Kukla's Korner

The Puck Stops Here

Phoenix Bankruptcy And Potential Sale

The financial problems have been known for a while.  The NHL had been propping up the team financially and looking for a new owner who would keep the team in Phoenix.  They had been trying to do this quietly, but the media got wind of it.  It looked like the NHL had found their owner to keep the team in Phoenix.  Jerry Reinsdorf, the owner of the Chicago Bulls and White Sox, was willing to buy the team at a cheap rate.

This idea didn’t go over very well for current owner Jerry Moyes.  Why should he have to sell the team for a low price?  He had a back-up plan.  He had been negotiating with Jim Balsillie (the man who had earlier attempted to buy the Pittsburgh Penguins and Nashville Predators and move them to Southern Ontario).  These negotiations had been ongoing - but unknown to the NHL.

The Phoenix Coyotes would declare chapter 11 bankruptcy and Balsillie tabled a $212.5 million offer to buy the team.  The Balsillie offer is contingent upon being able to re-locate the team. 

A bankruptcy court is obligated by law to get the maximum amount of money for any assets to be sold off.  It is very unlikely that anyone would offer more money than Balsillie did for the Coyotes (Forbes Magazine estimated their value at $142 million and the Reinsdorf offer is probably well below that). 

The NHL is fighting the process.  They claim that since they were bankrolling the Coyotes, Jerry Moyes was in no position to put the team in bankruptcy.  This is a controversy due to the NHL’s desire to keep the problems out of the media.  If they had publically removed Moyes from his position and publically assumed ownership of the team, then there would be much less argument against their position.  Since they had not done anything of that nature, it seems this argument is without merit.

The NHL also claims that Moyes may own the Phoenix franchise but he does not own the right to move it.  Therefore a sale to Balsillie that is contingent upon moving the team cannot be made.  There is precedent in the NHL for owners moving franchises with and without sales.  It has happened on multiple occasions.  It has happened in multiple sports.  How did the NHL get to Phoenix in the first place?  I am not sure this argument can hold up either.

We will find out soon.  The US bankruptcy court will have a new owner in place by the end of June.

If the Coyotes move, there are several questions to ask.  How will they get out of their 30 year lease in their arena in Glendale, Arizona?  Where will their final home be?  It seems likely that at least in the short term they would play in Copps Coliseum in Hamilton - there is no other clear choice.  Will they have to pay the Toronton Maple Leafs and Buffalo Sabres for infringement of territorial rights?  Will the NHL have to re-align its teams?  How would that look?

A move to Southern Ontario would be a good move financially for the NHL.  There is no question that the new team would make more money than the Phoenix Coyotes do.  The NHL has been fighting to keep teams from moving - and this fight has been strengthened since the 2004 lockout.  Keeping a team in Phoenix is looking like a lost cause.  This desire to keep teams from moving deflates the New York Islanders attempt to push through their new arena in the lighthouse Project by threatening a move to Kansas City.  How can that threat be taken seriously when we see the effort that the NHL is putting in to keep a team in Phoenix?

The Phoenix Coyotes will have different ownership next season.  That is clear.  They might have a different hometown as well.  The fight to move will be taken to the courts and its result will likely influence whether or not some other failing US markets stay put.

Filed in: | The Puck Stops Here | Permalink
 

Comments

Be the first to comment.

Add a Comment

Please limit embedded image or media size to 575 pixels wide.

Add your own avatar by joining Kukla's Korner, or logging in and uploading one in your member control panel.

Captchas bug you? Join KK or log in and you won't have to bother.

Smileys

Notify me of follow-up comments?

Feed

Most Recent Blog Posts

About The Puck Stops Here

imageThe Puck Stops Here was founded during the 2004/05 lockout as a place to rant about hockey. The original site contains over 1000 posts, some of which were also published on FoxSports.com.

Who am I? A diehard hockey fan.

Why am I blogging? I want to.

Why are you reading it? ???

Email: y2kfhl@hotmail.com