Judge rejects sale of Coyotes
PHOENIX (AP)—The Coyotes are staying in Phoenix, at least for now.
A bankruptcy judge has rejected the proposed sale of the franchise to Canadian billionaire Jim Balsillie, who would have moved the team to Hamilton, Ontario.
Judge Redfield T. Baum issued a 21-page ruling late Monday afternoon, concluding the June 29 deadline imposed by Balsillie did not allow enough time to resolve the complex case.
“Simply put, the court does not think there is sufficient time (14 days) for all of these issues to be fairly presented to the court given that deadline,” the judge wrote.
The ruling is a victory for the NHL, which had argued Balsillie was using the U.S. Bankruptcy Court to make an end-run around the league’s rules over who owns teams and where they are located.
“We’re pleased the court recognized the validity of league rules and our ability to apply them in a reasonable fashion,” NHL deputy commissioner Bill Daly said in a statement Monday night. “We will turn our attention now toward helping to facilitate an orderly sales process that will produce a local buyer who is committed to making the Coyotes’ franchise viable and successful in the Phoenix-Glendale area. We are confident that we will be able to find such a buyer for the Coyotes and that the claims of legitimate creditors will be addressed.”
But Balsillie, who has failed in two other bids to buy NHL teams, refused to concede defeat, saying he wants to work with the league and move the franchise.
“We look forward to hearing from the NHL soon on its view of our relocation application and an appropriate relocation fee, so as to allow the court to determine if that fee is reasonable,” Balsillie spokesman Bill Walker said. “We still think there is enough time for the NHL to approve Mr. Balsillie’s application and move the team to Hamilton by September.”
Walker said the judge’s ruling “invited mediation.”
“Mr. Balsillie is willing to participate in such mediation if the NHL is also willing to do so,” Walker’s statement said.
Baum called the case unprecedented in U.S. bankruptcy history.
“The legal issues trigger not only bankruptcy law, but antitrust law and commercial law in the context of a professional sports team, as a Chapter 11 debtor, which team has for years incurred, and is continuing to incur, very serious financial losses and problems,” Baum wrote. “No cases have been found that precisely or even closely fit this scenario.”
Walker’s statement ignored several aspects of the ruling that were made against Balsillie.
Baum shot down the claim by Coyotes owner Jerry Moyes and Balsillie that failure to allow the team, over the objection of the NHL, to move would violate antitrust law.
“This court can not find that antitrust law, as applicable nonbankruptcy law, permits the sale free and clear of the relocation rights of the NHL,” Baum wrote.
He added, “It is not an antitrust violation for professional sports leagues to have terms and conditions on relocations of its members.”
An antitrust claim requires a “bona fide dispute,” but there is none because Balsillie only sought the NHL’s permission to relocate the franchise after it was brought up in court, Baum wrote.
“This court is unconvinced that it should order that the NHL must decide the relocation application to meet the June 29 deadline,” the judge wrote.
Baum also rejected claims by Moyes and Balsillie that while assuming the contract the Coyotes have with the NHL, they can disregard the portion of the agreement that requires the games be played in Glendale.
The judge compared that claim to “a purchaser of a bankrupt franchise in a remote location asserting that it can be relocated far from its original agreed site to a highly valuable location, for example New York City’s Times Square …”
The judge’s decision is also a win for the city of Glendale, which had spent $183 million to build an arena for the Coyotes and had contended the franchise could not use bankruptcy to evade its lease.
Baum said that because he was rejecting the motion, he need not rule at this time on whether Moyes and Balsillie could void Glendale’s lease. The city said it was pleased with the ruling.
“Clearly the court recognized the significance of these issues and the unique interests of the City of Glendale and its taxpayers,” the city said in a statement. “The court based its decision on the law and facts and not on countless rumors and innuendo regarding this matter.”
This is the third time Balsillie—whose company makes the Blackberry—has tried to buy an NHL team. His made previous attempts to purchase the Pittsburgh Penguins and Nashville Predators.
Moyes took the NHL by surprise when he filed for Chapter 11 bankruptcy on May 5, proposing to sell the team to Balsillie for $212.5 million, contingent on the franchise moving to Hamilton, Ontario.
The NHL said that commissioner Gary Bettman was on his way to deliver a letter of intent to Moyes from Jerry Reinsdorf, owner of baseball’s Chicago White Sox and the NBA’s Chicago Bulls, to purchase the team and keep it in Glendale. However, any bid to buy the team will be far less than the offer Balsillie made.
“I think people are going to be shocked when they see the value of this team remaining in Glendale,” Moyes’ attorney Thomas Salerno said. “It’s going to be materially less than the offer we have on the table.”
Salerno said Moyes is disappointed and is evaluating his options. Moyes says he has more than $300 million invested in the team and would have recouped about $100 million if the Balsillie sale had gone through.
The NHL says four parties, including Reinsdorf, have filed preliminary applications to investigate purchasing the team and keeping it in Arizona. However, if no buyer can be found, the league would look to relocate the franchise.
Moyes and Balsillie contended that the team would never succeed in Arizona and would flourish in hockey-crazy Ontario. But the move raised territorial rights issues because of the proximity of the Toronto Maple Leafs and Buffalo Sabres.
Baum had raised the specter of a fee due to the NHL and the two teams if the franchise moved.
The Coyotes have lost more than $300 million since the franchise moved from Winnipeg, Manitoba, in 1996, and at least $36 million each of the last three seasons, but the NHL contends the franchise can be viable with better management and more success on the ice.
Associated Press writers Jonathan Cooper and Mark Carlson in Phoenix contributed to this report.
