The simmering Phoenix Coyotes situation blew up completely yesterday, with the team filing for Chapter 11 bankruptcy protection, and BlackBerry billionaire Jim Balsillie launching a wildcat bid to buy the team and move it to Hamilton, Ontario.
The rough timeline:
- NHL commissioner Gary Bettman and deputy commissioner Bill Daly arrived in Phoenix yesterday to negotiate the sale of the Coyotes, who’ve been making payroll only thanks to heavy subsidies from the league, to local interests.
- Less than an hour before a scheduled meeting with Bettman, team owner Jerry Moyes filed for bankruptcy, reportedly without bothering to notify the NHL.
- Balsillie, who’d previously been rebuffed by the NHL in attempts to buy the Pittsburgh Penguins and Nashville Predators with the intent of moving them to his native southern Ontario, jumped in with a $212 million offer to buy the team.
- The NHL announced it had removed Moyes as owner of the Coyotes and placed the team under league control
So, now what happens? The Coyotes had agreed to stay in Phoenix (really Glendale, Arizona) for 30 years (with a $700 million early termination penalty) as part of the deal to get a new $220 million arena in 2003, but a bankruptcy court can wave off that provision if it so chooses. Likewise, while the NHL insists that its approval is required to buy a team or move a franchise, a judge may disagree. (“We are investigating the circumstances surrounding the [bankruptcy] petition, including the propriety of its filing,” Daly said in an emailed statement last night, but it doesn’t seem there’s much the league can do to undo it now, “propriety” or no.) The Globe and Mail even reports that Balsillie has managed to get himself ahead of the NHL in line when it comes to secured creditors, though other sources disagree.
If Balsillie succeeds in winning the franchise, he’d almost certainly move it to the Copps Coliseum in Hamilton, though he’s reportedly said he’d working building a new arena and naming it after Wayne Gretzky’s dad. The players union, interestingly, is apparently in favor of such a move, believing it would boost league revenues, and so also salaries under the revenue-sharing agreement agreed to after the 2004-05 lockout. Bettman, who as NHL commissioner has pushed for more franchises in the U.S., especially the Sunbelt, reiterated this morning that he doesn’t feel likewise, saying, “We fix the problems. We don’t run out on cities.” (Threatening to run out on cities, that’s a different story.)
Regardless of how things work out, Glendale looks to be screwed: Either it loses its team and is stuck with an empty arena and 25 years of construction debt payments, or it is forced to offer major lease concessions to get the team to stick around &mdash Moyes even noted in his bankruptcy filing “the city’s willingness to offer incentives to keep the team as a tenant.” This could get ugly like the Saints deal before it’s all over.
An initial bankruptcy court hearing is set for 1:30 pm on Thursday in Phoenix. But given all the legal tangles involved — this could be the biggest challenge to leagues’ monopoly right to control franchises since the Oakland Raiders case in the 1980s — it’s not likely to be concluded for a long, long time.