With unlimited resources, how well can the NHL be challenged under competition laws?

Discussion in 'Fugu's Business of Hockey Forum' started by cutchemist42, Apr 20, 2011.

  1. cutchemist42

    cutchemist42 Registered User

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    Listening to the Jeff Sammut right now taking about a 2nd Toronto team. His guest was talking about how it can be done through the NHL or outside the NHL. He was of the opinion someone could challenge successfully the illegality of the Leafs' monopoly over Toronto under Canadian competition law?

    How true is this?
     
  2. tarheelhockey

    tarheelhockey Highest Boss

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    Yeesh, good luck making allies on the Board of Governors after you sue them.
     
  3. Buck Aki Berg

    Buck Aki Berg Done with this place

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    That's pretty much it - even if you strike down the law, the league can just refer to that prospective owner as "unfit", and make it all go away anyway.
     
  4. cutchemist42

    cutchemist42 Registered User

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    How could you legally be declared unfit by following a country's laws? Would there be any way to counter an attempt to kick you out after taking to law the restricted market ruling?
     
  5. Grudy0

    Grudy0 Registered User

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    The question on the post is:

    With unlimited resources, how well can the NHL be challenged under competition laws?

    The answer appears to be not well at all.
     
  6. Dado

    Dado Guest

    With "unlimited resources", you would be better off starting a competing league, IMO.
     
  7. IceAce

    IceAce Strait Trippin'

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    what exactly do the Leafs have a "monopoly" over? Not hockey. There's plenty of it all around.
     
  8. htpwn

    htpwn Registered User

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    However, a piece of that article highlights the following...

    Isn't the Leafs position that they do in fact control a veto?
     
  9. htpwn

    htpwn Registered User

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    There's only two pro hockey teams in the Greater Toronto Area, and that is the Leafs and the Marlies, both owned by MLSE.

    You could put forward that they do hold a monopoly over the professional hockey market in the GTA.
     
  10. Killion

    Killion Registered User

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    Yes, the CCB did indeed issue a rather tepid & less than thorough statement on the matter after an at best cursory investigation into the issue, purportedly based on a complaint from the Balsillie camp 3-4yrs ago. During the BK however, MLSE's letter to league offices was uncovered & exhibited, arguing their rights of veto, something that was revelatory to the CCB & caused them no little amount of embarrassment. It may indeed take a full blown investigation, challenge and court case to loosen MLSE lock on Southern Ontario, and Id be willing to bet the NHL may not in fact be on their side if it comes to that, as Bettman has clearly stated and stands by the leagues position that "no veto exists".
     
  11. cutchemist42

    cutchemist42 Registered User

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    "The NHL would not permit any single team to exercise a veto to prevent a franchise from entering into Southern Ontario."

    If the Leafs did exercise the veto vote though, would that just throw out the whole bureau's investigation?
     
  12. Buck Aki Berg

    Buck Aki Berg Done with this place

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    It has nothing to do with the legal system. You couldn't take the NHL to court over their decision to not make you a franchise owner anymore than you could take a girl to court over not wanting to go out with you. The league has (as it should) 100% discretion over who owns their member franchises.
     
  13. cutchemist42

    cutchemist42 Registered User

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    Not related entirely then because the league might work differently, but how did Al Davis stay in the NFL after weakening the league's ability to control teams?
     
  14. Grudy0

    Grudy0 Registered User

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    Relevant points, Killion. I didn't know that backstory, as I wouldn't have heard anything south of the border about the CCB and MLSE's letter.

    However, just for giggles let's pretend that MLSE doesn't have "veto power", and the NHL decides they want to put a team in Hamilton, by either expansion or relocation, as either requires a vote by the BoG.

    New York has three teams, where the incumbent Rangers received compensation from the expansion Islanders, and the Rangers and Islanders each received compensation from the Devils when they came from Colorado. In each case, the "indemnifictation fee" is basically a bribe for impacted franchises to vote "yea", and it appears that those get settled by some back-room deals before it ever gets to a vote by the BoG.

    I'm guessing that whether or not the Leafs hold a veto is irrelevant in the grand scheme of things, as money talks.
     
  15. tarheelhockey

    tarheelhockey Highest Boss

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    Whether or not it's legally possible, it's impractical to suggest that someone would take the league to court multiple times (first to break their anti-competitive policy, then again to gain admission as an owner) and then turn around and work with the league on a day-to-day basis. That's like suing to force someone to allow you to be their roomate. It's just not a reasonable way to go about your business.
     
  16. Buck Aki Berg

    Buck Aki Berg Done with this place

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    I'd imagine that it's harder to kick out a current owner than it is to deny entry to a prospective owner.
     
  17. Killion

    Killion Registered User

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    Ya, for sure money talks and rumor has it that not only was Balsillie willing to hand MLSE the Arena Mgmnt contract for Copps, but so too was the Hamilton Convention Centre Authority with a couple of other venues; additionally, JB was not adverse to paying healthy indemnification fee's & graduate the creep on MLSE's broadcasting rights a new team in the area would precipitate. Still no go. MLSE absolutely adamant they wont give an inch. If push came to shove and a negotiated settlement couldnt be reached, its a head scratcher to know what the league might do if (and Im sure it is the case) the majority of the BOG's designed to break in with a team in Hamilton. Could be the Mother of All Court cases, with the NHL enjoining whomever it is theyve decided to award a franchise to in forcing a court ordered settlement on MLSE. I dont think its going to come to that, and much will depend upon whomever buys MLSE in the near term.
     
  18. Wetcoaster

    Wetcoaster Guest

    The issue will be whether or not a team does in fact possess a veto. The NHL claims no single team does have such a veto but MLSE begs to differ.

    Per the Canadian Competition Bureau (CCB) report in March 2008 following its investigation:
    OTTAWA, March 31, 2008 — National Hockey League policies on ownership transfers and franchise relocations do not contravene the Competition Act, the Competition Bureau announced today after the conclusion of an investigation.

    The Bureau's inquiry focused on whether the NHL's policies regarding transfers of ownership and relocation of franchises constituted an anticompetitive practice.

    "We are confident that the NHL's policies are not anticompetitive," said Richard Taylor, Deputy Commissioner of Competition. "We conducted an extensive investigation which established that the NHL's policies were directed at furthering legitimate interests of the NHL, and not to prevent competition. This concludes our investigation of the matter."
    ...
    The Bureau's investigation established that under the NHL's rules and procedures, the proposed relocation of a franchise to Southern Ontario would require a majority vote by the NHL Board of Governors. The NHL would not permit any single team to exercise a veto to prevent a franchise from entering into Southern Ontario. ​
    http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/02641.html

    For details see:
    Competition Bureau Concludes Examination into National Hockey League Franchise Ownership Transfer and Relocation Policies - Technical Backgrounder - March 31, 2008
    http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/02640.html

    However it appears the CCB was not apprised of a 2006 letter from MLSE asserting it possessed a veto (see below).

    Subsequently in September 2009 the CCB indicated that if the information previously supplied by the NHL that there was no single team veto was not in fact accurate... and Toronto has maintained it does have a veto, then it would be prepared to re-open the investigation.

    In response to the NHL's assertions that relocation requires a majority vote by the league's board of governors, Maple Leaf Sports and Entertainment sent a letter dated Nov. 29, 2006, to NHL commissioner Gary Bettman claiming that the team holds a de facto veto. That letter was filed by Balsillie's lawyers with the court.

    "The Toronto Maple Leafs do not agree that the relocation of a club into their home territory would be subject to a majority vote. They continue to believe a unanimous vote would be required," the letter said. "The Maple Leafs ... reserve all rights to take whatever actions are necessary to protect their exclusive rights to their home territory."​



    Earlier in the (bankruptcy) court proceedings (in Phoenix), a 2006 letter to the NHL from the Maple Leafs was filed in which the Leafs claimed to have veto power over the arrival of another NHL team in southern Ontario. Balsillie's lawyers' argument that that veto claim is essentially behind the NHL's opposition to the BlackBerry billionaire's bid caught the attention of the competition watchdog.

    "We are concerned," Taylor said. "We are looking at all the paperwork that's coming out of the proceedings and we will take action if we believe that the veto that Toronto thinks they have is exercised and blocks a team. The exercise of the veto that effectively blocked a team from moving would raise concerns for us and would be something we would investigate." ​
    http://www.thestar.com/sports/hockey/article/694707

    There was an earlier investigation in 2006 launched by the CCB but it reportedly was halted.

    In July, 2006, the bureau launched a similar investigation into the NHL's relocation practices and expressed interest in "how those procedures might be applied with respect to a proposed relocation to southern Ontario," sources say.

    However, after meeting with NHL officials to discuss the territorial rights, the watchdog discontinued its probe and recommended against further action last December.

    According to insiders familiar with events, the bureau made the decision because the NHL provided written assurance that while "relocations generally had required a unanimous board vote," the league has enacted by-law 36 in response to a series of U.S. court decisions in the 1980s that ruled sports league franchise relocation rules were in violation of American anti-trust laws. ​
    http://www.canada.com/nationalpost/news/story.html?id=2ee34bd7-d43a-4cf5-bd9c-4aa1ccdbecf7

    An earlier complaint in 1993 from Peter Pocklington who had threatened to move the Oilers to Hamilton was in the process of being investigated when Pocklington renewed the lease in Edmonton.

    In 1993, the competition bureau conducted a preliminary review of the NHL's relocation practices when Peter Pocklington, owner of the Edmonton Oilers, threatened to transfer the team to Hamilton unless he could renegotiate his arena lease.

    According to a "preliminary" conclusion to lawyers representing Mr. Pocklington dated April, 23, 1993, the federal watchdog declared that if the NHL followed the transfer criteria outlined in its bylaws and an application for relocation receives less than the required three-quarters vote, there wouldn't be any concerns under Canada's competition act.

    However, the bureau expressed "concern" over the "use of the home territory veto as it could be invoked to solely protect Buffalo or Toronto from the threat of local intraband competition."

    The regulator wrote in its confidential opinion that any analysis of the NHL's relocation practices "would turn on the specific home territory veto" -- the veto afforded to individual teams in section 4.3. "This provision has the clear effect of precluding or dissuading franchise mobility to markets with existing franchises," declared the opinion. "If the transfer is prevented by either Toronto or Buffalo through the exercising of their veto rights this may raise an issue" under sections of the Competition Act's civil provisions. ​
    http://www.canada.com/nationalpost/news/story.html?id=2ee34bd7-d43a-4cf5-bd9c-4aa1ccdbecf7
     
  19. Killion

    Killion Registered User

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    Nice. Freakin. Post!.
    Very thorough. Just who the Sam Hill are you Wetcoaster?. My Spidey Senses are tingling. :squint::lightning
     
  20. Wetcoaster

    Wetcoaster Guest

    Lawyer, former player agent.
     
  21. Killion

    Killion Registered User

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    Thanks Al, I thought I recognized the syntax.... :biglaugh:
     

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