Coyotes bankruptcy court saga comes down to battle of 2 bidders

2 bidders left in battle over Coyotes

PHOENIX — Fittingly, the fight for what’s left of the Phoenix Coyotes has been narrowed to Canadian billionaire James Balsillie against the National Hockey League.

They have, after all, been the chief antagonists in this twisted tale played out with a large cast of high-priced lawyers in U.S. Bankruptcy Court over the past four months.

Balsillie’s company, PSE, and the NHL are the lone bidders on record for an auction before Judge Redfield T. Baum on Thursday and Friday.

The chief issue facing the judge, who has studiously avoided any precedent-setting decisions thus far, is whether he should overrule the NHL’s overwhelming rejection of Balsillie as an owner and allow the Canadian to move the team to Hamilton, Ontario.

A third potential bidder, Ice Edge Holdings, formally pulled out of contention on Wednesday but hinted it may try to buy the team later.

The proposed agenda for the two-day auction includes, on Thursday, cross-examination and redirect questioning of various experts who filed declarations supporting one side or the other.

Things get more interesting on Friday when Balsillie and NHL commissioner Gary Bettman are to be subject to questioning under oath by the attorneys.

Then, presumably, Baum will award the team to somebody.

Almost certainly, that won’t be the end of it. If Balsillie gets the team, the NHL has vowed an immediate appeal and will seek a stay of the sale. Balsillie says he probably would appeal if loses.

The Canadian, who lists his personal wealth at $3 billion, upped his bid on Tuesday to $242.5 million when he offered the city of Glendale $50 million to end its objections to the sale. Since the season opener is three weeks away, Balsillie said he might need to play a few games in Glendale before he can complete the cross-continent move to Hamilton.

The NHL says such a move at this late date is out of the question.

The league, citing concerns that there may be no other bidder in the competition, made its own offer of $140 million at the last minute. The league says it would resell the team outside the bankruptcy proceedings and give any net profit to the creditors. The NHL still says its first preference is to find a buyer to keep the team in Glendale, but if that doesn’t happen, the league will seek to relocate the franchise.

Ice Edge issued a statement on Wednesday that it was withdrawing because of the inability to reach a new lease agreement with the city of Glendale.

That is the same reason given by a group headed by Chicago sports mogul Jerry Reinsdorf when it pulled out last week.

Ice Edge, made up of a group of Canadian and American investors, had said it would spend up to $150 million to buy the team and keep it in Glendale. The group, whose supporters included Wayne Gretzky, wanted to play five games in Saskatoon, Saskatchewan.

“We continue to strongly believe in the potential of the Phoenix Coyotes for the long term in Glendale,” Ice Edge said, “and therefore we will be examining our options after the conclusion of the bankruptcy auction process.”

Bettman said in a declaration Tuesday that Ice Edge was pulling out of the competition. But Anthony LeBlanc, the Ice Edge CEO, told The Associated Press on Wednesday that his company and the city had additional talks Tuesday night and Wednesday morning to try to reach a deal.

“We just came to a collective decision that it just wasn’t going to be possible to get this done in time for the bankruptcy auction,” LeBlanc said.

The court proceedings will be conducted with the status of Gretzky under a cloud of uncertainty. The NHL’s offer would reject the contract of Gretzky to coach the team at a salary of $8.5 million in the coming season.

Meanwhile, the Coyotes are set to open training camp on Saturday with the first preseason game next Tuesday.

The number of documents filed in the case has approached 1,000 with several of the sticky issues yet to be resolved.

At the top of that list is whether the judge should overrule the 26-0 vote by the NHL’s board of governors rejecting Balsillie as an owner, saying he is untrustworthy.

Balsillie also wants the judge to set a reasonable relocation fee since the league says it need not act on moving the team because the issue is moot now that the Canadian has been turned down as an owner.

Still, the NHL offered two studies that put a proposed relocation fee at between $101 million and $195 million. A study for Balsillie by an economics professor puts the amount at $11.2 million to $12.9 million.

“I respect the NHL and honor its rules and processes,” Balsillie said in a declaration filed on Tuesday. “I have no interest in undermining the league’s rules or processes and have never had an intention to do so. I only ask that the NHL’s constitution and by-laws be fairly applied to me.”

Coyotes owner Jerry Moyes would get nothing under the NHL’s proposal but $104 million from Balsillie’s bid. The NHL contends Moyes’ $300 million in loans to the team is lost equity and not a debt.

The Coyotes have lost tens of millions of dollars in recent seasons. Balsillie contends there is no way the NHL can succeed in Arizona, but the franchise would thrive in hockey-crazy Hamilton. However, Hamilton is in the territory claimed by the Toronto Maple Leafs and the Buffalo Sabres.

Thursday’s agenda also includes arguments over whether Balsillie can break the lease with Glendale under bankruptcy law and whether the judge should allow relocation of the team without the NHL’s consent.

Glendale spokeswoman Jennifer Liewer declined to say how Balsillie’s $50 million offer will affect the city’s objection to Balsillie’s bid.