Wednesday, September 09, 2009

It's auction time in Phoenix

September 10th and 11th are the dates of the long awaited auction to determine who will own the Phoenix Coyotes. Judge Baum has indicated that he will not announce his decision this week but will make his decision known before the start of the NHL season. The judge plans to take his time writing up his decision with the full knowledge that however he rules, it will be appealed.

Now that Ice Edge has dropped out of the bidding it is down to Jim Balsillie and the NHL. Though the battle for control of the franchise has always been between these two antagonists even when a surrogate such as Jerry Reinsdorf was involved. I would be very surprised if Judge Baum orders that the team be sold to Balsillie but here are the considerations for both sides.

Jim Balsillie

· His bid is currently $100 million more than the NHL’s. That is a lot of money and will satisfy the largest proportion of creditors and the judge’s obligation is to the creditors and not the NHL.

· The latest bid now offers cash to the City of Glendale. The NHL has only indicated that a settlement would be worked out in the future.

· Balsillie is offering compensation to current owner Jerry Moyes who claims to have sunk $300 million into the franchise. However, Moyes is not really a creditor.

· He has now indicated a willingness to keep the team in Phoenix for one season which creates less of a disruption to the NHL schedule.

· He has indicated a willingness to pay a relocation fee although his appraisal is much lower than the NHL’s.


· The NHL is willing to keep the team in Phoenix until a suitable owner is found whether it is local or in another city.

· The NHL insists that the court has no right to impose an owner on the league. The league governors rejected Balsillie as an owner in July. However, since the NHL has now submitted a bid, that puts them in a conflict of interest position.

· The NHL insists it has the right to decide where a franchise is to be located. Unilateral franchise transfers will play havoc on sports leagues. A decision against the NHL would impact on all sports leagues.

· The league would lose out on a large expansion fee if the Coyotes were allowed to move into the lucrative Southern Ontario market.

· If Balsillie is allowed to purchase the Coyotes, it may trigger other owners into filing for bankruptcy in order to dump their money-losing franchise.