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Glendale, creditors back NHL bid for Coyotes

Friday, 09.11.2009 / 10:17 PM / News

By Dan Rosen - Senior Writer

Two days of proceedings in U.S. Bankruptcy Court in Phoenix regarding the auction of the Coyotes concluded Friday with a resounding show of support for the NHL's bid of $140 million.
In the final 45 minutes before Judge Redfield T. Baum adjourned the courtroom, the NHL received backing from the City of Glendale, the secured creditor, SOF, and the creditors committee.
The city said it believes its losses would be too great if PSE Sports and Entertainment's bid of $242.5 million were accepted. SOF said it believes there is less risk of an appeal if the judge approves the NHL's bid. The creditors committee said it is supporting the NHL's bid because in it all the unsecured creditors would get paid in full and would not suffer collateral damage.
The NHL feels that overwhelming show of support helps prove that it has put forth the best bid in front of Judge Baum.
"We believed from the outset that the club never should have been in bankruptcy and these proceedings resulted from effort by Mr. Balsillie and Mr. (Jerry) Moyes to circumvent the League's procedures," NHL Commissioner Gary Bettman told "I think in the final analysis, all of the other parties to these proceedings recognized that we were trying the best that we could to maintain the Coyotes where they belong in Glendale. It's gratifying the creditors committee, the City of Glendale and the secured creditor were all consistent in their belief and support of us."
The decision belongs to the judge, who adjourned the court with no ruling on who will take ownership of the team -- either the NHL or PSE, which is headed by Research in Motion co-CEO Jim Balsillie.
Bettman said the League "greatly appreciates" all of Judge Baum's time and efforts in allowing "all the parties ample opportunity to present such evidence and make such arguments and submissions as they deemed appropriate."
The judge said Thursday and reiterated Friday that there is possibility he won’t award the team to either the NHL or Balsillie -- but the NHL is hopeful that the support it received in the last 45 minutes Friday is enough to sway the judge.
Each side also offered a revised bid.

The NHL's revision reflected Judge Baum's insistence Thursday that not enough money in the League's bid was going toward the estate and that could be problematic. The League's offer now has roughly $14 million going to Jerry Moyes and Wayne Gretzky, the club's managing partner and coach. The NHL would also cut in half a claim it has on Moyes, from $30 million to $15 million.

"I think in the final analysis, all of the other parties to these proceedings recognized that we were trying the best that we could to maintain the Coyotes where they belong in Glendale. It's gratifying the creditors committee, the City of Glendale and the secured creditor were all consistent in their belief and support of us."
-- NHL Commisoner Gary Bettman

PSE amended its bid to offer $50 million with no strings attached to the City of Glendale for its losses. PSE previously said $50 million would go to the City as long as the relocation fee did not exceed $15 million. The city estimates its losses to be roughly 10 times that amount should the team leave for Hamilton.

At the urging of the judge, PSE also withdrew its Sept. 21 deadline for a conclusion to this case after the judge said he couldn't guarantee he would make a decision by then.

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 PSE lead counsel Jeffrey 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.

Balsillie has been rejected by a 26-0 vote by the Board of Governors, which according to the League's constitution is the only group that can vote on ownership applications and relocation applications. A three-quarters vote of the ownership is required to approve transfer of ownership, while relocation is subject to a majority vote.

Clark also said the League has no desire to own the Coyotes for the long term and is not looking to profit from this purchase. Bettman confirmed that in testimony.

The NHL states its goal is to run the team for the 2009-10 season while it seeks a local bidder who plans to keep the team in Glendale. 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.

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 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 that 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 states that all owners 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

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