Glendale Wants Moyes Held In Contempt

((HT: GlobeSports/Shoalts))

The City of Glendale and the NHL served notice that Monday afternoon’s emergency hearing in the U.S. Bankruptcy Court will be a major brawl, with the city asking the court to find Phoenix Coyotes owner Jerry Moyes ((pictured, thanks Arizona Republic file)) and his lawyers in contempt of court for disclosing confidential information and the NHL calling into question Jim Balsillie’s character.

In its declaration, the NHL said the league’s governors found Balsillie, the co-CEO of Research In Motion, “lacks the good character and integrity required” by the league’s constitution and by-laws. Earlier, the Balsillie camp charged that this was a charade created by the league because it did not want to see the Coyotes relocated to Hamilton and that NHL commissioner Gary Bettman has a personal bias against Balsillie.

As a result of Moyes revealing some of the concessions the Jerry Reinsdorf group is seeking from the city – a demand for subsidies of $23-million (all currency U.S.) per year from 2010 until 2014 and $15-million a year after that plus an escape and relocation clause – lawyers for Glendale claimed in a court filing Monday morning that attempts to negotiate a lease with Reinsdorf and Ice Edge Holdings LLC, the other group interested in keeping the Coyotes in Glendale, were badly damaged.

The declaration said Reinsdorf threatened to withdraw his bid after he learned that the concessions he was demanding from Glendale city officials were revealed in a court filing last Friday by Moyes and his lawyers. Judge Redfield T. Baum, who will hear requests from the NHL and both Glendale bidders to postpone an auction sale scheduled for Wednesday, was asked to find Moyes and one of the law firms representing him in contempt of court because they knew the information was subject to a confidentiality agreement.

“Glendale is absolutely outraged that Moyes and the Jennings Strouss firm would intentionally disclose confidential information produced in discovery and willfully violate the court’s confidentiality order,” the document said.

Glendale city manager Ed Beasley, who is leading the negotiations with Reinsdorf, said in a declaration filed with the court that efforts to agree on a new lease were “severely compromised.”

Judge Baum was asked to bar Moyes and his lawyers from the sale process, in which an auction for bidders wishing to keep the team in Glendale will be held first, followed by one for bidders who want to relocate the team if both the Reinsdorf and Ice Edge bids are rejected.

“I believe that this disclosure has had and will have a chilling effect on the Glendale negotiations with Reinsdorf and potentially Ice Edge Holdings LLC,” Beasley said. “Reinsdorf has indicated that it might withdraw from the negotiations and the Glendale sale process.”

The Moyes filing said the $23-million subsidy was to be raised by creating a special district around the Jobing.com Arena and the neighbouring Westgate City Center in Glendale. There would be “voluntary” surcharges to retail sales in the district, as high as 11.5 per cent, although no details were given as to how this would be accomplished.

In addition, if the surcharges failed to raise the required amount, the city itself would have to pay the Coyotes. The Coyotes would also get the right to move after 2014 if the team operated at a net cash loss (it lost more than $60-million in the 2008-09 season) and the city refused to pay it $15-million per year. The document also said Glendale officials had so far refused to agree to the demands.

Daryl Jones, one of the leaders of the Ice Edge group, said they are not seeking the same kind of subsidies from Glendale, nor do they want an escape clause to let them move the team.

“We aren’t looking for concessions,” Jones said in an e-mail message. “We are looking for an enhanced long-term partnership with the city. We have also not contemplated an escape clause.”

Both the NHL and Glendale once again asked Judge Baum to postpone the first auction until early September to give the Reinsdorf and Ice Edge groups time to finish negotiating a new lease and new deals with creditors.

The NHL followed the Glendale accusations with a filing that responded to the accusations of a personal bias by Balsillie, who has offered $212.5-million for the team on the condition it be moved to Hamilton.

The NHL’s filing denied this and said Balsillie was rejected as a potential team owner last week because the league’s governors determined he lacked the proper character. Balsillie said Bettman’s resentment of him stemmed from an attempt to buy the Pittsburgh Penguins in 2006 that fell apart after a disagreement about a clause in the deal that said the team could not be moved for seven years. Balsillie said this was inserted at the last minute, which the NHL denied, and withdrew his offer.

Moyes also took some shots from the NHL, which said he appears to be doing everything he can to scuttle the two Glendale bids in favour of Balsillie’s. Last week, Moyes and Balsillie both accused the league of stalling in order to subvert Balsillie’s bid.

In its filing on Monday morning, the NHL agreed the Penguins dispute played a role in Balsillie’s rejection. But the league also said the governors were angry about Balsillie’s conduct in a subsequent attempt to buy the Nashville Predators and for other dealings with league owners.

The NHL declaration said it would not use the word “grudge” in describing its rejection of Balsillie but “he is correct in that several of the owners formed an unfavourable opinion of him as a potential business partner well before his current attempt to buy the Coyotes. Those opinions were based largely on the owners’ personal dealings with Mr. Balsillie since the more favourable reception he received from the [governors’] executive commitee in 2006.”

During Monday’s hearing, lawyers for Balsillie are expected to ask Judge Baum not to postpone the relocation auction, which is set for September 10, even if he grants the requests to postpone the Glendale auction. They will also be seeking permission to examine Bettman and NHL deputy commissioner Bill Daly about the decision to reject Balsillie’s ownership application.