Judge order brief hearing on request to force NHL to mediate Coyotes sale

Judge orders hearing on Coyotes mediation request

PHOENIX — A federal bankruptcy judge has scheduled an emergency hearing on Wednesday on a request by Phoenix Coyotes owner Jerry Moyes to force the NHL into mediation over the contentious issues surrounding the sale of the team.

Judge Redfield T. Baum set the hearing for 9 a.m. MST and said it would last no longer than 30 minutes.

Moyes wants the judge to force mediation over, among other things, the NHL’s rejection of Canadian billionaire Jim Balsillie as an owner.

Baum is expected to rule in the next few days whether to award the team to the NHL or to Balsillie, who would move the team to Hamilton, Ontario, over the league’s vehement objection. Baum could also reject both bids.

Balsillie’s dogged attempt to buy the team took a major hit when the NHL’s $140 million offer was endorsed by the Coyotes creditors committee and the lead secured creditor in the case, SOF Investments, which is owed $80 million.

In what could be a last-ditch effort to save his plan, Moyes sought the emergency hearing as the lead debtor who took the team into Chapter 11 bankruptcy on May 5 with the intention of selling the team to Balsillie.

The NHL board of governors vote 26-0 against the Canadian as an owner, labeling him untrustworthy. Balsillie wants the judge to override that vote and to force the NHL to accept relocation of the franchise as soon as the move can be implemented.

Baum has repeatedly noted that such a ruling would be unprecedented. NHL commissioner Gary Bettman has said the NHL would appeal any ruling in Balsillie’s favor and would seek a stay of the transaction.

Balsillie boosted his bid to $242.5 million with an offer of $50 million to the city of Glendale to drop its opposition to the move.

But the Glendale City Council rejected that offer last week and reaffirmed its support for the NHL bid.

The NHL says it will initially attempt to resell the team to a buyer who would keep the franchise in Glendale. If that doesn’t happen, the league will look to relocate the team.

The NHL and Glendale filed objections on Friday to any mediation.

The NHL said mediation would be pointless.

“The NHL board of governors voted unanimously to disapprove Mr. Balsillie as an owner,” the league said. “As a result, his qualification to become an owner is not something that the NHL can compromise, and it is not something the NHL is willing to mediate.”

Glendale agreed.

“There is no common ground on which a possible consensual deal could land,” the city said.

SOF, an investment company founded by computer magnate Michael Dell, added its voice to opposition of mediation, citing the franchise’s continued financial losses as it awaits determination of its fate on the brink of the start of the NHL season.

“SOF is gravely concerned that any imposed mediation will unnecessarily delay the court’s determination regarding the outcome of the auction and related issues, to the detriment of SOF and other creditors,” the company said.

In a filing on Monday, Balsillie, not surprisingly, supported mediation.

PSE, the company formed by Balsillie to pursue the Coyotes, “has offered several times to mediate with the NHL,” the document said, “but the NHL has never been willing to mediate or even negotiate with the NHL.”

Balsillie filed another document on Monday that, his attorneys said, adds evidence that each NHL franchise has veto rights if a team attempts to move within its territory. Balsillie pointed to a radio interview with Ottawa Senators owner Eugene Melnyk.

In that interview, Melnyk was asked that if a team moved to the city of Hull, which is near Ottawa, would he have a right to block that.

“I believe we do,” Melnyk said. “Yes, we have territorial rights. Yes, absolutely.”

Bettman has said the move of a franchise is subject only to a majority vote of the owners.

Balsillie’s attorneys have contended that the real reason the NHL is trying to block the move of the Coyotes to Hamilton is to avoid a legal fight with the Toronto Maple Leafs, the most valuable franchise in the league.

In the interview, Melnyk said the “same cast of characters” approached him in 2003 with the proposal to put the Senators into bankruptcy and then move them to Hamilton. He said he thought about it for 48 hours, then said no.

Moyes could get up to $104 million under Balsillie’s offer. The NHL bid leaves about $13.5 million that could be divided between Moyes and Wayne Gretzky, who has a $22.5 million claim.

Although Gretzky still is listed as the Coyotes’ coach, he has not attended any of the team’s training camp or preseason games.

On Monday, the Coyotes hired Dave King as assistant coach.

The club said that King would assist associate coach Ulf Samuelsson, who has been serving as interim head coach as the bankruptcy court battle has dragged on.