May 06, 2009

Phoenix Coyotes May Move: The Phoenix NHL Franchise has filed for Chapter 11 bankruptcy, meaning that they wish to reorganize, not that they will liquidate. Canadian businessman Jim Balsillie wants to buy them and move them to Southern Ontario, probably to the Hamilton area.

posted by Howard_T to hockey at 05:11 PM - 14 comments

I'm not sure the Toronto - Hamilton - Buffalo area can support 3 teams, although the rivalries would be very attractive. My preference would be to put a team back in Quebec to replace the Nordiques.

posted by Howard_T at 05:15 PM on May 06, 2009

Quebec's metropolitan area has a population of 715,515, according to Wikipedia. Toronto's is around five million. It seems to me that Toronto getting a second team is more likely than the return of the Nordiques.

posted by rcade at 05:35 PM on May 06, 2009

Please please please let this be the stake which finally kills Bettman and his ridiculous anti-hockey sunbelt strategy.

posted by rumple at 09:35 PM on May 06, 2009

Though I think Bettman is the worst commissioner in the history of American sports. I think allowing this move without the Board of Governours approval (which is what they are trying to do here) is very very bad for sports and would set a bad precident. If the courts allow it, it would open up Pandora's box and would make every franchise one bid away from being moved (I can see someone like Marc Cuban "taking" any franchise he deems he wants and move it to wherever he wants without ramifications to the teams already in those areas--see Toronto Maple Leafs and Buffalo Sabres in this case.)The whole of the league must superside that of one franchise, since it would effect all of them and not just the ones nearby (think of things like tv money, re-alignment would be needed, etc, then when the next franchise moves do it all over again, then again, etc)

posted by jagsnumberone at 10:29 PM on May 06, 2009

I agree. As much as I'd love to see another team up here, Balsilie is going about this in such a combative way, that's it's just not a good precedent to set. He has chosen to circumvent the Board and no league would, or should, stand for that.

posted by WeedyMcSmokey at 10:44 PM on May 06, 2009

This is Balsilie's third attempt to get a team into Ontario and might work if only because the US bankruptcy laws give a very different spin on what can be done to maximize creditor recovery.

posted by billsaysthis at 11:35 AM on May 07, 2009

jags, Weedy, I think you're slightly off on a key point here. Balsillie isn't trying to circumvent the Board of Governors for the entire process of buying and moving the team-- just the immediate bankruptcy entanglement aspect.

The bankruptcy declaration is the key thing. The Coyotes can't get out of their iron-clad lease without declaring bankruptcy. So it's in Balsillie's interest that they do, and in Gary Bettman's interest that they don't.

For the past few weeks, before the Coyotes declared bankruptcy, there were reports of the team receiving cash infusions from the league and, in effect, being operated by the NHL. Given that, what Gary Bettman is challenging is the team's right and ability to declare bankruptcy. In other words, Bettman feels that Jerry Moyes already threw the keys on the table and walked away, and thus already forfeited his privilege to declare bankruptcy and/or sell the team.

That's why it's a good thing that this is going into bankruptcy court. It keeps the proceedings of the Coyotes business on the public record. The alternative would be for Bettman to disappear into his office to conduct an "investigation", coming out an hour later and concluding that the Phoenix Coyotes are perfectly financially viable and are in no position to declare bankruptcy. Meanwhile, the league keeps bleeding cash into propping up the franchise, until another sucker buyer can be found—a buyer who will be paying significantly less than Balsillie, thus short-changing yet another subscriber to Bettman's sun belt dream.

If the court permits the bankruptcy, then the transfer of the team to Balsille and subsequent team move would certainly go before the Board of Governors. It's just the current bankruptcy situation which needs court resolution.

So this doesn't set any sort of precedent for the regular sale and moving of sports franchises, unless of course you can think of another league besides the NHL which would get itself into this sort of mess.

posted by DrJohnEvans at 11:42 AM on May 07, 2009

Actually, I think this is Balsillie's way of circumventing the Board of Governours. He states that his buying of the franchise is strictly with the premiss that he be allowed to move the franchise. If the bankruptcy courts say that is fine with them to settle the debts, then there will be legal precedent. The question is whether the NHL can stop the courts from saying this is ok. Every major sport will be watching this case, and pulling for the NHL to win because of what it could mean for their league as well. In this economy there are a lot of teams not fairing well, and this would give an "out" to a lot owners who can't sell their franchise because of things like long leases and leagues that wont allow them to move by making them more desirable for someone to purchase (since that baggage would not be there).

posted by jagsnumberone at 02:09 PM on May 07, 2009

You may be right: Balsillie might be able to tie the moving of the franchise to the resolution of the bankruptcy, in which case he'd be circumventing the BoG. I still have to read up on those details, so I'm not going to insist I'm right on this point.

But I still don't think that any sort of general precedent is going to be set here. There are too many details involved which are very specific to the Coyotes' lease arrangement. What other failing franchises are tied to unreasonable venue leases which can be broken only in case of bankruptcy, with a league commissioner who has staked his reputation on that particular franchise being viable in that city?

Even if Balsillie ends up in Hamilton/Waterloo/Chatham next September, that doesn't mean that half of the continent's sports teams are going to declare bankruptcy so they can be sold. That just doesn't make sense.

posted by DrJohnEvans at 02:40 PM on May 07, 2009

Balsillie might be a little too confrontational about this, but I'd think he's probably guessing that he has no other choice. It's pretty clear that Gary really, really doesn't want him owning anything more substantial than Zamboni futures. So what's he going to do, ask nicely? He's already shown his hand - no one is going to believe he wants to buy a team that's staying in the USA.

Maybe the GTA can't support 3 franchises, but I think it stands a better chance than Kansas City, or whatever. Even so, I can't imagine the Sabres or the Leafs letting this happen. And maybe the league doesn't care so much what the Sabres think, but the Leafs pull a lot of water in this town. Balsillie doesn't pull shit.

posted by fabulon7 at 08:33 PM on May 07, 2009

From what I see, this is complicated. It is the duty of a bankruptcy judge to maximize the return to creditors from a business in Chapter 11 bankruptcy. This is one of the sticking points in the Chrysler bankruptcy. Some of the creditors (senior debt holders) feel that they should be able to get more than 29 cents on the dollar, saying that they deserve at least 50 cents on the dollar. Chrysler is made more complex by the role of the government in trying to increase the stake of the unions (a so-called junior debt holder) at the expense of senior debt holders. Meanwhile, some of the senior debt holders who have received federal bailout funds are willing to cave in for the 29 cent offer.

In the Coyote's case, a bankruptcy judge would obviously approve of the sale of the team to the highest bidder, regardless of conditions. The problem now is that the NHL may disapprove of the relocation of the team. This would leave Balsillie in limbo, owning the team but unable to make money with it by moving to a better location. He could wind up taking the league to court, where he would have a fair chance of success. The league's possible settlement might be to allow the move, but to indemnify Buffalo and Toronto in case a third team in the area causes a drop in attendance or other revenues. The other option would be for the league to exceed Balsillie's offer and to operate the team until another buyer could be found.

I have the feeling that this could take a very long time to settle.

posted by Howard_T at 09:06 PM on May 07, 2009

Toronto and Buffalo might say yes, for the right number of digits.

posted by jjzucal at 10:55 PM on May 07, 2009

Looking at the Conference/Division structure as it is, 99% of it makes perfect sense, with the 1% being Detroit. But let's say that Phoenix is moved to S. Ontario, they can't legitimately (or geographically) be in the Pacific Division anymore, being further east of a Central Div. team. But I can't see any way to regain the region-ish set up. Move the Florida teams? Carolina? Atlanta? To where though, the Central? Any sort of restructure at this point in the NHL's rebuilding phase, I think, would kill off a lot of new-er fans that have developed a love for rivalries. STL/CHI...PHI/PIT...BOS/MON...and so on. I think a move from PHO to the Southern Ontario area has more affect on the rest of the NHL than most people think. While I support the opportunity for someone to purchase and move a franchise, I also support the NHL for slowing down the process, making sure the move will not cause a negative ripple effect for the other 29 teams.

posted by BoKnows at 11:23 PM on May 07, 2009

When people malign Bettman's "Sun Belt dream," are they including the Dallas Stars as one of his mistakes? The team's been successful at winning fan support in Dallas and built an incredible arena downtown that it shares with the Mavericks. They've won one cup and reached another finals. Hockey is now ingrained in the Dallas sports culture -- which as I recall was viewed as an impossibility by many when the Minnesota North Stars relocated.

The only Sun Belt franchise I can see that's having trouble is Phoenix, and it could probably be cured with better ownership. The people who thought hockey wouldn't thrive in the American south have been wrong.

If you're ever in Dallas you have to see a Stars or Mavs game at the American Airlines Center. The fan amenities are unbelievable.

posted by rcade at 07:07 AM on May 08, 2009

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