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The Globe and Mail

Balsillie, American Needle and the damage done

If Jim Balsillie ultimately fails in his bid to buy the Phoenix Coyotes, or any other NHL team for that matter, the Canadian billionaire will be able to look back on two events that shaped his fate more than any others.

One was entirely in his control and may be Balsillie's single biggest mistake of the entire campaign, even though it had nothing to do with the Coyotes. The other was not, although its outcome, which has not yet been determined, will affect not only Balsillie but all four of the major professional North American sports leagues, their unions, companies that do business with them and their fans.

First, the matter not in Balsillie's control: A lawsuit between a company called American Needle, which makes knit caps and baseball hats, and the NFL.

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Five years ago, American Needle launched an anti-trust suit against the NFL after the football league dropped it as a supplier, arguing the league could not prevent the apparel maker from doing business with all of its 32 teams at once.

This lawsuit could make all the difference to the NHL, which is going into the latest U.S. Bankruptcy Court hearing today with its legal guns blazing. The hockey league has asked Judge Redfield T. Baum to make a ruling on the admissibility of Balsillie's $212.5-million (U.S.) bid for the Coyotes in advance of the Sept. 10 auction of ownership of the team.

The league filed a lengthy brief with the court last Friday, arguing its board of governors' rejection of Balsillie as a potential owner is fully acceptable under bankruptcy and anti-trust law because it acted in good faith and had legitimate concerns about Balsillie's fitness as an NHL owner.

Balsillie and current Coyotes owner Jerry Moyes have asked the court to allow them to grill NHL commissioner Gary Bettman and deputy commissioner Bill Daly about that decision - presumably in hopes of proving it was a charade designed to prevent Balsillie from joining the owners' ranks.

The U.S. Supreme Court has not yet issued a ruling on the American Needle lawsuit and it may not by the time the Coyotes go on the auction block. But given the bitterness of all parties in the Coyotes mess, the Phoenix issue could still be dragging on by the time the American Needle decision comes down, or it could figure in any of the probable appeals or lawsuits that will follow the NHL team's sale.

American Needle lost the initial lawsuit, appealed to a higher court and lost again. So the company asked the U.S. Supreme Court to review the case and issue a decision.

At this point, the NFL shocked the legal community by making the same request. The league wants the right under anti-trust law to act as a single entity. It is a daring legal gamble but one that could allow the NFL, NBA, Major League Baseball and NHL to do business as they please - without regard to anti-trust laws - as long as they can show they are operating in good faith.

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That is why the NHL, NBA and MLB are submitting arguments to the Supreme Court in the American Needle case. So are the leagues' unions, including the NHL Players' Association. They have all hired superstar lawyers who make the dozens of lawyers filling the courthouse in Phoenix look like a novice house-league team.

Based on the U.S. Supreme Court's makeup and recent decisions, some legal experts think the NFL could win this one. But even if the decision goes the other way, Balsillie is still not in the clear.

If the co-chief executive officer of Research In Motion Ltd. still loses his play for the Coyotes, he can also look back on something that was in his control as the catalyst: His rash decision in November of 2008 to tell a reporter from La Presse that George Gillett wanted to sell the Montreal Canadiens.

The story set off the predictable furor.

It does not matter that the Canadiens were, in fact, sold this summer. What matters is Gillett hotly insisted they were not at the time, and Balsillie turned the Habs owner against him.

At that point, Balsillie was making some inroads among the NHL's governors. Despite the hard feelings from his earlier attempts to buy the Pittsburgh Penguins and later the Nashville Predators, a growing number of owners were coming to look favourably on him.

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Bettman still ruled the NHL roost with an iron fist and did not want Balsillie, but if enough owners were won over, the commissioner would have little choice but to go along.

Then came the La Presse slipup. An influential advocate in Gillett was lost. And it was Gillett that was front-and-centre last month, pointing a finger when Balsillie was rejected by the NHL governors as a potential franchise owner.

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