'This conclusion effectively is the end' of Balsillie relocation attempt, judge rules Sep 30, 2009 08:06 PM (TORONTO STAR) ROBERT CRIBB SPORTS REPORTER Canadian billionaire Jim Balsillie has given up his bid to bring the Phoenix Coyotes to Hamilton. In a statement, Balsillie said he will not appeal a judge's decision that rejected his bid to buy the team. Phoenix bankruptcy judge Redfield T. Baum also rejected the NHL's bid to seize control of the troubled hockey club. But the result was not exactly a tie. Baum said he is "passing the puck to the NHL" to alter its bid and "take another shot at the sale net or it can pass off the puck." "The NHL can probably cure the defect in its bid" if it makes some amendments related to the payment of debts to former team coach Wayne Gretzky and owner Jerry Moyes. The NHL had tabled a $140 million (U.S.) bid for the bankrupt team with a commitment to keep it in Arizona for the near future. Balsillie put $242.5 million on the table along with a plan to move the club to Hamilton if he were successful. "From the beginning, my attempt to relocate the Coyotes to Hamilton has been about Canadian hockey fans and Canadian hockey. It was a chance to realize a dream. All I wanted was a fair chance to bring a seventh NHL team to Canada, to serve the best unserved hockey fans in the world. I believe I got that chance. I respect the court's decision, and I will not be putting forward an appeal," Balsillie said in the statement. The legal battle in Phoenix has drawn attention to the southern Ontario hockey market and the prospects for a franchise at some point, he said. "Nobody can deny that we are now a big step closer to having a seventh NHL team in Canada. It doesn't matter who owns that team. When that day comes, I will be the first in line to buy a ticket to the home opener." Dr. Kirk L. Wakefield,a professor of sports entertainment marketing atBaylor University in Texas, saidthe league's decision to pursuesouthern-style hockey in cities like Phoenix, Atlanta and Nashvillewasn't such a bad idea in principle. But it has failed isthe implementation. "Going into those marketsyou have to recognize that these people are not hockey fans. You clearly have to do way more to engage the fans and teach them the involvement.You have to have a clear plan about how to convert these folks into hockey fans." Shawn McBride, vice president ofBoston-based Ketchum Sports & Entertainment, said that "(Phoenix) will be remembered as the flashpoint for revealing all the ills facing NHL's sun belt division. "It's fair to say that Commissioner (Gary) Bettman's attempt to expand the NHL to warm weather climates is a failed experiment." Balsillie's lawyers had argued Phoenix is not a viable market for professional hockey, that Hamilton could successfully support the team and that the NHL rejection of a relocation application was conducted in "bad faith." The league vigorously challenged those assertions. Baum ultimately sided with the NHL. "In the final analysis, the court cannot find or conclude that the interests of the NHL can be adequately protected if the Coyotes are moved to Hamilton without first having a final decision regarding the claimed rights of the NHL." "This conclusion effectively is the end for the efforts of (Balsillie's) PSE (Sports and Entertainment LP), Balsillie, Moyes and the Coyotes to force a sale and relocation of the hockey team." Baum's 28-page ruling says the Balsillie bid is denied "with prejudice." The NHL offer was denied "without prejudice." It remains to be seen whether the NHL will come to the table with enough to tip the legal scales in its favour. The NHL's bid promised Moyes only about $14 million of his claimed losses of more than $100 million. And that would be shared with Gretzky, who has a claim of about $9.3 million. Balsillie's bid treated both as full creditors. "There are multiple factors that support the NHL bid," reads the decision. But Baum takes issue with the league's lack of debt repayment to the two Coyote top dogs. "One of the prime policies of bankruptcy is equality of distribution amongst the creditors," the decision reads. "The apparent practical effect of the NHL's bid is to pay all creditors in full except the Moyes and Gretzky claimants." Baum's summary of the case starts with the massive red ink surrounding the Coyotes, the former Winnipeg Jets who flew south in 1996. The ruling cites total losses of $75 million in 2004, $50 million in 2005, $75 million in 2006, $117 million in 2007 and $72 million in 2008. Financial statements "raise substantial doubt as to the company's ability to continue as a going concern." The team was also a failure on the ice – "The Coyotes have not been a particularly successful team," Baum wrote. Money aside, Baum says other issues played into his decision – key among them the NHL controlling the right who to admit to its club, the right to control where its members play their home games and the right to a relocation fee if a team moves. "This court struggles with how it can adequately protect the NHL's membership selection right and control over home team location rights if the court were to allow PSE (Balsillie's group) to move the Coyotes to Hamilton." Baum notes that if he were to allow the team to move and then the NHL was to win subsequent litigation over that, it would be akin ``to the old adages about closing the barn door after the horse is long gone and how do you un-ring the bell. "The obvious refrain to the first adage is it's 'too late,"' and to the second, 'you can't."' The back-and-forth wrangling over the team's future started when Moyes caught the NHL by surprise and filed for Chapter 11 bankruptcy protection on May 5. More than 1,000 documents were submitted to the court in the ensuing months and several hearings were held in courtroom No. 703 – with Baum rarely tipping his hand about which way he was leaning. Commissioner Gary Bettman and Balsillie were among the occasional attendees, along with a large contingent of Canadian journalists. The NHL contended all along that Balsillie's bid was an attempt to skirt the league's rules on the transfer of ownership and relocation, arguing attempts should first be made to sell the franchise to a buyer who would keep it in Phoenix, despite over $300 million in losses since the franchise moved to the desert. Chicago sports mogul Jerry Reinsdorf and a group of Canadian and American businessmen called Ice Edge Holdings were among the others to show interest, but another firm bid never actually materialized. That forced the NHL to put together its own offer to buy the franchise, with an eye on keeping it in suburban Glendale for at least this season while it sought out a local bidder. In early September, Baum presided over two days of hearings that culminated with an auction for the team and saw both the league and Balsillie sweeten their bids. Even though the Canadian billionaire was offering $100 million more than the NHL, the largest unsecured creditor (SOF investments), city of Glendale and the committee of unsecured creditors all spoke up in favour of the league's bid. An emergency hearing on Sept. 23 gave Balsillie an unexpected chance to improve his offer even further. He agreed to keep the team in Glendale this season, pay the city a non-refundable fee of $25 million (with another $25 million promised if he was awarded the team) and sell the Coyotes to someone else if a local bidder emerged – "a fairly significant change," according to Baum. After that, everyone simply waited for the judge to file his ruling. The drawn-out bankruptcy proceedings have been extremely tough on those employed by the team – everyone from Gretzky (who stepped down as coach last week), to the players, to the people in charge of selling tickets and trying to market the Coyotes. All in all, it's been a trying few years for the franchise. The Coyotes finished 13th in the Western Conference last season, allowing Jobing.com Arena to become the only current NHL building to have never hosted a playoff game. Prior to the start of the season, Gretzky stepped down as coach of the Coyotes. It's been seven years since Phoenix was last in that position and a staggering 22 years since the franchise advanced past the first round, dating back to a series victory by the Jets over Calgary in 1987. With files from The Canadian Press
Courtesy of TSN.ca http://tsn.ca/nhl/story/?id=293208 Courtesy of Sportsnet.ca http://www.sportsnet.ca/hockey/2009/09/30/judge_rejects_bids/
