Checks and Balance Ledgers

Hockey Digest, Dec, 2000 by David Stone

WHILE THE SALE OF THE Stanley Cup champion New Jersey Devils to the YankeeNets corporation was approved long ago, the team didn't officially change hands until an 11th-hour transaction in late August. The $176-million sale had been delayed for months; while YankeeNets had been approved as the majority owner, the NHL took its time in completing background checks on the team's new minority owners, as the league doesn't want a repeat of the John Spano-New York Islanders fiasco.

Former Devils owner John McMullen, who expressed deep regret after agreeing to sell the team, imposed an August 31 deadline, after which he threatened to take the Devils off the market. However, a week before McMullen's final deadline, YankeeNets, through its subsidiary Puck Holdings, officially purchased a majority interest in the Devils. Puck Holdings now owns approximately 40% of the franchise, while YankeeNets, which is led by New York Yankees owner George Steinbrenner and New Jersey Nets owners Lewis Katz and Ray Chambers, is a 10% owner. The rest of the team is held by a small number of limited partners.

The new ownership group still intends to build a new arena in downtown Newark for both the Devils and Nets, although the state of New Jersey wants them to remain in East Rutherford, N.J. The state and the New Jersey Sports and Exposition Authority have offered to build a new $250-million arena in East Rutherford to replace Continental Arena, which is the teams' current home. But YankeeNets remains intent on going ahead with plans for a $325-million facility in Newark, in spite of the state's offer of only 875 million in infrastructure contributions, which is half of what the team originally wanted.

The NHL, in addition to the NBA and DirecTV, has been sued for allegedly conspiring to keep prices too high for television viewers who wanted to watch blacked-out games. Lawsuits filed on behalf of The Beer Hunter, a restaurant chain that operates in California and South Dakota, claim that DirecTV subscribers were forced to purchase an entire package of pay-per-view games in order to watch games outside of their local area.

The suits seek compensation for individual viewers and commercial establishments that bought DirecTV's NHL Center Ice package. According to the complaints, the NHL and NBA agreed to prohibit the rebroadcast of certain games outside of designated local areas, which artificially inflated the price of plans such as the Center Ice package. Restricting these broadcasts outside of a team's market "is not reasonably necessary to achieve any legitimate business objective," as the lawsuits state.

Alexei Yashin was denied in his most recent attempt to become a free agent after an Ontario court upheld a previous ruling that the center owes the Ottawa Senators the last year on his contract. Over the summer, arbitrator Lawrence Holden decided that Yashin, who sat out last season after being suspended in November due to a contract dispute, was still Senators property.

A year ago, Yashin wanted to renegotiate the final year of his contract, which was to pay him $3.6 million, but the team refused to budge. Yashin then sought to become a free agent at the end of the season, arguing that the term of his contract had expired, but the team was backed by Holden's ruling. Now with the Superior Court of Ontario also on their side, the Senators have seemingly wrapped up the rights to Yashin's services, although it's unclear whether he'll ever report for duty.

"We are pleased with Justice Douglas Cunningham's decision to uphold the arbitrator's ruling that the contract of Alexei Yashin does not expire until he provides an additional season of service to the Ottawa Senators," NHL executive vice president and chief legal officer Bill Daly says.

"The concept that people have to perform under their contracts--we think that's a helpful precedent," adds Daly.

For the first time ever, the NHL and broadcast partners ABC and ESPN teamed up to secure a joint sponsorship and advertising deal by signing Southwest Airlines Co. to a four-year pact. Although most of the league's sponsors also buy media packages, Southwest is the first to purchase a joint package. Southwest will title sponsor an intermission report on ESPN and ESPN2 broadcasts and sponsor the "Southwest Airlines Goal Cam," as well as air two or three 30-second commercials on all ABC, ESPN, and ESPN2 telecasts.

The deal also marks the first new U.S.-based sponsor to sign on with the league in more than a year. The last, FedEx Corp., was a sponsor of last year's All-Star Game but let its contract expire at the end of the season.