Court was back in session Thursday in Arizona with Judge Redfield T. Baum overseeing a two-day auction to determine which of two bidders will own the Phoenix Coyotes: Canadian billionaire Jim Balsillie or the NHL — or shockingly, neither.
Balsillie, the co-CEO of Research in Motion Ltd., maker of the BlackBerry smartphone, has offered $242.5 million US for the bankrupt franchise, contingent on relocating it in Hamilton.
The NHL has countered with a bid of $140 million amid claims that Balsillie is ineligible to participate in the bidding process because the league's board of governors rejected his application for ownership by a vote of 26-0 with three abstentions (Buffalo Sabres, Pittsburgh Penguins and Toronto Maple Leafs).
"There is a third possibility here — no sale," Baum said, much to the surprise of stunned onlookers in Courtroom 703.
"It is more than theoretical. You all ought to keep that in mind."
If unsold at auction, the franchise presumably would be dissolved and all assets sold off with the players shipped elsewhere in a dispersal draft.
Bettman to take stand
Both Balsillie and NHL commissioner Gary Bettman were scheduled to take the stand on Friday, but the court was told Thursday that Balsillie wouldn't need to testify.
"Nhl + glendale say they have no cross exam for Balsillie so he will not take the stand tmrrw," Hockey Night In Canada Radio host Jeff Marek said on Twitter.[Balsillie's lawyer Jeffrey]
Kessler, however, will have at bettman."
Asked what he can expect from the flamboyant Kessler, who Marek likened to "a pit bull on a pork chop," Bettman said: "Mr. Kessler took my deposition in this case and we go back a long time together. I think we have both been in the sports and legal business for about 30 years. Actually, I think he has probably taken my deposition more than once."
After the NHL and PSE Sports & Entertainment — the company Balsillie formed to pursue the Coyotes — confirmed their bids, no other parties stepped forward to enter the fray.
"Record reflects no other bidders," Marek tweeted from the courtroom.
The league entered into the bidding about two weeks ago when Jerry Reinsdorf, owner of the Chicago Bulls and White Sox, withdrew his $148-million bid, citing an inability to reach an agreement with the City of Glendale — the Phoenix suburb where the Coyotes play.
Ice Edge Holdings LLC, a group of American and Canadian businessmen committed to keeping the team in Phoenix if it played five games in Saskatoon, pulled out Wednesday.
NHL lawyer Shepard Goldfein revealed Thursday in court that Toronto Argonauts co-owners David Cynamon and Howard Sokolowski were involved in the Ice Edge bid and Coyotes head coach Wayne Gretzky, too, having agreed to accept a pay cut from $8 million to $2 million.
Follow the riveting exchanges and drama from Thursday's hearing in CBCSports.ca's live chat replay featuring Tom Harrington of CBC News and HNIC Radio host Jeff Marek from the Phoenix courtroom.
Be sure to rejoin our duo for more online chat live from the courtroom Friday beginning at 11:30 a.m. ET.
NHL sets relocation fee at $127 million
Thursday's agenda focused on the contentious issue of relocation, with former CFL commissioner Tom Wright first to take the stand.
Wright, who was paid $115,000 to prepare Balsillie's application for relocation, told the court the City of Glendale isn't capable of supporting an NHL team, even a winning one, but Hamilton is.
"Wright says NHL's own reports suggested revenues could be generated at Copps [Coliseum]. NHL objects but overruled," CBC's Tom Harrington tweeted.
The matter of a relocation fee, to be paid the league for moving the team, was discussed next.
Two studies commissioned by the NHL proposed a fee ranging between $101 million and $195 million whereas Andrew Zimbalist, Balsillie's expert, put it between $11.2 million and $12.9 million.
Zimbalist looked at the moves made by the Quebec Nordiques (Denver) and Hartford Whalers (Raleigh) in determining the range reached by PSE, but Goldfein said it should be 60 per cent of Balsillie's initial offer or $127 million.
"A big number," Baum said. "But the relocation fee is not the most important legal issue that is going to be submitted to the court."
Glendale rejects Balsillie bid
Balsillie increased his original bid of $212.5 million to $242.5 million on Monday and earmarked $50 million to Glendale to release the team from its 30-year lease at Jobing.com Arena.
Balsillie's offer is contingent on municipal officials accepting the offer by Sept. 30, and the team moving to Hamilton as soon as possible.
"Given the two choices that we have, we're prepared to put our lot in with the NHL," Glendale lawyer William Baldiga said. "It is not our preferred choice … [but] gives us the chance to mitigate our harm. We vehemently reject the PSE bid."
Jordan Kroop, a lawyer representing Coyotes majority owner Jerry Moyes among other debtors, argued the city is owed $500 million if the lease is broken.
Calling the lease "non-severable," he said: "This case is about one thing — maximizing the value of the assets for the creditors."
The NHL, which plans to keep the team in Phoenix for the time being, was admonished by the judge for its lack of a legitimate payment schedule for creditors.
"I cannot approve a bid I don't understand," said a visibly frustrated Baum.
Baum, who has overseen the case from the beginning and sifted through more than 1,000 documents, must rule on whether or not Balsillie can participate in the auction and, ultimately, the winner.
If Balsillie can — and wins — the NHL has vowed appeal and request a stay of sale.
If Balsillie cannot, he reportedly will file an antitrust lawsuit against the league.
Baum was expected to rule on the fate of the Coyotes at the conclusion of Friday's session, but speculation is he will put off a final decision until a later date.
"In the final analysis, the judge will make a decision and we will all know what it is," Bettman told reporters afterward.
"This is part of me being a lapsed lawyer. I don't like to second guess judges or prognosticate what they're going to do.
"This is the judge's procedure now. He will render the decision and conduct the proceedings as he sees fit."
Join CBCSports.ca for an online chat with Harrington and Marek live from the courtroom at 11:30 a.m. ET on Friday.