((HT: Globesports/Waldie and Naylor))
The NHL is refusing to provide details about an offer from Chicago businessman Jerry Reinsdorf, which the league says would keep the Coyotes in Phoenix.
The league has said it was pursuing a possible deal with Reinsdorf, who owns baseball's Chicago White Sox and basketball's Chicago Bulls, days before Coyotes majority owner Jerry Moyes ((pictured with NHL Commissioner Gary Bettman, thanks East Valley Tribune)) put the NHL club into Chapter 11 bankruptcy and announced a proposed sale to Canadian businessman Jim Balsillie. The NHL has objected to the U.S. court protection filing and the planned sale to Balsillie, who wants to move the team to Hamilton.
Moyes has insisted he knew nothing about the Reinsdorf bid, and this week his lawyers asked the Arizona judge overseeing the Chapter 11 process to compel the league to produce details about the Reinsdorf bid and any others.
The NHL has refused, arguing in a court filing that “premature disclosure of any expressions of interest in the team could be harmful.”
Buying a sports franchise is complicated, the league argued, and providing information about offers to other bidders, such as Balsillie, could disrupt the “value maximizing process.”
“The NHL has demonstrated its commitment to the success and welfare of the Phoenix Coyotes by providing additional financing to support the venture. Once the NHL determines that a legitimate and worthwhile exchange of confidential information with bidders may be productive, it will do so.”
In other court filings, the league has said it informed Moyes's lawyers about the Reinsdorf proposal on May 1, and was told “Moyes was not able to come up with anything better.” Four days later, Moyes put the club into court protection and announced the Balsillie offer.
Corporate records show Balsillie is making his bid, worth $212.5-million (U.S.), through a company he incorporated in Delaware three years ago, when he tried to buy the Pittsburgh Penguins. In 2006, the company was called Pittsburgh Sports & Entertainment. When that bid failed, Balsillie went after the Nashville Predators and renamed the company Predators Sports & Entertainment. He change the name again last month, after striking a preliminary deal with Moyes. It's now called PSE Sports & Entertainment.
While Moyes and Balsillie are hoping for a quick sale, some creditors have filed objections to the process, including SOF Investments LP – a private equity fund linked to computer magnate Michael Dell – which is owed roughly $80-million.
Another potential stumbling block could be the Coyotes' lease for the Jobing.com Arena with the City of Glendale. The Coyotes operate the arena, and pay annual fees to the city, through a separate business called Arena Management Group. That company lost $20.2-million in three years, according to court filings.
Legal experts say Glendale is most likely to end up as an unsecured creditor in the event Balsillie wins the right to buy the team and move it to Southern Ontario. His offer does not include buying Arena Management.
“If you can terminate a union-negotiated collective bargaining agreement in bankruptcy, you can certainly terminate a lease,” University of Indiana sports law professor Gary Roberts said.
The NHL has argued that a precedent was set in 1998, when a bankruptcy court refused to discharge the lease and would not allow the Penguins to seek owners or venues outside their current home.
But those in the bankruptcy field say Glendale's claim would be limited to three years of rent, despite an existing 30-year lease, and would have no claim to keep the team from seeking a new home.
“The whole aspect of limiting relocation is not really a bankruptcy question,” University of Illinois professor and bankruptcy scholar Charles Tabb said. “The Coyotes would have no greater or less a right to relocate to Canada in or outside of bankruptcy.”
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