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Judge won't make decision on PHX ownership today

Friday, 09.11.2009 / 6:38 PM / News

By Dan Rosen - NHL.com Senior Writer

U.S. Bankruptcy Court Judge Redfield T. Baum indicated on Friday afternoon that he will not be making a decision on the future ownership of the Phoenix Coyotes or potential relocation to Hamilton, Ont. when today's auction proceedings conclude at the end of the day.
 
Baum told Research in Motion co-CEO Jim Balsillie's lead counsel, Jeffrey Kessler that his client ought to think about waving his Sept. 21 deadline for a decision because "it's unfair to the court."
 
"If I get to the night of the 20th or the morning of the 21st, I should just put my pen down?" Baum said to Kessler. "You all have some sense of the materials I have to go through. I have to make a decision and then write it sufficiently enough so those of you that are unhappy with it can take it to the appellate courts and understand the rationale. To say I can do it in five days is unfair to the court.
 
"I will rule as soon as I can. With so much at stake here there should be a thoughtful decision made."

After Baum’s statement, NHL Commissioner Gary Bettman took take the stand shortly for cross-examination by Kessler and Tom Salerno, attorney for the debtor. NHL attorneys had a chance for a redirect once Kessler finished his line of questioning.

Earlier, NHL attorney Tony Clark argued the League's position as to why Balsillie should not be considered as a qualified bidder for the purchase of the Coyotes.

Clark, who spoke after Kessler, told Judge Baum that Balsillie doesn't meet the requirements to own a team because he has not followed the existing rules in the NHL constitution and bylaws.

Clark said there is no conspiracy against Balsillie, but instead said he does not meet the three criteria to own an NHL franchise, which Clark described as wealth, passion for the sport and, most important, the desire to play by the rules that bind NHL owners.

Balsillie has bid $242.5 million to purchase the Coyotes and move the team to Hamilton, even though he has been rejected by a 26-0 vote by the Board of Governors, who according to the League's constitution are the only group that can vote on ownership applications and relocation applications. A three-quarter vote of the ownership is required to approve transfer of ownership, while relocation is subject to a majority vote. 

Clark also said the League, which has put in its own bid of $140 million, has no desire to own the Coyotes for the long term. The goal is to run the team for the 2009-10 season while it seeks a local bidder that plans to keep the team in Arizona. Should that prove impossible, the League will seek other bidders and the potential relocation of the team could then be brought to the Board of Governors.

Judge Baum reiterated a point he made Thursday by stating there is the potential that he doesn't award the Coyotes to either bidder, Balsillie or the NHL. While Balsillie's counsel urged Baum to make a decision and laid out the reasons why he is legally bound to do so, Clark said, once the League made its bid for the franchise, the NHL always has operated under the proposition that it would run the team for the 2009-10 season while it seeks out a new owner for the club.

Once the NHL is able to sell the team, Clark said the League will turn over the profits to the current estate.

Clark also said the NHL Board of Governors never voted on the application to relocate the Coyotes to Hamilton because Balsillie was disapproved as a potential buyer before the relocation application was fully submitted and the evaluation of that application was complete.

Clark also told the Court that the relocation bid wasn't even submitted in full by the July 29 Board of Governors' meeting, when Balsillie was rejected by the 26-0 vote.

Clark also argued why the debtors don't have the right to sell the team without consent, citing the constitution and bylaws that prove they are already in default because they haven't complied or even sought to comply with contract provisions.

In regards to relocation, although the bylaws stipulate that owners have the right to seek out relocation, Clark said the constitution said they have to be bound by the current bylaws. They have to submit an application to the League by Jan. 1 of the year they want to relocate the team. In this case the League didn't receive an application until May.

Baum said he knows of instances when the League has considered membership transfers and relocation applications that were filed after the Jan. 1 deadline, but Clark said it has never considered them if they were filed as late as June. Clark said the NHL's schedule for the 2009-10 season was near completion by the time they received the relocation application.

Contact Dan Rosen at drosen@nhl.com



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