Tuesday's court proceedings could be huge for NHL, Balsillie Staff

6/8/2009 4:40:40 PM

Tuesday's legal proceedings in the courtroom of Judge Redfield T. Baum have the potential to effectively end Jim Balsillie's chances of owning the Phoenix Coyotes on the spot. Or the judge might approve a sale of the team from Jerry Moyes to Balsillie, and as such set a legal precedent involving the sales and potential relocations of professional North American sports teams.

Or, there might be nothing in the way of a dramatic announcement if Baum chooses to rule later in the week, or perhaps at some other future date.

In recent days, the judge has been examining a number of documents from the NHL, Balsillie, Moyes, and the other major pro leagues (NFL, MLB, NBA). Baum is debating the legalities of Moyes being able to sell the Coyotes, who are operating under bankruptcy protection, to Balsillie for the $212.5 million that the co-CEO of Research in Motion has offered. As has been well documented, the Balsillie offer comes with the condition that he be allowed to move the franchise to Hamilton.

The critical question that Baum will address is whether the Coyotes are a portable asset and whether Moyes has the right to sell to Balsillie (knowing that he wants to relocate the team) and whether the court has the power or inclination to allow a bankruptcy court-ordered sale to supercede the rules and regulations of a professional sports league.

"It's going to be an interesting day, or perhaps week," said TSN Hockey Insider Bob McKenzie. "Based on everything I have heard, it's clear that the bankruptcy court judge has the broad powers required to relocate the Phoenix Coyotes to Hamilton, but there is a real question as to whether he's prepared to use them in a precedent-setting case that could impact on the NFL, NBA and Major League Baseball as well as the NHL."

Baum's primary mandate as a bankruptcy court judge is to protect the numerous creditors of the Coyotes. If he believes that Balsillie's offer represents the best opportunity for the creditors to recoup their investments, then he can rule in favour of the sale.

But NHL commissioner Gary Bettman has made court filings stating that there are four investor groups who have offered to purchase the team and keep them in Phoenix, including Toronto Argonauts owners Howard Sokolowski and David Cynamon. It's Bettman's wish that the team remain in Arizona, and furthermore, that the NHL's rules governing ownership and the potential movement of a franchise take precedent over any court decisions.

"If the judge rules in favor of the NHL, I don't think there's any question the intervention of the NFL, NBA and Major League Baseball will have been the turning point," said McKenzie. "If the judge rules in favor of the relocation, the question then becomes, can the NHL tie it up in legal proceedings by either getting a stay or filing an appeal that would prevent the Coyotes from actually going to Hamilton for next season? Either way, I would be surprised if the Coyotes are playing in Copps Coliseum in October. But anything, I suppose, is still possible."