PHOENIX – The NHL has asked a bankruptcy judge to throw out Canadian billionaire Jim Balsillie’s bid to buy the Phoenix Coyotes based on the league’s overwhelming rejection of him as a potential owner.
The 26-page motion, accompanied by declarations from Boston Bruins owner Jeremy Jacobs and Minnesota Wild owner Craig Leipold, says the owners have concluded that Balsillie would be untrustworthy and that the court has no right to overturn their July 29 vote.
The owners say their opinion is based on Balsillie’s behaviour in earlier attempts to purchase the Pittsburgh Penguins and Nashville Predators.
“We voted to deny approval to Mr. Balsillie because we concluded he lacks the good character and integrity required of a new owner” required under NHL bylaws, said Jacobs, chairman of the league’s board of governors.
The board, made up of a representative from each NHL team, voted 26-0 against Balsillie’s application. Three abstained and one representative was absent, according to Jacobs.
Two days after the board’s vote, Balsillie filed a document in U.S. Bankruptcy Court in Phoenix contending NHL commissioner Gary Bettman and “a number of owners have a personal grudge” against him.
Balsillie also said his interview with the NHL board, which preceded the vote, “consisted of a strong and rather hostile interrogation by persons whose minds appear to have been made up before the meeting began.”
The NHL’s filing on Friday came in advance of a hearing scheduled by U.S. Bankruptcy Court Redfield T. Baum on Tuesday.
Baum ruled earlier in the week that the Sept. 10 auction of the team could include bids to relocate the franchise and specifically mentioned Balsillie’s US$212.5 million offer, which is contingent on moving the Coyotes to Hamilton.
The case has dragged on with murky twists and turns since Coyotes owner Jerry Moyes filed for Chapter 11 bankruptcy, to the surprise of the NHL, with a plan to sell to Balsillie. The NHL and the city of Glendale are fighting the move. The league contends the franchise, which has lost more than $30 million each of the last three seasons, can succeed with better management and a more success on the ice.
The NHL has long contended the bankruptcy filing is an attempt to circumvent the league’s ownership and franchise transfer process.
“This court should put an end to Mr. Moyes’ and Mr. Balsillie’s jointly devised scheme to force entry into the league through the bankruptcy ‘side door,”‘ the NHL said in its Friday filing. “There is only a front door, and it is now unavailable to Mr. Balsillie in accordance with the NHL’s constitution and bylaws.”
The NHL said it has been established in prior court cases that a professional sports league has the right to ratify who owns its teams as long as there is reasonable justification for its decision.
“Settled law is that the court may not ‘second-guess’ the NHL board’s decision under the undisputable facts of this case,” the league said.
Both Jacobs and Leipold said Balsillie’s answers during the interview that preceded the July 29 vote were unacceptable.
“Mr. Balsillie’s answers during the interview only served to confirm our conclusion that he is not willing to comply with league rules and procedures and would not be a good business partner,” Jacobs said.
The Bruins owner recounted questions presented to Balsillie regarding his attempt to purchase the Penguins. Balsillie’s agreement to keep the team in Pittsburgh, Jacobs said, was a main reason that the league approved him as a potential owner at that time.
The deal fell through with the NHL believing Balsillie wanted to move the franchise and the Canadian contending the league changed the terms and sabotaged the agreement.
“I reminded Mr. Balsillie that he understood full well the NHL’s rules and procedures for franchise ownership when he attempted to purchase the Penguins, the Nashville Predators, and the Coyotes, and I informed him that he should have used the ‘front door’ into the league,” Jacobs said.
Leipold, owner of the Nashville Predators at the time Balsillie attempted to buy them, said he read a statement to the board of governors explaining why he opposed him as a potential owner of the Coyotes. The statement was included as an amendment to his declaration.
Leipold accused Balsillie and his attorney, Richard Rodier, of “a surreptitious attempt” to devalue the Predators in 2005, negotiations in bad faith in 2007, and threats made to him and the NHL regarding an investigation by the Canadian Competition Bureau.
“Based on my owner experiences with Mr. Balsillie, I have formed a highly unfavourable opinion regarding him, including his suitability as an NHL owner,” Leipold said in his declaration.
The NHL said it also questioned Balsillie on statements he made to a reporter in November 2008 that the Montreal Canadiens were for sale. Canadiens owner George Gillett responded that the team was not for sale, “but the story led to a media storm that damaged the Canadiens franchise,” Jacobs said.
In June, seven months after Balsillie’s comments, Gillett announced an agreement in principal to sell the Canadiens to the Molson brewing family.