Jim Balsillie might finally be giving up on his dream to own an NHL team.
The Canadian billionaire’s dogged pursuit of the Phoenix Coyotes appeared to end Wednesday with a ruling in U.S. bankruptcy court. Even though judge Redfield T. Baum rejected bids from both the BlackBerry boss and the NHL, he suggested the league’s offer could still be amended and essentially closed the door on Balsillie.
That brought an end to a five-month process that saw the Canadian billionaire spend an untold amount of money on legal fees and an aggressive public relations campaign. He launched a website, took out advertising and even brought on sponsors in support of his bid to move the Coyotes north from the desert.
None of it was enough to sway the court.
“All I wanted was a fair chance to bring a seventh NHL team to Canada … (and) I believe I got that chance,” Balsillie said in a statement. “I respect the court’s decision, and I will not be putting forward an appeal.”
Wednesday’s court ruling does not close the book on the Coyotes’ ownership limbo.
But in the end, the NHL got what it wanted all along – the ability to control the sale process for the money-losing franchise. And the ruling will probably set the scene for the league to fix its bid and then find a new ownership group to keep the franchise in Phoenix – at least for the time being.
The ruling also prevents Balsillie from circumventing what could be a bonanza expansion fee should the league ever decide to place another franchise in Southern Ontario, although the Toronto Maple Leafs may have something to say on that.
Baum’s primary concern with the league’s current US$140-million bid is that it attempts to pick which unsecured creditors will be paid in full, excluding former owner Jerry Moyes and former coach Wayne Gretzky from drawing their total claims.
Moyes says he loaned about $100 million to the franchise, while Gretzky has a $22.5-million claim.
However, the judge expressed hope that the league might amend its offer to make it more palatable.
“In hockey parlance, the court is passing the puck to the NHL who can decide to take another shot at the sale net or it can pass off the puck,” Baum wrote in his decision.
He was unequivocal in his rejection of Balsillie: “This conclusion effectively is the end for the efforts of PSE (Balsillie’s company), Balsillie, Moyes and the Coyotes to force a sale and relocation of the hockey team.”
NHL deputy commissioner Bill Daly issued a statement saying the league is “pleased that the bankruptcy court has confirmed the league’s rights to select its owners and the location of its franchises.”
“We are reviewing the opinion and considering how we can best address the court’s concerns regarding our offer to purchase the Coyotes,” Daly said. “It remains our goal to secure the long-term stability of the Coyotes in Glendale.”
The ruling brought a sudden and dramatic end to Balsillie’s pursuit of the team, although he tried to see the positives in his statement.
“Nobody can deny that we are now a big step closer to having a seventh NHL team in Canada,” he said. “It doesn’t matter who owns that team. When that day comes, I will be the first in line to buy a ticket to the home opener.”
Balsillie has now been rebuffed in attempts to buy the Coyotes, Pittsburgh Penguins and Nashville Predators. A brilliant businessman, his out-of-the-box efforts to pluck a team out of Phoenix only served to further alienate him from the NHL’s inner circle.
One of the few promises made by Baum during court proceedings was that he would deliver his decision before the start of the NHL’s regular season. He made good on his word by filing a little more than 24 hours ahead of the first game.
In the 28-page ruling, the judge said it would make no sense to move the team with the prospect of more litigation over the NHL’s rights to control its own membership, who owns its teams and where they play.
Baum’s summary of the case starts with the massive red ink surrounding the Coyotes, the former Winnipeg Jets who flew south in 1996. The ruling cites total losses of $75 million in 2004, $50 million in 2005, $75 million in 2006, $117 million in 2007 and $72 million in 2008.
Balsillie saw an opportunity to get the franchise into the black by moving it to Hamilton and playing out of Copps Coliseum. In the end, he was offering $242.5 million – roughly $100 million more than the NHL.
The back-and-forth wrangling over the team’s future started when Moyes caught the league by surprise and filed for Chapter 11 bankruptcy protection on May 5.
More than 1,000 documents were submitted to the court in the ensuing months and several hearings were held in courtroom No. 703 – with Baum rarely tipping his hand about which way he was leaning beyond making it clear he was reluctant to set a precedent.
Commissioner Gary Bettman and Balsillie were among the occasional attendees, along with a large contingent of Canadian journalists. The two men sat several feet from each other when they were in court together but didn’t acknowledge one another.
Their only real interaction reportedly came when they bumped into each other in the washroom. That resulted in a handshake.
The NHL contended all along that Balsillie’s bid was an attempt to skirt the league’s rules on the transfer of ownership and relocation, arguing attempts should first be made to sell the franchise to a buyer who would keep it in Phoenix, despite over $300 million in losses since the franchise moved to the desert.
Chicago sports mogul Jerry Reinsdorf and a group of Canadian and American businessmen called Ice Edge Holdings were among the others to show interest, but another firm bid never actually materialized.
That forced the NHL to put together its own offer to buy the franchise, with an eye on keeping it in suburban Glendale for at least this season while it sought out a local bidder.
In early September, Baum presided over two days of hearings that culminated with an auction for the team and saw both the league and Balsillie sweeten their bids. Even though the Canadian billionaire was offering $100 million more than the NHL, the largest unsecured creditor (SOF investments), city of Glendale and the committee of unsecured creditors all spoke up in favour of the league’s bid.
An emergency hearing on Sept. 23 gave Balsillie an unexpected chance to improve his offer even further. He agreed to keep the team in Glendale this season, pay the city a non-refundable fee of $25 million (with another $25 million promised if he was awarded the team) and sell the Coyotes to someone else if a local bidder emerged – “a fairly significant change,” according to Baum.
After that, everyone simply waited for the judge to file his ruling.
The drawn-out bankruptcy proceedings have been extremely tough on those employed by the team – everyone from Gretzky (who stepped down as coach last week), to the players, to the people in charge of selling tickets and trying to market the Coyotes.
All in all, it’s been a trying few years for the franchise.
The Coyotes finished 13th in the Western Conference last season, allowing Jobing.com Arena to become the only current NHL building to have never hosted a playoff game.
It’s been seven years since Phoenix was last in that position and a staggering 22 years since the franchise advanced past the first round, dating back to a series victory by the Jets over Calgary in 1987.