Phoenix Coyotes file Chapter 11; Ontario move next?

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.

15 comments on “Phoenix Coyotes file Chapter 11; Ontario move next?

  1. Where have all the hockey teams gone?
    Short time passing.
    Bettman screwed them every one.

    When will they ever learn?
    When will they ever learn?

  2. The Phoenix (Glendale) Coyotes should move to Canada. Even if they’re horrible there at least they’ll sell tickets. Why does Bettman want more teams in the sunbelt? Every team in the sunbelt is absolutely horrible other than the Ducks. Has anyone noticed that there were no teams in the sunbelt other than the L.A. Kings prior to the ’92-’93 season? Miami, Tampa, Atlanta, Dallas, Phoenix and Nashville (even L.A.) are not hockey towns. The only reason these cities have teams is because their TV and advertising revenues can pay the teams payroll due to the size of their market. It’s too bad for smaller market cities such as Quebec City, Winnipeg and Hartford because their fans seemed to love the game more than the fans in the sunbelt.

  3. No one cares about hockey in Phoenix, and they should just let them go to Canada. The question remains which teams will also be on the move and to where? Atlanta and the New York Islanders come to mind.

  4. Though they both deny it, it’s obviously personal between Balsillie and Bettman and has been since Bettman pulled a fast one when Balsillie he tried to buy the Penguins. Bettman took another shot at Balsillie today but this episode shows that Balsillie isn’t backing down. He might not get the Coyotes but he’s going to keep throwing money at failed NHL franchises until the owners tell Bettman to take a hike. Today it’s Phoenix – in another month it’ll be Tampa and then who knows. And when that happens Bettman and his sunbelt footprint plan will be done.

  5. Though they both deny it, it’s obviously personal between Balsillie and Bettman and has been since Bettman pulled a fast one when Balsillie he tried to buy the Penguins. Bettman took another shot at Balsillie today but this episode shows that Balsillie isn’t backing down. He might not get the Coyotes but he’s going to keep throwing money at failed NHL franchises until the owners tell Bettman to take a hike. Today it’s Phoenix – in another month it’ll be Tampa and then who knows. And when that happens Bettman and his sunbelt footprint plan will be done.

  6. I’m still trying to understand how a league can dictate moves. It makes no sense to me.

    MLB has an antitrust exemption, so that’s clear to me. But I don’t see how the other leagues can compel teams to stay put, especially when you’re potentially forcing team owners to lose money when you operate that way. Isn’t there a law about restraining free trade?

    The NBA is next here, in my opinion. The Kings reportedly lost $28M last year, and I think next year will be even worse. So if the Kings decide to move on to greener pastures, and the NBA tells them they cannot, what legal basis do they have to do so?

    I’m asking out of genuine curiosity, by the way.

    (While admitting that I think things like relocation fees are probably not legal.)

  7. “We fix the problems. We don’t run out on cities.”

    How did the Coyotes become the Coyotes again?

  8. MikeM: The same way that Dunkin Donuts can tell you that you can’t move your store to be across the street from another existing store. They’re hockey “franchises,” after all.

    Now, whether controlling all the franchises in an entire industry violates antitrust laws, that’s another story. There hasn’t really been a test of this in the last 80 years other than the Raiders case, so if Bettman and Balsillie can’t cut a deal, we could be looking at a long, drawn-out court battle.

  9. This case could end up being a landmark as far as franchise relocation and debt servicing is concerned. If Moyes is successful in bankruptcy court, and is able to sell the team to Balsille, and the team is moved to Ontario, it could open the door to other franchises and owners to get out of bad leases and (Or)unfavorable financial situations. Charles Wang being able to get out of the Nassau Coliseum lease that expires in 2015, and sell the team and move them to Kansas City or Canada, would come to mind under the relocation context.
    Under the debt service relief scenario, a team like the Dallas Cowboys, who are having trouble selling luxury boxes, for their $1b Stadium, and are facing a major lawsuit over their practice facility collapse, could actually go into b/k court, to try and get out from under their stadium debt service obligations, under the guise of “The economy collapsing”. Would this be morally wrong? Of course so. But, it does not mean it could not happen.

  10. What a joke. These words are uttered by the same guy who watched the Winnipeg Jets become the Coyotes in the first place (not to mention the Nordiques and Whalers).

    I will be very interested to see where this all goes. The NHL’s situation is intriguing, perhaps the most of any major sport in the US/Canada. They have 30 teams, very limited TV exposure in the US, big payrolls, high ticket prices, and a lot of franchises no one cares about. This is a recipe for disaster, particularly given the current recession.

    Bettman’s Sun Belt expansion frenzy doesn’t seem to be panning out and there are a lot of hard economic realities the league will soon have to face. In my opinion, Phoenix is just the first such situation to boil over and several others (Predators and Islanders at the least) are already bubbling.

  11. The Coyotes situation is bad because not only do they have compete with the Suns and Cardinals, but ASU and University of Arizona football and hoops, and spring training/Diamondback baseball.
    As for Winnipeg, they did not exactly have the Montreal Canadiens record when it came to performance on the ice (Something like one playoff team in 17 years), so I do not wax poetic for them.
    As for the Sunbelt expansion, I give Bettman credit for trying to grow and expand the NHL, and although not totally successful, he did see FOUR Sunbelt teams (Carolina, Dallas, Anaheim, & Tampa Bay) win Stanley Cups, which is a better record than the Original Six teams (Montreal, Toronto, Chicago, Detroit, Boston & the NY Rangers) did during the same period. As for Bettman’s critics of the expansion, many of them are from Canada, who would love to see no teams in the NHL from the lower 48, except MAYBE Boston, Detroit, Chicago and the Rangers, because they were part of the original six, Philadelphia, and Pittsburgh (If the Penguins agree to give Sidney Crosby to a team in Hallifax, Nova Scotia). These guys are simply not living in the real world.

  12. Im all for any American team that can support itself without having profitable teams prop them up. It has been reported that the 6 Canadian teams make up 40 percent of the league revenue, so that shows where the backbone of this league is.
    Keep any team in the States that can support itself. If it looses money like the Lightning and Coyotes, then move them some where were they wont, be it in the Northern US or Canada.
    Januz, your comments are simply a stereotype, i know many Canadians, they don’t feel that way.

  13. The problem for Hamilton has always been relocation fees. You’d have to pay off Toronto AND Buffalo. Still, if anyone decide to put up that cash, it would be Mr. Blackberry.

    Hamilton makes perfect sense for an NHL franchise. There are corporate backers, a loyal fan base, and lots of potential revenues. The last time Hamilton was considered for an expansion team, 17,000 season ticket deposits were sold in something like two hours. The players want it, there is an enthusiastic local owner, the only people against it are Bettman and Maple Leaf Entertainment, Inc.

    The NHL’s core audience has always been in the Northeast and Canada. I have no problem with Bettman trying to grow the base, but he seems so intent on trying to ignore the sport’s most loyal fans. (And the die-hard hockey fans are the most die-hardiest of any sport.)

  14. Sean, I am not the biggest fan of moving franchises to Canada, I am flat out against it, the more I think about it. Websites such as TSN (From Canada) and the Hockey News give the most thorough and unbiased coverage of this issue, and they know this would be a mistake. I am not a xenophobic nationalist, I love the history of the NHL, and would not be sorry to see Vancouver bring the Cup back to Canada (UNLESS, of course, the opposition was the Penguins). But I have read a lot of opinions from fans in Canada on Bettman, and their opinion are quite similiar to Yankees fans on the Red Sox, and vice versa. The reality of the matter is that a devoted fanbase does not exactly mean Championships (Check out the last 40 years of Maple Leaf Hockey, or 100 years of Cub baseball).
    Hockey is simply a regional sport like every sport in the US is, with the exception of the NFL, and even there, there are markets where it is secondary to baseball, basketball, or college sports (See PHOENIX, until this year)).
    In International competitions like the World Juniors and in the NHL Draft, American kids are on the rise, doing better and better. Taking teams out of here, and putting teams in Halifax or Winnipeg will do nothing except retarding this development, and putting this sport further behind the NBA, MLB and NCAA hoops in this country.

  15. Balsillie is dying to put a team in Hamilton, but there’s no way in hell that the Leafs and Sabres let that happen. Balsillie would build a winning team there and embarrass the idiots who own the Leafs.