Oilers and Otters: Snakes and Snake Oil
9 years ago
Back in November a story broke out of Erie, Pennsylvania that the Oilers were suing Otters owner Sherry Bassin for 4.5 Million dollars. You can find that story here and I would suggest reading more of Erie Times reporter Ed Palattella’s work as he’s followed the situation unfold over the past few months. He is no doubt the go to person for this information. Very recently the Globe and Mail ran a piece about that same legal battle written by David Shoalts that you can see here. The slant on the most recent article was about the seedy underside of sports and it portrayed Katz as something of a slimy figure. A snake in the grass.
Is that fair? Is that accurate?
At the time of the original news I covered it briefly here, but I’ll go over it again. In 2011 the Oilers and Bassin (owner of the Otters) had a deal in place to sell the OHL team to Katz for at least 6.9 Million dollars. As part of the deal the Oilers loaned Bassin money to pay off his own debts. The Oil loaned Bassin something to the effect of 4.2 million dollars in advance of the sale.
That’s when things go pear-shaped.
Bassin was unable to get the OHL’s approval of the sale and ultimately was unable to complete the sale of the Erie Otters to the Edmonton Oilers. So the Oilers believed they were in the process of buying the Erie Otters, apparently with the intention of moving them to Hamilton, and then suddenly they had nothing.
As per that initial report the Oilers gave Bassin two years (until December 26, 2013) to repay the loan or sell the team so that he would have the means to pay them back. That date came and went and the Oilers demanded their money (that they gave under the assumption that it was effectively a down-payment) back. They demanded the 4.2 million, another roughly 300k in interest and legal fees.
The Oilers, no doubt, felt cheated and wanted their money back. Keep in mind it’s 2015 and Bassin still owns the team well past the deadline for the sale. The sale of the team was supposed to be what allowed him to repay the loan so we are left under the assumption that he took 4.2 million dollars from the Oilers and has no way of paying it back even still.
SO WHAT HAPPENED SINCE?
Well if we follow our man on the ground, Ed Palattella of the Erie Times, then we can see that the Oilers pushed the courts to force Bassin to sell the team, as it is his most valuable asset, in order to repay that 4.2 million dollars he took from the NHL franchise four years ago and has not yet repaid. Bassin, in turn, challenged to strike the judgement against him that he owed the 4.5 million to the Oilers. This was apparently done to prevent the forced sale of the Otters and (for heart-string tugging) to keep the OHL team in Erie.
It may not come as a shock to you, but since the Otters landed junior phenom Connor McDavid their bottom line has gotten much better. They are experiencing something of a resurgence these days, no doubt due to the fact that they have the most marketable kid in the entire Canadian Hockey League. Understandably, Bassin doesn’t want to part with his team now that he’s presumably making money.
As Palatella noted, a forced sale of the Otters would no doubt be at a lower price than could be had under normal circumstances. A sale of the team will also affect the community of Erie not just because they support the team emotionally, but because the Erie County Convention Center Authority runs the arena that the Otters play out of.
In any event, in early December a judge ruled against the Oilers allowing Bassin to sell the team on his own terms instead via a forced sale. The Oilers were forced to pursue the matter in civil court. The process may take years to be resolved in this manner. Fans of the Otters and Ontario based writers may rejoice but the Oilers are still left swindled out of 4.2 Million dollars.
WHAT DID THAT NEW REPORT SAY?
Shoalts’ article is inflammatory to Oiler fans because it focuses on the implied threat of relocation and the nasty politics of the Business of Sport. But Shoalts’ piece (linked at the beginning of this post) also starts off with a misdirection. He claims that all of this Erie/Oilers business started with a simple Associated Press article about the lawsuit.
On the face of it, is seemed just another business-deal-gone-bad – the settlement amount was for a loan Katz advanced to Bassin, plus interest, nearly three years earlier. It was before the Otters had drafted the bankable teen phenom Connor McDavid, and Bassin needed the money to prop up the financially struggling franchise. Then, for reasons that weren’t made clear in the wire story, Katz called the loan. Bassin couldn’t pay, so off to court they went.
Mr. Katz, big bad NHL owner and Western Billionaire, called in his loan suddenly with no reason given. Well, a very brief amount of work is all it takes to see that there has been much more in-depth reporting on this than a brief AP release and that the Oilers called in the loan two years after it was given and only after the deal to sell the Otters to Katz fell through and Bassin refused to sell his team to someone else so he could repay the loan.
But I guess “Swindler Playing With Other People’s Money Asked To Return Ill-Gotten Goods” isn’t the title he wanted for his headline.
Actually, with the fact that the Otters are only operating today because of money given to Bassin by Katz conveniently removed from the beginning of the story it’s easy for Shoalts to paint Katz in an extremely negative light.
The very first place he goes, even acknowledging that nobody has actually said this, is to the suggestion that the Oilers were going to use their eventual landing of the lease in Hamilton as leverage against the city of Edmonton:
Bassin agreed to be his front man in the Hamilton transaction because Katz insisted on a low profile. No one is saying it straight out, but the timing of Katz’s move on Copps in late 2012 suggests he may have been interested to use the Copps lease as leverage to get more public funding in Edmonton in a deal to build a new downtown arena for his Oilers.
The ugly and poorly executed arena negotiations that the Katz group fumbled through cost Katz a lot of public support and his group looked ham-fisted as they appeared in Seattle implying relocation talks were imminent. Katz looked like a buffoon and that was a serious gaffe, but there’s a serious leap from A) Attempting to buy an OHL team in Erie to Z) Acquiring the lease rights from under the nose of another NHL owner in a completely different city and twisting the knife in the backs of Edmonton’s city council.
Throughout Shoalts’ piece there are several indications that the connections made to Hamilton and leveraging the city are tenuous at best. First, there is the basic fact that even the writer admits nobody is saying for certain that Katz tried to do that. Second, there’s the stipulations of the initial loan agreement that clearly state Bassin was to get exclusive Hockey rights at Copps for all except NHL hockey:
The agreement also spelled out specific items Bassin was to get in the Copps lease, such as exclusive rights for all hockey teams except for the NHL, although there is no doubt Hamilton officials would have welcomed Katz had he arrived with the Oilers.
It would have been pretty difficult to leverage Edmonton city council with anything if the lease he potentially would have gotten in a deal that didn’t happen did not include the rights to NHL hockey.
SNAKES
It seems clear the Oilers wanted an OHL team in Hamilton. Beyond that I have trouble connecting the dots the way Shoalts has laid things out. I fail to see how this situation displays the grimy underbelly of Professional Sports as the thesis implies.Or, at least, I fail to see how Katz is the one being grimy here.
Let’s question for a second why Bassin, who is strapped for cash, wouldn’t sell his OHL team. Throughout every story written about the Otters and this fiasco Bassin has always maintained that he’s going to sell the franchise. Even now he makes no attempt to hide his intentions.
He doesn’t even seem to care if the team stays in Erie. He continually says that whether they stay or move will be up to the new owner, whoever that is. So he is not committed to either the franchise or the city.
He had an agreement to sell the team. He has acknowledged that he borrowed money to make a sale possible. He acknowledged that he wants to pay the Oilers back. He acknowledged that he is still going to sell the team.
So why hasn’t he done it?
I think the answer is simple: in between when he initiated the sale process with the Oilers in 2011, and when he was supposed to have finalized the sale to repay the loan in 2013, Connor McDavid landed in his lap when he was granted exceptional status for the 2012 OHL draft.
Suddenly Bassin had the most marketable CHL player on the planet and enough money to effectively operate the team, even if it was borrowed under false pretenses. Today the Otters have the 5th best attendance in the OHL and McDavid sweaters are flying off the racks.
He may not have made enough money to pay the Oilers back, but this stretch must have been the best he could possibly foresee as the owner of the team. It would not shock me in the least if, after this season is finished and Connor McDavid becomes an NHL player, Sherry Bassin finalizes the sale of the team to somebody.
Is Daryl Katz a snake in the grass? A ruthless businessman out for only himself at the cost of private citizens and civic governments alike?
Maybe.
But in this scenario there are two high profile sports owners involved and only one cheated the other out of millions of dollars he refuses to repay, has backed out of opportunities to make things right, is trying to double deal lease agreements with Erie and Hamilton, and is profiteering from a marketable underage worker.
It isn’t Daryl Katz.
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