Among the many questions surrounding the sale of the Coyotes is: Is this a mobile asset?
PHOENIX -- "Who owns the Chiefs?" became "Where are the Chiefs going to play?"
They came to a Phoenix courtroom to argue about who controls the Phoenix Coyotes, and by the time they walked out the doors more than four hours later, all parties decided that it didn’t really matter so much who controlled the team.
"The biggest issue here is, is this a mobile asset," said National Hockey League deputy commissioner Bill Daly.
"Are you bidding on a franchise in Glendale, Arizona?" asked NHL lawyer Anthony Clark sarcastically. "Or are you bidding on some free-floating right to put a franchise anywhere in the world? Not just Hamilton. What if you put it in Hong Kong? Maybe you could get a half a billion for it?"
After weeks of filings in which the NHL vigorously disputed the right of Coyotes owner Jerry Moyes to take the team into Chapter 11 bankruptcy, it turns out the NHL will leave the team in bankruptcy even if they win this fight. Bankruptcy court judge Redfield T. Baum sent the two sides to mediation, ordering them to report back to him on May 27 on their progress in deciding who has control of the team prior to and during this legal process.
But as the good judge said, "Why are we arguing over who had their hands on the steering wheel of a car that’s going to be sold in 60 days?"
Clearly this team needs to be sold -- Moyes said last summer that he was through with covering US $40 million in annual losses. So the issue shifted to an auction process that the NHL is surprisingly in favour of.
Why?
Because the NHL is confident that the judge will allow them to vet the list of bidders at any auction, and that an auction will maximize the sale price. Though Jim Balsillie lawyer Richard Rodier was just as confident that his client would be successful in any auction for the Coyotes, an auction for a portable NHL team would drive the price up considerably, while an auction for a team tied to Glendale would likely eliminate Balsillie from the picture.
Either way, the NHL is better off. And Balsillie likely would not get a Southern Ontario franchise for the US $212.5 million he’s prepared to pay for the Coyotes.
That is how the relocation issue was pushed to the top of the agenda in Baum’s courtroom on Tuesday, with NHL counsel arguing that Moyes can not sell the Hamilton Coyotes. "You can not sell what you do not own," said Clark.
He can only sell the Phoenix Coyotes -- and even then, only to an NHL-approved owner, the NHL states.
This day had it all: from Taylor Swift’s concert promoter wanting to make sure that the gate from Thursday’s show at Jobing.com Arena doesn’t get caught up in the bankruptcy, to a judge admonishing lawyers for writing run-on sentences with too much legalese in them. Like they’re going to do anything else?
A lawyer showed up representing Major League Baseball, the National Football League and the National Basketball Association, the first hint that this is heading towards anti-trust territory, with Moyes and Balsillie set to dispute the NHL’s right to protect territories (i.e., Toronto and Buffalo) and dictate any and all teams on franchise relocation.
Baum eviscerated the NHL’s proxy that the league believed gave them total control of the franchise. Then, when asked by Balsillie lawyer Susan Freeman if he may address the court, Baum -- ever the pistol -- refused to allow Rodier to speak.
Rodier, who is as pompous as Balsilie is rich, embraces an open debate on the NHL’s relocation practices. And he will no doubt get his chance to speak on June 22, when all sides will gather to argue over the NHL’s bylaws regarding relocation.
That should be a doozy.
"The people of Southern Ontario and Canadians need to be able to have a close look at how the NHL treats the relocation issue. How it treats its best customers," Rodier declared.
Countered Daly: "This really has nothing to do with Southern Ontario."
Remember, this is a bankruptcy court. Baum’s mandate is to maximize proceeds from the sale to protect the Coyotes’ many creditors.
So Moyes’ lawyers are arguing that tying the franchise to Phoenix makes it far less valuable. And they are also injecting urgency into the sales process, because if the team is forced to play the 2009-10 season in the desert, it will surely lose another $40 million.
"Justice delayed is justice denied," said the Dom DeLuise look-a-like Rodier.
The NHL’s counsel promised, however, that any application to move the franchise before next season will be denied.
This fight, some wrongly believed, would be concluded on Tuesday. The truth is, it is only getting started.
