TORONTO – Jim Balsillie isn’t giving up on moving the Phoenix Coyotes to Hamilton but a legal expert says the Canadian billionaire faces an uphill battle.
On Monday night, U.S. bankruptcy court judge Redfield T. Baum rejected Balsillie’s bid to buy the money-losing club and move it to southern Ontario. In a 21-page ruling, he said there wasn’t enough time to deal with all the unresolved issues raised by the case.
Balsillie did propose to work with the NHL to find “an appropriate” relocation fee – which could be as much as US$100 million – to bring the club north through mediation. But the NHL plans to help a future owner make the Coyotes viable in the Phoenix suburb of Glendale.
The league says it has received four expressions of interest from potential buyers interested in operating the Coyotes in Arizona – including Toronto Argonauts owners Howard Sokolowski and David Cynamon, and Chicago White Sox and Bulls owner Jerry Reinsdorf. Lacking a firm offer, however, did prompt Baum to dismiss them as little more than hearsay.
“The legal issues have been well defined but they haven’t been resolved,” said Eric Schaffer, a senior partner at Reed Smith who worked on the Pittsburgh Penguins’ bankruptcy a few years back. “The judge did say if (Balsillie) wants to buy the team without league permission and keep it in Arizona, the judge will let that happen.”
Schaffer said that if all Balsillie wanted was to own an NHL team, the Coyotes would be his.
“But it seems pretty clear he wants to own a team in Hamilton and if he really wants to do that he can do down the route of pursuing the anti-trust claim, which is not an easy one, or he can try and reach an accommodation with the league, knowing the league hasn’t been terribly open to dealing with him,” Schaffer said.
Richard Rodier, a lawyer representing Balsillie, said during a news conference Tuesday he expected his client to submit a new motion to buy and move the NHL team. However, Rodier added there has been no communication between Balsillie and Jerry Moyes, the Coyotes majority owner.
Balsillie’s spokesman Bill Walker also took part in the news conference Tuesday but Balsillie did not attend.
The date of Sept. 10 has been tentatively established for the NHL to hold an auction involving perspective owners looking to keep the team in Arizona. If none emerge, then another auction would be held for those interested in moving the team after reaching an agreement with the league on a relocation fee.
“A lot of times what happens in bankruptcy auction proceedings is you get a number of people at the table,” NHL deputy commissioner Bill Daly told Toronto radio station AM640 on Tuesday. “Sometimes they combine their efforts.
“And if there’s one objective, and the objective is to see the Coyotes remain in Glendale, sometimes the parties themselves determine the best way to achieve that goal.”
However, Rodier said sometimes it’s best to expect the unexpected in such proceedings.
“You still have a team that’s bankrupt and it has to be sold in a process that’s going to be administered by judge Baum,” Rodier said. “I caution you that in bankruptcy things can come out of left field and there’s a lot of time between now and Sept. 10 and our offer is still on the table.”
Walker said the Balsillie group wants fans to voice their support and will be emailing members of its Make It Seven website in the coming days to explain how they can get involved.
“The commitment remains completely unchanged,” said Walker. “He’s committed to Hamilton, he’s committed to Copps Coliseum.
“He just sees this as another day at work, another day at the office.”
Hamilton Mayor Fred Eisenberger wasn’t prepared to admit defeat just yet either.
“The issue is still very much alive,” said Eisenberger. “It doesn’t mean relocation can’t happen.”
But Baum’s ruling certainly creates additional hurdles for Balsillie, especially considering the NHL has no obligation to negotiate with the co-CEO of BlackBerry maker Research in Motion regarding a relocation fee.
“Everyone has hurdles, everyone has things to overcome,” Rodier said. “The nature of the process is you have to explain your positions to the judge and persuade him to your way of thinking.
“Right now I think what he indicated is there hasn’t been sufficient time for him to consider some rather complex issues.”
And Rodier downplayed suggestions that there is an acrimonious relationship between the NHL and Balsillie, who was turned down in his third attempt to buy an NHL team.
But Daly offered a much different opinion.
“This whole process since May 5 has been another in what has now become a long line of issues and troubles that he has caused for the board and for the league,” Daly said. “I think it’s fair to say that a large number of governors don’t look kindly on the process that he’s put us through.”
Balsillie sought to buy the Coyotes out of Chapter 11 protection with a US$212.5-million offer conditional on moving the team to Hamilton. He had set a June 29 closing date for the sale to have the franchise in place for the 2009-10 season.
Rodier said Balsillie is willing to negotiate with the NHL on bringing the Coyotes to Hamilton but that the league hasn’t approached the Balsillie group.
With perspective groups apparently waiting in the wings, the NHL doesn’t have to, seemingly leaving the league with the advantage in determining the Coyotes’ future.
However, Schaffer said the NHL isn’t without its share of risk, especially if Balsillie continues his pursuit of the Coyotes.
“The NHL has the hammer but has a lot at risk,” he said. “If Balsillie really wants to force the issue, the league has a lot at risk. It may be likely to prevail but if it loses on the anti-trust issues, it has lost a lot.
“The judge has said he’s not going to approve this by their deadline of June 29 but if you still want to pursue this, the motion to sell was denied without prejudice meaning you can come back. If you really to dig into this issue, develop the facts and pursue it the door is still open. But it’s a lot of work to get that done and it takes time and time is very relevant when you’re talking about a seasonal business.”