BANKRUPTCY JUDGE REJECTS COYOTES MOVE TO HAMILTON, ONT

The NHL’s Phoenix Coyotes won’t be moving to Hamilton, Ontario—at least not right now.  On Monday, a Federal Bankruptcy Court judge rejected the immediate sale of the team to Canadian billionaire Jim Balsillie.  The ultimate fate of the team remains up in the air, however, as the ruling simply rejected a June 29^th deadline imposed by Balsillie to close the deal.

While both sides have tried to spin it in their favor, the ruling did little more than affirm what those following the situation have known for awhile:  it’s a mess.  The Phoenix Coyotes have been in financial disarray for several years now,  losing more than $36 million in each of the past three seasons and more than $300 million since the franchise moved from Winnipeg in 1996.   The current owner, Jerry Moyes, simply wants to unload the team for as much money as he can get as quickly as he can.  That’s where Jim Balisille comes in—he’s one of the founders of RIM, the company that makes the Blackberry smart phone and has been trying for some time to get an NHL team for Hamilton, Ontario. 

The NHL meanwhile, has been helping to prop of the Coyotes financially and wants the team to stay put for reasons that aren’t readily apparent.  Perhaps they don’t like the symbolism of a team moving from the US Sun Belt back to Canada, which would serve as a repudiation of its expansion into non-traditional hockey markets.  They also have something of a personal issue with Balsillie, again for reasons that aren’t quite apparent.  The NHL contends that with better management and a better team on the ice that the Coyotes can be a success in Phoenix.  While that may be true, it doesn’t negate the fact that it would be an almost surefire success in hockey mad Canada.

Another part of the issue could be the so called ‘territorial rights’ of a couple of existing NHL teams, the Buffalo Sabres and Toronto Maple Leafs.  The claim of ‘territorial rights’ by the Baltimore Orioles kept major league baseball out of Washington, DC for many years but in this case with the Leafs and Sabres playing to capacity crowds already its less of a valid issue.  Still, deference to these long standing franchises could be another reason for the NHL’s reticence at the sale to Balsillie and the move to Hamilton.

The whole mess ended up in US Bankruptcy Court after current owner Moyes filed for Chapter 11 bankruptcy on May 5^th.  Part of the bankruptcy filing included the sale of the team to Balsillie for $212.5 million dollars contingent on the NHL’s approval to move it to Ontario.   The NHL has been scrambling to put together  competing bids to keep the team in Phoenix, but it’s doubtful that any other buyer would be willing to pay a premium above market value like Balsillie.

Despite the judge ruling that the issues were too complex to facilitate a ruling by June 29^th, both sides issued statements claiming that it was in their favor.  First, the NHL’s deputy commissioner Bill Daly:

"We're pleased the court recognized the validity of league rules and our ability to apply them in a reasonable fashion. 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."

And a spokesman for Balsillie gave his take:

"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. We still think there is enough time for the NHL to approve Mr. Balsillie's application and move the team to Hamilton by September."

Where things go from here is somewhat up in the air.  NHL commissioner Gary Bettman claims that he’s got four ownership groups that have expressed interest with the desire of keeping the team in Arizona.  Among these, Jerry Reinsdorf who owns the NBA’s Chicago  Bulls and the AL Chicago White Sox.  Mediation between the various parties could also be an option.  From a hockey standpoint, it’s important that something get resolved by late summer so the coaches and players can begin to prepare for the upcoming NHL season.