Friday, September 11, 2009
NHL's new bid pays Moyes, Gretzky
PHOENIX -- The fate of the floundering Phoenix Coyotes finally is in the hands of a U.S. bankruptcy judge after Canadian billionaire Jim Balsillie and the NHL sweetened their offers to buy the team at the last minute.
Four months of often-bitter, complex courtroom wrangling came to an end on Friday with the auction. Judge Redfield T. Baum is expected to rule in the next week or two.
Even though the largest secured creditor and the creditors committee both endorsed the league offer, Balsillie expressed satisfaction at this stage of his dogged attempt to force his way into ownership of an NHL team operating in Hamilton, Ontario.
"All I was looking for was a level playing field, a chance to really have a fair shot at buying a team," Balsillie said in the triple-digit heat outside the downtown courthouse. "I think we got it here today and I couldn't be more appreciative of this opportunity that I've been looking for for a long, long time."
NHL commissioner Gary Bettman said the league is "very comfortable with what we've presented in the evidence that's before the court."
"I know the judge is taking these matters very seriously," Bettman said. "We're obviously hopeful and optimistic that he comes to the result that we've been urging since day one, which would be a vindication of the league's rules and procedures."
Baum again raised the possibility of rejecting both bids. If that happens, attorneys for the NHL said, the league would seek court-ordered control of the franchise and would look to sell the team.
Balsillie, who withdrew the Sept. 21 deadline he had set, offered the city of Glendale $50 million free of conditions to drop its objections to the transfer of the franchise. The earlier offer, rejected by the city, could have reduced that $50 million through various factors.
Glendale attorney William Baldiga said Balsillie's new offer would be considered by the city council at its meeting Tuesday. But for now, he said, Glendale remains "enthusiastically" behind the NHL bid.
Balsillie's bid of $242.5 million, on the surface, dwarfs the $140 million offer by the NHL.
"I think it's unambiguous that our offer is by far the best for creditors, it's the best for fans and is the best for the long-term viability of the franchise," he said.
But the bid hinges on whether the judge would take the unprecedented step of overruling the 26-0 vote by the NHL board of governors rejecting the Canadian as an owner. Baum also would have to approve relocation over the NHL's objection and set a relocation fee.
While the NHL said it would immediately appeal an adverse ruling and even seek a stay of the sale, Balsillie was unclear on what he would do if he loses. The co-CEO of Research in Motion, the company that makes the Blackberry, already has failed in attempts to buy the Pittsburgh Penguins and Nashville Predators.
"I'm going to respect the judge's decision, as I have all of his decisions in the past," Balsillie said. "I'm going to respect the decision he makes here now and I'm just not going to speculate on next steps and what we're going to do thereafter."
The NHL's offer, which would keep the team in Glendale at least for now, remained at $140 million. But, for the first time, it provided money to Coyotes owner Jerry Moyes.
Moyes and hockey great Wayne Gretzky, who coaches the team and owns a small share of it, would have access to about $14 million remaining in the estate, under the NHL's estimate.
Moyes, the founder of Swift Transportation who says he has $200 million invested in the team that he never expects to recoup, has a claim of about $100 million as a creditor, Gretzky $22.5 million.
The franchise has lost more than $300 million since it moved from Winnipeg in 1996. It has lost at least $34 million each of the past three years and has been funded by the NHL for a year.
"I think I did my part," Moyes said of his efforts to make hockey work in the desert. "I put plenty of money in it, I put a lot of time in it. I gave it the best try I could. Hockey will not work in the South. Mr. Bettman's plan is not working out."
Asked how he felt about the NHL, Moyes said, "I feel pretty poorly, to be right honest with you. I just don't think I've been treated right. I gave it 100 percent try and I feel betrayed by the NHL."
If it is awarded the franchise, the league plans to resell it outside of the bankruptcy process. Bettman said he believed Ice Edge Holdings and a group headed by Chicago sports mogul Jerry Reinsdorf would be interested. Both pulled out of the bidding after failing to reach a new lease agreement with Glendale.
If it can't find a buyer to keep the team in Glendale, the league would look to relocate the franchise.
SOF Investments, the lead secured creditor in the case, supported the league's offer even though it would get all of its $80 million under both bids.
"Frankly we believe there's less legal risk in accepting the NHL bid," Steven Abramowitz, attorney for SOF Investments, told the court. "For that reason, we strongly prefer the NHL bid."
Paul Sala, the creditors' committee attorney, said some 99 percent of creditors would get paid in full. The exceptions would be Moyes and Gretzky.
"It's not perfect," Sala said, "but from the committee's standpoint we support the NHL's position."
The NHL also said it would reduce a separate claim it has against Moyes from $30 million to $15 million. Moyes argued that the NHL claim is being challenged.
The NHL's offer would reject the $8.5 million contract of Gretzky to coach the team for the coming season. But Bettman said he expected a new deal with Gretzky, who had agreed with Ice Edge on a salary reduction to $2 million.
Moyes also said Gretzky is expected to coach the team for the coming season.
The Coyotes open training camp in Glendale on Saturday.