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Bankruptcy judge speeds up Coyotes relocation fight schedule

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The Canadian Press
5/27/2009 11:30:53 PM
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PHOENIX -- A U.S. bankruptcy court judge has accelerated the schedule for determining whether Canadian businessman Jim Balsillie can buy the Phoenix Coyotes and move the club to southern Ontario over the objection of the NHL.

At a hearing Wednesday, judge Redfield Baum called the relocation issue "the 10,000-pound elephant in the room" and said it needed to be resolved quickly.

He set a hearing for June 9 and promised a ruling shortly thereafter. All briefs and declarations must be submitted by June 5. The relocation hearing had been scheduled for June 22, but Balsillie has said he will withdraw his US$212.5-million offer if the sale is not completed by the end of June.

NHL deputy commissioner Bill Daly said the league will appeal if it loses at the bankruptcy court level. But he expressed confidence that won't be necessary.

"We're confident in what the law says," he said, "and the law is pretty clear with respect to our rights to control both the identity of our owners and the location of our franchises."

The NFL, Major League Baseball and the NBA have filed papers asking the judge to respect the NHL's rules, expressing concern that an adverse ruling would serve as a dangerous precedent undermining the operation of professional sports leagues.

Lawyers for Balsillie and Coyotes owner Jerry Moyes argue that blocking the move violates antitrust law and Baum has the authority to force the move under bankruptcy statutes.

The judge set two tentative dates for the auction of the team, depending on how he rules on the relocation issue -- June 22 if Balsillie gets his way and Sept. 10 if the NHL prevails.

The NHL, which wants to find a buyer to keep the team in Glendale, Ariz., welcomed speeding up the process, saying that having the franchise in limbo is further damaging an already bankrupt business that lost $74 million over the past two years.

"This is a franchise that obviously needs to improve its revenue streams to be viable," Daly said outside the courthouse after the hearing. "So this is an important time period right now and that's why today's ruling in terms of moving up the date for determination on the relocation issue is a good ruling."

Richard Rodier, a spokesman for Balsillie, also backed the new timeline.

"It seems to clear the way for closing within the time frame contemplated by our offer, should we win the relocation motion," Rodier said. "Really that's what it depends on, and I think Judge Baum made a very good decision."

The city of Glendale also is fighting the move, contending that the Coyotes cannot not break their lease to play in Jobing.com Arena without paying a significant penalty. Baum said the city's concerns also would depend on the relocation ruling.

Baum told lawyers for Moyes and Balsillie that their arguments would have to centre on two specific sections of the U.S. Bankruptcy Code. The judge said of all of the related cases that he's studied, none "has a fact scenario remotely close to this case."

While Balsillie has applied to the NHL to buy the Coyotes, and says he will file an application by Monday to move the franchise to Hamilton, Baum said it was obvious the league opposes the Canadian's plans.

League lawyer Tony Clark told the judge the NHL is immediately accepting bids to buy the team and keep it in Glendale. If the NHL wins the relocation fight, then the league's owners would approve the sale of the team before the bankruptcy court auction in September.

Two possible buyers to keep the team in Arizona have surfaced. The NHL says it was about to present Moyes with a letter of intent from Jerry Reinsdorf, owner of baseball's Chicago White Sox and the NBA's Chicago Bulls, to buy the team when Moyes took the league by surprise by declaring Chapter 11 bankruptcy. Lawyer Scott Cohen said last week his client, Las Vegas-based businessman John Breslow, was interested in making a bid to buy the franchise and keep it in Glendale.

Asked if Reinsdorf was still interested, Daly said, "I hope so."

Any sale to keep the team in Arizona would be contingent on reworking the lease agreement with the city of Glendale, Daly said.

Jerry Moyes (Photo: The Canadian Press)

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(Photo: The Canadian Press)
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