NHL to Investigate Phoenix Coyotes’ Bankruptcy-Court Filing 06/05/2009 |
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The National Hockey League said it is investigating the propriety of the Chapter 11 bankruptcy filing by the Phoenix Coyotes that could result in the franchise relocating to Canada.
The Coyotes’ owners issued a statement yesterday about the filing to pursue a court-approved sale of the team. The sale involves a $212.5 million offer from Jim Balsillie, Co-Chief Executive Officer of Blackberry maker Research In Motion Ltd., to buy the Coyotes and move them to Ontario.
The NHL, which has said the Coyotes won’t relocate, later issued its own statement saying it’s investigating the circumstances surrounding the filing. The league also stripped Coyotes Chief Executive Officer Jerry Moyes of authority to act on behalf of the club.
“The league will appear and proceed before the bankruptcy court in the best interests of all of the club’s constituencies, including its fans in Arizona and the league’s 29 other member clubs,” NHL Deputy Commissioner Bill Daly said.
The Coyotes haven’t turned a profit since Moyes, owner of trucking company Swift Transportation Co., invested in the team in 2001. Annual financial losses have exceeded $20 million in some years, the Arizona Republic reported on April 29.
Moyes said yesterday that the bankruptcy filing allows Glendale, Arizona, officials to provide potential buyers assurances about the city’s willingness to offer incentives to keep the team.
Higher Bids
The Coyotes’ ownership group said the bankruptcy court will hold a hearing within several days to establish a sales procedure to attract higher bids.
Balsillie’s PSE Sports & Entertainment LP purchase price would pay secured creditors in full and give $97.5 million to unsecured creditors.
Balsillie said yesterday in a separate statement that he agreed to post $17 million in so-called debtor-in-possession financing and that his offer is conditioned upon relocation to Ontario. Research In Motion is based in Waterloo, Ontario.
NHL Commissioner Gary Bettman told the Associated Press on March 26 that the Coyotes wouldn’t move out of the Phoenix area and the league’s goal was to bring in money to make the franchise solvent. The NHL and league owners must approve any offer for the Coyotes.
“The question is where all the owners stand on relocating that franchise,” Steve Patterson, president of ProSports Consultants in Portland, Oregon, said in a phone interview. “The greater Phoenix area is an attractive market in the long run, but the team has had its struggles there given the lease terms it operates under and the state of the economy.”
Failed Attempts
Balsillie, a triathlete who graduated from Harvard Business School in 1989, previously failed in attempts to move the NHL’s Nashville Predators and Pittsburgh Penguins to Canada.
“I am excited to move closer to bringing an NHL franchise to what I believe is one of the best un-served hockey markets in the world, southern Ontario,” Balsillie said in his statement. “A market with devoted hockey fans, a rich hockey history, a growing and diversified economy and a population of more than 7 million people.”
The Coyotes have yet to win a playoff series since moving to Phoenix in 1996. The team hasn’t reached the postseason the past six years and had a winning record just once in that span.
Minority owner Wayne Gretzky, the NHL’s all-time leading scorer, has run the team’s hockey operations since 2001 and has been head coach the past four seasons.
(Source: Bloomberg)
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