ORLANDO, FL – The battle over the future of the Phoenix Coyotes’ hockey team continued in a Phoenix courtroom Thursday as the NHL and Research in Motion co-C.E.O. Jim Balsillie headed into a one-on-one showdown straight out of a old time western gun fight. Judge Redfield T. Baum is currently hearing arguments from both sides as he attempts to determine who may ultimately win the bankruptcy auction for the hockey franchise. According to reports on TSN.com, both Balsillie and NHL Commissioner Gary Bettman are expected to take the witness stand on Friday to answer questions about the bids they have placed for the Coyotes. If the league wins, the team will stay in Glendale at the Jobbing.com Arena while a new owner is found. Balsillie plans to move the franchise to Hamilton, Ontario should he be declared the winner. (The NHL has conceded that should it fail to find an owner willing to keep the team in Glendale, it would consider an owner who would move the franchise.)
Baum reiterated that the auction will take place on Friday and that he would take a week or so to rule on relocation fees and other issues. Thursday’s proceedings began with arguments from lawyers for AT&T, one of the Coyotes’ creditors, over monies it is owed. Judge Baum then confirmed both sides’ offers and found that in a worst case scenario, the NHL would give the state of Arizona $2 million and work with a “select group of creditors” on outstanding bills while Moyes would get nothing. Baum then requested the league provide a schedule of payment for creditors. Former CFL Commissioner Tom Wright, who wrote the application bid for Balsillie, was then questioned by league attorneys regarding the viability of the franchise in Glendale. Wright expressed his doubt about the Coyotes’ survival in the desert while the league contended that Ice Edge Holdings’ bid as well as the one submitted and later pulled by Jerry Reinsdorf proved otherwise. Wright was then asked his opinion on whether the Copps Coliseum in Hamilton could host an NHL team now without $200 million in renovations, to which he responded “yes”. City of Glendale lawyer William Baldiga then was called to the stand and indicated that the city would prefer to do business with the NHL because it “gives us the chance to mitigate our harm”. He added that the city “vehemently rejected” the Balsillie offer. He went on to testify that Balsillie’s offer of up to %50 million to the city would be “less than 10% of the damages to the city”. Coyotes’ lawyer Jordan Kroup was challenged by Judge Baum over a $794 million claim by the city – Baum called it a “crystal ball analysis” – due to lost revenue should the team leave. Kroup attempted to tell the court that “sports teams do not provide economic benefit to municipalities”, a concept that Baum quickly dismissed. Later, Zimbalist was questioned by NHL attorney Shepard Goldfein regarding his methods in reaching his figures pertaining to the relocation fee. He noted that Zimbalist’s testimony in a case involving NASCAR was disregarded because the economist “improperly created a methodology” in the case. Goldfein went on to say that, as he interprets it, a relocation fee “should be tied to the value of the franchise” and cited the New Jersey Devils paying $8 million – 60% of their value – to relocate. “If Balsillie’s bid is $212.5 million, 60% would be approximately $127 million,” Goldfein said.
Following a lunch break, Zimbalist and NHL relocation expert Franklin Fisher were expected to be questioned by lawyers from both sides. Since the two sides were in Judge Baum’s courtroom last week, several significant developments have taken place. First, the Toronto Star reported that Coyotes’ owner Jerry Moyes suggested through his lawyers that the NHL needed to up its $140 million offer by some $80 million or more to allow Moyes to “recoup some of the $300 million he claims to have lost on the team”. Ironically, the $80 million figure was approximately the difference between the NHL deal and the one offered by Balsillie and PSE Sports and Entertainment was putting on the table at the time ($212.5 million). On Labor Day, Balsillie announced that he was upping his offer to $242.5 million. Included in that price would be up to $50 million that Balsillie would give to Glendale to allow the Coyotes to break the 30-year lease they have with the city. The deal would have Balsillie putting $10 million in an escrow account with $182.5 million to follow. The $40-$50 million for the city would allow the team to continue using the arena until they could relocate, a nod to Balsillie conceding that a move before the start of the regular season – training camp opens this Saturday – would not be possible. A point of serious contention was raised over the holiday weekend on the subject of relocation fees. According to economics professor Andrew Zimbalist, who was hired by Balsillie to study the situation, a reasonable relocation fee would be in the range of $11.2 million to $12.9 million. The NHL filed paperwork with the court stating that its studies show a reasonable fee to be between $101 million and $195 million. On Wednesday, Ice Edge Holdings – a third group that had the backing of Phoenix head coach Wayne Gretzky – dropped its $150 bid for the team. Representatives said that the failure to reach an agreement on a reworked lease with the city of Glendale led the group to withdraw, setting up the head-to-head clash between the league and Balsillie. Ahead of Thursday’s hearing, TSN.com reported that former Columbus Blue Jackets’ president and General manager Doug MacLean would be brought in as an advisor to Balsillie to work on the move from Glendale to Hamilton. MacLean helped build the Blue Jackets’ team ahead of its debut during the 2000-2001 season. He also coached the Florida Panthers for two and a half year, one of which the Panthers got to the Stanley Cup finals. For more details and additional information from the hearings, fans can go to www.tsn.ca or check back with PHN for updates. Contact the author at don.money@prohockeynews.com
You must be logged in to post a comment.