Judge Baum sides with Balsillie
Judge Redfield T. Baum has decided to allow all bidders into the September 10th auction, including Jim Balsillie against the pleading of the NHL. It was the most significant decision that Judge Baum has made so far in the bankruptcy case and in my opinion has clearly put Jim Balsillie’s offer for the Coyotes at the front of the line.
On June 15th, Judge Baum ruled against the Balsillie offer to purchase the team largely because Balsillie could not prove that the NHL was violating anti-trust laws mostly because they had not yet denied his request to move the team to Hamilton. This was a setback for the Balsillie camp, but only a setback. Today’s decision of Judge Baum’s to allow Balsillie to participate in the September 10th auction is an outright nightmare for the NHL. It really is a worst case scenario because unlike what was set to occur, a Glendale only auction followed by a relocation auction only if necessary, the new setup will see any bids to keep the team in Glendale directly compared to Jim Balsillie’s bid and that is bad news because it will likely now just come down to how much Jim Balsillie is willing to pay for the team. In essence the Phoenix Coyote’s are now Jim Balsillie’s team to lose. Yes, there will be appeals by the NHL and possibly by Glendale, but that probably won’t change the outcome.
I suspect that there are two key factors in Judge Baum’s decision today. The first is that he has no assurances that either the Reinsdorf or the Ice Edge bids can resolve all of their outstanding issues (and there are still a number of significant outstanding issues with both bids) prior to the September 10th auction meaning there might still be no bidders on September 10th just as there were no bidders for the auction that was supposed to be today. The second significant factor, and maybe the primary factor, is the statement from Michael Dell’s investment company SOF Investments Ltd. in which they supported the Jim Balsillie bid as it was the only bid that provided cash to fully repay the nearly $80 million in secured debt that SOF is owed and neither the Reinsdorf or the Ice Edge bids had come to any satisfactory arrangement with SOF (Reinsdorf has stated he wants to renegotiate the loan arrangement but hasn’t even talked to SOF yet). Furthermore, SOF and nearly every other creditor outside of the NHL spoke to the importance to have these bankruptcy proceedings resolved by the end of September at the latest and of course right now, keeping the Jim Balsillie bid alive is the only way to assure that of happening. These factors made the NHL Board of Governors vote against Balsillie look like a small issue in comparison.
With all the issues that still surround the Jerry Reinsdorf and Ice Holdings bids and the fact that they are now going to be bidding against Balsillie, it would not surprise me if one or both of them drop out of the process. Jerry Reinsdorf has previously threatened to drop out and his attorney’s in court on Monday stated they they never expected to be bidding against relocation bids. With all the backlash that has come about regarding the $23 million subsidy request Reisndorf has made to the City of Glendale I might actually be surprised if Reinsdorf just says it is not worth it anymore and pull his offer.
I eagerly await the response from Gary Bettman and the NHL regarding this decision. I expect the response will be to fight the decision however it can, but the proper response should be, at least behind closed doors, is to start preparing for hockey in Hamilton this October.