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Coyotes decision so close, but it's far from over

September 9, 2009 10:54 AM | Posted by   Scott Morrison  

So the saga continues Thursday in a Phoenix courtroom with the NHL and Jim Balsillie entering the next phase in this remarkable fight for control of the bankrupt Coyotes.

And though it appears the process is inching towards a merciful conclusion, it is entirely possible it is nowhere close.

On Thursday and Friday, Judge Redfield T. Baum, who thus far has reserved judgment on many of the major and contentious issues in the case, is expected to start the bid process in the sale of the club.

On one side is Balsillie, who has upped his offer to $242.5 million US, but with the equally hefty proviso that the offer stands only if he is allowed to move the team to Hamilton.

On the other side, Gary Bettman and the NHL, who have put a $140 million offer on the table to purchase the team and in the process protect is league's constitution and bylaws.

At stake, obviously, tons.

Decision could have dramatic implications on all sports

Indeed, this case continues to have the potential to have a profound influence on the landscape of the sporting world regardless of how it turns out. It has the potential to be precedent setting and with dramatic implications.

The bottom line is: This isn't about Bettman and the NHL being anti-Canadian. Rather, from their point of view, this is still all about a league that is intent on protecting what it perceives to be its right to determine where it locates franchises, how it relocates franchises, and who owns those franchises.

No, the NHL is not opposed to one day having a team in the Greater Toronto Area, they just don't want it in Hamilton (now or ever many believe) and they want it at a price it has established and with an owner it has approved.

In its many court filings, the league has been clear it believes it has the right to approve ownership and "the relocation right is an asset of the NHL as a whole and not of any individual team."

So those are two huge decisions Judge Baum may ultimately have to make, either before or after he auctions off the team and it will likely be after, if Balsillie wins the auction.

But can a bankruptcy judge allow the sale of a team in Phoenix with the rider it must be moved to Hamilton? The argument, as we said, is the owner of the Coyotes does not own the territory in Hamilton, thus it can't be sold, not even to get creditors the money they deserve.

And can the judge approve and allow the sale of a team to a man, Balsillie, who the league has ultimately decided it does not want in its club?

NHL guarding its constitution

If Judge Baum allows Balsillie to have the team and to move it, the decision will have a monumental impact on all sports, where teams could thrust themselves into bankruptcy, be sold and relocated at will. That is why not only the NHL, but every other major professional sports league is keeping such a close eye on these proceedings.

It is the constitution and bylaws of the NHL and perhaps other leagues that could be compromised if Balsillie wins and the impact of that could be huge and, in the eyes of the leagues, devastating.

It could have an impact beyond the sporting world, as well, affecting any kind of franchise business.

Beyond that, there is the matter of the court potentially determining a relocation fee, something the league would otherwise do itself. Can the court overrule the vote of the NHL board of governors to reject Balsillie as an owner but still award him the franchise?

So many questions, so much potential fallout.

Of course, if the court should rule in favour of the Balsillie auction bid on Friday because it is best for the creditors, the end is still nowhere close because all of those tough questions have to be ruled on. And, if they fly in the face of the NHL, well, Bettman has already vowed to appeal because there is so much at stake - and not just a hockey team.

"The right of the collective NHL venture to choose who owns a member club franchise and the location in which that franchise may operate are two of the most valuable rights that any professional sports league — whether the NHL, the NFL, the NBA or MLB — possesses," court documents filed by the NHL last spring stated.

"Thus, what is at stake here is not simply an ownership interest in a stand-alone business but, rather, the fundamental structure of the 30-team NHL venture itself."

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