Phoenix Coyotes Dispute Continues

There have been a lot of developments over the past couple days in the Phoenix Coyote situation and the next week will be an interesting one for sure.

Yesterday the NHL Board of Governors voted to approve Jerry Reinsdorf as a potential owner of the Phoenix Coyotes while voting against Jim Balsille and postponing any decision on the Ice Edge group do to an incomplete application. None of this is really surprising news but the vote against Balsillie is an interesting one as Judge Baum in an earlier ruling that barring material changes PSE (Balsillie’s company for purchasing an NHL team) should be an acceptable owner.

Absent some showing by the NHL that there have been material changes in PSE’s circumstances since 2006, it appears to the court that the NHL can not object or withhold its consent to PSE becoming the controlling owner of the Phoenix Coyotes. –Judge Baum

So if this was Judge Baum’s ruling, why would the NHL vote against Balsillie? The NHL was quick to point out that the vote was because of a clause in the NHL by-laws addressing ones character and integrity.

“The criteria set forth in the (NHL) constitution and bylaws relates to financial wherewithal, character, integrity and the view whether or not the other owners would deem you a good partner,” –Gary Bettman

Clearly financial wherewithal wasn’t the concern so it had to be in regards to character, integrity and whether Balsillie would be a good partner. It will be interesting to see the NHL defend their vote in the court of law should it get that far because they didn’t seem to have many problems with him when Balsillie was looking into buying the Penguins or Predators.

The other thing that the NHL was quick to point out was that this had nothing to do with relocation. To me, I believe that this had everything to do with relocation in that the last thing the NHL wants to do is consider relocation. By voting against Balsillie the person they don’t have to conduct a vote against relocation of the Coyotes to Hamilton because had they made that vote that would be all the ammunition that the Balsillie group would need to conduct an anti-trust case against the league. The main reason why on June 15th Judge Baum rejected the Balsillie bid was because he rejected Balsillie’s claim the NHL was violating anti-trust laws because the NHL had never voted against any team relocating and without such a dispute the judge felt no obligation to overrule the NHL constitution and by-laws. The NHL does not want to open themselves up to that so they are avoiding it by not addressing the relocation issue and clearly stating that the vote against Balsillie had nothing to do with relocation.

There have been more developments today as well that are quite interesting.

In a motion filed in bankruptcy court on Thursday, Moyes’ attorney said that Reinsdorf’s bid “cannot be approved as a matter of law” and that “there are no qualified bidders” based on terms set by the court.

We should find out tomorrow what the details of the argument against Reinsdorf and we’ll find out if the motion has substance or just more legal posturing.

Glendale said that it is “very close to a definitive agreement with each of the Reinsdorf group and Ice Edge that would allow the team, under new ownership, to continue to play at the Arena in Glendale for the foreseeable future with strong economic essentials and support from all necessary constituencies.”

The filings did not divulge what the “strong economic essentials” would be or provide details of the negotiations.

Glendale asked Judge Redfield T. Baum to postpone the sale to “early to mid-September.” The NHL, meanwhile, asked Baum to set a Sept. 10 deadline.

In my mind the agreement between the City of Glendale and the Reinsdorf and Ice Edge groups is a key to whether Balsillie has any chance of purchasing the team. If no agreement can be reached both the Reinsdorf and the Ice Edge offers to purchase the team go away and Judge Baum will have no choice but to open up bids to groups interested in relocating the team, and for that matter, the NHL will have no choice either.

As for the requests to set a mid-September deadline, I do not believe that Judge Baum will give that any consideration. He has made it clear that he wants this issue resolved ASAP and before the NHL season begins and he has shown little patience for delays. He set a September 10th date for the relocation auction because he believes that it will give the NHL enough time to relocate the franchise for the 2009-10 season where as any delays beyond that will delay relocation until the 2010-11 season and essentially take the Balsillie offer off the table and he won’t do that. If the Reinsdorf/Ice Edge bids need more time I am sure that the judge will simply say they are welcome to submit bids during the September 10th relocation auction.

This article has 1 Comment

  1. Sooo … the NHL is going to take a team that lost $67 million U.S. while taking in $58 million in revenue — and sell them to someone else who will leave them in Phoenix to rot. (That’s $125M in expenses there.)

    There’s no combination of cash cuts and revenue increases that will ever make that gap up in Phoenix. FWIW, playing a few home games in Saskatoon’s small arena would only be a drop in the bucket.

    Meanwhile, the only man with a sound business plan and the money to implement it is dismissed without serious thought. And there are a number of franchises vying to be the next Phoenix.

    The NHL is being run by a bunch of clowns. They have no idea how to run a business — or if they do, they let their judgment be compromised by delusions of grandeur.

    Compare them to the NFL. The NFL can deal with arrogant owners that want to move clubs around. They just let them do their thing, provided they’re somewhat competent and turn a profit. The Davises, Irsays, and Joneses are all welcome — and managed, to some degree.

    I’m afraid that the current cabal is running the NHL into the ground. Only some great catastrophe will force the hand of the team owners to replace them. Until then, we can expect this circus to continue.


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