Jerry Moyes arrives at U.S. bankruptcy court for a hearing in Phoenix on Tuesday. Moyes has agreed that he was the owner of the Phoenix Coyotes when taking the team into bankruptcy and when acceding to a sale to Canadian billionaire Jim Balsillie. (Ross D. Franklin/Associated Press)An Arizona bankruptcy judge had some harsh words for the National Hockey League and representatives for Phoenix Coyotes owner Jerry Moyes as he ordered the two sides into mediation in an attempt to untangle the team's ownership situation and potential sale.
Judge Redfield T. Baum questioned why the dispute had reached his court without any apparent attempts to settle the matter before that stage, and he ordered a report on the progress of mediation by May 27.
Coyotes owner Jerry Moyes put the team into Chapter 11 bankruptcy protection on May 5 and declared his intent to sell it for $212.5 million US to PSE Sports and Entertainment, led by Canadian billionaire Jim Balsillie.
Mediating Coyotes mess
A mediator will attempt to help facilitate an agreement between the NHL and Phoenix Coyotes majority owner Jerry Moyes regarding control of the hockey team.
During a bankruptcy hearing on Tuesday, U.S. Judge Redfield T. Baum ordered both parties into mediation in the hope of resolving the ownership and sale issues.
Baum wants a progress report by May 27.
The mediator "is a neutral person whose job, if he can do it, is to get the people to settle on a mutual agreement," Rob Becker, a New York attorney specializing in sports law, told CBCSports.ca.
"He'll try and get the two sides to meet on common ground and come up with creative compromises."
Unlike an arbitrator, the mediator can't make a ruling on the case.
"In arbitration, a decision is made by a neutral person, whether it's the arbitrator or the judge," Becker said. "He's going to listen to the arguments from both sides, and then he's going to make a ruling. That's not the case here."
If the parties can come to an agreement, then a written deal would settle the issue. If the mediator can't get the parties to settle, then Baum will rule on which side has control of the Coyotes, a decision Becker expects would take no longer than a day or two after the May 27 deadline. Baum can also agree to an extension at the mediator's request.
"Let's say the mediator feels he's making a lot of progress and feels 'I've got them very close but can't get it done by [May 27],' " Becker said. "What I would assume would happen is the mediator would go to the judge and ask for [an extension]. I would say that the judge would certainly say yes, because the mediator is neutral."
Balsillie plans to relocate the club to Hamilton if successful.
The co-CEO of BlackBerry maker Research in Motion Ltd., who was not present at the hearing, issued a statement Tuesday night after the proceedings wrapped up.
"I appreciate the court's careful consideration of the facts at hand and I respect Judge Baum's decision to recommend mediation for the Coyotes and NHL on the issue of current ownership," Balsillie said.
"I will also be filing formal applications to the NHL both for transfer of ownership and for relocation to Southern Ontario to my chosen Hamilton Copps Coliseum venue," he added.
Baum deemed the relocation aspect of the sale the "hot button" issue. The judge said he will allow further briefs on the sale and relocation of the team by June 12, hearing oral arguments 10 days later.
The extended timeline seemingly makes it more difficult for the club to be moved from Arizona before next season.
"It's our position that we can't schedule a team outside of Glendale for next year," NHL deputy commissioner Bill Daly said after the hearing, adding that the league was prepared to abide by whatever the court ruled.
Daly said last week that if the league prevailed, it could keep the Coyotes in bankruptcy court to find a buyer — and that still may be where the impasse is headed.
"What we did resolve today is that, subject to how we decide to determine the control issue going forward, that we're committed to going through a sale auction that's overseen by the court, so we're prepared to do that," he said.
The NHL submitted in court that it wanted to ability to vet those who bid for the team.
Thom Salerno, an attorney for Moyes, expressed great skepticism in session whether mediation would work, a skepticism that was not warmly received by the judge.
The four-hour hearing was jammed with a contingent of mostly Canadian media, requiring a second room to house reporters.
Wildly varying accounts
The NHL claims the agreement Moyes reached with Balsillie is an end-around to circumvent the league's rules involving relocation, and Baum asked aloud why the pair didn't take their proposed deal to the league.
Baum early on in the hearing guaranteed the saga would continue on for at least several more days when he said he needed more time to sift through documents submitted to the court, which number in the hundreds.
"To save the suspense, I'm not going to rule from the bench today," he said.
Since a brief hearing two weeks ago, wildly varying accounts of what has transpired in recent months with the NHL team were submitted to the court.
The NHL has contended that it took over the club through proxy documents it signed with Moyes last November, and that any ownership change must be approved through its board of governors.
"The NHL did not manage, control, run or direct Coyotes hockey, the Coyotes hockey team or any of their related operations, nor to my knowledge did it attempt to do so," Moyes countered in a filing.
Baum disagreed strongly with NHL attorney Tony Clark's assessment that the proxy documents clearly demonstrated league control.
Balsillie was represented by lawyer Susan Freeman. The judge agreed with Freeman that the league was wearing "many hats" in the dispute.
Moyes has characterized himself as a reluctant owner who began his involvement in the team with a small loan to previous owner Steve Elkman, before ultimately pouring more than $300 million US of his money into the franchise. He says he's hoping to recoup approximately $100 million through the sale to Balsillie, and he has said it was the only serious offer that would satisfy the team's many creditors.
But Baum seemed to take some of the shine off the Balsillie bid by stressing that it wouldn't satisfy all creditors.
Earl Scudder, a lawyer for Moyes, said the Coyotes lost a combined $74 million in 2007 and 2008.
Balsillie offered a sop to the league in a recent filing, saying he'd be amenable to keeping the club in Phoenix another season, although it came with the proviso that the league cover all operating costs.
The Coyotes haven't made the playoffs since 2002, and some hockey observers have argued that the club's continued history of losing has prevented obtaining an accurate gauge of the prospects in the local market for the Coyotes.
Jeff Shumway, CEO of the team for nearly three years, until January, has said the hockey team was not a financially viable entity in the Phoenix area.
The Phoenix Coyotes have struggled on and off the ice over the past seven years. (Marcio Jose Sanchez/Associated Press) NHL commissioner Gary Bettman, who was not present on Tuesday, has admitted that the lease at Jobing.com Arena in nearby Glendale is prohibitive, and has tried to get millions in concessions from the city.
The league had said it was taken surprise by the Moyes-Balsillie agreement and that it was in the process of arranging a prospective sale of the team, to a group headed by Chicago White Sox and Chicago Bulls owner Jerry Reinsdorf. The White Sox owner built the baseball team's spring training facility not far from Glendale.
Baum shot down attempts by the Moyes side on Tuesday to make public the details of Reinsdorf's or any other prospective ownership bids.
Balsillie has called southern Ontario an unserved hockey market in media interviews and has tried to stir up the nation's passion for hockey through a website, MakeitSeven.ca.
Bettman — portrayed by some hockey fans as anti-Canadian — was alleged in a filing to have said to Moyes's lawyer in early April that if the league headed north of the border again, it would be to Winnipeg, the original home of the franchise under the name the Jets.
It was not clear if that alleged statement was sincere or a reflection of his disinterest in a Hamilton location.
Bettman has repeatedly said the issue of whether another team could succeed in southern Ontario was unrelated to the matter of the Coyotes.
It is Balsillie's third swing at owning an NHL club. He previously attempted to buy the Pittsburgh Penguins and Nashville Predators, but negotiations broke down.
The NBA, NFL and Major League Baseball filed statements on Monday saying a ruling in favour of Moyes could undermine stability in North America's pro sports leagues.
