Four potential bidders have emerged to buy the Phoenix Coyotes franchise, which Jim Balsillie wants to acquire and move to Canada, the National Hockey League told a judge.
At least one of the interested bidders who contacted the league has vowed to keep the team in Phoenix, Shepard Goldfein, one of the NHL’s lawyers, told U.S. Bankruptcy Judge Redfield Baum at a hearing yesterday in the Arizona capital. Baum is hearing arguments on whether Balsillie, co-chief executive officer of BlackBerry maker Research In Motion Ltd., should be allowed to buy the team and move it to Hamilton, Ontario, about 1,860 miles away.
“There are four expressions of interest” in the team, Goldfein said. “We hope those expressions mature into offers.”
Coyotes owner Jerry Moyes sought Chapter 11 protection for the team last month, citing almost $400 million in losses. He wants to sell the team at an auction. Balsillie has offered to pay $212 million.
The New York-based NHL opposes Basillie’s request to Baum to allow the relocation. NHL Commissioner Gary Bettman was in the Phoenix courtroom for yesterday’s arguments.
The NHL said in a June 5 court filing that four groups were interested in buying the Coyotes, including Jerry Reinsdorf, owner of the Chicago White Sox of Major League Baseball and the National Basketball Association’s Chicago Bulls. Also expressing interest in the Coyotes were Howard Sokolowski and David Cynamon, co-owners of the Toronto Argonauts of the Canadian Football League, the NHL said.
Formal Offer
Goldfein told Baum he couldn’t identify some of the potential bidders because they filed confidential letters-of- intent. Baum noted that Balsillie is the only one who has made a formal offer for the team, which has never turned a profit in its nine years in Phoenix.
“Expression of interests in the eyes of an old bankruptcy judge aren’t helpful,” Baum said. “You either make an offer or you don’t.”
The judge said the case presents “unique” legal issues because it involves the relocation of a professional sports teams between countries.
Thomas Salerno, a lawyer for the current Coyotes ownership group, said that the Atlanta Flames NHL franchise moved to Calgary in 1980. Susan Freeman, one of Balsillie’s lawyers, noted that Canadian teams, such as the Quebec Nordiques, also had moved south without opposition from the NHL.
Winnipeg Jets
The Nordiques moved to Denver in 1995 to become the Colorado Avalanche. The Coyotes played as the Winnipeg Jets in Canada before relocating to Phoenix in 1996.
Balsillie’s group seeks to move the team to “an Anglo- American country with virtually the same laws,” Freeman said.
Lawyers for pro sports leagues, including the NHL, the NBA and the National Football League, urged Baum in court filings to bar Balsillie from buying the team and moving it without the NHL’s permission.
A forced sale over the NHL’s objections would make federal courts the first option of owners seeking to sidestep league rules to move a franchise without the consent of other owners, the NHL said in a June 5 filing.
Ordering the sale to Balsillie “would wreak havoc in the professional sports industry,” the league said.
Baum noted beloved pro sports teams, including the NFL’s Baltimore Colts and Oakland Raiders, have left their home cities for other venues without crippling the league.
NFL’s ‘Fine’
“NFL has been fine. It’s making a lot of money,” the judge said.
Anthony Clark, one of the NHL’s lawyers, said he recognized that Baum is a knowledgeable sports fan as well as a veteran bankruptcy judge.
“But when it comes to making a determination about what is best for 30 hockey teams, that business-judgment decision is best left in the hands” of NHL officials, Clark said.
A courtroom “is not the best place to make those decisions,” Baum conceded. “But that’s the hand we’re dealt here.”
Allowing Balsillie to move the team out of the Phoenix suburb of Glendale would “cause damage” to the area’s taxpayers who shelled out $180 million to build an arena for the Coyotes, said William Baldiga, one of the city’s lawyers.
“This team made us a promise to play here for another 26 years,” Baldiga told the judge.
Coyotes 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. Gretzky is owed $22 million under his contract with the Coyotes, making him a creditor in the bankruptcy case.
The case is Dewey Ranch Hockey, LLC, 09-09488, U.S. Bankruptcy Court, District of Arizona (Phoenix).
(Source: Bloomberg)
