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Off-ice action: Bozo Bettman versus the Blackberry Billionaire? Could be the greatest sports sideshow of the summer.

Jim Balsillie, a founder of Waterloo's handheld-computing company Research in Motion and a former multi-sport star at the University of Toronto, wants to buy the NHL's Nashville Predators. Team owner Craig Leipold is eager to take Balsillie's US$220M+ bid and walk away from a market that hasn't supported a winning team. Balsillie clearly wants to move the franchise to Hamilton, where he is already taking deposits on season tickets from fans who can't afford overpriced Maple Leafs seats. But Gary Bettman, commissioner of the NHL, is trying to apply the brakes, which suggests that the existing NHL owners may have doubts about Balsillie's swashbuckling incursion.


Moving the Preds into Hamilton means a possible loss of expansion-fee revenue from a brand new team down the road, and Bettman is probably not eager to give up on the American heartland franchises, or to relent on the principle that new owners should try to make existing markets work. No one is sure yet whether the league will really try to stop the kidnapping of the Predators. But what if it came to a lawsuit? That's a question most sportswriters have naturally shied away from answering, and with good reason.

On June 5, the National Post's Theresa Tedesco reported that the NHL is being investigated by the Competition Bureau, the federal agency that decides whether to start proceedings when businesses appear to be acting unlawfully in restraint of trade. According to Tedesco, the Bureau sniffed around the NHL in 2006 and received assurances that it had abandoned old rules permitting franchise movements only after a unanimous vote of governors. Future relocations will need only a majority vote of team governors to go ahead--a change already made by most other North American leagues in response to the evolution of U.S. antitrust law.

American law carries great weight when it comes to antitrust, or competition law, as we call it up north, because the entire idea of antitrust is essentially an American one, and nearly all the strong scholarship on the subject is American. Under contemporary U.S. doctrine, a sports league can't block franchise relocations in the interest of one or two teams unless the league itself is operated as a "single [business] entity" rather than a cartel. (This is a major reason some newer sports ventures, like Major League Soccer and several independent baseball leagues, are explicitly structured as single entities.) This principle was established largely through the fractious efforts of Al Davis, the legendary owner of the NFL's Raiders. In 1979 he sued for the right to move the team from Oakland to Los Angeles, smack dab into the L.A. Rams' territory. The result, when Davis eventually won in federal court, was a series of NFL franchise shuffles.

Balsillie may see himself as a modernday Davis shaking up a hidebound establishment, but there are other factors for him to consider. U.S. rulings have established that a league, even if not a "single entity," can demand some financial compensation for a team whose territory is invaded. That could add to the immense price Balsillie is already paying for the Preds. Moreover, the "single entity" analysis can be complicated and unpredictable. It depends partly on the "economic unity" of individual franchises, and in turn, on how free they are to conduct business independently and engage in unrestricted competition.

One scary fact for Balsillie's lawyers is that the NHL, unlike any other traditional pro sports league, has been explicitly ruled a "single entity" and thus exempt from ordinary antitrust law. In the early 1970s, the owners of the struggling San Francisco Seals tried to sell the team to an ownership group in Vancouver, which did not yet have NHL hockey. The league won in a California federal district court in 1974, but the squabble displayed the strength of the Vancouver market and led directly to the creation of the Canucks.

Experts in antitrust agree that the Seals case is anomalous, and it wouldn't be binding on Canadian regulators anyhow. But an anomaly that happens once could happen again. And if anything, the league's "economic unity" would seem to have gotten stronger in the past three decades. Could Bozo Bettman have an ace up his sleeve?
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Title Annotation:SPORTS
Author:Cosh, Colby
Publication:Western Standard
Date:Jul 30, 2007
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