CBC-Sports

Balsillie faces tough legal battle

May 5, 2009 10:19 PM | Posted by   Scott Morrison  

The next few months will be very interesting in the NHL - and we're not talking about the Stanley Cup playoffs, either.

It's the other big prize that is being contested - property in Southern Ontario for a seventh Canadian team.

As we all know, Jim Balsillie has put in a purchase offer on the bankrupt Phoenix Coyotes, a whopping $212.5 million US, contingent on the team being relocated.

Now, there is much that has to play out. First, a bankruptcy judge has to accept the Chapter 11 filing and purchase plan. If that happens, there will be an auction and overbidders must exceed Balsillie's bid by at least $5 million and not have conditional franchising.

It is hard to envision anyone paying roughly $218 million US for a team that has lost close to $200 million reportedly over the past eight years. Then again, the city of Glendale could create enough lease and revenue concessions to entice someone. But it's doubtful.

If Balsillie is able to acquire the team it isn't just as easy as backing up the moving vans, either.

According to NHL governors, the league is still very much of the opinion that you cannot join the league or move a franchise without league approval. So that smells like a major court battle ahead if everything unfolds as such.

Will the league want to welcome Balsillie? Presumably they will watch to see if any other bidders step up and with a lease in place in Glendale, a judge might opt for less of a bid if it means keeping the team. Or not.

The judge's ultimate goal is to try to get as much money for the secured and unsecured creditors as possible. So far Balsillie is offering the best deal amongst proposals discussed.

Ultimately there will be the matter of the Maple Leafs and Buffalo Sabres and a new team in their neighborhood and a lot of other quetions. Is there indemnification, are the league's bylaws airtight, is it time to embrace a seventh Canadian team?

We will find out in the coming months, perhaps just after they crown a Stanley Cup champion.

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