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Eugene Melnyk Eugene Melnyk (Sean Kilpatrick/THE CANADIAN PRESS/Sean Kilpatrick)
Eugene Melnyk Eugene Melnyk (Sean Kilpatrick/THE CANADIAN PRESS/Sean Kilpatrick)

Melnyk fires salvo at Balsillie Add to ...

Ottawa Senators owner Eugene Melnyk opened fire on Jim Balsillie yesterday after the would-be owner of the Phoenix Coyotes used Melnyk as an example of questionable character.

Melnyk took exception to being mentioned in a document filed by Balsillie's lawyers with a U.S. Bankruptcy Court. The document disputed the NHL's rejection of Balsillie as an owner on character grounds. The NHL owners also mentioned in their rejection that Balsillie reached settlements this year over complaints by the U.S. Securities and Exchange Commission and the Ontario Securities Commission over backdating Research In Motion Ltd. stock options.

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Balsillie has been trying to buy the Coyotes, but only on condition he can move the franchise to Hamilton.

Balsillie, co-chief executive officer of RIM, wondered in the court filings how the NHL could find fault with his character when current and former NHL owners had similar or worse problems. Melnyk, who has been fined by the OSC, was one of the owners mentioned, along with former Los Angeles Kings owner Bruce McNall, jailed for fraud, and former Nashville Predators part owner William (Boots) Del Biaggio, whose bankruptcy scandal caused the NHL to overhaul its due-diligence procedure.

Melnyk issued a statement yesterday saying he once was sympathetic to Balsillie's desire to buy an NHL team but not any more. He also said his problems with the OSC were not nearly as bad as Balsillie's.

"I'm comfortable in my own skin, Jim," Melnyk concluded in his statement. "You should look around at the friends you are losing and the damage you are causing to yourself, the NHL and all Canadians."

The NHL addressed the issue a couple of weeks ago in a court filing. It said all of the owners' legal woes happened after they became owners, not before.

Meanwhile, the City of Glendale, home of the Coyotes, asked the U.S. Bankruptcy Court to hold an emergency hearing before the Sept. 10 auction sale of the team to decide if the team owes Coyotes head coach and minority owner Wayne Gretzky $9.3-million (all currency U.S.). Some of Gretzky's $8-million salary as head coach was deferred when the team ran into financial problems, and as minority owner, he was entitled to some of the team's revenue.

Glendale's lawyers say Gretzky's claims should not be allowed under bankruptcy laws or they should be capped as employment-related claims. There was no immediate response from Judge Redfield T. Baum.

Baum did rule that the NHL could get access to e-mails among Balsillie and his chief legal strategist, Richard Rodier, and Coyotes co-owner Jerry Moyes, Moyes's lawyer Earl Scudder and former Coyotes governor Jeff Shumway. But Baum denied the league's request for e-mails between Balsillie and Rodier, ruling they were confidential.

The judge also ruled Rodier may sit in when NHL lawyers question Balsillie next week. But he made it clear that Rodier is to be only an observer and cannot do any "coaching" of Balsillie, as the NHL fretted about in its opposition to the move.

The judge sided with Balsillie on the NHL's request for e-mails between him and the Canadian Competition Bureau. Baum denied the NHL's request, but asked Balsillie to provide proof that such communication is private under Canadian law. He also ordered Balsillie to send the e-mails in question to his Phoenix lawyer so they could be turned over to the NHL later.

The NHL believes Balsillie was behind a complaint made to the competition bureau that the league was acting as a monopoly in denying a second franchise for Southern Ontario. The bureau ruled the NHL was not acting as a monopoly, but said the decision was not to be considered binding under law and could be revisited later.

With a report from The Canadian Press

Melnyk's full statement

"As a businessman, I know about playing tough and getting your elbows up.

I also know lessons that most of us learned early in our childhoods - you play fair; you play by the rules and you help others when you can.

I have watched with some dismay Jim Balsillie's fall from being a deserving business icon to what now appears to be a desperate man willing to say anything or do anything to buy an NHL franchise.

I used to privately feel sympathy for his plight, but as I've watched his conduct with and towards the league and other owners, I clearly believe the sport of hockey is better off without him.

In a recent legal filing, he dragged me into his hurricane of legal filings and panicked pleas and cited me as someone who is lacking the personal integrity to own the Ottawa Senators hockey franchise.

I've tried to reach Jim through his office to find out why he would say something like this about me - we barely know each other - but I've received no response.

I will say in response publicly that his willingness to drag down anyone he can get his hands on along with him is discouraging and saddens me.

Jim and I both found great success in our Canadian businesses. And that is where the comparisons stop.

When I sought to purchase the Ottawa Senators, there were great obstacles but I played by the rules and respected the NHL as an institution. I have spent my adult life helping others - supporting charities, orphanages, day care centres, supporting our troops and our athletes.

I do these things to give back to my country and to really deserving men, women and children in Canada. I mind my own business and don't drag in others when I get into trouble.

It is well documented that I was required to pay fines to the OSC over civil administrative oversights like filing paperwork on time. This is a far cry from the sanctions imposed on Jim Balsillie by the Ontario Securities Commission arising from his role in the improper grant by Research In Motion (NASDAQ:RIMM, TSX: RIM) of more than 1,000 stock options involving millions of shares over a period of almost ten years, his role in the systematic and repeated issuance by RIM over many years of misleading disclosure concerning RIM's stock option dating practices, and the benefits Balsillie derived personally from stock options that were granted improperly to him . These sanctions are widely acknowledged to be among the most severe ever imposed by a Securities Commission in Canada (see http://www.osc.gov.on.ca/Enforcement/Proceedings/AlphaListing/ep_r_index.jsp)

I'm comfortable in my own skin, Jim. You should look around at the friends you are losing and the damage you are causing to yourself, the NHL and all Canadians."

NHL Statement

The following is a statement issued to media earlier today by the NHL spokesperson Bill Daly:

"I'm not going to comment specifically except to say that none of the cited situations are even remotely comparable to Balsillie's situation.

With respect to Mr. Melnyk in particular, Balsillie's attempt in any way to disparage his reputation and his good standing as an NHL owner is nothing more than a malicious act of desperation. During his time in the League, Mr. Melnyk has been a model owner and good and loyal business partner to the rest of the League's Clubs. He has consistently and effectively advocated in the best interests of his franchise, while at the same time acting consistently with, and in support of, broader League interests and initiatives.

None of the circumstances cited in Balsillie's legal filings have in any way affected Mr. Melnyk's ability to be an effective owner, or have otherwise adversely impacted the reputation of the National Hockey League. Mr. Balsillie knows full well why he was unanimously rejected by the NHL Board of Governors. He has consistently and repeatedly demonstrated a total disregard of League rules and structure. He has turned his back on numerous commitments and representations made to the League and to our owners demonstrating a clear lack of personal integrity. And he has spent considerable time and resources deliberately attempting to destabilize and undermine both the League and several of our franchises, which has caused significant damage to our business as a result. Why would any team or owner in our League want him as a business partner?"

Follow on Twitter: @dshoalts

 

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