Thursday, June 11, 2009

Balsillie is making progress

I have to admit I like the way Judge Redfield Baum operates. He has this huge dispute dropped in his lap that really has nothing to do with Chapter 11 bankruptcy. This is an anti-trust dispute and he knows it. So Judge Baum has carefully avoided making any decisions. He hasn't even ruled on whether the Jerry Moyes or the NHL own the Coyotes.

His strategy has been to attack each sides position on issues to create uncertainty as to whether they can win the dispute. For example, when the Balsillie claims the NHL won't allow the Coyotes to relocate, Baum points out that no application was ever filed. He jumps on the NHL for not following its own constitution when Quebec was moved to Colorado. Baum shrugged off Bettman's claim of 4 or 5 parties interested in keeping the Coyotes on Phoenix.

As I've stated from the start, no bankruptcy court wants to wade into the issues being presented in this case. That is why I have been pessimistic about Balsillie's chances here. But I did not take into consideration the craftiness of the Judge. Baum is pushing back at the lawyers before him in an effort to get the parties to reach an agreement outside of the courtroom. That gets him off the hook. He obviously want to avoid setting any precedents in this case.

So yesterday when the discussion of relocation comes up, Judge Baum quickly acknowledged that of course Balsillie would have to pay a relocation fee. The judge has put Bettman in a box. He’s going to have to attach a price to the legitimate NHL interest in the Ontario market. Instead of arguing about whether Balsillie has the right to buy and relocate the team, they will be arguing about how much Balsillie has to pay to acquire a right the NHL doesn’t want to sell. And what if Balsillie agrees to the price? That is why his lawyer quickly declared that Balsillie would walk if the price was $100 million. But if the league says the price is $150 million and Balsillie decides to accept then Bettman is stuck. Though I believe Bettman will wiggle out of this one too. He has already suggested that the league doesn't come up with a price before it approves a franchise relocation. Somehow I don't think Judge Baum will buy that one.

I for one am intrigued.