Coyotes hearing set for Tuesday

Updated: June 8, 2009, 8:54 PM ET
Associated Press

PHOENIX -- The highly contentious fight over who will own the bankrupt Phoenix Coyotes and where the team will play reaches a critical stage this week with a Canadian billionaire on one side and the National Hockey League on the other.

More than 300 documents have been filed on the case in U.S. Bankruptcy Court since Coyotes owner Jerry Moyes filed for Chapter 11 protection on May 5, much to the surprise of the NHL.

A hearing is scheduled Tuesday on whether Judge Redfield Baum should order the team sold to Blackberry maker Jim Balsillie and moved to Hamilton, Ontario, over the heated objection of the NHL.

Major League Baseball, the NFL and the NBA have weighed in supporting the NHL's contention that such a ruling would undermine the integrity of professional sports leagues.

The NHL wants the team sold to an owner who would keep it in Arizona, where the Coyotes have lost more than $300 million since the franchise moved from Winnipeg in 1996. Commissioner Gary Bettman says four potential buyers who would do just that have filed preliminary applications with the league.

The prospective buyers, according to Bettman's declaration filed in court Friday, include Jerry Reinsdorf, owner of the baseball's Chicago White Sox and the NBA's Chicago Bulls; Las Vegas-based businessman John Breslow, who owns 3 percent of the Coyotes; and Howard Sokolowski and David Cynamon, owners of the Toronto Argonauts of the Canadian Football League.

The fourth would-be buyer asked not to be named pending further investigation of the purchase.

None of the offers to keep the team in Arizona is expected to come close to the $215.5 million that Balsillie is offering. But the NHL contends Balsillie's offer is quite smaller once factors are considered, including a payout to Wayne Gretzky, Coyotes coach and owner of 1.5 percent of the team.

Balsillie, who lists his worth at more than $3 billion, contends that a franchise would flourish in hockey-crazy southern Ontario. Hamilton is located in territory now held by the Toronto Maple Leafs and Buffalo Sabres. Despite their recent lack of success on the ice, the Maple Leafs are considered the most valuable franchise in the NHL.

Much of Balsillie's argument on antitrust ground center on a league rule that requires approval of a team if another franchise moves into its territory. That "veto" power amounts to unreasonable restraint of trade, Balsillie and Moyes argue.

The NHL contends that under its current setup, only a majority vote of owners is required for a franchise to move.

This is Balsillie's third attempt to buy an NHL franchise. Previous efforts to purchase the Pittsburgh Penguins and Nashville Predators fell through.

Among the many cases cited by Balsillie's attorney Susan Freeman is the 1970 purchase of baseball's Seattle Pilots and transfer of the franchise to Milwaukee in bankruptcy proceedings. The purchaser then was Bud Selig, now baseball commissioner and an opponent of the Balsillie sale.

A case cited by both sides is the fight in the NFL in the early 1980s over Raiders owner Al Davis' attempt to move the franchise from Oakland to Los Angeles. Davis eventually won a court order granting the move over the NFL's objections.

Salil Mehra, a law professor at Temple University, said that ownership could be an important issue in considering whether the Raiders case is relevant.

"Raiders was just about a movement of the franchise," Mehra said, "it was not about approving another ownership. Al Davis owned the team."

A second case involving the Raiders, known as Raiders II, found that a league could levy an appropriate fine for a team that moves into the territory of another, Mehra said.

Hundreds of pages of declarations and briefs were filed just ahead of Baum's midnight Friday deadline. The city of Glendale is joining the NHL in opposing the sale, arguing the franchise must adhere to 23 years left on its lease to play in Jobing.com Arena. The city spent $183 million to build the arena specifically for the hockey team and says it will seek a fine of hundreds of millions of dollars if the team leaves.

Moyes and Balsillie say the bankruptcy filing should allow the team to break the lease.

The Coyotes have yet to show a profit or have much success on the ice. Balsillie has produced expert testimony that hockey will never succeed in the desert, while Glendale's case is supported by an analyst who lists many improvements that could be made to make the franchise viable.

Among those suggestions: slashing the money paid annually to Gretzky from $8 million to $2 million.


Copyright 2009 by The Associated Press

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