Jim Balsillie's decision to drop a bid for the Pittsburgh Penguins has so offended hockey legend Mario Lemieux, who co-owns the team, that he won't give back the Canadian billionaire's deposit.
"We were shocked and offended that Mr. Balsillie would back out of such an important deal at the last minute - and less than a week before a decision on the funding of a new arena that will have far-reaching implications on our franchise, our city and our region," Lemieux said in a statement. "As a result, we intend to retain Mr. Balsillie's deposit because we believe him to be in breach of our agreement."
The tone of Lemieux's comments was a far cry from the glad-handing the two men did in early October when Balsillie announced his agreement to buy the team for $175-million (U.S.). At that time, Lemieux praised Balsillie as a "perfect owner for this market" and chatted amicably about how they first met a couple of years earlier at a charity golf event in Toronto.
Balsillie backed out of the deal last Friday, blaming the National Hockey League for putting several last-minute conditions on his purchase. According to sources familiar with the transaction, NHL commissioner Gary Bettman sent Balsillie a letter on Dec. 8, only two days before the deal was to close, restricting his control over the club. The letter was apparently aimed at preventing him from moving the Penguins. The conditions caught Balsillie off guard, sources say, and he spent several days trying to negotiate with the league before pulling the plug on Friday.
Penguins owner Mario Lemieux speaks at a press conference confirming that Jim Balsillie's deal to buy the team is dead. (Andrew Rush/AP)
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Balsillie could not be reached for comment yesterday, but Lemieux, who has co-owned the club for seven years, said "unequivocally" that "the deal with Mr. Balsillie is dead."
It is not clear exactly how much of a deposit Balsillie put down, but it is believed to be several million dollars. Balsillie co-runs Research In Motion Ltd. and his holding in that company, which makes the popular BlackBerry device, is worth almost $2-billion (Canadian).
At a news conference yesterday, Lemieux said he had not spoken to Balsillie since Friday. He added that his group did all it could to reach a deal. "It wasn't a problem from our end," Lemieux told reporters at the 45-year-old Mellon Center, where the Penguins play. He declined to comment on Balsillie's issues with the NHL.
NHL deputy commissioner Bill Daly said the league had been consistent with Balsillie throughout negotiations. "Nothing in the [Dec. 8] letter or the consent were inconsistent with the substance of numerous discussions and correspondence we had with the potential buyer throughout the process," Daly said in an e-mail message. "We are willing to work with any potential buyer who wants to own a National Hockey League franchise."
Daly added that the league was prepared to wait until tomorrow before completing the purchase. That's when a Pennsylvania state commission is expected to announce the winning bid for a slot-machine licence. Balsillie had backed a bid by a company called Isle of Capri, which has agreed to contribute $290-million (U.S.) toward a new hockey arena in Pittsburgh if it gets the licence.
If the company isn't selected, local officials have promised to build a new arena with money from the government and fees paid by the Penguins. Balsillie had been cautious about the state's proposal, which could have ended up costing him as much as $100-million, and he had wanted to discuss it further.
However, sources say the NHL's Dec. 8 letter forced his hand by taking away any option of moving the team if the discussions broke down. Balsillie was committed to the Isle of Capri deal, a source said, but he wanted to have negotiating room if that company did not win the licence.
In his e-mail message, Daly said the league "had an agreement with Mr. Balsillie that we were going to wait until the Gaming Commission issued its decision on the License before continuing to work through the terms of his approval that he was objecting to. For whatever reason, Mr. Balsillie decided not to adhere to that agreement."
Sources say Balsillie was also prepared to wait until tomorrow to see whether Isle of Capri won the licence. However, his deal with the club's current ownership required him to make a decision last week without financial penalty. It is not clear whether he would make another bid if Isle of Capri is successful.
Lemieux said yesterday the owners will wait to see who wins the slots licence before considering other bids. His group backs Isle of Capri, and he said tomorrow's decision will be "a turning point in the fate of the franchise." He added that the club had received expressions of interest over the weekend.
One of those calls is believed to have come from a group trying to bring a team to Kansas City. The group includes William Del Biaggio, a California venture capitalist who owns part of the San Jose Sharks and is a partner with Lemieux in a United States Hockey League team.
Del Biaggio made an unsuccessful bid to buy the Penguins last year. In November, he signed a long-term lease with the Sprint Center in Kansas City to own and operate an NHL team. Los Angeles-based Anschutz Entertainment Group , which owns a stable of sports entities including the Los Angeles Kings, is also involved in that project. Anschutz recently hired former Kings star Luc Robitaille as a senior consultant and charged him with finding a team for the Kansas City arena.
