Balsillie back in hunt for Preds

UDATE 4:16 pm: Statement from David Freeman, who is leading the local investors group trying to by the team UPDATE 3:28 pm: Mayor Karl Dean's statement Canadian billionaire Jim Balsillie saw error of his ways and seeks to keep team here with a proposal that doesn't seek changes to the Sommet Center lease

Email | Print By Richard Lawson

UPDATE 4:16 pm: David Freeman, president and chief executive officer of 36 Venture Capital and leading the local effort to buy the Predators, issued the following statement: "I think it would be inappropriate for me to comment on Jim Basillie or any of his activities, statements or certainly his obvious intentions.

"The Predators belong to Nashville. Quite frankly, I'm tired of our community's resolve to retain the Predators on a permanent basis being questioned by outsiders that neither contribute to our community nor care about our community. In effect, they question the character and commitment of our city and our people. This is our home. This is 'Our Team.'

"I believe that we will thoughtfully and successfully complete our discussions with the city very soon and that Mayor Dean will be able to present recommendations to the Sports Authority and the Metro Council that will allow us to complete our transaction by October 31.

"In the meantime, to paraphrase one of my favorite fans, 'Keep your damn hands off our hockey team!'"

UPDATE 3;28 pm: Mayor Karl Dean issued the following statement regarding the recent development with the Predators. “At this point, we continue discussing options with the group of local investors. The team, however, is Craig Leipold’s to sell. My No. 1 priority remains the same, which is to act in the best interest of Nashville taxpayers. As long as taxpayers are protected, I want to do everything we can to keep the Predators here.”

As originally reported:

Canadian billionaire Jim Balsillie is back in the hunt for the Nashville Predators.

If the deal with David Freeman and his group falls apart, Balsillie is ready to step in, having made a proposal to the Metro Sports Authority. And he wants to keep the team here.

The Research In Motion chairman made a proposal that wouldn't change the Sommet Center's lease terms for the benefit of the team. In fact, he offered to substantially increase the penalty for terminating the license agreement.

Bo Roberts, managing partner of communications firm NetCom, and Aubrey Harwell, a partner in Neal & Harwell, are representing Balsillie. Rumors have circulated for about a week or so that Roberts was representing someone in putting together a competing proposal. Interestingly, Roberts went to Dean's mayoral campaign after former Vice Mayor Howard Gentry just missed the run-off for mayor in the Aug. 2 election. Roberts had been Gentry's campaign chairman.

Balsillie made an offer for the team earlier this year but was summarily dismissed when he started a season-ticket campaign in Hamilton, Ontario, Canada, using the Predators logo in the sales and irking team owner Craig Leipold. In addition, Freeman and other local investors had stepped forward, a scenario Leipold preferred. They combined forces with Silicon Valley venture capitalist William "Boots" Del Biaggio to make a bid on the team.

The local group then asked for changes to the Sommet Center lease so the team would at least break even and not lose the millions Leipold lost on the team. There have been ongoing discussions between the investors and Metro. Broadly, both sides agreed but have been hung up on working through details on legal language regarding bonds on the arena and the team. Although a technicality, it's a big one and the deal hinges on it.

Apparently, Balsillie has seen the error of his ways. "After having had extensive discussions with him (Balsillie), I am completely convinced that Mr. Balsillie’s understanding of the Nashville market at that time was incorrect, and that Mr. Balsillie recognizes that," Roberts wrote in a letter delivered today to the auuthority. "He is now committed to Nashville as a viable hockey market, one in which he strongly desires to own a franchise; and that he will commit the resources that are necessary to lead to a Stanley Cup for the Predators and Nashville. He is also keenly aware of the recent outpouring of support of the Predators by the community, and our concrete expressions that hockey and the Predators are important to Nashville. Along these lines, Jim has assured me that he would welcome, but not require, local partners as a part of the ownership team."

According to the letter, Balsillie would welcome Freeman and others from the local group in joining the ownership. But for now, the Predators have a deal with the local investors until Oct. 31. If they don't close then, Leipold can entertain other offers.

The following is the full text of the letter and proposal Roberts sent to the Metro Sports Authority:

Memorandum

To: The Sports Authority of the Metropolitan Government of
Nashville and Davidson County

From: Bo Roberts, Managing Partner
Net Com LLC

CC: Aubrey Harwell, Managing Partner
Neal & Harwell

Re: Nashville Predators Hockey Club (“Predators”)

Date: October 12, 2007

I am writing on behalf of a client of NetCom LLC, Predators Sports and Entertainment LP (“Purchaseco”). We have been asked to summarize my client’s position on matters related to the two arena operating agreements in the event, however unlikely, that the Freeman/Del Biaggio Group may not be able to reach an agreement with the Authority and Metro government.

First, let me state that Purchaseco is 100 per cent owned by Jim Balsillie of Waterloo, Ontario, Canada and that Mr. Balsillie was previously in negotiations with Craig Leipold for the purchase of the Predators. After having had extensive discussions with him, I am completely convinced that Mr. Balsillie’s understanding of the Nashville market at that time was incorrect, and that Mr. Balsillie recognizes that. He is now committed to Nashville as a viable hockey market, one in which he strongly desires to own a franchise; and that he will commit the resources that are necessary to lead to a Stanley Cup for the Predators and Nashville. He is also keenly aware of the recent outpouring of support of the Predators by the community, and our concrete expressions that hockey and the Predators are important to Nashville. Along these lines, Jim has assured me that he would welcome, but not require, local partners as a part of the ownership team. Specifically, he would welcome the participation of the local investors in the Freeman Group, who have so diligently worked to keep the Predators in Nashville. You can be assured, ladies and gentlemen of the Authority, that Aubrey Harwell and I would not be associated with any group that we felt would lead to the demise of this important franchise in Nashville.

That said, I want to outline, in layman’s terms, the steps that Purchaseco would be willing to take to make this franchise successful. First the existing arena operating agreements will require no changes whatsoever unless they benefit the Authority and the residents of Nashville. In that regard, Purchaseco will make the following commitments that will strengthen the position of the Authority and Metro Government:

• Purchaseco will respect the previously stated opinion of Metro’s legal department to the effect that the 2006-07 hockey season was not the second consecutive “full season” of sub 14,000 paid attendance. As such, the Early Termination Notice issued by the Predators in June, 2007 will be void and of no effect. Further, any such notice could not occur until after the 2007-2008 season results are known.

• Purchaseco will make the necessary arrangements to comply with the minimum tangible net worth guarantee provisions, as required in the arena operating agreements.

• Purchaseco will increase the exit fee to the owners for terminating the License Agreement to approximately $75 million from approximately $16 million, to be adjusted only by cumulative operating losses, but in no event will decrease below $25 million.

• Purchaseco will contract with a nationally-recognized facility management firm to operate the Sommet Center, and structure the contract so that Nashville (the Authority) and Purchaseco would share the benefits from improved financial results.

• To assure the Authority and Nashville that the team will be competitive and the franchise has a chance to succeed, the owners would guarantee a minimum salary base of at least the midway point between the minimum and maximum requirements under the salary cap arrangements. This would be at least an $8 million investment over and above the required floor.

These are the highlights of our proposal. Detailed and appropriate language describing the foregoing can be submitted immediately when appropriate and upon the Authority’s request.

Let me summarize: the only changes my client would request in the current operating and licensing agreements would be changes that would benefit the Authority and the citizens of Nashville. If you feel that it is appropriate, my client is willing to meet with the Authority and any appropriate officials to further discuss the items outlined above, but, more importantly, to share his passion for hockey and his desire to bring a Stanley Cup to Nashville.

Thank you for the consideration of these comments.