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Plot thickens in the great bankruptcy trial

May 20, 2009 01:05 PM | Posted by   Scott Morrison  

So, after the first day of the great bankruptcy trial, we are really no closer to knowing whether Jim Balsillie will be bringing a team to southern Ontario any time soon.

Actually, we know it won't be any day soon, but we don't know whether it will happen period.

But the plot certainly did thicken and the tension rose in that Phoenix courtroom Tuesday.

Many expected that the bankruptcy judge, Redfield Baum, would simply listen to arguments and rule as to who has control of the Phoenix Coyotes - Jerry Moyes or the NHL. And depending on that judgment, everything else, including potential relocation would be dealt with.

But that's not quite how it is playing out.

Mediation could be in vain

The good judge has instead sent Moyes and the NHL to a mediator to determine who is in control of the franchise, though it is hard to fathom that exercise will be anything but futile.

If, for instance, Moyes cedes to the NHL, then they could take the team out of Chapter 11 if so desired. Or they could certainly control the auction process, present another offer ...

Anyway, the judge has instead decided to take time to examine the relocation issue and both sides are busily preparing briefs to argue their cases.

But leaving that door open is interesting for all and obviously it’s scary for the NHL and other pro leagues. It seems Judge Baum is very much of the opinion that he can allow for relocation if that is the best way to increase the value of the franchise and raise money for the creditors. But that doesn't mean, he pointed out, he will necessarily rule in that favour.

Judge Baum knows, too, that his ruling ultimately could lead to many more lawsuits and potential anarchy in the NHL, if not all pro leagues. If he says the franchise is movable, the NHL has said it will abide by the ruling, but you can be certain they will challenge it in another court. If he says it isn't movable, well, there are still many challenges ahead.

Opens the door for other suitors?

Now, the other interesting twist is that if the franchise is ultimately deemed movable and the auction proceeds, yes the value goes up but so too does the interest.

If, suddenly, the southern Ontario market is in play, might the auction process flush out the two or three parties that are said to be interested in a team for the Toronto-Hamilton area, but were waiting for that process to be played out by the league, not the courts?

There just may be a group with pockets and interest as deep as Balsillie.

All of which means, regardless of the scenarios that play out, the next few weeks are going to be very interesting.

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