Pretty interesting day to be sure. Here is the roundup:
First and foremost. If you want to know why Prime Time Sports is number one in this market, then you HAVE to listen to the podcast here. Mccown, Brunt and Doug Maclean go at it on the the topic du jour and it is what makes talk radio so special. It is the type of banter that we look for every night. It was, without exaggeration, fantastic.
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Listen to the Chat here
The winner in media coverage today was the Star, Kevin MCGran was live blogging (twittering) play by play of the events. He really provided the best insight of anyone I saw who was there proving commentary:
“Bankruptcy court judge Redfield Baum ordered the NHL and Coyotes owner Jerry Moyes into mediation to try to resolve the dispute over a potential sale of the team. ‘The court orders both parties to mediate the control issues,”‘Baum said prior to a recess. ‘The court expects the parties to pursue that as quickly as possible and wants a status report … May 27 at 9 a.m.’
For the record, this is VERY typical. Alternative dispute resolution is the in thing in litigation of all types in the US and there is no surprise that the court has insisted that the parties give mediation a shot.
“The judge didn’t like that billionaire Jim Balsillie has already launched an antitrust lawsuit designed to allow the team to move to Hamilton, pointing out he doesn’t own a team. And he scolded Moyes for not going to the league with Balsillie’s $212.5 million (U.S.) offer. ‘To have a bonafide dispute, you have to have someone turned down.’ ”
Most judges don’t like the cart being placed before the horse, it questions their authority. That doesn’t mean Balsillie was wrong for doing it.
“Baum grilled NHL lawyer Anthony Clark over the proxy agreement the league argues gave it control of the financially troubled team, saying the language of the document is anything but clear. Baum also wondered why – if the league was in control – owner Jerry Moyes was acquiring loans in February. ‘Sounds like they weren’t exercising power and control,’ said Baum. Clark responded: ‘That they weren’t exercising power and control isn’t the same as they didn’t have control.’ ”
This is the number one issue before the court right now. Who owns the team and did Moyes have the authority to place the team in Bankruptcy. The NHL’s argument that the league controlled the team hinges on one document; the proxy that it had Moyes execute in the leagues favour. There is a problem though and here is your legal lesson of the day. When you have a document between two parties, and that document is ambiguous in any of it’s terms, that ambiguity is almost always held against the party that wrote the document. In other words, if the proxy, written by the NHL is unclear with respect to ownership of the team, it is very likely that the court will hold that part of the proxy in the most favorable way to Mr. Moyes. Think about it, the party who writes something has the burden of getting it right; not the receiving party. Therefore, unless there is some other murder weapon that we don’t know about, it will be very difficult for the court to rule that Moyes didn’t have the right to place the team in bankruptcy. That doesn’t mean he will win. It just means he will survive this first round.
David Shoalts offers up his take:
“The judge said he wants the matter resolved quickly and scheduled a hearing for May 27 for a report on their progress. ‘You guys are either going to mediate this or I’m going to rule on it,’ Baum said. Both sides obviously want a sale of the Coyotes, the judge said, but cannot agree on the timing, although both agree it should be done as soon as this summer. The judge also said the plan by Balsillie to buy and move the team cannot be decided until the relocation issue is settled by the court. ‘But I’m not deciding that today.’The judge ruled all briefs and other material concerning the relocation issue have to be submitted June 12. He will hold a hearing for the oral arguments on June 22.
As I stated above, the mediation thing is standard operating procedure. Shoalt’s quote from the judge is very typical. He is giving the parties to fix this in a way that they both can live for face his way which, is very possible neither side will like. Consider your calendars folks. June 22 will be the date for oral arguments. Tack on to that another week or two for flings and his decision and the NHL free agency period kicks off with Phoenix in limbo. Not good in anyway, shape or form. The good news is that the NHL apparently extended it’s line of credit up to $200 million USD so that they can operate this team.
“Tony Clark, a lawyer representing the NHL, asked the judge to decide the relocation issue ‘and, with respect, handle it now.’ He said buyers have to know what they are bidding on – a team that can be moved or one that has to stay put. However, lawyers for Moyes and prospective buyer Jim Balsillie asked for more time to file briefs on the issue. They also asked the judge to hold another hearing to listen to oral arguments. They asked the relocation and sale hearings be held at the same time, in mid June. Susan Freeman, Balsillie’s Phoenix lawyer agreed to the judge’s request that an official request for relocation be submitted to the NHL. But she asked that the league be told to make a decision quickly. The judge did not immediately rule on the requests, although he said, ‘I don’t think I have enough [written arguments] in front of me to really decide.’ ”
This is fascinating. The league wants the court to decide this issue asap for a couple of reasons. First, if they lose, they want to start the appeal engine immediately. Second for timing reasons. Thirdly, for the reasons they stated. The easiest way to defeat Balsillie is to bring a better offer and they aren’t going to do that with this issue up in the air. Having said that, how does Balsillie file a relocation application on something he doesn’t own??? Now, the reason Balsillie wants a decision soon is that this issue of relocation has never gone to a vote before the board of governors. It hasn’t had to. When a team was moved the ducks were all in a row, whomever was getting paid off did so before it got to this point. Should the league vote the application down that steps up the anti-trust argument. Again, how that happens on an asset that Balsillie doesn’t own is a tad bit puzzling. It’s kind of like applying for a permit to build an extension on your home before you own the home….
Brahm Resnik, an Arizona reporter filled in with word of a late entrant into the plot, a potential new bidder for the team:
“There’s a new name among potential bidders for the Phoenix Coyotes, emerging from the team’s current ownership. John Breslow, one of the team’s minority partners, has filed a statement in support of the NHL’s position to block the sale of the team at an auction proposed by the Coyotes. Breslow’s attorney, Scott Cohen, confirms that Breslow is a member of a group of potential buyers who would keep the team in Phoenix. Cohen says Breslow is not part of the Jerry Reinsdorf group, which has been the only potential bidder named to date. The NHL has asked the bankruptcy court judge to keep Breslow’s statement supporting the league’s motion confidential, because it might embarrass the team and affect the sale process. Documents show Breslow holds a roughly 2 percent interest in the team, but he is among the most active partners in the ownership group. He runs Coyotes Charities and flies with the team to many of its games, Cohen said. Breslow was a Republican candidate for governor in his home state of Nebraska in 1998 and was the state auditor, as well. He sold his family-owned welding business in Lincoln for a reported $260 million three years ago. At the time, Breslow said he and his wife were spending most of their time at their home in Las Vegas. One other interesting Breslow connection: Earl Scudder, the personal attorney for Coyotes owner Jerry Moyes, was Breslow’s longtime attorney. Court documents show it was Scudder who shopped the team to potential investors. Breslow could not be reached for comment.
Mark Spector was on hand for Sportsnet too:
” ‘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?’ ”
Funny how the rules seemed to change almost immediately form the word go at today’s hearing. Up until now all the experts were suggesting the number one issue is….who own da cheifs. Suddenly that issue, at least for the NHL has changed. Why? Probably because it looks like the proxy isn’t as clear as they would have liked.
“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?’ ”
Precisely. Remember, the judge has 1 thing in mind here, CREDITORS. That is all his obligation is to. He has to get those who are owed money as much of it back as possible.
“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.”
Remember, this much like a flowchart. If you get stuck at one point, you move on to the next. The NHL has to carry it’s happy face. An auction may work for all parties. It will of course hinge on that nasty pre-condition clause that the court wants wrapped up and soon. The question I have is, why does the league think it will get more money in an auction? Say they have Reinsdorf at $120m. Who is going to pay more for a team that the commissioner is now on the record as saying loses $40m a year??? Even with $15m in concessions form the city (which taxpayers will likely revolt over), you haven’t closed the gap far enough to get anyone dumb enough to poney up more then 120m! As MacLean said on PTS tonight, the current system wasn’t designed to help team that can only draw 7500 fans a night.
Where Spector carried the day is in this type of stuff:
“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.’
Can you imagine being a fly on the wall during this mediation?? Remember War Of the Roses??
“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.”
Balsillie’s bid expires at the end of June, another reason that the clock is ticking. That any application to transfer will be denied is a clear shot a the anti-trust legislation. The gloves are off and it’s going to get ugly.
Bruce Dowbiggin is right about one thing, everyone looks pretty bad right about now:
“The release of private documents has embarrassed NHL commissioner Gary Bettman, lifting the cloak of secrecy he and the league use to keep faltering franchises in line. The guerrilla attempt by Jim Balsillie to buy and relocate the Coyotes’ franchise to Southern Ontario has distanced him from even his most sympathetic supporters within the league. But with no ceasefire in sight, the sides keep firing away. The release last Sunday of unprecedented Labatt Brewing Co. Ltd. commercials supporting Balsillie’s makeitseven.ca website has ratcheted up pressure on the league, portraying it as anti-Canadian and self-serving.
Related Information Considering the six extant Canadian teams reportedly supply as much as 35 per cent of the league’s gross revenues, the commercials are highly prejudicial to the NHL in Canada even if they don’t affect the Phoenix hearings a jot. The advertisements wrap Balsillie’s effort to land the Coyotes in the Canadian flag, equating success for the Research In Motion co-founder with maple syrup, Gordon Lightfoot and snow angels. Combined with the support of Home Hardware for makeitseven.ca, they represent a naked assault on the league in its backyard. And coming from a respected corporation such as Labatt — a unit of Anheuser-Busch InBev SA, which sponsors its Bud Light brand as the “Official Beer of the NHL” — the ads are stunning in their advocacy. Few in the industry can recall such an affront to a pro sports league from a sponsor.”
That is what Balsillie wants. He wants this tried in the court of public opinion. Will it work? I highly doubt it. Every media outlet has been telling folks that this isn’t a battle between Bettman vs. Canada. Maclean, again on PTS tonight said it best. This is about getting the league the most money out of expanding to Southwestern Ontario. The league doesn’t want a team in Phoenix that loses $40m a year. Move it to a market where there is no competition. The league needs to protect it’s $400 million expansion golden egg.
Interesting opinions in the National Post:
” ‘I don’t see what mediation will solve if both sides are convinced that they are right – and they are convinced, since to give in now ruins everything,” said Rick Powers, the associate dean at the University of Toronto’s Rotman School of Management. “What the judge did answer was the importance of this issue. Everything rests on this question. If Moyes had the right to petition the club into bankruptcy, then he probably has a right to strike a deal with Balsillie. And the judge will consider any bids and determine who the club gets sold to – usually the highest bidder – which at this point is clearly Balsillie. If the NHL is declared the owner, we are back to square one with a team in Phoenix and the NHL keeping it on life support as they grapple with finding a buyer or consider other alternatives such as relocating the team.’ ”
I think that is a fair assessment of the day.
“Gary Bettman’s second-in-command also said the league is too far along in the scheduling process to have the team play anywhere but Phoenix in 2009-10. Mr. Balsillie’s lawyer, Richard Rodier, disputed Mr. Daly’s notion that the Coyotes were heading for a scheduling conundrum. ‘In a previous situation, in the Nashville situation, we were told in writing by the NHL that they could take an application in the spring – and process it quickly enough to consider relocation by that fall,’ Mr. Rodier said. ‘You can interpret that the way you want.’ ”
Anyone think that Bettman, Daily and Balsillie and his team will ever be able to look at each other ever again????
“It really has nothing to do with Southern Ontario,” Mr. Daly said. “We’re not dealing with the Southern Ontario issue. We’re very appreciative and sensitive to the passion of hockey fans in Southern Ontario. This really has nothing to do with Southern Ontario. It has everything to do with our rules, our processes and our commitment to cities that we grant franchises to.”
Can you imagine the reception the league officals will get in Montreal at the draft if all this going on??? If Balsillie is smart, he will have the city and country painted ANTI-NHL everywhere he can. He is already on the road. Yes Bettman and Daily ususally get booed at public events. Can you imagine them getting booed off stage??
Speaking of Balsillie, he of course issued a release:
“This case offers many competing claims and testimony for the court to consider. I appreciate the court’s careful consideration of the facts at hand and I respect Judge Baum’s decision to recommend mediation for the Coyotes and NHL on the issue of current ownership. I also respect his decision to hold a June 22 hearing on the relocation issue. But let’s be clear, I am moving forward. I have tabled a comprehensive and attractive offer. I will also be filing formal applications to the NHL both for transfer of ownership and for relocation to Southern Ontario to my chosen Hamilton Copps Coliseum venue. I am being open and transparent about this as I’ve been from the beginning. My Hamilton proposal, drawing on the world’s best hockey fans located in the fourth largest urban region in North America, meets all the conditions for a successful NHL franchise. Nothing has changed in terms of my bid to bring a seventh NHL team to Canada, to the best un-served hockey market in the world. Momentum continues to build through our website, www.makeitseven.ca. I ask all hockey fans to continue to let their voices be heard.”
That’s all that appears to be out there tonight. More tomorrow.
TSM
McGran is here
Shoalts is here
Resnik is here
Spector is here
Dowbiggin is here
National Post is here
