The bitter fight for control of the Phoenix Coyotes seems headed to overtime after courthouse hours came and went Friday without a ruling from the Arizona bankruptcy judge presiding over the insolvent team’s fate.
A ruling was expected sometime this week after Tuesday’s tense and dramatic hearing ended with Judge Redfield T. Baum telling the parties he wanted to sleep on the matter before deciding how they should proceed.
Baum offered hints of where his thinking was at during the hearing when he said he believed the NHL was entitled to a relocation fee if the Coyotes are moved to Hamilton as stipulated by Jim Balsillie’s conditional US$212.5 million bid, and put the league on notice that it may be ordered to work quickly to determine exactly how much that would be.
There were suggestions the sides go to mediation for the matter, but Thursday the court issued a notice saying Baum “will not be setting a separate hearing on the relocation and fee issue. It will be dealt with in the court’s ruling from the (June 9) hearing.”
That raised speculation a decision was imminent, although Eric Schaffer, a senior partner at Reed Smith who worked on the Pittsburgh Penguins’ bankruptcy a few years back, said there were several potential reasons why Baum might be putting it off.
“What he’s done is give the league and the team reasons to think they need to consider a compromise, a way to reach a resolution,” said Schaffer. “It’s possible the judge would say that delay creates more pressure on all concerned to reach an agreement because if you don’t have this resolved reasonably soon, you have fewer options going forward.
“The judge could also be delaying things based on communications from the parties that they continue to make some progress and they’d like to have more time.”
Time is certainly of the essence, as the sides are facing a proposed June 22 auction deadline if Baum decides the team can be moved to Hamilton as part of its Chapter 11 sale.
The relocation fee became a critical issue since it would eat away from the money available to creditors, making the bid virtually worthless to them should Balsillie decide not to pay it.
If he balks, Baum would be able to grant the NHL’s suggestion of a Sept. 10 auction for buyers interested in keeping the Coyotes in Glendale, Ariz., and not have to deal with any of the case’s many other thorny legal issues.
Not that sorting out the relocation fee will be a walk in the park.
During Tuesday’s hearing, one of the lawyers for the co-CEO of BlackBerry maker Research in Motion let slip that they believe the NHL will charge $100 million for the move – a figure redacted from court documents and not confirmed by the league.
There may also be some sort of indemnity fees demanded by or due to the Toronto Maple Leafs and Buffalo Sabres as compensation for the incursion into their territory, and it’s unclear whether Balsillie is willing to ante up.
Richard Rodier, his representative, noted outside the courthouse Tuesday that the deal allows Balsillie to walk away if there’s a relocation fee, but the billionaire said in a statement Wednesday that he was one step closer to his goal of a seventh NHL team in Canada.
The NHL has steadfastly stuck to its view that there can be no relocation fee discussion until both an owner and the move have been approved by its governors.
Baum’s delay may also be giving the league some time to gets its numbers straight before bringing out the stick.
“We’re beyond posturing,” said Schaffer. “If there is going to be any meaningful negotiation, it has to happen now.”
Yet after more than a month of legal wrangling over the team’s fate since Coyotes owner Jerry Moyes surprised the NHL by seeking Chapter 11 protection, it’s hard to imagine the sides coming together so quickly to strike a deal.
The formula for the relocation fee may be the difference between the value of a franchise in Hamilton and the value of the Coyotes (perhaps $165 million based on what creditors would get from Balsillie’s offer), with indemnity charges on top of that.
How the Maple Leafs react remains a big question lurking in the background.
Reports suggest they will sue the NHL and every other team if the Coyotes move to Hamilton, while one person close to Larry Tanenbaum says the Maple Leafs Sports and Entertainment chairman will do all in his power to keep it from happening.
Should the Balsillie deal fall apart, the NHL says it has received four expressions of interest from potential buyers interested in operating the Coyotes in Phoenix – including Toronto Argonauts owners Howard Sokolowski and David Cynamon, and Chicago White Sox and Bulls owner Jerry Reinsdorf.
Lacking a firm offer, however, prompted Baum to dismiss them as little more than hearsay.