Perspective Needed In Coyotes Balsillie Bankruptcy Case

Don’t get me wrong folks, the media coverage on the biggest sports trial in these parts since OJ (that’s a joke okay)but we all need to take big, deep breath with respect to the Phoenix Coyotes/Jim Balsillie/Gary Bettman bankruptcy case. Nothing, let me say this again, nothing, has happened that is the least bit unexpected. Strongly worded documents are filed in court cases EVERY day, they are nothing more than arguments. They are supposed to be persuasive. In order to be successful, a good argument will use words like “sham” to try and influence the decision maker. The press, especially in this city is hanging on every word that gets filed in this case as if it were fact. Jerry Moyes hired the top bankruptcy attorney in the state of Arizona. I guarantee you that nothing that has been in the filings has surprised the lawyer one bit. When you pick up the paper and you read things like:

“Just when billionaire Jim Balsillie cleared one hurdle – getting a 32-year lease for Copps Coliseum – his bid to buy the Phoenix Coyotes and move them to Hamilton ran into a potential new roadblock. The city of Glendale, Ariz., laid out its legal objections to the proposed sale of the Coyotes late last night, saying a bankruptcy court judge shouldn’t consider the sale of the team “based on the false premise that (the winning bidders) are legally capable of relocating the Phoenix Coyotes hockey team.”

Take a deep breath and ask yourself this very simple question. If you were the city of Glendale and you have a hockey arena with no other major tenant, and you have a long lease with that hockey team that pays you lots of money, wouldn’t you strongly object to a proposed nullification of that lease?? I mean come on people!! This isn’t news. The only way Glendale can protect itself is by thumping it’s chest. Imagine if they didn’t!!! That would be news!

“The city is not asking the judge to rule on the lease, but wants all bidders to be aware of it and threatens to drag out litigation over the issue. “Any relocation of the Phoenix Coyotes is … prohibited by law. The city has stated that it intends to vigorously and fully enforce that (lease) commitment.”

Of course that is what they are saying. It would be incredibly stupid if they didn’t do just that. Does that mean it is a done deal”? Hell no. The city knows it, the Coyotes know it and so to does Balsillie. This is all part of having to play things out. In baseball terms, we aren’t even out of the first inning yet!

“The good news for Balsillie occurred last night at Hamilton city council. In a deal approved unanimously by the council, Balsillie is promising to sign a long-term lease if he secures the Phoenix Coyotes. The deal includes a $5 million injection of cash from Balsillie to help upgrade the 17,000-seat arena by 2010.”

I have no problem with this fact being reported, however, again, is this really news? What other choice does the Hamilton city council have??? In the grand scheme of things what does the city of Hamilton have right now??? NOTHING. The elected officials can tell their constituents that they were doing their best to bring hockey to town. Other than that??? nadda!.

“The NHL is taking direct aim at Canadian businessman Jim Balsillie, calling his bid to move the Phoenix Coyotes to Hamilton a sham and alleging he is trying to undermine the “fundamental structure of the thirty-team NHL venture.”The league attacked Mr. Balsillie in a series of strongly worded filings in an Arizona court, alleging his offer for the Coyotes smacks of “duplicitous dealing” and, along with his two previous attempts to buy NHL teams, demonstrates an unwillingness to follow league rules.“Apparently, Balsillie does not want to face the scrutiny that comes with the NHL Board of Governor’s standard review and approval process,” Bill Daly, the league’s deputy commissioner, said in an affidavit.”

Gary Bettman has proven to be a pitbull. Gary Bettman was stunned by this move by Moyes (how that is possible is stunning in of itself). Therefore Gary Bettman’s lawyers are going to come out swinging. Does it mean anything yet? NO! What were people expecting these documents to say? The NHL really prefers that this doesn’t happen? How effective would that be? The lawyers on both sides are highly skilled at their trade. They are paid to draft arguments like this. They know what the elements are in each law that is in question and they are trying to persuade the trier of facts that their argument is more persuasive then their opponents.

“Some observers questioned Mr. Balsillie’s strategy. “I look at it and say, ‘Gosh, what an amateur [Mr. Balsillie is],’ ” said Chuck Greenberg, a Pittsburgh lawyer who worked with Penguins co-owner Mario Lemieux when Mr. Balsillie tried to buy that club. “He’s not the first person to buy a franchise. He seems to repeat the same mistakes over and over again. Leagues are an unusual being. You’re a competitor; you’re a partner. When a guy takes the same action and circumvents the rules in the same way, it’s pretty reasonable to ask if he would be willing to follow any rules.” Mr. Greenberg added that Mr. Balsillie has “probably done more to hurt the chance of a second team in Southern Ontario.”

Now that is an interesting observation and one that is newsworthy. Keep in mind that there is a stated bias on the part of the owner of that opinion. I don’t think Greenberg is alone in disagreeing with the theory that Balsillie is destined to fail given his repeated path of choice. As for the last part about Balsillie hurting SW Ontario, I am not sure I buy that. I don’t think that another failed bid to land a team here has any adverse effect on it happening down the road.

What is really interesting too is that Balsillie is trying to win this case in the court of public opinion. The problem is, the public in Canada or Ontario is so far removed from an Arizona courtroom. Do you think the judge gives a rats ass what people here think? His obligation is to the creditors. No more, no less. So Balsillie can get 10 million email addresses and do radio shows every day of the week and three times on Saturday and it won’t make a difference in how the judge rules. I know the argument, if there is enough public push other owners may be swayed. I find that hard to believe. These guys again aren’t going to be swayed by people in Ontario. Moving a team to Southwestern Ontario only removes a small problem for other owners, it takes one team off the take. They don’t get a big fat expansion check when a team moves. I consider the other owners unmoved by any amount of public sentiment.

Here, my friends is the question I would love to know the answer to. We all know what happened to Balsillie’s previous unsuccessful bids. “There was no front door to get this team here. I looked. I checked every which way. I’m so inside in every which way. I know a lot of these owners,” said Balsillie.” I can think of one way which he didn’t consider. Balsillie walked away in the past because the league imposed qualifications on him. “You can buy the team if you agree to commit to the market in Nashville”, “you can buy the team if you agree not to move the pens for 7 years”. So what did Balsillie do? He turned the tables. “I will buy the team if I can move them “Balsillie said. Here is my question. Imagine for a second that Moyes puts the team into bankruptcy(just like he did in reality). The difference is, what if Balsilie’s bid didn’t have the condition? He puts in an unconditional bid, at the same money to buy the bankrupt franchise. Reinsdorf’s bid comes in at $130 million with a condition of the team getting tax relief. Now, what would Bettman do? Bettman would now have to be the ultimate bad guy bad mouthing Balsillie wherever and whenever he could. Would Bettman tell a bankruptcy court that he will only accept Balsillie’s far superior bid if Balsillie agrees to keep the team in Phoenix??? He may. Would the trustee enforce that??? I suspect that the trustee would be far less willing to enforce Bettman’s condition in that scenario as opposed to pre-condition he is currently facing. The trustee would be facing a huge pay day for the creditors UNCONDITIONALLY under my scenario. Why would a trustee want to risk that? Now I know what you are going to say, Balsillie wouldn’t be able to get out of the lease. The lease situation would be no less in play then it is now. The lease is questionable because of the bankruptcy. Moyes puts the team in bankruptcy, Balsillie makes an unconditional offer and forces Bettman to impose the condition. I would love to know how that would have played out. I am willing to bet it would have been much better then how this is going to end. We will never know.

Don’t get me wrong in all of this. The press is doing a great job bringing all of this to us, the public. I think they are failing us in not providing us with the proper perspective. Everything is unfolding the way all other cases do.

TSM

The Star is here and here
The Globe is here

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