SBD/Issue 172/Franchises

Balsillie, NHL Lay Out Their Proposed Timetables For Coyotes Sale

Balsillie Says Important To
Have Resolution Before Draft
A new conflict emerged yesterday in the ongoing Coyotes saga, as Coyotes Owner Jerry Moyes and RIM co-CEO Jim Balsillie pushed for the team to be sold by June 24, while the league favors a later sale date of August 24. The dates were disclosed in court filings by both parties. The Moyes-Balsillie proposal sees the NHL's BOG voting on Balsillie's bid and relocation application by June 12 and competing bidders' applications by June 23. An auction would then take place June 24, two days after the court determines if the team can be relocated. In a hearing last week, Judge Redfield Baum expressed concern that selling the team before the end of June may be too fast to deal with the complexities of the case. But Balsillie has said publicly that it's important to have ownership resolved prior to the NHL Draft on June 29. Conversely, the NHL favors waiting until after the court rules on June 22 if the team can be relocated before proceeding with a sales process. Over the ensuing month, it would collect applications from potential bidders and process them in time for a potential auction of the team August 24. The two sides also disagreed over how the auction process would work with the Balsillie-Moyes team favoring bids increasing at $5M increments, while the NHL is pushing for $2M increments. The auction process and timelines the parties submitted will be argued in Phoenix court today (Tripp Mickle, SportsBusiness Journal). 

Deadline for notice
Deadline for Balsillie and Moyes to file a joint relocation application to NHL
Deadline for any competing bids to be filed
Deadline for NHL to advise court of BOG's position on relocation and Balsillie's application for membership
Deadline for filings ahead of June 22 hearing on relocation
Hearing on relocation
Deadline for NHL to provide BOG's vote on competing bidders' applications for membership
Auction in bankruptcy court
Decision on relocation
NHL application due for bidders interested in buying team
Preliminary bid deadline in which bidders propose purchase
Qualified bid deadline in which bidders turn in purchase agreements
NHL BOG votes on approval of bidders
Auction in bankruptcy court
Sales hearing

TAKE IT OR LEAVE IT? In Hamilton, Milton & Peters report Moyes' timeline presented to the court "suggests that Balsillie will withdraw his $212.5[M] conditional offer for the club by the end of June rather than absorb an estimated $30[M] loss by the Phoenix club for the 2009-10 season." Moyes' filing states, "An expedited sale is necessary to maximize the value of Coyotes Hockey assets" (HAMILTON SPECTATOR, 5/27). However, NHL Deputy Commissioner Bill Daly in an e-mail said the league will “continue to oppose any sales process that contemplates a relocation for the 2009-10 season” (ARIZONA REPUBLIC, 5/27).

OPERATING PROCEDURE: The GLOBE & MAIL's David Shoalts reported the NHL and Coyotes will tell a bankruptcy judge today “they have essentially agreed on how to operate the team.” The NHL “will continue to lend the Coyotes money to keep them operating.” Daly in an e-mail said that an agreement is “basically in place on operating the team” (GLOBE & MAIL, 5/26). Daly added, “The control issue is not resolved. But the parties are trying to agree on a process to jointly operate the club pending the sale” (TORONTO STAR, 5/26). The NATIONAL POST’s Tedesco & O’Connor noted the tentative agreement between the Coyotes and the NHL “does not resolve any of the major issues -- who controls the Coyotes; did Moyes have the power to petition the money-bleeding club into bankruptcy; will the club be sold, and to whom; and can and will the franchise be moved out of Phoenix?” (NATIONAL POST, 5/26).

RUSH UP ICE: In Toronto, Kevin McGran reported Balsillie “has officially applied to the NHL to become a team owner.” A second application -- from Moyes -- to “move the team to Hamilton is expected to be filed” this week. If Balsillie “fails to gain approval, his camp believes it would have the basis for an antitrust suit” (TORONTO STAR, 5/25). In Hamilton, Steve Milton reported in a front-page piece Balsillie is “willing, if the [NHL] so desires, to forgo dipping into the league’s revenue-sharing pool.” Balsillie’s team is “ready to make that concession because they are confident the Hamilton market will offer enough support from an eager fan base to make it a profitable venture.” Balsillie spokesperson Bill Walker: “We anticipate operating profitably in Hamilton by bringing NHL hockey to the best unserved market in the world and therefore not drawing on revenue sharing under the CBA” (HAMILTON SPECTATOR, 5/25). In Toronto, Steve Simmons writes Balsillie “seems confident the judge will rule on relocation and is surprisingly optimistic that he will emerge successful this time, even if there is no indication he will be so rewarded in court.” Balsillie: “Our bid should stand on its own merits. … The judge said there will be an auction and he will rule on relocation. What more could we ask for?” Balsillie added that if he is “given the green light to purchase and move the franchise that it wouldn’t necessarily be called ‘Hamilton.’” Balsillie said he chose Hamilton to relocate to because “there is an arena there.” Balsillie: “That’s really important, even though we’d have to renovate it. If you can point to another arena that’s available (in Southern Ontario), I’m all ears” (TORONTO SUN, 5/27).

CREDIT CHECK: The TORONTO STAR’s McGran reported SOF Investments, the Coyotes’ “single-largest secured creditor,” has given its “qualified support” to Balsillie’s bid. SOF in court papers said it believes Balsillie’s bid “would result in substantial recovery of the amounts owed to the debtors’ creditors” (TORONTO STAR, 5/23). The PHOENIX BUSINESS JOURNAL’s Sunnucks & Casacchia note the team “owes more than $108[M] to its top 40 creditors and service providers, including media and broadcast partners, insurers, the Coyotes Ice Den practice facility and Aramark Corp., the team’s concessions provider.” The Coyotes owe FS Arizona “$261,438 for production costs from last season," while KAZT-Ind is listed as the "second-largest media creditor, with an unsecured claim of $72,750 stemming from fees the Coyotes paid the independent Flagstaff station to broadcast 20 games during the 2008-09 season" (PHOENIX BUSINESS JOURNAL, 5/22 issue). 

BACKING A BID: In Phoenix, Craig Harris reports Sports Properties Acquisition Corp. CEO Tony Tavares was working with Bulls and White Sox Chair Jerry Reinsdorf to “buy the Coyotes one day before the team filed for bankruptcy protection.” Public records reveal the agreement was “signed May 4 with the city of Glendale,” though no purchase price was listed. Glendale spokesperson Julie Frisoni said that the city “had no knowledge or information if Tavares was representing an outside entity, including Sports Properties” (ARIZONA REPUBLIC, 5/27).

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