Balsillie may amend Coyotes offer

6/16/2009 - NHL Phoenix Coyotes

PHOENIX -- Jim Balsillie seems to have as much determination as he does money.

The Canadian billionaire is not giving up his quest to buy the Phoenix Coyotes and move them to Hamilton, Ontario, despite the rejection of his bid by a U.S. bankruptcy judge.

While the NHL praised Judge Redfield T. Baum's decision and says it is pursuing a buyer who would keep the team in Arizona, Balsillie's representative Richard Rodier painted the ruling as nothing more than a minor setback.

"The process ebbs and it flows," Rodier said in a conference call on Tuesday. "This is a bit of an ebb, but so what? It's not a sprint, it's a marathon."

Rodier said Balsillie would either amend his bid or submit a new one, pending talks with Coyotes owner Jerry Moyes.

Moyes issued a statement Tuesday and continued to align himself with Balsillie, whose offer would return the most money to the embattled owner. Moyes noted that the judge left open revisiting the relocation issue.

"Now the most important thing for us to do is work towards an open and transparent sales process that will result in obtaining the most money for the team's creditors," Moyes said.

In a 21-page ruling issued at the close of business on Monday, Baum said there was not enough time to resolve the complex case by the June 29 deadline Balsillie had imposed for completion of the sale.

While the deadline has been erased, Balsillie insists the sale still can be completed and the team moved to Hamilton in time for next season.

Rodier said Balsillie wants to enter mediation with the NHL to resolve the case by determining a relocation fee that would clear the way for the move. The NHL kept quiet on Tuesday but has insisted all along it wants the team to stay in Arizona.

Balsillie applied for league approval as Coyotes owner and for relocation of the team last month, after Baum wondered why such applications had not already been filed. Now it appears Balsillie will wait for the league's board of governors to act. If the NHL denies relocating the team, then expect Moyes and Balsillie back in court raising their antitrust contentions.

"The case depends upon whether the NHL denies relocation under any circumstances and thus violates antitrust laws," Moyes said, "or specifies a relocation fee that is reasonable in this case."

One reason given by Baum for rejection of Balsillie's antitrust claims was the fact that the league had not made a decision on whether the franchise could be relocated.

The NHL, meanwhile, was left to find an owner who would buy the franchise and keep it in Glendale, where it has lost $36 million each of the past three years. The name most often mentioned is Jerry Reinsdorf, owner of baseball's Chicago White Sox and the NBA's Chicago Bulls.

Any offer to buy the team and keep it in the desert is certain to be far less than the $212.5 million Balsillie put up contingent on moving the club to Hamilton. That would mean less money for creditors, especially Moyes. Last fall, Forbes magazine listed the Coyotes' value at $142 million.

Any prospective bid also would hinge on the city of Glendale reworking its lease agreement for the Coyotes to play in Jobing.com Arena.

According to Balsillie, the city would have to come up with $20 million in concessions to satisfy Reinsdorf, who has not commented on the Coyotes issue.

The Glendale council might balk at giving more help to the Coyotes, and the conservative Goldwater Institute says it is watching the situation closely. The institute won a court ruling that the city of Phoenix's subsidies for an upscale shopping mall violates the state constitution. That case is now before the state Supreme Court.

If Glendale doesn't provide help to a new buyer, though, it would be left without a main tenant for the arena it built for the Coyotes in 2003.

If Balsillie wants to get back in the picture, he faces a number of hurdles.

Baum noted that the consent agreement signed by Moyes with the NHL requires that all home games be played in Glendale. The judge said that Balsillie would have to assume that portion of the agreement as part of the proposed purchase.

The buyer, Baum said, "can not assume only the benefits of a contract; rather the assumption is the entire agreement, benefits and burdens."

The NHL has contended that Moyes, who surprised the league by filing for Chapter 11 bankruptcy on May 5, had the right to own a hockey team that plays in Glendale and nowhere else. The league believes the bankruptcy filing was an attempt by Balsillie to circumvent NHL rules on who owns teams and where they should be located.

Baum said that it's a fair assumption that the league's board of governors would approve Balsillie as an owner, since it already did so in 2006 when the Canadian nearly purchased the Pittsburgh Penguins.

The real challenge, the judge said, was over relocation.

Left unanswered was Glendale's claim that the Coyotes can't get out of their lease agreement.

A ruling upholding an anti-relocation clause prevented Balsillie from moving the Penguins to Canada three years ago. The Penguins came back to thrive in Pittsburgh and won the Stanley Cup last week.

Attorney Eric Schaffer wrote that clause for the Penguins. He said the Coyotes' status remains shaky, despite the judge's ruling.

"Significantly, he does not foreclose future efforts to move the team, if the team and its proposed buyer can satisfy the factual prerequisites," Schaffer said in an e-mail. "At the same time, he leaves open the possibility that he will enforce the lease prohibition on relocation. [Glendale's arguments closely track those made in the Penguins case, in which the court enforced the non-relocation clause that I drafted.] So for now, the team stays. But the story is not over."