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Bankruptcy court judge orders NHL, Moyes to mediation

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The Canadian Press
5/19/2009 11:27:06 PM
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PHOENIX -- The wait continues for those hoping to see the Phoenix Coyotes move to Hamilton.

Judge Redfield T. Baum wasn't prepared to tackle the relocation issue as part of the Coyotes' bankruptcy hearing on Tuesday and ordered all parties to return on June 22 to decide whether the franchise can be moved as part of the team's sale.

That will help determine exactly what potential purchasers, including Canadian billionaire Jim Balsillie, will be bidding on. The co-CEO of BlackBerry maker Research in Motion has made a US$212.5-million offer for the team that is contingent on being allowed to move it to Hamilton.

"It seems like in large part that (the relocation) issue is driving the case right now," said Baum.

Even if it's decided that the Coyotes can be relocated, there's no guarantee that the team will become Balsillie's property. The judge's main reason for wanting to make a ruling on relocation is to help ensure that the highest bidder comes forward.

The court will hold an auction to sell the team -- perhaps as soon as July -- and wants to make ensure that everyone knows what they're bidding on.

"It's very important to try and keep the playing field as level as possible," said Baum.

Ultimately, all sides seemed fairly happy with the decision to settle the relocation issue before putting the team up for auction.

NHL deputy commissioner Bill Daly said it will bring more "clarity" to the process while Richard Rodier -- a representative for Balsillie -- claimed that it would give his client a better chance to finally buy a team and move it to Hamilton.

"It makes the process more transparent than it otherwise might be," said Rodier. "There's a number of a stakeholders who should be able to see the process. Our point of view is that the people of southern Ontario and Canadian hockey fans generally need to be able to have a good look at how the NHL treats the relocation application and indeed how it treats its best customer by far."

Balsillie certainly plans to push forward.

He released a statement shortly after the end of the four-hour hearing indicating that he intends to file formal applications to the NHL both for transfer of ownership and relocation -- something Baum indicated in court should already have been done.

"I am being open and transparent about this as I've been from the beginning," Balsillie said in his statement.

With the next key hearing not coming for another month, it seems less and less likely that the Coyotes will be anywhere other than their current home of Glendale next season.

The NHL says its completed roughly 55 per cent of the schedule for 2009-10 and indicated that it would be virtually impossible to handle the logistics of moving a team before September. However, it may not have a choice.

"That's ultimately up to the court," said Daly.

The bankruptcy hearing produced some good theatre, with Baum often displaying a dry wit and hammering the NHL over its claim that a proxy agreement signed by Coyotes majority owner Jerry Moyes essentially amounted to him giving up control of the team.

The judge never did establish who is currently running things.

Instead, he ordered the NHL and Moyes to enter into mediation and asked them to return to court on May 27 to provide a status update. Both sides claimed in court documents that they were in charge of the Coyotes.

The judge chose mediation because he wasn't interested in having the two sides continue putting so much effort into arguing over what is essentially a moot point.

"Why are we arguing about who has their hands on the steering wheel of a car that's going to be sold in 60 days?" Baum said.

Often referring to relocation as a "hot-button issue," the judge wasn't prepared to make an immediate decision on it -- even though lawyers from the NHL suggested that he should.

Statements filed to the court by the NBA, NFL and Major League Baseball seemed to catch Baum's attention. The other major sports leagues have come out in support of the NHL out of fear that this case could set a dangerous precedent.

Daly believes that past cases ensure the Coyotes can't be moved without league approval.

"Many courts have decided the issue over many years," he said. "Sports leagues have always maintained the ability to control the location of their franchises. I don't expect any different result here."

Moyes has plunged more than $300 million into the Coyotes and stands to lose the majority of that investment even if Balsillie -- or someone else -- is allowed to purchase the team.

The trucking magnate has lived in the Phoenix area for the past 42 years and describes himself as an "accidental owner" of the Coyotes. He started as a small investor before increasing his stake to try and protect the investment, eventually purchasing the team from Steve Ellman.

He declined to speak to reporters after leaving the courtroom, choosing instead to have spokesman Steve Roman take questions. Roman said that Moyes was encouraged that the judge seemed intent on expediting the bankruptcy process and suggested that a buyer might still be found who is willing to operate the team in the desert.

That isn't something the Balsillie group is worried about.

"As the commissioner said in his declaration, I think interest to buy a team that's been losing the kind of money that Phoenix has been losing is limited," said Rodier. "On the other hand, Mr. Moyes is a resident a Glendale and I know that he would be delighted -- delighted -- to see a competitive bid come out that keeps the team (there).

"Realistically, that may not happen."

If the judge ends up ruling next month that the franchise can be relocated, there's a good chance that Balsillie won't be the only interested buyer.

His main representative isn't concerned about the potential for a bidding war.

"I'm not worried at all because it's not my money," said Rodier.

Bettman, Moyes and Balsillie (Photo: The Canadian Press)

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(Photo: The Canadian Press)
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