One Day in Court–The latest on the Phoenix Coyotes Situation

Posted by Drew Mindell in News You Can Use,Uncategorized on May 7, 2009 — 3 Comments

Let’s take a look at what happened in a Phoenix courtroom this afternoon. (Courtesy of the Canadian Press, read the article here and here is the CBC account)

The National Hockey League says it has been in control of the Phoenix Coyotes franchise since last November and is asking a federal judge to throw out the team’s bankruptcy filing. NHL deputy commissioner Bill Daly says Coyotes owner Jerry Moyes signed documents giving control of the team to the league. Daly says the documents specifically prohibit Moyes from taking the franchise into bankruptcy.

Instant analysis: I don’t know if it was on the radio show, or in one of the many conversations I have been having regarding the issues in Phoenix, but I definitely know that I, at one point, accurately predicted that the NHL would claim to have been in control of the ownership of the Phoenix Coyotes prior to Jerry Moyes filing for Chapter 11. The question is, did Moyes actually sign the document that Bill Daly alleges. If that document can be produced, then I suspect Bettman will win this battle. However, if Bettman was paying the bills, but had a “nudge-nudge” agreement with Moyes that Moyes would publicly still be the owner, and didn’t get a letter signed, then that might be Bettman’s ultimate un-doing.

Darren Dreger of TSN reports that Bettman sent a letter to the other 29 teams, saying that Moyes had surrendered control of the team to the NHL long before Moyes filed for bankruptcy (editor’s note: CBC reports Moyes stopped paying the bills in November 2008).

The immediate question that comes to mind then is why was the NHL continuing with the facade that Moyes was the actual owner of the team? (Note: The answer is because Bettman would rather lie to the public, than admit that the NHL had to take over one of his beloved “southern expansion” franchises.) It is Bettman’s insistence on continuing with the public charade that Moyes was owner from November (when he stopped paying the bills) until May 4 (when the Chapter 11 was filed), that may be the proverbial “smoking gun” that his honour, Judge Redfield T. Baum, (great name), has to take into account when he makes his ruling as to who owns the Coyotes. The judge’s decision is expected on May 19th, but rest assured whoever “loses” will undoubtedly appeal the ruling (as was predicted by bankruptcy attorney Richard Farroh on last night’s Radio Show.)

Stay tuned to for all the latest in this rapidly developing story.

  • hockeyaddicts

    A team in Hamilton would do a lot to the Canadian hockey market. However I believe there are a large number of Canadians living in Arizona, which “should” have made the coyotes successful.

  • Cameron

    My (limited) understanding of the bankruptcy laws of the US is that even if Moyes received money and or signed a document promising that he wouldn’t go into bankruptcy his rights as the owner can’t be superseded. He would likely have to pay the money received back to the NHL in the form of damages + interest for breaking his contract with them ($30M+) but legally he is ultimately the owner – not the NHL.

    The trickier legal question isn’t who owns the team, it is whether or not the bankruptcy judge can accept a condition to move the team to Southern Ontario. I assume that the NHL is going to lose the argument that they and not Moyes own the team, and then proceed to insist that the Judge can’t force a relocation over the NHL bylaws.

    And this is where it gets really interesting. Balsillie will argue that these NHL bylaws violate anti-trust laws, and this too is an argument he could well win.

    So what is really happening is that Balsillie is playing a massive game of chicken with Bettman (and the BOG), one that threatens to overturn the NHL’s own rules on how and when a team can move.

    Key in all of this is the Board of Governors. As much as Bettman is the face of the NHL, he is ultimately just their representative acting in their interests – and some of these interests are conflicting;

    Does the board REALLY prefer to have a team in Phoenix losing money to one in S.Ontario that rakes in cash? Maybe. Maybe not.

    An expansion franchise in S.Ontario would likely net more revenue ($500M is what Bettman threw around) than moving the Coyotes would, but factor in the legal costs of fighting Balsillie, the fact that Balsillie’s bid floats everybody’s franchise value upwards, the additional revenue sharing a rich team will pay the poor teams, the territory violation money that Balsillie would pay to the Leafs/Sabers to enter ‘their’ territory ($75M), etc., and it isn’t clear anymore that all the Governors will hate the idea of Balsillie moving the team.

    Whats more the Governors risk having the decision taken away from them by the bankruptcy court – as well as overturning their own authority on how to relocate teams.

    First one to flinch loses.

  • I think the interesting point that has gone unmentioned in all of this is that Balsillie’s bid for the team mentions nothing regarding paying the Sabres & Leafs for infringing on their territorial rights. That is another issue, that I certainly expect will result in further litigation. May 19th is just the first date in what promises to be a long, protracted legal battle, where at the end of the day it is likely all parties come out of it, battered and bruised.