SBD/Issue 191/Franchises

Judge Sets Two Coyotes Timelines; Reinsdorf Set To Submit Bid

Coyotes Will Go Up For Auction August 5 To
Bidders Interested In Keeping Team In Arizona
The Coyotes moved a step closer to staying in Arizona yesterday after a U.S. Bankruptcy judge set a timeline that could see the team sold to local owners by early August. U.S. Bankruptcy Judge Redfield Baum set two timelines for the sale of the team. The first puts the team up for auction August 5 to bidders interested in keeping the team in Arizona. If that auction generates a satisfactory and legal bid, the team will stay in Glendale. If it does not, then a second auction on September 10 will be held for bidders interested in relocating the team, as RIM co-CEO Jim Balsillie wants to do. The NHL expects to file an offer as early as Friday from Bulls and White Sox Chair Jerry Reinsdorf, former Nationals President Tony Tavares and Arizona attorney John Kaites. An attorney representing the group, known as Glendale Hockey LLC, told Baum that the group was in the midst of reviewing the team's financials and working out details on a series of lease concessions from the city of Glendale. The Reinsdorf offer is the only local one the NHL mentioned during yesterday's hearing. NHL attorney Tony Clark of Skadden Arps said that the NHL expects to sell the team to “the right owner and right manager” in Glendale and that if that did not happen, the league would sell to the highest bidder in the best outside market possible.

MOYES, BALSILLIE ARGUE FOR SIMULTANEOUS REVIEW: The decision by Baum to set the two timelines came during a three-and-a-half-hour hearing in which attorneys representing Coyotes Owner Jerry Moyes and Balsillie argued that the judge should have the NHL simultaneously review Balsillie's relocation proposal and competing bids that would keep the team in Glendale. Their argument was that creating such a “dual-track” timeline would allow the court to look at the local bid and relocation bids side-by-side at a September auction and determine which was best for creditors. Instead, Baum asked the NHL to move up its auction date from early September to early August. He then created the subsequent timeline for the sale of the team to bidders interested in relocating it. An attorney representing Balsillie said that a sale of the team would have to close by September 10 or Balsillie would drop his bid. When NHL attorneys said the timeline for approving relocation was too tight, Baum told them that they would either have to reach a decision or have a reason why they could not. Baum: "The court expects the NHL to do everything reasonable to comply with this deadline." NHL Deputy Commissioner Bill Daly following yesterday’s hearing said, “We’re pleased that the judge adopted the two-tiered approach to the auction, and we are confident -- we’ve said all along we’re confident -- there’s a viable offer that will make this team viable in Glendale, and now we’ll let that process play out” (Tripp Mickle, SportsBusiness Journal).

NHL Has Until Sept. 2
To Accept Or Reject Balsillie
HOLDING OUT HOPE: In Toronto, Kevin McGran notes Baum “gave the league until Sept. 2 to accept or reject Balsillie and Hamilton.” Balsillie attorney Richard Rodier: “It’s tremendous news. We’re in the game.” However, the NHL "believes the issue will be moot with the promise made on behalf of the Reinsdorf group." If Baum likes Reinsdorf's offer, "it could be the end of Balsillie’s dream to put a team in Hamilton." But Baum said that approving a sale that “covered half the Coyotes' debt -- they owe about $300[M] -- ‘would be tough.’” McGran notes that is “where Balsillie’s camp sees reason to hope.” If a local owner is not found, Balsillie would “table a new bid” that would “still be contingent upon moving the team.” Balsillie's camp is “banking on a rejection to build an anti-trust suit, and argues the NHL is simply trying to avoid the issue by avoiding a decision” (TORONTO STAR, 6/23).

THINKING LOCALLY: The GLOBE & MAIL’s David Shoalts notes no details of Reinsdorf’s offer have been made public, but sources said that it consists of $130M to “satisfy the team’s secured creditors and the assumption of other debt.” It also will require a “hefty contribution from the City of Glendale," possibly as much as $15-20M a year. An attorney for Glendale “objected to the Aug. 5 sale date, telling Baum it did not allow enough time for concessions on the arena lease and other financial assistance to be negotiated with Reinsdorf.” Baum said that the Glendale City Council “will have to hurry if it wants to keep the team because he wants a quick sale to see that the team’s many creditors are paid as soon as possible” (GLOBE & MAIL, 6/23).

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