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Phoenix Coyotes courtroom hearing blog

Thursday, 09.10.2009 / 8:55 PM / Blog Central

By Dan Rosen - NHL.com Senior Writer

8:55 p.m. ET

We have reached the end of the day's court proceedings and it closed with a bang. The NHL announced that it, in conjunction with the City of Glendale, has no desire to cross examine Balsillie during Friday's proceedings and as a result it does not appear that Balsillie will take the stand.

Kessler said that since no other parties would want to cross examine him than Balsillie's declaration that he submitted to the court stands with no rebuttal. However, Kessler did confirm that PSE wants to cross examine NHL Commissioner Gary Bettman, and the NHL attorneys said they welcome it.

Friday's proceedings begin at 11:30 a.m. ET with arguments on the relocation motions. It is likely that Bettman will appear on the stand closer to 1 p.m. ET, but that time is still very much in flux. Once Bettman leaves the stand, the case will go to auction and Baum will have to decide if he's ready to rule or if he still needs more time.

8:15 p.m. ET

NHL expert Michael Rapkoch is testifying on the value of the Coyotes in Phoenix and in Hamilton right now. Rapkoch worked independenty of fellow NHL expert Daniel Barrett, who will take the stand next. Rapkoch estimated the Coyotes value in 2009 at $120 million but believes a team in Hamilton can be worth much more. He does not necessarily believe that is better for the League because of many factors.

Earlier, Fisher said the difference between the team's financial success and how it relates to the League are different because if one team moves it can have a negative affect on another team and that's why fees are applied.

Rapkoch, by the way, has done more than 60 evaluations of sports franchises over seven leagues in his career. He has always used the same methodology to value franchises.

7:40 p.m. ET

During a short recess the two sides struck a deal in regards to time that will allow them to get back on the original agenda schedule and be finished by 9 p.m. ET tonight. The arguments on the relocation fee will start Friday's edition of these hearings.

7:30 p.m. ET

Judge Baum has jumped in and told the parties that they are spending too much time on the relocation fee issue and that's not the central issue at hand according to the Court. The judge is concerned with time now.

7 p.m. ET

Dr. Fisher is currently being cross-examined by PSE's attorney Kessler, who is trying to get Dr. Fisher to agree that a franchise in Hamilton would be more valuable and better off for both the organization and the League than a franchise in Phoenix. Dr. Fisher has countered by saying that there is a real difference between incentives for the League and for the team and it matters greatly. It appears that Dr. Fisher and Kessler are having an intense and somewhat frustrating back and forth between one another.

It has also come out in Court that PSE values a franchise in Hamilton at around $174 million while the NHL values a franchise in Hamilton at roughly $100 million more.

6:20 p.m. ET


Dr. Franklin Fisher, listed in the court agenda as an NHL expert, has been sworn in and is now on the stand.

6:15 p.m. ET

Zimbalist is off the stand now, but not before saying it is possible for his value on the relocation fee to go up to $16 million.
6 p.m. ET

The PSE attorney, Kessler, is currently conducting his redirect cross-examination on Zimbalist and is attempting to put the numbers for relocation fee and franchise value that Zimbalist came up with in a positive light to prove why they are valid. Next up will be a pair of NHL experts to discuss the relocation fee.

5:35 p.m. ET

Court is back in session. The NHL attorney still has a few questions left for Zimbalist and Baum has told him to be as quick as he possibly can.

4:20 p.m. ET

For the entire time the NHL attorney cross-examined Zimbalist they discussed/argued the methodology that the economist used to come up with his figure of $11.2-$12.9 million as a relocation fee for the Coyotes to move to Hamilton. The NHL's proposed relocation fee would fall somewhere between $101 million and $195 million.

Zimbalist admitted in court that the formula he offered for this case has not been submitted for peer review. The NHL attorney feels Zimbalist's methodology could devalue a franchise.

The NHL attorney also asked Zimbalist if he was first working for Coyotes Hockey LLC and then for PSE and he admitted that was the case. The switch occured in June when PSE approached Coyotes Hockey LLC and asked if they could use Zimbalist's services to calculate the relocation fee and Coyotes Hockey LLC agreed.

Zimbalist admitted in court he has been paid by both Coyotes Hockey LLC and PSE.

The judge has ordered a lunch break until 5:35 p.m. ET. The NHL attorney said he still has five or six questions left for Zimbalist.

3:20 p.m. ET

Jeffrey Kessler, an attorney for PSE, presented PSE expert Dr. Andrew Zimbalist for cross-examination by the NHL. He was sworn in and relocation is on the agenda.

3 p.m. ET

The city was unmoved by PSE's having upped its bid in what it said was an attempt to help Glendale recoup some of its losses and asked Judge Baum to deny the bid. The money the city would get by the increase in the bid does not nearly equate to what the city will lose if the team moves.

2:10 p.m. ET

As soon as court resumed, shortly before the top of the hour, one of the City of Glendale's attorneys said he was standing there urging Baum to accept the NHL's bid because the city has no objection to the bid and believes if the NHL wins in court its interests will be protected. He said the city supports the NHL's bid.

Baum felt compelled to bring up the idea that the city could be in a similar situation as it is right now next year, but the attorney said the city and the NHL can either agree or disagree on sale, but it won't be another Chapter 11 bankruptcy proceding because it will be an NHL affiliate that will own the team and transactions will proceed from there.

The city believes it will suffer "huge and disproportionate harm" if the PSE bid prevails. He also said the city has confidence that the Coyotes will be playing in Glendale next year and many years beyond if the NHL is a successful bidder because the NHL itself has stated that and is going to make reasonable efforts to make that happen.

1:35 p.m. ET

They are taking a break right now and once again the judge has offered all people in court to remove their sport coats because of the heat.

1:30 p.m. ET

Baum to Glendale attorney: "If the NHL succeeds, then the decision on relocation or rejection is to some extent deferred."

The Glendale attorney responds by saying that is true, but maybe only for a year and without any guarantees after that for the city. The attorney wants Glendale to get some security with its lease for the hockey team in the arena and is arguing that neither of the bids takes on the assumption of the current 30-year lease.

The judge has indicated that it's possible there will be no sale out of this case.

1:10 p.m. ET

The NHL asked Wright a lot of questions on the Copps Coliseum in Hamilton, where the Coyotes would play should the Coyotes relocate to the Southern Ontario city. Wright's belief is that NHL hockey can be played at the 24-year-old arena this season, but renovations have been promised should Balsillie win in court.

Wright says their are no commitments for who will pay for those renovations, which could be upwards of $200 million, but nothing can be decided until it is certain that the team will be moving there. The NHL wants to know how the funding of those renovations would proceed. Balsillie is asking governmental agencies to pay for them.

Wright has stepped down from the stand. They are now moving on to some issues regarding the City of Glendale and the arena issues, so no one will be taking the stand right now.

12:55 p.m. ET

The NHL is finished cross examining Wright. The goal was to show that a team can be viable in Phoenix citing numerous examples. Wright continues his stance that the team is not viable in Glendale.

PSE is now getting an opportunity for redirect.

12:30 p.m. ET

The NHL asks Wright if his primary reason to agree with relocation is there is no sufficient fan support in Glendale to support the Coyotes? He said yes.

The NHL cites Ice Edge Holdings, which withdrew its bid Wednesday, has indicated that they believe there is enough evidence to support the future of NHL hockey in Glendale. Wright was not aware of what the Ice Edge group has said.

If Wayne Gretzky's view were NHL hockey can be successful in Glendale you would disagree with him, the NHL asks? Wright responds that based on the finances and fan support, both current and historical, that he still believes the NHL would not be successful in Glendale.

The NHL is citing many examples, including the Jerry Reinsdorf group, of people who have said hockey in Glendale can be successful. Wright is not budging and still believes in his initial opinion that hockey in Glendale can not be successful. The NHL also sites that Jerry Moyes has said the NHL can be successful in Glendale.

The gist here is to provide many examples of people who have testified or stated an opposing viewpoint of Wright's.

12:15 p.m. ET

Baum, now finished asking questions about the NHL's bid, asks if there there anybody else who would like to make a bid to buy the Coyotes. There was no response.

PSE expert Tom Wright, whose daughter is getting married this weekend, has just taken the stand. He has until only 1:30 p.m. ET before he has to leave for the airport.

12:10 p.m. ET

Baum says he can't approve the NHL's bid before seeing a schedule of who the NHL plans to pay and when. The NHL says it can provide that ASAP, but Baum says he would like to see it before they leave Friday.

The NHL says that those schedules will address "virtually every creditor in full with two exceptions."

12 p.m. ET

Baum wants to understand the bid because "I don't think I can approve a bid I don't understand." He wants to know that in a worst-case scenario the estate would get $2 million from the $140 million bid and the NHL says that is correct.

Baum and the NHL attorney are having a back and forth about which creditors are going to get paid and which won't in the NHL's bid.

11:50 a.m. ET

It is on record now in court that PSE Sports and Entertainment has reaffirmed its bid and so, too, has the NHL. Baum has questions about the NHL's purchase agreement.

11:43 a.m. ET

The hearing has begun. Thomas Salerno of Squire, Sanders & Dempsey L.L.P., the attorneys for the debtors, is addressing Judge Redfield T. Baum right now. He is asking for the court's consideration as to how to proceed with the arguments that need to happen over the next two days.

Salerno has confirmed that Ice Edge Holdings has withdrawn its bid.

11:20 a.m. ET

The hearing in U.S. Bankruptcy Court regarding the sale of the Phoenix Coyotes is set to begin at 11:30 a.m. ET. According to the court agenda, it will last until 9 p.m. ET today and begin again Friday at 11:30 a.m. ET and go until 7 p.m. ET.

According to the agenda, today's portion of the hearing will begin with the court asking all parties (the NHL and PSE Sports and Entertainment) to "affirm their bids and clarify any recent modifications."

According to court documents, PSE, which is headed by Research in Motion co-CEO James Balsillie, has upped its bid to $242.5 million contingent on relocating the Coyotes to Hamilton, Ont. The NHL is on record with a bid of $140 million to take control of the team and keep it in Arizona while it seeks out an owner with similar interests. The NHL has stated that all profits of its re-sale of the Coyotes will go to the creditors.

Those who are expected to be cross-examined today include PSE experts Tom Wright and Andrew Zimbalist as well as NHL experts Franklin Fisher, Michael Rapkoch and Daniel Barrett. The cross examination is expected to be in regards to the relocation fee that would be charged by the NHL should the franchise be awarded to PSE and move to Hamilton.

Following the live testimony today, the court agenda stipulates that the parties would like 90 minutes of argument on the relocation issue with 45 minutes allocated to PSE and 45 minutes allocated to the NHL.

Friday's agenda begins with another hour of argument on the relocation issue followed by 30 minutes of cross examination by the NHL to Balsillie and then 30 minutes of cross examination by PSE to NHL Commissioner Gary Bettman.



Quote of the Day

Your team is going to want to recapture the feeling. What they're going to have to figure out is they're going to have to rewrite the story. Because you're going to rewrite the story doesn't mean you want a different end. It's just that you're going to have to learn that there's different challenges to get there, and if you're going to try and tap the same feeling, it ain't going to happen.

— Los Angeles Kings general manager Dean Lombardi on maintaining their success from last season