NHL may have to buy, sell and move Coyotes
PHOENIX (AP) -- If the NHL is successful in buying the Phoenix Coyotes in U.S. Bankruptcy Court, the league plans to quickly engage in talks over a new lease agreement with the city of Glendale.
If no deal is forthcoming, the NHL says it would be forced to turn to a buyer to move the team elsewhere.
"I think we've got to get the lease situation resolved or not by the end of this calendar year," NHL deputy commissioner Bill Daly said on Thursday.
No new lease could mean a lame-duck season in Glendale while plans are made to relocate the franchise.
"That's always a possibility. We're hoping that's not the case," Daly said in a telephone interview with The Associated Press. "Our first priority is to find a local purchaser because we think this team belongs in Phoenix."
The lack of a new lease with Glendale prompted the NHL to take the unusual move this week of submitting a bid to purchase the franchise. The league acted while its preferred purchaser, a group headed by Chicago sports entrepreneur Jerry Reinsdorf, pulled out because it had been unable to reach a deal with Glendale by Tuesday's court-imposed deadline for submitting a firm offer.
Ice Edge Holdings, a group of Canadian and American investors, submitted a bid, but it's contingent on reaching an agreement with Glendale, something Ice Edge CEO Anthony LeBlanc says must happen by the end of next week.
"The risk is if we don't finalize a deal with the city we simply can't move forward with the auction," LeBlanc said.
The franchise is scheduled to be sold at auction on Sept. 10.
The NHL bid would assume the existing lease agreement but only through the coming season.
"We felt at this point the best thing for the franchise was to put in our own bid, which doesn't contain any contingencies," Daly said.
The NHL plans to resell the team outside of the encumbrances of bankruptcy court. Could that buyer be Reinsdorf?
"I wouldn't rule anybody out," Daly said.
Daly placed much of the blame for a lack of local bidders on Coyotes owner Jerry Moyes and Canadian billionaire Jim Balsillie, saying the two "have taken every opportunity to make it as difficult as possible" for potential buyers who would keep the franchise in Arizona.
The franchise's value has been eroded by the bankruptcy process, Daly said.
"I think to a certain extent the Moyes and the Balsillie parties have intentionally tried to damage the club to make it less attractive to the local purchasers," Daly said.
Moyes took the team into Chapter 11 bankruptcy, to the surprise of the NHL, on May 5, with a plan to sell it to Balsillie for $212.5 million, on the condition the franchise be moved to Hamilton, Ontario.
The NHL has fought the move from the start, contending the filing was unnecessary and is a scheme to sidestep the normal transfer of ownership and relocation process. The league's board of governors rejected Balsillie as a potential Coyotes owner by a 26-0 vote.
The case should come to a head next Wednesday, when arguments are scheduled on Balsillie's request that Judge Redfield T. Baum overrule the NHL vote and approve relocating the team in Hamilton. The NHL refuses to consider relocation, saying the issue is moot because Balsillie has been rejected as an owner.
If Baum rules in Balsillie's favor, Daly said, the NHL will immediately appeal and seek a stay to halt the sale.
"We're willing to go to the wall to defend those principles," Daly said.
Moyes, who says he loaned the team $300 million, would recoup $104 million under the Balsillie deal. He would get nothing under the NHL and Ice Edge bids, which contend the lost money is equity, not a debt.
LeBlanc said his group is committed to keep the team in Glendale, to the point that Ice Edge is not seeking an "out clause" from the city. He said the plan to play five regular season games in Saskatoon is only to increase revenue while efforts are made to "re-brand" the team in Phoenix. He said Ice Edge has decided against an earlier idea, mistakenly included in the bid, to play some potential playoff games in Saskatoon.
"We think we've got the best possible bid from everything we've seen," LeBlanc said. "We think we've got a good, solid bid in terms of what we're offering creditors."
LeBlanc was a top executive of Research in Motion for nine years. Balsillie is co-CEO at RIM but has nothing to do with Ice Edge, LeBlanc said.
The NHL finds itself in the position of supporting Ice Edge and competing against it.
"It is kind of an odd dynamic," Daly said. "Having said that, we've not been shy about supporting local ownership."
Daly said he would give Ice Edge "full marks for all they've done in a very short time."
The NHL board of governors has not voted on Ice Edge's application to own the Coyotes but is expected to do so before the Sept. 10 auction, Daly said.
Ice Edge also must work out details of its agreement in principle to pay the debt owed by the Coyotes to the NHL and the $80 million due SOF Investments, the franchise's largest secured creditor.