Judge rejects bids by Balsillie, NHL

Updated: October 1, 2009, 12:11 PM ET
ESPN.com news services

PHOENIX -- The NHL could claim a partial victory on Wednesday after a U.S. bankruptcy judge rejected bids by the league and Canadian billionaire Jim Balsillie to purchase the Phoenix Coyotes.

Judge Redfield T. Baum rejected outright Balsillie's offer to purchase the team and move it to Hamilton, Ontario, which the NHL had vehemently opposed. The judge upheld the league's right to decide who owns its teams and where they play.

Although Baum also turned down the NHL offer, he left the door open for the league to go ahead and purchase the franchise if it amends its bid to treat Coyotes owner Jerry Moyes and ex-coach Wayne Gretzky more favorably.

"In hockey parlance, the court is passing the puck to the NHL who can decide to take another shot at the sale net or it can pass off the puck," Baum wrote.

NHL deputy commissioner Bill Daly issued a statement saying the league is "pleased that the bankruptcy court has confirmed the league's rights to select its owners and the location of its franchises."

"We are reviewing the opinion and considering how we can best address the court's concerns regarding our offer to purchase the Coyotes," Daly said. "It remains our goal to secure the long-term stability of the Coyotes in Glendale."

Speaking to ESPN.com on Thursday in Helsinki, Finland, where Chicago and Florida play on Friday, Daly said, "Timing is important, but the fans in Phoenix have finally been given an opportunity to rally around this team now that the relocation option has been removed from the equation."

The court's ruling came on the eve of the start of the NHL season and after nearly five months of bitter legal wrangling with Balsillie and Moyes on one side and the NHL and the city of Glendale, where the team plays, on the other.

Balsillie said he would not appeal.

"From the beginning, my attempt to relocate the Coyotes to Hamilton has been about Canadian hockey fans and Canadian hockey," he said in a statement. "It was a chance to realize a dream. All I wanted was a fair chance to bring a seventh NHL team to Canada, to serve the best unserved hockey fans in the world. I believe I got that chance."

Glendale issued a statement expressing pleasure at Balsillie's bid being turned down, saying the city "looks forward to working with the NHL to keep the Coyotes playing in Glendale, Arizona, for years to come."

Moyes took the team into Chapter 11 on May 5 with a plan to sell to Balsillie, contingent on moving the franchise to Hamilton.

Balsillie's bid, which rose to $242 million when $50 million was added in an unsuccessful effort to persuade Glendale to drop its opposition, was denied with prejudice, meaning the proposal is dead.

Baum said he found no legal basis for overturning the NHL's right to determine the ownership of its member teams and where those teams play.

"This conclusion effectively is the end for the efforts of PSE, Balsillie, Moyes and the Coyotes to force a sale and relocation of the hockey team. ...," Baum wrote.

PSE is the company formed by Balsillie to pursue the Coyotes. The Canadian, co-CEO of Blackberry manufacturer Research In Motion, contended that the NHL was an illegal cartel and that its rules were anticompetitive under antitrust law.

Balsillie, who listed his personal worth at $3 billion, has said his bid obviously was the best and that a team would thrive in hockey-crazy Hamilton, while it could never succeed in Glendale.

The NHL board of governors voted 26-0 against Balsillie, labeling him untrustworthy. It is the third time Balsillie has tried and failed to buy an NHL team. Previous efforts to purchase the Pittsburgh Penguins and Nashville Predators also fell through.

At the last minute when other potential bids fell through, the league offered $140 million to buy the team and try to resell it. Its first option was to resell the franchise to a purchaser to keep the team in Arizona. Failing that, the NHL said it would look to relocate the franchise.

"There are multiple factors that support the NHL's bid," the judge wrote.

However, he based his rejection of the league bid on that fact that it would pay all unsecured creditors in full except Moyes and Gretzky, who would get only a share of what was left after every other party got its money.

"One of the prime policies of bankruptcy is equality of distribution among creditors," Baum wrote.

Moyes says he loaned about $100 million to the franchise, while Gretzky has a $22.5 million claim.

"There has been no determination that the Moyes and Gretzky claims are not 'legitimate creditors," Baum said. "It would be inherently unjust for this court to deprive them of their possible rightful share of any proceeds without first providing all involved a fair trial on their claims."

Just what happens next is uncertain in a complex case where more than 1,000 documents have been filed. The league has funded the franchise since last fall and the Coyotes open their season Saturday at Los Angeles.

Gretzky announced his resignation as coach last Thursday.

The unsecured creditors committee and the largest secured creditor, SOF Investment, backed the NHL bid.

The franchise has never turned a profit since moving from Winnipeg in 1996. Baum listed the results of the audit of the franchise that concluded the Coyotes had an operating loss of $54.8 million and a total loss of $72.1 million in 2008.

Baum also commented on the mountain of documents filed in the case:

"The attorneys for the parties have inundated the court with multiple motions, massive briefs and legal memorandums, numerous expert opinions on antitrust and other esoteric issues, conflicting declarations on issues tangentially related to the bankruptcy sale and the assertion of many satellite issues."

Information from The Associated Press and ESPN.com NHL writer Pierre LeBrun was used in this report.

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