SBD/Issue 181/Franchises

Timeline Details The Ongoing Battle Over The Coyotes' Future

Coyotes Drama Has Been
Ongoing Since Last Year
The future of the Coyotes is one of the most closely followed stories in sports business, and THE DAILY today presents the most comprehensive timeline to date on the ongoing dispute between Coyotes Owner Jerry Moyes, RIM co-CEO Jim Balsillie and the NHL over ownership and relocation of the Phoenix franchise. The court battle began on May 5, when Moyes filed for bankruptcy protection and reached a tentative agreement to sell the team to Balsillie, but the drama over the club has been ongoing since last year, when reports began circulating about the Coyotes’ perilous financial situation.

HINTS OF TROUBLE: One of the first reports detailing the Coyotes’ financial struggles surfaced last December, with claims the team was expected to lose between $25-35M for the ’08-09 season. NHL Commissioner Gary Bettman in January admits the Coyotes are in need of “an infusion of capital,” and says the league is assisting in the club's effort to find additional investors or a buyer. But in February, Bettman, appearing on FS Arizona, lashes out at the media coverage of the Coyotes’ financial situation, saying “reports about the franchise's demise are just ridiculous.” By the end of February, more details of the team's shaky financial situation continue to emerge, as Glendale city documents reveal that the Coyotes have not made lease payments for Arena in the previous seven months. A report also claims if the team fails to pay its debt, the league will take the club over. But Coyotes President & COO Doug Moss asserts that the NHL has not assumed control of the club, and NHL Deputy Commissioner Bill Daly says a report claiming the league could take over and potentially move the team “contains some inaccuracies.”

WHO'S IN CHARGE? Moyes' Chapter 11 filing in May comes as a surprise to many, including Bettman, who says he was in Phoenix on his way to discuss sales offers with the team when he was notified. It quickly becomes evident that the case will come down to whether Moyes has the right to sell the team, or whether the NHL is in control of the franchise. Daly claims Moyes "had no right to seek bankruptcy protection and sell the team" to Balsillie, and the NHL characterizes Balsillie's effort to buy the Coyotes and relocate the club to Ontario as a "sham" that "should be rejected" by the bankruptcy court. But Balsillie, who has previously bid on the Penguins and Predators, claims the bankruptcy judge must allow the sale to go through because his $212.5M is the highest bid for the team, and the court has an obligation toward the club's creditors. The resulting showdown in a U.S. Bankruptcy Court in Phoenix could have far-reaching implications in the sports industry, as a ruling on the case could set a precedent on how much control leagues have over who can buy a franchise.

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