PHOENIX – The Phoenix Coyotes’ bumpy six-month journey through U.S. Bankruptcy Court has come to an end with a judge’s approval of the sale of the franchise to the NHL.
Judge Redfield T. Baum signed the order on Monday after a quiet, brief hearing in a mostly empty courtroom. It was a stark contrast to earlier scenes of high drama featuring countless high-priced lawyers locked in often-bitter arguments before a gallery full of mostly Canadian reporters.
The NHL’s bid totals about US$140 million. The official figure listed in the sale order is $128.4 million, but that does not include the $11.6 million the NHL has agreed to spend to purchase claims of nearly all the unsecured creditors in the case.
NHL deputy commissioner Bill Daly said the league would work to quickly close the deal and take full control of the Coyotes’ business operations.
“The league also will engage immediately in a process to identify – and expedite sale of the franchise to – new ownership that is committed to the club’s long-term success in the Phoenix/Glendale area,” Daly said in a statement released by the league.
Daly said the NHL hopes Monday’s developments “will provide fans further reason to embrace the Coyotes in order to ensure the team’s long-term future in Arizona.”
The only party who didn’t join in the agreement is former coach Wayne Gretzky, who owned a small portion of the team. However, Gretzky did not file a formal objection with the court.
The sale ends a lengthy, contentious court fight pitting the NHL against Moyes and Canadian billionaire Jim Balsillie.
Moyes, founder of Swift Transportation, took the team into Chapter 11 bankruptcy on May 5, with a plan to sell the team to Balsillie, contingent on moving the franchise to Hamilton, Ontario. The filing took the NHL by surprise and the league vowed to fight it to the end, accusing the owner and the Canadian of trying to circumvent the NHL’s rules for who owns a team and where it plays.
Balsillie doggedly kept up the court fight until Baum rejected his bid on Sept. 30. Balsillie’s offer grew to $242 million when he added $50 million in a failed attempt to get the city of Glendale to drop its opposition.
Baum threw out Balsillie’s bid on the grounds he could not overrule the NHL board of governor’s 26-0 vote rejecting the Canadian as an owner. The judge also rejected the NHL’s offer, but left open the possibility the league could buy the team if it made alterations to its proposal.
In the end, Moyes decided a few million dollars were better than none and reached an agreement with the NHL. As part of the deal, the league will reduce the amount of money it says Moyes owes it from $30 million to $15 million.
The sale leaves about $11.3 million that could be divided among Moyes, Gretzky and Glendale, but that figure is expected to drop by a few million when attorneys’ fees and other administrative costs are subtracted. It will take several months to determine the exact payouts. Balsillie’s bid would have paid Moyes about $100 million.
The NHL submitted an offer to the court at the last minute when it became apparent that Balsillie would be the only other bidder.
Daly says any new buyer would have to get a reworked lease agreement with the city. If an owner who would keep the team in Arizona can’t be found, the league says it will look to relocate the franchise.
Glendale issued a statement thanking the NHL for its work on the city’s behalf.
“This now opens up the opportunity to initiate and finalize negotiations with other parties for the long-term success of the team in Glendale,” the city said.
Under the purchase agreement, all the unsecured creditors would be paid except Moyes and Gretzky. The largest secured creditor, SOF Investments, will get all of its $80 million, either in cash or over time in an agreement with the NHL.
Gretzky, who resigned as coach in September, says he is owed about $8 million, mostly in deferred salary. The NHL’s purchase agreement excludes Gretzky’s employment contract dated March 2008.
The amount of money available to Moyes and Gretzky was dwindling because the league continued to fund the club, with that cost coming out of the purchase agreement. The NHL gets about $36 million it loaned the franchise to keep it operating.
Moyes has contended that the NHL never will succeed in the desert, but the league says the team can make it with a better product on the ice. The Coyotes are off to a good start this season, but crowds at Jobing.com Arena have been sparse.
Ice Edge, formed by a group of investors from the United States and Canada, says it still is interested in buying the team. The owners of the CFL’s Toronto Argonauts, Howard Sokolowski and David Cynamon, also reportedly have interest in purchasing the team.
Ice Edge issued a brief statement saying it was pleased with the development
“Ice Edge is focused on their prudent next steps,” the company said. “At this moment, there is nothing new to report.”
The franchise has never turned a profit since moving from Winnipeg in 1996. In his initial rejection of the Balsillie and NHL offers, Baum noted an audit that listed the Coyotes’ operating loss at $54.8 million for 2008.