The sale and relocation of the Phoenix Coyotes to Jim Balsillie won’t be occurring anytime soon, and possibly never, after a U.S. bankruptcy judge rejected his end-around offer of $212.5 million that would have bypassed the NHL’s relocation approval process.
Arizona bankruptcy Judge Redfield T. Baum ruled that the accelerated timeline that Balsillie’s offer was contingent upon did not allow enough time to with several complicated legal issues such as a relocation fee to the league, and possible extra fees to indemnify both the Toronto Maple Leafs and the Buffalo Sabres, both of which would be impacted by the relocation of the Coyotes to Hamilton, Ontario, Canada.
(See Judge Baum’s ruling along with other key document in the Coyotes case)
Balsille was looking to have the relocation issue resolved by June 29, less than two weeks from now, to allow the team to begin play in Hamilton in the 2009-2010 season.
“Simply put, the court does not think there is sufficient time (14 days) for all of these issues to be fairly presented to the court given that deadline,” Baum wrote. Adding that since the Motion had been denied that, “Accordingly, the June 22nd auction date and other deadlines related thereto are vacated.”
The league, who has fought the relocation saying that it would usurp the league’s relocation approval process, sees the ruling as positive. NHL deputy commissioner Bill Daly addressed the ruling in a statement Monday night.
"We're pleased the Court recognized the validity of League rules and our ability to apply them in a reasonable fashion,” Daly said. ”We will turn our attention now toward helping to facilitate an orderly sales process that will produce a local buyer who is committed to making the Coyotes' franchise viable and successful in the Phoenix/Glendale area. We are confident that we will be able to find such a buyer for the Coyotes and that the claims of legitimate creditors will be addressed.”
As noted by Daly, the City of Glendale would see considerable losses if the Coyotes were to leave Jobing.com Arena, and relocate to Hamilton. Baum noted in the ruling that Glendale has projected nearly $795 million in various taxes and fees over the life of the 30-year lease agreement between the city and the Coyotes that would be lost. Also, Aramark, who is the arena’s concessionaire, has within their agreement a termination fee should the Coyotes ever relocate from Glendale. Based upon the current value of Aramark’s assets at the arena, that value is assessed at $5,095,022.
With Baum claiming the timeframe outlined by Balsillie is too short to rule on relocation, the sale of the club to satisfy creditors is opened up, with the NHL looking to renegotiate the lease with the City of Glendale, and find a buyer looking to keep the Coyotes in Phoenix.
However, Balsillie seems intent on the continued pursuit of the Coyotes with the full intent of relocating them to Canada.
“We look forward to hearing from the NHL soon on its view of our relocation application and an appropriate relocation fee, so as to allow the court to determine if that fee is reasonable,” Balsillie spokesman Bill Walker said. “We still think there is enough time for the NHL to approve Mr. Balsillie’s application and move the team to Hamilton by September.”
Walker failed to mention a key aspect of Baum’s ruling: the lease agreement between the Coyotes and the City of Glendale. It should also be noted that Balsillie was planning to initially attempt the relocation without ever filing the league’s relocation application. Only after the judge made comments in a May 19 hearing was the relocation application filed.
Baum addressed key relocation cases that were heard by the Ninth Circuit as well, including the 1982 case involving the NFL Raiders relocation to Los Angeles, and the NBA’s Clippers, who relocated to Los Angeles in 1984 without following league protocol. As for relocation being conducted outside of league control, which the NHL claimed would “wreak havoc” Baum noted that, “From the outside looking in, it appears that each of the leagues has not suffered or been materially damaged when one of its members made a quick and unapproved move as the Baltimore Colts and San Diego Clippers did in 1984 and the Seattle Pilots did in 1970.”
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