Deadline may be Balsillie's undoing
Citing time constraints, an Arizona bankruptcy judge turned aside Jim Balsillie's attempt to purchase the Phoenix Coyotes and move them to Hamilton.
The Canadian billionaire had placed a June 29 deadline to complete the $212.5-million US sale and relocation of the NHL franchise, but Judge Redfield Baum said Monday he didn't have enough time to resolve all of the complex issues and had, therefore, rejected the motion.
Should Balsillie have simply let the bankruptcy process take its course? Has the NHL's argument that it alone controls a team's right to relocate been validated? Where does Baum's decision leave the Coyotes for next season?
These are some of the questions Rob Becker, a New York lawyer and legal analyst on sports issues, addressed for CBCSports.ca.
CBCSports.ca: Will Balsillie regret putting a deadline for buying the Phoenix Coyotes after Baum ruled it didn't give him sufficient time to go over all the key issues?
Becker: It may be that Balsillie's tough-guy strategy of holding the league's feet to the fire with a deadline may have backfired because it may have also held the judge's feet to the fire. If it was a deadline that he himself did not need for business reasons, he may well regret it. But if the reason he put the deadline on there was because he didn't think that he could move the team unless it was done by [June 29], well then I guess he doesn't regret it because he had to do it.
CBCSports.ca: Was Balsillie being impatient with the bankruptcy process?
Becker: The judge was being indecisive and, to some extent, changed his mind as to which issue should be decided first. I think what may have happened is when Balsillie saw that the judge was being indecisive, he felt that the only way to bring this to a head was to put a deadline [in place], and that may have backfired.
CBCSports.ca: Does Baum's ruling validate the NHL's argument that the league alone has the right to determine which teams can relocate?
Becker: I would expect that the NHL will say that this ruling vindicates its rules on relocation. I think this decision does not appear to approve or disapprove of the league's relocation rules, but rather seems to been made on the basis that there was not enough time for Mr. Balsillie's offer to be accepted during the time limits which he placed on it.
Therefore, this ruling seems to have been made on a pragmatic basis and not on any kind of precedent basis that tells us what we want to know, which we and all the [professional sports] leagues [want answered]. Do the NHL's rules about relocation survive in bankruptcy? In other words, do the league's rules trump a bankruptcy or not? It seems to me that question was not really answered.
CBCSports.ca: The NHL argued that the Phoenix Coyotes should not have been placed in bankruptcy by owner Jerry Moyes in the first place. However, the league has no objections now. Why?
Becker: It seems to be over time they've accepted that [the franchise is] properly in bankruptcy and even seemed to accept it as an OK way for [the Coyotes'] fate to be decided. They just didn't want it to go to Balsillie. Their position now seems to be: 'It's OK for this team to be auctioned off in bankruptcy to the highest bidder.' Unfortunately for [the creditors], it's going to be the highest bidders among those willing to keep it in Phoenix.
CBCSports.ca: The NHL filed court papers stating it had four potential buyers interested in operating the Coyotes in Phoenix. Are these legitimate offers?
Becker: Four parties have filed preliminary applications to investigate purchasing the team and keeping it in Arizona. I would take that at face value. That's not the same thing as an offer. If I [make] an application to investigate purchasing your team, that doesn't mean I'm making an offer. So it may mean all four of those are not offers.
CBCSports.ca: What does all this mean for the Phoenix Coyotes going forward?
Becker:If [the NHL] can find someone who makes a decent offer and wants to keep it in Phoenix, I can see them selling it to that person before the season. That's no big deal because all you have to do is sign a few papers and there's no major logistical concerns.
If, on the other hand, they can't find anyone with a decent offer to keep it in Phoenix to the point where they have to seriously consider moving to some other place, I think it will be too late to move it [for next season]. They will have to spend at least one year in Phoenix with the NHL funding the team. The league said it will fund the team for the coming season if necessary. To me, that's something I would take at face value. The bottom line at least for the 2009-10 season [is] this team will be in Phoenix. So if you're a Phoenix Coyote fan, I think as of today you're at least guaranteed one more year, regardless of what happens.