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What does future hold for Phoenix Coyotes?

The future of the Phoenix Coyotes has hung in the balance since owner Jerry Moyes filed for bankruptcy protection in May and Research In Motion co-CEO Jim Balsillie filed a $212.5 million offer to buy and relocate the team.

On Thursday, a Phoenix bankruptcy court will hold an auction for the team that could provide some resolution. Some answers to questions still swirling around the case.

Who is bidding to buy the team?
There are three bids currently before the court. The first bid is Balsillie’s $212.5 million offer, which is contingent upon being able to relocate the team to Hamilton, Ontario. The second is the NHL’s $140 million offer, which is designed to withdraw the team from bankruptcy proceedings and allow the league to sell it in a more orderly fashion. The last is a $150 million bid by Ice Edge Holdings, a Canadian group that wants to buy the team and have it play eight games in Saskatoon, Saskatchewan, in 2009-10.

How will the auction work?
The judge is expected to take the bids, ask if there’s anyone else in the open courtroom who cares to file a bid, and hear arguments about remaining issues in the case. Ultimately, he will determine under bankruptcy code what the highest and best bid is. The highest bid may not be the best.

Will the case end after the auction?
Probably not. The judge said that he has so many issues to decide that he may not decide them before Sept. 14 and hopes to have a final decision by NHL season. The NHL also guaranteed that it would appeal the case should it lose.

What issues are outstanding?
The court is considering a host of issues, including: Whether it has the legal right to force the NHL to accept Balsillie as a member after the board of governors rejected his membership application because of character and integrity concerns; whether it is possible to relocate the team to Hamilton during the 2009-10 season; who has to pay Coyotes coach Wayne Gretzky and how much he should be paid; and whether Glendale’s lease can be rejected.

Why does this matter?
This is more than a fight over a struggling NHL franchise. At its core, it’s a battle over whether leagues can determine the locations of their franchises and manage the sale of a franchise. If Balsillie wins, it could set a precedent that damages all sports leagues. His ability to buy and relocate the Coyotes out of bankruptcy could inspire other owners to file for bankruptcy protection to circumvent league rules and sell their team to a buyer willing to pay more if the franchise can be relocated. Should the court force the NHL to accept Balsillie as an owner, other rejected applicants for ownership in leagues could see the court as an avenue to force a league to accept their membership.

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