Wily Coyotes Face Off NHL

The recent bankruptcy filing by the Phoenix Coyotes of the National Hockey League could end up determining how much control major sports leagues have over who owns their franchises, as the NHL and the team face off in bankruptcy hearings.

The Coyotes parent company, Coyotes Holdings LLC, filed for Chapter 11 bankruptcy protection after months of speculation that it was running out of money. The NHL claims the holding company’s owner, Swift Transportation Co. magnate Jerry Moyes, has been removed from all positions of authority and lawyers for Moyes claim the NHL is violating the proceedings by attempting to appear in court as “owners” of the club, according to the Arizona Star.

The NHL’s stance is that it removed Moyes from all positions shortly after he filed for bankruptcy and that he did not have the authority to file in the first place. The move reportedly came about an hour after BlackBerry billionaire Jim Balsillie made a firm $212.5 million offer to buy the team and move it from Phoenix to Hamilton, Ontario.

Balsillie and Moyes “intend to fight tooth and nail” to complete the sale and move the team across the border, where it would most likely play in Copps Coliseum, according to the Star. And the NHL is doing everything it can to stop it.

Ultimately, the showdown will come down to which party has team ownership rights to make decisions that affect entire leagues.

The outcome will surely be of interest to James Dolan of Cablevision, who owns the New York Rangers and has a notoriously prickly relationship with the NHL over the “who owns what” question. And he may have an answer to that sooner rather than later.

The NHL and other sports leagues have historically tried to keep the franchises out of bankruptcy in order to avoid having to cede control of teams to the courts. Moyes’ filing apparently took the league by surprise.

Now the question is: Does the court defer to the rights of leagues to control their franchises, or follow the tenet of getting the most money for creditors? The first option favors the NHL; the latter, Moyes.

An Arizona bankruptcy judge is being asked to put the Coyotes up for auction June 26 – which happens to be the same day as the NHL draft. Balsillie would presumably buy the team at auction or counterbid if another suitor emerges.

The NHL and Toronto Maple Leafs are expected to try to block the Coyotes’ move to Hamilton, as the Leafs consider it an encroachment on their territory.

Another hurdle for Balsille is that the Coyotes have a 30-year lease at Jobing.com Arena in Glendale, Ariz., which opened in 2003. The lease includes a $700 million termination fee that Balsille will have to cough up if he purchases and insists on moving the team, according to the Wall Street Journal.

And despite the fact the Coyotes have never made money and the economy isn’t exactly rosy, a rival buyer may yet step to the plate to bid against Balsillie – Chicago White Sox baseball owner Jerry Reinsdorf, according to the Star.

NHL Commissioner Gary Bettman is said to be searching for a new owner that would keep the Coyotes put. And Reinsdorf is believed to have been that recruit.