Maybe Canadian entrepreneur Jim Balsillie – who has entered into a letter of agreement to buy the NHL team for US$220 million, Leipold confirmed Thursday – will have better luck. Or maybe it’s the first step in the team’s departure from the Music City.
Either way, Leipold is done after losing of $70 million during the team’s nine seasons. He made the deal with Balsillie, who outbid the Anschutz Entertainment Group, which is seeking a team for Kansas City.
“I have come to the conclusion that I cannot make it work here,” said Leipold, who became emotional and had to pause at one point. “We are one of the elite teams in this league and we are by far the lowest revenue team in the league.”
Under terms of the deal, the sale – including approval from the league’s board of governors – must be completed by June 30.
As Balsillie, co-CEO of Waterloo, Ont.-based Research In Motion (TSX:RIM), the company that makes BlackBerry handheld devices, found out last autumn when his deal to buy the Pittsburgh Penguins fell apart, that’s no slam dunk.
That’s probably why he was playing things close to the vest Thursday, not returning phone calls and issuing a statement saying he is respectful of all the “due diligence” required before the deal can close.
“This is still Craig Leipold’s franchise until the deal is completed, so for me to comment at this time on any number of topics relative to the franchise would not be appropriate,” Balsillie said in the release.
Those careful words didn’t stop speculation that the Predators will soon be on the move, perhaps to the Waterloo area.
If paid attendance in Nashville does not average at least 14,000 next season – the Preds averaged 13,815, 2,000 below the NHL average in 2006-07 despite low ticket prices and one of the best teams in the league – the team could pay an exit fee of US$18 million to get out of its arena lease and leave.
Balsillie’s $175 million deal to buy the Penguins unravelled when commissioner Gary Bettman attached a list of conditions to the sale, including, it is believed, one that he not move the club until every possible avenue was exhausted.
That condition likely wouldn’t be needed this time, given Leipold’s many failed efforts at wooing the local corporate community. While the NHL doesn’t want teams moved, Nashville hasn’t shown that it will support the Predators long term.
“(The NHL) knows how hard we’ve worked in this market and the things we’ve done, the group that we have and the team that’s already here,” Leipold said.
“There are some major corporations that are just completely missing in action in our business. It’s not because we haven’t knocked on their door.”
So while the NHL would have been Balsillie’s biggest hurdle in moving the Penguins, the biggest obstacles in his way of relocating the Predators would be the lease in Nashville and territorial rights issues with the Toronto Maple Leafs and Buffalo Sabres.
Both those teams would take issue with another team in the region and under NHL by-laws, a team cannot move within 80 kilometres of another city’s corporate limits.
The Kitchener-Waterloo area is right on that border.
Leipold has until June 19 to exercise a “cure” clause in the team’s arena lease that would force the city to buy tickets and ensure attendance averages 14,000 next season. Leipold said he has not yet discussed with Balsillie whether to exercise that clause but will.
The Predators have fewer than 9,000 season ticket subscribers. The team amassed 110 points, third best in the league, but still lost US$15 million this season.
Balsillie said he would visit Nashville, talk with Predators fans and “become more familiar with the community” once the deal is final.
Leipold predicted that “we’ll have hockey here for a long time” if attendance improves. Balsillie will make an effort to keep the team in Nashville, he suggested.
“I think he’s going to give it a chance,” said Leipold. “If (attendance) is over 14,000 paid, it’s not going anywhere.”
Leipold said last January he was looking for one or more local investors to buy up to 40 per cent of the team in the hope that local owners could boost attendance. No local buyer or buyers stepped forward.
If the Predators had advanced to the NHL’s conference final or even the championship series, it “could potentially change the whole aspect of this team” and investors might have stepped forward, said Leipold.
“It didn’t work out,” he said. “That’s just the way it is.
“We had injuries and, unfortunately, we got knocked out in the first round.”
Leipold signed a multi-year naming-rights deal for the city’s hockey arena with Franklin, Tenn.-based Sommet Group last week. The revenue from that agreement goes to the team.
It is Leipold’s team until at least June 30.
“This is truly one of the toughest days of my life,” said Leipold. “I poured my heart and soul into this franchise for 10 years.”
He lives in Wisconsin.
“We have had the most incredibly wonderful time owning this team,” he said. “My family, my kids, we just love doing this.”
But he’s tired of losing millions.
Coach Barry Trotz, whose option for the next season was picked up recently, said he spent Wednesday night calling players. He hasn’t met the prospective owner but likes what he has read of the amateur hockey player.
“He says, ‘I want my name on the Cup,”‘ said Trotz. “There’s only one way to do it, and you have to win it. So I’m really excited about that.”