Bettman Names Coyotes Suitors As Case Heads Back To Court

By Tripp Mickle, Staff Writer, SportsBusiness Journal

Bettman Says NHL Has Four Potential Bidders For Coyotes Besides Balsillie

BALSILLIE'S ARGUMENT: Attorneys for Jim Balsillie focused on two things: a '70 bankruptcy case in which MLB Commissioner Bud Selig acquired and relocated the Seattle Pilots for $10M, despite objections from the city of Seattle and state of Washington, and the Quebec Nordiques' sale on May 25, 1995 and relocation to Colorado on June 6, 1995. In a conference call Saturday, Balsillie's advisor Richard Rodier described the Selig case as “a lawyer's wet dream” because he said it was nearly identical to the Coyotes case. In a memorandum, attorneys wrote, “Judge Volinn (in the Pilots case) thus authorized the sale and relocation of a professional sports club less than one week prior to the start of its season. This court can do the same, within the longer period of time before the next hockey season.” Rodier supported that claim on the conference call by pointing to the Nordiques' relocation as an example of how -- despite the NHL's insistence that it needs to consider relocation beginning January 1 in accordance with league rules -- the NHL can move quickly to relocate a franchise. In a complaint, the application of that January 1 rule in the by-laws is called “anti-competitive” because it would result in protracted negotiations in the Coyotes case “that would scuttle” Balsillie's bid and in essence grant the NHL a “pocket veto” over his bid. In a declaration, Balsillie took exception with the league's characterization of him having a history of misconduct, explaining his recollection of his issues that arose in his effort to purchase the Penguins and Predators. In a conference call, Balsillie's attorney Susan Freeman said keeping the Coyotes in Phoenix would be nothing more than "throwing good money after bad.” But a move to Hamilton, Balsillie said in a declaration, “will make the franchise one of the strongest in the league from a business and hockey perspective.”

THE LEAGUE'S TAKE: The NHL's legal team argued that the league controls who owns its clubs and where they're located and that membership in the league was the only thing that gave the team value. Without membership, “the proposed transaction would transfer a collection of used hockey equipment -- none of which could bear the NHL logo.” The league said that rights to the southern Ontario market belong to the NHL and can't be claimed by anyone else without approval through the league. A supporting declaration from Bettman dismissed Balsillie's claim that the Coyotes couldn't survive in Phoenix. Bettman said, “A franchise relocation that is not adequately studied and ultimately approved by the (NHL) board could result in undermining municipal support, fan interest, business partnerships, broadcast relationships, and the stability of the league as a whole.” He said that relocation fees to Hamilton would be “substantial” and called the debtors' $100M estimate of those fees “conservative.” Bettman added that Balsillie's bid of $212.5M to buy the Coyotes is closer to $165M because Coyotes Managing Partner and coach Wayne Gretzky would be owed $22.5M and the NHL would be owed $25M based on advances against revenue sharing.

Moyes' Attorneys Trying To Affirm Position As Creditor

TAKING SIDES: MLB, the NFL and the NBA filed a joint brief supporting the NHL and urging the court to block the sale and relocation of the team. The leagues cautioned that relocation through bankruptcy proceedings could undermine sports leagues' ability to control the membership and location of franchises. But attorneys for Balsillie and Moyes said the transfer and relocation of the team “will not be the end of the world as we know it,” saying sports teams move all the time. Meanwhile, Aramark, which manages concessions at the Jobing.com Arena, would seek a $5M termination payment if the Coyotes are relocated because leaving Glendale will violate its service contract with the club, according to legal briefs filed by the company. Aramark claims it provided the Coyotes with an $8M grant to cover concession development costs in '03 and according to its contract with the Coyotes, the team is obligated to play all home games in Glendale.

IN BALSILLIE'S CORNER: Sports economist Andrew Zimbalist filed a declaration supporting Balsillie's offer, saying that preventing relocation of the Coyotes “will reduce consumer welfare and lower the value of franchises in the NHL.” He also accused the NHL of acting like a cartel. Zimbalist's support in the case comes on the heels of his appearance in the ATP anti-trust case of '08. In that case, the judge said he considered striking Zimbalist's testimony after he brought an outline of his questions to the stand, which violated court protocol. Instead, Judge Sleet instructed the jury that they could take into account this breach in determining Zimbalist's credibility.

SINGLE TEAM VETO? Considerable attention in the filings focused on whether or not the Maple Leafs or other NHL teams have a veto over the relocation of a team into their territory. The NHL said the idea that a single team has a veto “is simply not true.” But Balsillie's attorneys point to its inclusion in the league's by-laws as a potential anti-trust violation.

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