Tuesday, May 19, 2009
Mediator to settle Coyotes' ownership
PHOENIX -- A bankruptcy judge has sidestepped the issue of who controls the Phoenix Coyotes for now and centered his attention instead on whether the team should be allowed to move to southern Ontario, Canada.
Judge Redfield Baum ordered the NHL and Phoenix Coyotes owner Jerry Moyes to mediation on Tuesday in an attempt to resolve their fight over who is in control of a franchise that both sides agree is insolvent.
Baum made the ruling after hearing arguments from attorneys in U.S. bankruptcy court over the NHL's contention that Moyes had no authority to file Chapter 11 bankruptcy earlier this month.
The league and Moyes are to report their progress at a status hearing May 27.
The question of whether the team could relocate needs to be decided before the franchise is sold, Baum said.
During a four-hour session in a crowded downtown courtroom, the judge scheduled a June 22 hearing for arguments on whether he should approve the potential move.
"If you lose that one," Baum told Susan Freeman, attorney for prospective buyer Jim Balsillie, "I think the sale motion is dead."
Under Moyes' bankruptcy plan, the team would be sold to Balsillie, whose company makes the Blackberry, for $212.5 million and would move to Hamilton, Ontario. The NHL -- with support from the NFL, Major League Baseball and the NBA -- has asked the judge to uphold that the league has a right to determine who owns a team and where it plays.
The NHL wants to find an owner to keep the team in Glendale, Ariz.
"The biggest issue here is, is this a mobile asset," NHL deputy commissioner Bill Daly said outside the courthouse, "and we have to decide that before we have an auction."
Freeman said that Balsillie would file motions with the NHL next week to purchase the team from Moyes and move it to Hamilton. NHL attorney Tony Clark told the judge, however, that there is no way the league could reach a decision on a request to move the team in time for the upcoming season.
"It's impossible," Clark said. "It can't be done."
Balsillie's offer is conditioned on quick approval in the coming weeks. But Baum said the timeline proposed, closing the sale by June 30, would not be fair to other potential bidders. The judge did not set a deadline for accepting bids or closing the sale. He said he would be out of the country from June 25 to July 3.
Moyes and Balsillie have contended that blocking the transfer of the franchise would violate antitrust law, and that Baum has the authority to consider that in his ruling.
The NHL initially had wanted the case thrown out on the grounds that Moyes didn't have authority to file for bankruptcy. But after the hearing, Daly said the league was willing to go through with the sale through auction in bankruptcy court.
"I don't think there were really any victories or losses today," Daly said. "Again, we got a little more clarity on the process. I was very impressed that the judge obviously was very well prepared, very familiar with the material that both sides had submitted and identified the issues very clearly."
The Coyotes never have made a profit since moving from Winnipeg in 1996. Court documents say the franchise lost $74 million over the past two years. Moyes says he has a $300 million investment in the team and would recoup only about $100 million in the sale to Balsillie.
The league has funded the team since last fall and wants to find an owner that would keep the franchise in Glendale.
Baum chastised the attorneys for the 600 to 700 pages of documents filed in the case over the last week, not counting supporting case law.
"I'm not going to let you do that to me and my staff again," he said in asking that future filings be more brief.
The judge ruled in favor of the NHL in Moyes' attempt to get a copy of the potential offer from a group that includes Jerry Reinsdorf, owner of baseball's Chicago White Sox and the NBA's Chicago Bulls. Baum said that if Reinsdorf wants to bid for the team as part of the bankruptcy proceedings, then it will be there for all to see.
Another potential roadblock to the franchise's move is the city of Glendale, which filed a massive brief that includes the lease that the Coyotes have to play in Jobing.com Arena through 2035. A hearing has yet to be set for arguments on whether the franchise can break the lease without penalty because it is in bankruptcy reorganization.
Richard Riordan, Balsillie's top representative in Phoenix, said that while the Coyotes are struggling for support in Phoenix, the franchise would thrive in hockey-crazed southern Ontario.
"Anyone from southern Ontario knows that this is a slam dunk," Riordan said outside the courthouse after the hearing. "Easily we can move the team there, easily it's an appropriate owner."
The transfer of ownership should be no problem for the NHL, Riordan said, because owners earlier approved Balsillie's proposed purchase of the Pittsburgh Penguins. That acquisition fell through, as did his subsequent attempt to buy the Nashville Predators.
"I don't kid myself," Riordan said. "The key issue is relocation."
According to Glendale attorney William Baldiga, Coyotes coach Wayne Gretzky would receive $22.5 million as part of the sale to Balsillie. Gretzky, who owns 1.49 percent of the team, has not commented on the bankruptcy proceedings.