’s arena lease. The caller’s name was Richard Rodier, and he said he wanted to know whether the Predators were in breach of an obscure clause in the deal requiring the team to maintain a net worth of more than $30 million—an amount intended to cover the city for money it had contributed for the Predators’ NHL expansion fees, and for improvements to the Sommet Center.
David Manning, then the finance director for the city, says he didn’t think much of Rodier’s calls at the time. “It’s my recollection that we were already aware of the net worth and lease issues,” he told Maclean’s in an email. Yet within weeks of the inquiries, the city embarked on a costly two-year legal battle against Leipold over the net worth issue, which saw the municipality withhold thousands of dollars that the club desperately needed. By early 2007, Leipold had lost $70 million operating the team, and was looking to sell. To the surprise of many, Jim Balsillie was on hand with a very generous offer.
Leipold knew nothing of the 2005 calls at the time. But he did know the Canadian billionaire would be a tough sell to Bettman and the rest of the NHL owners, with Pittsburgh so fresh in their memories. He also understood that Balsillie wanted to put a team in Hamilton. The Canadian’s opening offer in February 2007 put everything on the table. It not only required the Predators to relocate to southern Ontario the following season, but for Leipold to get NHL consent for them to do so. It was, in short, a non-starter: Nashville’s arena lease had a default provision allowing the city one season to try to boost average ticket sales back up to 14,000, which would keep the team in place. Any agreement to move the club before then would expose the league to severe criticism and probably legal action.
Yet there was too much money on the table for Leipold to walk away. “This $220-million offer is $50m MORE in cash at closing than Boots’ offer,” he wrote to Bettman in a late-night email, referring to a competing bid from Silicon Valley financier William “Boots” Del Biaggio. “I think it’s something I need to pursue for that kind of valuation.”
