PHOENIX – Chicago Bulls and White Sox owner Jerry Reinsdorf has promised to make an offer by Friday to buy the bankrupt Phoenix Coyotes and keep the NHL team in Arizona.
Reinsdorf lawyer Alan Klein said his client is in the midst of conversations with the city of Glendale, Ariz., on a new lease agreement that would be part of the proposal.
Klein made the comment from Chicago via conference call Monday in U.S. Bankruptcy Court in Phoenix, where Judge Redfield T. Baum adopted a sale schedule that gives the NHL the first shot at finding a buyer who will keep the team in Arizona.
The judge set Friday as a deadline for potential buyers who would keep the team in Arizona to submit purchase applications to the NHL.
If a suitable buyer for Arizona isn’t found by the Aug. 5 sale date, Baum established a backup schedule for anyone who would want to move the team. That would allow Canadian billionaire Jim Balsillie to renew his $212.5-million bid to buy the franchise and move it to Hamilton.
Baum turned down an attempt by Balsillie and Coyotes owner Jerry Moyes to have the Canadian bid considered at the same time any offers to keep the team in Arizona are judged.
NHL deputy commissioner Bill Daly said the judge’s decision to open bidding for a local owner first “gives the Coyotes a real shot to remain in the Phoenix-Glendale area.”
However, Balsillie’s representative Richard Rodier refused to consider Baum’s decision a setback, saying it doesn’t matter that the team will be offered to local ownership first.
“It’s the way it should be anyway,” Rodier said outside the courthouse after the three-hour hearing. “A city shouldn’t lose its franchise unless there’s a good reason, so let them take a shot.
“If Mr. Reinsdorf has an offer that makes sense to the city of Glendale and makes it work long-term, tremendous. More power to them.”
However, Rodier said he’d be “very, very surprised if an offer came through that makes sense because I think Mr. Reinsdorf expects massive, massive concessions from the city of Glendale.”
Glendale city lawyer Craig Tindall said after the hearing that the city has had “some very positive preliminary discussions” with Reinsdorf. Tindall disputed claims the city would be expected to heavily subsidize a new owner.
“That’s absolutely incorrect. That’s been reported over and over again and that is not the case,” Tindall said. “There are some discussions about the use agreement that would be revenue-neutral to the city.
“We think we can handle the situation without making massive monetary concessions. I think that’s a complete misconception and it has been from the very beginning.”
Baum emphasized that he wasn’t approving sale of the team to anybody.
“All the court has done is set a schedule,” the judge said.
The hearing was the first in the Coyotes matter since Baum rejected Balsillie’s bid to buy the team, saying the June 29 deadline the Canadian sought made it impossible to resolve the complex issues in the case.
Balsillie has amended his bid to set a Sept. 10 deadline, with the intention still to play next season in Hamilton.
Baum accelerated schedule for resolving the case, setting the Aug. 5 deadline for finding an acceptable buyer who would keep the team in Arizona. If that fails, the judge set a “fallback” deadline of Sept. 10 to sell to someone who might relocate the franchise.
Moyes surprised the NHL by filing for Chapter 11 bankruptcy protection on May 5 with a plan to sell the team to Balsillie, contingent on moving the franchise to Hamilton.
Moyes says he has lost over US$300 million on the team and would recoup about US$100 million in the sale to Balsillie.
The NHL might dispute whether Moyes’ lost money is equity, not debt. That could mean Moyes would get far less money, if any, under the Reinsdorf proposal.
“Obviously, Mr. Moyes put a lot of money into this club over a number of years,” Daly said, “and how that should be characterized legally as to whether it’s debt, whether it’s equity, or maybe it’s some hybrid situation.
“Maybe he is a creditor but he’s a subordinated creditor. The thing about bankruptcy is you try to generate the best bid available to generate cash for creditors but not all creditors end up getting paid all the time.”
Baum had stern words for the NHL after its lawyers indicated it would be difficult to come up with a decision on Balsillie’s bid to move the team by the Sept. 2 deadline the judge set.
The judge said the league’s board of governors would “either have to reach a decision or have a very good explanation of why they’ve been unable to.”
After the hearing, Daly said Balsillie – who failed in bids to buy the Pittsburgh Penguins and Nashville Predators – hasn’t endeared himself to NHL owners with his behaviour in the Coyotes case.
“I’m not going to presume what the board might do because it’s totally within their power,” Daly said. “But certainly, I think the board has legitimate questions as to” Balsillie as an owner.