CHAPTER 5 – The Road to Privatization
While the Kamloops Blazers Sports Society’s board of directors continued to work to extricate the organization from the mess left when Colin Day, its president for 17 years, was forced to resign and office manager Maxine Patrick was charged with fraud, the wheels that would lead to privatization had begun to turn.
The 2006 World Junior Championship had been held in Vancouver, Kamloops and Kelowna. Dennis Coates, a Kamloops lawyer and the society’s treasurer, was a co-chairman of the Kamloops organizing committee. He told The Daily News on Feb. 2, 2006, that at least one group had been kicking the Blazers’ tires.
Coates, who said “two or three people” had approached him during the tournament, also told the newspaper that he had told the society’s board that it should expect to hear from groups or individuals who were interested in purchasing the WHL franchise.
"I alerted our group," said Coates. "I said, 'You know what? You are going to get an inquiry or an offer or something. So you had better prepare yourself for the question as to how you're going to deal with it.' "
And just who was it who was interested in buying the WHL team?
"They knew I was involved (with the Blazers)," said Coates, who declined to reveal identities for reasons of confidentiality. "There are people out there who are snooping around wanting to acquire teams just because (Vancouver Giants owner Ron) Toigo has sort of given it credibility in B.C., and so has the ownership group in Chilliwack. People can see that it's fun and profitable and entertaining. There are people who would be interested."
Coates said his message to the inquiring minds was: "I can't tell you whether it is or it isn't (for sale), and if you think you are interested you had better write to the board."
It turned out that Coates had heard from Vancouver businessman Tom Gaglardi, the president of Northland Properties, which owns, among other things, Sandman Hotels, Inns and Suites, Denny’s and Moxie’s restaurants, and the Shark Club Bar and Grill.
Coates, a lawyer with the Kamloops firm of Mair Jensen Blair, specializes in liquor-licensing matters and has done work for Northland Properties.
Asked on Feb. 2, 2006, what he thought of privatization, Coates, who was one of the men responsible for the WHL coming to Kamloops in the first place, said:
"It is an interesting issue. My personal reaction, although I really haven't thought it out . . . I know the one critical criteria that would have to be met if you were ever going to consider it . . . there would have to be a 100 per cent, absolute, gold-wrapped guarantee that (the Blazers) would never leave town. Beyond that, I haven't really thought it out.
"But that would be an absolute necessity."
The Blazers were one of five community-owned teams in the WHL, the others being the Lethbridge Hurricanes, Moose Jaw Warriors, Prince Albert Raiders and Swift Current Broncos. While the Blazers had mostly been able to steer clear of rumours involving potential sales to private interests, that can't be said of the other four.
The Warriors, Raiders and Broncos all found themselves involved in the rumour mill when the NHL's Edmonton Oilers began shopping for a WHL franchise in 2003. Around the same time, the Hurricanes' board had to quell rumours that the franchise was going to be sold to a group that included brothers Rich and Ron Sutter, who had been attempting to purchase the team.
Who would have thought that the Blazers would be the team to be privatized?
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On June 21, 2006, River City Hockey Inc. (RCH) – Gaglardi owned 60 per cent at the time, with ex-Blazers players Shane Doan, Mark Recchi and Darryl Sydor owning the rest – offered to purchase the Blazers for $6 million. That was at least $1.5 million more than had ever been paid for a WHL franchise.
The NHL's Edmonton Oilers paid Cdn$4 million for an expansion franchise. The Portland Winter Hawks were sold after the 2005-06 season for US$2.7 million – new owners also had to take on general manager Ken Hodge’s five-year contract. In an even more-complicated deal, the Tri-City Americans changed hands for US$2.6 million US, with their former owners picking up the Chilliwack Bruins expansion franchise for Cdn$2.2 million.
The four men involved in RCH all have strong ties to Kamloops. Gaglardi’s grandfather, Flyin’ Phil Gaglardi, was a prominent B.C. politician from Kamloops, and Tom’s father, Bob, is from Kamloops. The family owns property in the area, and Tom and his wife, Brittney, who have three young sons, have a summer home on Kamloops Lake near Savona.
Doan and Sydor and their families have property in the Shuswap and spend their summers in the Kamloops area. Recchi, who owns property in the city, is from Kamloops and has family in the city.
On June 27, 2006, the society's board of directors – without speaking to anyone in the Gaglardi group and without meeting with its 194 shareholders – unanimously recommended rejection of the offer and called a membership meeting for July 11.
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From June 27 to July 11, the society’s board was pretty much at sea.
It didn’t have any idea how much its franchise was worth. There was concern over the issue of capital gains. The board expressed concerns about taking a tax hit if it were to sell the franchise and assign the proceeds to the Kamloops Blazers Sports Foundation.
But the board didn’t obtain an expert opinion.
RCH did and was told the board would have nothing about which to concern itself, that there wouldn‘t have been a tax hit and that proceeds could have been turned over to the Kamloops Blazers Sports Foundation. That message, however, never got through to the membership, at least in part because the offer never was considered.
The Daily News contacted a local accountant who said the best-case scenario would be a tax cost of zero.
"Non-profit and community-owned groups and what not . . . they've done fairly well over the years in terms of government . . . art galleries and community kind of stuff have done very well in terms of tax breaks," the accountant said.
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In early July, rumours surfaced that former Blazers head coach Ken Hitchcock, very much a legend in the Kamloops area, was involved in the would-be ownership group.
"I am not involved at all. Period," said Hitchcock, at the time the head coach of the NHL’s Philadelphia Flyers. "Why are people talking like that?"
"I don't even think about that. I don't think it's appropriate for an active coach to have ownership in another area. It's just a distraction. It takes every bit of your focus just to coach. At our level, it's nine months of total focus.
"For me, if you're going to do something like own a sports franchise or a business you're going to have to be active every day in it."
Not being involved with RCH didn’t mean Hitchcock wasn’t following what had turned into something of a soap opera.
"I'm very much like everybody . . . I'm watching with intrigue," he said. "There is a lot of emotion on both sides. If you think this is the talk in town, you should hear the talk with former players. The phone lines are buzzing with alumni talking about it . . . because Mark and Shane and Darryl represent the alumni.
"I know the three kids really well. I know that they are very, very proud Kamloopsians. They want to return the bar to when it was so high . . . they want the opportunity to put the bar back up there. They want that responsibility."
Of course, Hitchcock also was close friends with members of the board and with various shareholders. So how was he hoping it all would end?
"I'm not trying to stay neutral. I have passions on both sides," he said. "I just feel . . . those kids are doing it for the right reasons and that's the thing that impresses me more than anything. They're not doing it to make money. They're doing it for one reason and one reason only -- that is the competitive side of things. They watch other franchises like Kelowna go to the top of the heap year after year after year and they want Kamloops back there.
"There are four or five guys on the directorship who were there when I was here in 1984. A lot of them are very, very good friends. The direction coming from the three players is that they feel very strongly that this was a huge part of their lives. It was a stepping stone to what they have. This is now, for all three of them, their home and the team is their home. And they want the franchise back to the top of the heap again.
"In talking with Mark and Shane and Darryl . . . they feel very strongly that over the next 20 years they want to be the people . . . they feel responsible. That's their motivation. They look at the next 20 years and say, we want to be the model franchise for the Western Hockey League."
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On July 11, 2006, the society’s membership met and voted 49-38 that its assets weren’t for sale. There were 194 shareholders but only 96 were in attendance. Do the math and you discover that 49.5 per cent of the membership showed up and 25.3 per cent voted "No" and carried the day.
The RCH offer never was presented to membership by the board of directors, so it was never even given consideration.
"I think we've heard the members of the society say very clearly that the assets of the society are not for sale," said society vice-president Gary Cooper, who was guiding the board in the absence of its vacationing president, Case van Diemen, "so it's business as usual in the sense that we are now going to get ready for the upcoming season. We're delighted with the response but there was lot of emotion, a lot of passion."
RCH had been turned down when it asked for permission to attend the meeting. And that meeting was tightly managed by the board, something that didn't sit well with all concerned.
"This meeting from the beginning was very much weighted," said Derek Johnston, who would be elected to the board a couple of months later and would be on the board when the franchise was sold to RCH slightly more than a year later. "We came into the meeting knowing absolutely nothing about what was going on. Obviously, we knew it was about the sale of the Blazers . . . but all it was was rehearsed speeches to tell us why not to sell the Blazers. I'm really disappointed in that.
"That's an unfair advantage . . . you saw how close the vote was. How many of those votes might have gone the other way if anyone had an opportunity to look at the offer?"
Reached after the meeting, Gaglardi said: "All I know is we lost. I don't know anything about the process. I guess they made their bed . . . they get to lie in it."
Board member Don Moores, the chairman of the society’s hockey committee, had spoken passionately about the franchise and the fact that it has always been community-owned.
"The Kamloops Blazers should not be for sale and should never be for sale," he told the meeting. "I totally understand and I appreciate that (Doan, Recchi and Sydor) want to get it back to where it was. But it is a community-owned franchise and it should remain that way."
After the meeting, Moores said: "It's the right move for the Kamloops Blazers. I really think it's the darkest before the dawn and I really believe this club is going to turn the corner.
"Right from the start, I just believe it's a community-owned franchise. It's been that way for 25 years. It belongs to the entire community; it always has and I just believe it should stay that way."
A year later, Moores would address another meeting and say pretty much the same thing. This time, however, his pleas would fall on deaf ears.
NEXT (Feb. 4): The Summer of the Sale
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