The NHL season is a month away and the Phoenix Coyotes bankruptcy case is still unresolved. NHL commissioner Gary Bettman and Blackberry Founder and CEO Jim Ballsille are currently involved in a heated court battle that will decipher which party will own the franchise. There are many underlying issues in this case that make the decision a tough one. It will be interesting to see how the judge rules.
Jim Balsille has made it clear from the start. He wants an NHL franchise and he wants to move the team to Hamilton. He tried to buy the Nashville Predators last off-season but the NHL blocked negotiations between the two sides. The NHL wants nothing to do with the idea of moving another franchise to Canada or allowing Balsille to own an NHL team. Bettman has stressed the importance of hockey south of the border for the last couple of years and will not turn his back on struggling franchises. The only issue is that it’s ridiculous to keep a team in a city that doesn’t support hockey.
On May 5th, 2009 Coyotes owner, Jerry Moyes declared bankruptcy on behalf of his team. The move forced the NHL to put the franchise up for bid. It also forces the NHL and the Board of Governors out of the decision-making process when it comes to who gets the franchise. Instead, as we’ve seen, it’s now up to the judicial system to rule on who gets the team and what Balsille can and can’t do. It is the right move for Balsille and the same tactics that furthered him in building his muti-billion dollar empire.
In attempts of preventing Balsille from obtaining the franchise, the NHL scurried to form alternative ownership groups to make bids for the Coyotes. In a counter-move Balsille then upped his bid $212.5 million, which took all other potential ownership groups out of the picture. The NHL didn’t give up. They then proceeded to make their own bid of $140 million. Although it’s a lesser bid, the NHL has the backing of the Glendale Arena in Phoenix and would have the sufficient resources to get the team back on it’s feet in Arizona. It is definitely a tricky situation. Balsille still has the upper hand in the situation but there are some underlying issues that could force the judge to rule in favour of the NHL.
Many questions have surrounded Coyotes’ owner Jerry Moyes and whether or not he had authority to declare bankruptcy in the first place. In court, the NHL claimed that Moyes received a loan from the league in April. They stated that Moyes forfeited his right to declare bankruptcy in exchange for cash. It’s up to the judge to decide if these accusations are true. In a perfect world, the NHL wants this promise from Moyes to be deemed as a loan contract between the NHL and the Phoenix Coyotes. If this happens, Moyes would be barred from owning a franchise for a “breach”. It will be hard for the NHL to convince the judge that Moyes has permanently and completely forfeited his right to manage the team he owns with regards to filing for bankruptcy. That scenario is highly unlikely.
Another issue will be the courts’ authority to influence the relocation of an NHL franchise. Balsille’s bid is conditioned on being able to relocate the franchise to Southern Ontario. In court, the judge can’t accept the bid without the right to relocate. The NHL is highly against moving the team to Canada and other NHL owners (Toronto Maple Leafs and Ottawa Senators) have made it clear they would veto the move as well. If the judge rules in Ballsilles favour, don’t expect the NHL to sit back and accept the ruling.
Now, while waiting for the judge’s decision, there is only time to speculate on what could happen. In reality, there are only three options. The judge could accept Balsille’s offer without considering the NHL’s self-determination rights. The judge could also rule in favour of the NHL and the league would take full control of the team, leaving Moyes with about $15 million. Finally, the judge could also consider the relocation dispute when a bidder is selected. It is up to the judge whether he/she will consider both issues at the same time. This option would allow Balsille to move the franchise while taking full control. Any ruling in favour of Balsille will result in the NHL appealing the decision.
Regardless of what happens with the situation, Balsille is stuck in a predicament. Even if the judge rules in his favour, he will have to keep the franchise in Phoenix for the remainder of the season, giving the NHL time to appeal a move to Canada. It’s a shame that the NHL can’t come to some kind of agreement with Balsille instead of trying to make it work in state where hockey has no relevance. It just goes to show that Gary Bettman and the NHL are more confused about the direction of the league more so than anyone. Even if Balsille doesn’t get an NHL franchise, he won’t look bad, the NHL will.
by: Jesse Neary
by: Jesse Neary
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