Balsillie Willing To Leave Coyotes In Phoenix For 1 Year Updated

This just hit my email inbox:

“Last week, the NHL filed a motion with the bankruptcy court in Phoenix which argued, in part, that scheduling issues made it impossible to fulfill the main condition of my offer to buy the Phoenix Coyotes, that is to bring the team to Hamilton and to begin NHL-scheduled play this fall.

I say to all Canadians, but in particular to the many Hamilton and Southern Ontario supporters of our bid: my commitment to bringing an NHL team to Hamilton remains. It’s my firm commitment to Hamilton hockey fans. It’s the best un-served hockey market in the world and it deserves an NHL team.

If bringing an NHL team to Hamilton means needing to remove a scheduling impediment to my bid to purchase the Coyotes franchise, I am willing to do what is necessary to assist the NHL in order to get us to our ultimate goal. That is why I have indicated to the bankruptcy court, in reply to the NHL’s argument, that if beginning NHL play in Hamilton this fall truly creates a scheduling impediment, I am willing to remove that impediment and leave the team in Phoenix for one additional season.

I know you share with me our end goal here – to bring a seventh NHL franchise to Canada, and specifically to Copps Coliseum in Hamilton. I appreciate that support. We’re focused on making that happen, and making it seven. So stay tuned and I will keep you up to date with the latest developments.”

So there you have it. I don’t necessarily think it will mean anything, however it is a good idea on the part of Balsillie to make this move so the court can’t accept the NHL’s ‘we can’t move this fast argument.’ The National Post has a very good editorial today on why Balsillie is facing a nearly un-winnable war here with Bettman:

“Bankruptcy law, corporate law, franchise law, anti-trust law, sports law — the Phoenix Coyotes tangle is deep in a messy swamp. FP Comment’s legal budget has been drastically cut back, making it difficult to put together an air-tight opinion on the validity of Mr. Balsillie’s bid or the likelihood he will succeed in his battle with the NHL and its commissioner, Gary Bettman. From what has been filed so far, however, and based on the nature of sports franchise operations, especially the NHL, Mr. Moyes and Mr. Balsillie will have trouble pulling this off. First off is the fact that Mr. Moyes, facing more calls on his money to keep funding the Coyotes last year, appears to have virtually given up his 91.8% ownership of the team. On Nov. 14, 2008, Mr. Moyes signed an “irrevocable proxy” in which he granted the NHL the rights to the club. It begins: This irrevocable proxy … is granted by the underesigned to the Commissioner of the National Hockey League in respect of its 91.79% ownership interest in Coyotes Hockey, LLC, which is the owner of the Phoenix Coyotes NHL franchise, to provide for the continued management, operation, ownership and financing of the Club and its affiliates in order, among other things, to preserve and protect the interests of the NHL and its member clubs. The proxy agreement would seem to leave no avenue of escape for Mr. Moyes. It continues: The undersigned hereby irrevocably appoints, with immediate effect, the Commissioner of the NHL as its true and lawful attorney and proxy in respect of all of the undersigned’s interest and rights in the club, including without limitation a 91.79% ownership interest in, and all rights as managing member of, the Club (collectively referred herein as the “Coyotes Interests”; the term Coyotes Interests shall be deemed to include, without limitation, all of the limited liability company interests, shares, membership interests or units issued by the club… Since Mr. Moyes signed that agreement last November, the NHL has been paying for the Coyotes’ operation, running up millions in expenses. Since the NHL is picking up expenses at a company over which he gave up all control, it’s hard to see how Mr. Moyes could assume he had the authority to put the Coyotes into bankruptcy so as to facilitate Mr. Balsillie’s takeover offer. A bankruptcy judge will rule on this and other matters next week. The NHL also has what looks to be rock-solid franchise claims over the future of the Coyotes. No sports league can hold together if individual owners can unilaterally move their franchise to what might be a more profitable location. If they could, the owners of the Ottawa Senators might rather be in Hamilton than Ottawa. Why can’t they get first dibs? An odd but revealing bit about Mr. Moyes’s business strategy appeared yesterday in The Arizona Republic. In a letter to the editor, he said he expects to be down $200-million on his investment in the Coyotes, which had been seen as a big draw in the Glendale area, part of a complex development strategy involving the team, the arena and a giant mall, Westgate Center. “Unfortunately,” Mr. Moyes writes, “the arena leases and agreements were constructed so that, in some ways, they subsidized the development of Westgate.” Somehow, he says, that economics made sense when all three enterprises were combined, but not after the team became a separate entity. Few people around professional sports expect to use a team to subsidize something else. For his part, Mr. Balsillie seems to be covering all his corners. In response to the NHL on Thursday, he distanced himself from the ownership issue. “I made a generous good faith offer to by the Coyotes from Jerry Moyes, who I understand is the owner of the Coyotes” (emphasis added). Remarkably, he also added: “Who owns or controls the team is a distinction without a difference.” Tell that to the lawyers.”

The legal hurdles facing makeitseven.ca are not small. There is little chance the judge will decide anything on the 19th. If he does it won’t be good for Balsillie. Should he rule that Moyes was able to put the team in bankruptcy that will be a victory for Balsillie. It will be the first of many he will have to win. Insurmountable? No. However the odds are somewhere between slim and none.

TSM

UPDATE:

Just saw this in a good article:

“Not so fast.

Balsillie’s offer was made on condition the relocation of the team gets approved and that the NHL would pick up all the losses, which may have amounted to $45 million this season.

Well, the NHL’s never going to accept that. The other 29 teams would never countenance such a deal. And Balsillie knows it.”

Oddly enough, the email from Balsillie didn’t include this pre-condition in his email 🙂

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