Canadian billionaire Jim Balsillie's bid to buy the bankrupt Phoenix Coyotes and relocate them in Hamilton has ended in failure.
Balsillie confirmed late Wednesday he will not appeal an Arizona bankruptcy judge's rejection of bids for the Coyotes from both the BlackBerry tycoon and the NHL.
"I respect the court's decision and I will not be putting forward an appeal," Balsillie said in a statement.
The ruling handed down earlier Wednesday by Judge Redfield T. Baum proved to be the knockout punch for Balsillie, who has tried — and failed — three times to buy an NHL team and relocate it in southern Ontario.
"Nobody can deny that we are now a big step closer to having a seventh NHL team in Canada," Balsillie said. "It doesn't matter who owns that team [and], when that day comes, I will be the first in line to buy a ticket to the home opener."
Balsillie offered $242.5 million US for the Coyotes, contingent on moving the team to Hamilton, but Baum turned down the bid because it failed to satisfy the NHL's rights regarding relocation.
The league was opposed to Balsillie moving the team to Hamilton, preferring to keep it in the Phoenix suburb of Glendale for the time being.
Baum sided with the NHL on three points — the right to approve membership; the right to control where teams play; and the right to a relocation fee — and, in doing so, avoided setting a legal precedent feared by all major professional sports leagues.
"We are pleased that the bankruptcy court has confirmed the league's rights to select its owners and the location of its franchises," NHL deputy commissioner Bill Daly said in a statement.
"It was a chance to realize a dream. All I wanted was a fair chance to bring a seventh NHL team to Canada, to serve the best unserved hockey fans in the world. I believe I got that chance. I respect the court's decision and I will not be putting forward an appeal. " — Jim Balsillie responds to the ruling
Baum rejected Balsillie's bid "with prejudice" and the NHL's bid "without prejudice," leaving the door ajar for the league to amend its $140 million offer to the satisfaction of the court.
"It seems to the court that the defect in the NHL's bid could be easily cured by the NHL," he said. "In hockey parlance, the court is passing the puck to the NHL who can decide to take another shot at the sale net or it can pass off the puck."
Baum expressed concern over the NHL's omission of Coyotes majority owner Jerry Moyes and former head coach Wayne Gretzky on its list of creditors to be paid.
Moyes claimed to have lost more than $200 million in equity and accumulated $100 million in debt since partnering with developer Steve Ellman and Gretzky to buy the team for $90 million in 2001.
Gretzky is owed $9.3 million on his minority stake.
The NHL argued in court that the debt incurred by Moyes and Gretzky was, in fact, equity — thus removing them as creditors — but Baum disagreed.
"There has been no determination that the Moyes and Gretzky claims are not 'legitimate creditors,'" Baum said. "It would be inherently unjust for this court to deprive them of their possible rightful share of any proceeds without first providing all involved a fair trial on their claims."
"We are reviewing the opinion and considering how we can best address the court's concerns regarding our offer to purchase the Coyotes," Daly responded. "It remains our goal to secure the long-term stability of the Coyotes in Glendale."
Jim Balsillie had an agreement with the City of Hamilton on a lease at Copps Coliseum with $5 million in upgrades if he succeeded in landing the Coyotes in bankruptcy court.
"It certainly would've meant a lot of business for the downtown core of Hamilton. It would certainly have brought a lot of awareness to the city and with awareness creates opportunities." — Ruth Liebersbach, president of Hamilton Chamber of Commerce
All is not lost, however. Witnesses for the NHL testified in court that Hamilton ranks high among the untapped markets for an NHL team, be it relocated or an expansion entry.
"The good news in it for Hamilton is that all have agreed that hockey in southern Ontario is viable and that it would be a successful market for them to start working with. We will continue to work to see if we can get an NHL franchise here for Hamilton." — Fred Eisenberger, mayor of Hamilton
Moyes filed for Chapter 11 bankruptcy protection on May 5, with the expressed purpose of selling the Coyotes to Balsillie over the NHL's vehement objections.
The league had already rejected Balsillie's application for ownership by a 26-0 vote with three abstentions (Buffalo, Pittsburgh, Toronto) and, based on past dealings, questioned his character and integrity as a businessman.
Moyes later filed an emergency motion requesting Baum order mediation to resolve the case, but it was tossed.
"This conclusion effectively is the end for the efforts of PSE, Balsillie, Moyes and the Coyotes to force a sale and relocation of the hockey team," Baum said.
Failed bids for Penguins, Predators
The resentment between Balsillie and the league — and the reason why mediation was viewed as pointless — has intensified since he tried unsuccessfully to buy the Pittsburgh Penguins and Nashville Predators, so he could move them to Hamilton.
Balsillie struck a tentative agreement with Penguins majority owner Mario Lemieux to purchase the team for $175 million in 2006, but NHL commissioner Gary Bettman intervened and reportedly imposed restrictions to ensure the team would stay in Pittsburgh.
Balsillie later agreed to purchase the Predators for $238 million from Craig Leipold in 2007 and began accepting deposits for season's tickets in Hamilton — a move that miffed the NHL and led to Leipold scuttling the deal and selling the team to local interests for considerably less.
Leipold was later rewarded for his loyalty with majority ownership in the Minnesota Wild, and Balsillie has since irked board members by pursuing the Coyotes in bankruptcy court.
The ruling on the Coyotes is the result of five months of legal wrangling for a floundering franchise that lost $75 million in 2004, $50 million in 2005, $75 million in 2006, $117 million in 2007 and $72 million in 2008.
Baum hinted he might reject both bids during a two-day, court-supervised auction in mid-September.