“Who Actually Controls The Team”
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Although the NHL and the owner of the Phoenix Coyotes both insisted over the past two weeks that the most important issue in the team's contentious bankruptcy case is "who actually controls the team," the judge hearing the case has placed two other issues above it.
Judge Redfield T. Baum said in court yesterday that the bidding process for an auction sale of the team, and establishing whether the team can legally be relocated -- "and not just to Hamilton, Ontario" -- are the two critical issues which have to be resolved.
Accordingly, Baum ordered the NHL and the Coyotes (essentially, Jerry Moyes, the owner) to try to agree on a mediator on the "control" issue by the time the parties return to court May 27, to work on smaller details of the case. If the sides cannot agree on a mediator, Baum said, he would rule on the control issue himself.
Bettman declines invitation to Hamilton
Despite bitter arguments which at times descend into to name-calling, both sides said after court adjourned that they could work together on finding a mediator.
Baum said that in his court -- which is bound to do what is best for the creditors of the Coyotes -- the most pressing issue was determining whether the team is portable.
BlackBerry billionaire Jim Balsillie has an agreement with Moyes to purchase the Coyotes for $212.5 million US, contingent upon relocating the team to Hamilton by the end of June.
But the NHL argues that it has a process for approving a change of ownership of a franchise and for relocation and that those rules must be followed. It says the process could not be met, and therefore the team could not be moved, in time for the 2009-10 season.
The Coyotes argue that sections of the bylaws and constitution of the NHL that give an existing franchise (in this case the Toronto Maple Leafs) de facto veto power over another team coming into its protected territory are infringements of U.S. antitrust laws.
Coyotes lawyers say the relocation and antitrust issues are "intertwined."
Baum said that it was likely there would be two different types of suitors for the Coyotes, depending upon the relocation issue. It's assumed there would be more, and higher, bids for a portable team than for a team which would remain in Glendale, where it has lost $73 million US over the past three years.
Tony Clark, the lead lawyer for the NHL side, tried to show the strength of the NHL argument when he humorously, but pointedly, suggested the extreme: there could be a bidder from Hong Kong who might bid a half-million dollars.
Baum said it was obvious both sides wanted to get the team into an auction to produce the best buyer, but were a matter of 30 days apart. The Coyotes wanted the auction to be completed by mid-June to accommodate Balsillie's "stalking horse bid." The NHL was more interested in a date later in July because it wants to approve potential buyers first and present a list to the court.
Baum set June 22 as the date for both sides to present oral arguments on both the sale process and, most importantly, the relocation possibilities.
Each side absorbed some chastisement from Baum in court yesterday, with more of the implied criticism levelled at the NHL.
Baum suggested that commissioner Gary Bettman hadn't really taken full control of the team because Moyes, his wife, Vickie, and team executive Jeff Shumway were still taking care of some of the business. He also expressed reservations about "the number of hats" the NHL was wearing in this case, including being the first-in-line secured creditor and also the entity which is running the team.
He also had concerns that there were any real damages that could occur to a prospective owner like Balsillie, who has not applied directly to the league to purchase the team and relocate it.
Richard Rodier, Balsillie's hockey lawyer, said after the proceedings the team is filing an application -- through Moyes, who is still the owner of record -- for both a change of ownership and a relocation.
That had not occurred in the two weeks since Balsillie signed an agreement to purchase the team, Rodier said, because "I don't think it occurred to anyone with a sense of how the NHL handles things that the application would have been dealt with. I think now that the judge has made his feelings known, the application will be dealt with in some manner, and then will be heard in June.
"Hopefully they won't stand on ceremony that it hasn't been determined yet who has control of the team and will give it a hearing.
"We think it's a slam dunk, the application could be processed quickly because nothing's really changed since the (NHL) board approved Jim in the Pittsburgh Penguins sale (in October 2006). It's a slam dunk, it's easy to move the team there.
"And we could still, even with this timetable, get a team ready to play in Hamilton for next year."
NHL deputy chair Bill Daly steadfastly disagreed.
"We believe it is impossible to schedule a team in Hamilton in time for next year, but that's the court's jurisdiction not mine," Daly said after the hearing.
He added that the NHL is comfortable having a court determine whether its relocation policies are legal.
"The most important issue here is 'Is this a mobile asset?'" Daly said. "We have to decide that before we have an auction.
"I'm confident in the court's ability to decide the issue. Many courts have decided the issue over many years and sports leagues have always maintained the ability to control the location of their franchises. I don't expect anything different here."
Rodier said that he thought Balsillie's chances of having a team in Hamilton for next year are "better" than they were before yesterday's hearing.
Rodier and Balsillie have said privately for years that they have never had an open hearing on their desire to relocate a team to southern Ontario and, Rodier agreed somewhat reluctantly, there is now a very public forum for them to present their case.
"I think it's fair to say the NHL has to listen," Rodier said. "But it doesn't have to agree. It makes the process more transparent than it otherwise might be.
"There are a number of stakeholders who should be able to see the process, in particular the people of southern Ontario and Canadian hockey fans, generally, and need to be able to have a good look at how the NHL treats the relocation application and indeed, how it treats its best customer."
Moyes sought Chapter 11 bankruptcy protection and conditionally sold the team to Balsillie on May 5, just half an hour, documents by the NHL suggest, before the league was to present Moyes with a purchase offer from Chicago based sports entrepreneur Jerry Reinsdorf, who also owns a home near Phoenix.
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