Today the National Hockey League officially filed a bid in U.S. Bankruptcy Court to purchase the Phoenix Coyotes and keep the team in Arizona.
In what some would have you believe is an “unexpected turn of events” in the Phoenix Coyotes drama, we talked about from day one of the legal proceedings here on NHL Digest.
Eerily prophetic, if I do say so myself, here is a direct quote from our May 22 overview of the Coyotes situation:
The NHL raised its line of credit from $70 million to $200 million Monday, citing low interest rates and the need to be prepared for the future. These reasons seem hollow and the timing suspect at best. A US bank holds the credit, whose rates are directly impacted by the Federal Reserve. The next scheduled Fed meeting regarding rates is June 23-24, or well after the Cup finals. If interest rates were the true motive, they will likely still be there after the Cup is awarded and the deal did not have to be executed the day before the first major hearing.
Could the NHL potentially be a bidder to stabilize a market they obviously believe in? Could they be ready to run the team and bankroll its operations throughout a prolonged legal battle? Or is the financial health of other franchises far worse than anyone knows, with this being the first of many dominoes to fall during the recession?
It has become more and more clear that the National Hockey League will do anything in its power to prevent Jim Balsillie from owning a franchise. And, with Balsillie’s bid looking strong in comparison to the fledgling bids of two other groups – one from Jerry Reinsdorf (Update: Reinsdorf’s bid has mysteriously been pulled off the table) and the other from a group called Ice Edge Holdings the NHL decided to take the step of entering it’s own bid for the team.
The League’s position is that if they are successful in bidding for the franchise, they would then turn around and sell it to whomever they believe is a suitable owner – which they could do at their leisure outside of bankruptcy protection.
A quote from a statement released today leads us to believe that this is indeed what the league believes is the most likely scenario:
“We believe this step was necessary at this time in order to best preserve and maximize the value of the club asset for benefit of the club’s creditors and for the community of Glendale”, said NHL deputy commissioner Bill Daly in a statement.
“The bankruptcy petition and subsequent events have been incredibly damaging to the club’s business, and the sooner the club can be extricated from the bankruptcy process, the sooner club personnel can begin to restore the team’s vitality and local fan base. In the event the league’s bid proceeds and ultimately is the one approved by the court, we intend to conduct an orderly sale process to a third party buyer outside of bankruptcy.”
It’s not surprising in the least to see the League become the major suitor in competition to Jim Balsillie. No businessman or investor would sanely bid enough to satisfy creditors and keep the Coyotes in Phoenix; it’s just not a prudent investment.
So, how much could the league bid be?
It’s clear that the League will have the upper hand in negotiations with the City of Glendale, seeing as how the other major potential bid has now pulled out. Glendale may now make concessions to the League that they were unwilling to make to other bidders – simply because they are out of options.
This bodes well for the National Hockey League because they will likely need all, and more, of the $200 million credit facility to out-bid Balsillie at auction.
The season is just around the corner and the long, drawn out, saga has to end sooner or later. It’s been a long race, but we just might be in for an exciting finish!
Of all the hockey magazine’s available, I have to say that I am quite impressed with “Canadiens”, the official magazine of the Montreal Canadiens. It’s not just because I am a huge Montreal Canadiens fan, but the magazine has a great mix of entertainment, hockey, and personal stories of the Canadiens players, staff and legends.
My Favorite issue of the magazine from 2008 is a great example.
Not only did I find out the three favorite Montreal restaurants that Patrice Brisebois frequents, but also checked out 15 songs on the iPod of Tom Kostopolous (A classic mix of Metallica, Pearl Jam, and Nickleback).
The magazine always has a nice feature article that is several pages in length on the career and life outside of hockey of one current Canadiens player.
In a previous issue, Alexei Kovalev was featured and readers were treated to an inside look at Kovalev outside of hockey. I had previously heard that Kovalev was a licensed pilot, but this article went into greater detail about his flying career, his frequent flights to New York, and the plane that he owns.
Forget the Playoff Beard – Check Out The Mustache!
Larry Robinson received my vote as the former Habs rearguard sported an excellent handlebar style mustache throughout the 1970’s.
Younger Canadiens fans might remember a more recent Captain of the Canadiens, Mike Keane, who sported a beautiful blonde ‘stache as late as 1996!
A great quote comes from the mustache article in the Canadiens magazine:
“Current Canadiens GM, Bob Gainey, wisely left his perm and cookie-duster where they belong – in the ‘70s”
The First Kiss
In honor of Valentine’s Day, several players also remarked on who, where, and how they got their first kiss. I’m not sure what team that Tom Kostopolous played on, but apparently his entire team got kissed at the World Pee-Wee Tournament in Quebec – not too bad if I do say so myself!
Even if you’re not a fan of the Habs, I highly suggest that you take a few minutes to read an issue of Canadiens magazine if you get the chance.
The following is the first podcast attempt for NHL Digest. It runs very short at just 3 minutes long and covers the recent Hockey News article outlining the Top 10 American Born hockey players.
Comments and suggestions are appreciated. I especially hope you enjoy my cheesy intro!
July 6th has typically been a busy day over the course of history. With some quality free agents still available, is there any reason to believe that this season will be any different?
If history is any indicator, we might see some of those available free agents signing contracts today!
Historical July 6 NHL Free Agent Signings
July 6, 2004 – Phoenix Coyotes signed free agent defenseman Sean O’Donnell, who had been with the Boston Bruins.
July 6, 2004 – Ottawa Senators signed free agent goaltender Dominik Hasek.
July 6, 2004 – Los Angeles Kings signed free agent Craig Conroy, who had been with the Calgary Flames.
July 6, 2001 – Minnesota Wild signed free agent Andrew Brunette. Brunette went on to lead all 2001 Free Agents – in scoring, with 69 points in 2001-02.
July 6, 2001 – Boston Bruins signed free agent left wing Rob Zamuner.
July 6, 2000 – Philadelphia Flyers signed free agent Michal Sykora.
July 6, 2000 – Los Angeles Kings signed free agent Stu Grimson.
July 6, 1999 – New York Rangers signed free agents Valeri Kamensky and Stephane Quintal.
July 6, 1998 – Nashville Predators signed free agent Tom Fitzgerald, and named him the first Captain in team history.
July 6, 1994 – Philadelphia Flyers signed free agent Craig MacTavish
July 6, 1983 – Detroit signed free agent goaltender Ken Holland, who went on to play 3 games with the Red Wings in 1983-84, finishing with a 4.11 GAA.
*Incidentally, Holland was named the Red Wings General Manager in 1997.
July 6, 1983 – Boston Bruins signed free agent Geoff Courtnall
July 6, 1978 – The Islanders signed John Tonelli as a free agent. Tonelli went on to star with the Islanders’ four Stanley Cup Winners.
- #Blackhawks could be in serious trouble due to improper qualifying offers! (Not a joke) http://ff.im/-4Me4j #
- Lots of player movement, but little improvement says Duhatschek http://ff.im/-4Mhbp #
- The Colorado Avalanche have traded Ryan Smyth to the Los Angeles Kings. Details to follow http://ff.im/-4Mq17 #
- On this note…I’m heading to bed http://bit.ly/PQ5wG
No way to top that tonight I’m afraid! #
- NHL Free Agency Drama http://ff.im/-4MtL1 #
- Thanks to those who have already commented on my NHL Free Agency Drama post! http://ff.im/-4MtL1 Happy 4th of July to my USA Tweeps! #
- Mike Knuble was born on the 4th of July! The newest hockey player in the nation’s capital was born on Independence… http://ff.im/-4Nsxf #
- 4th of July Question – Who is America’s Best Hockey Player? http://ff.im/-4NRl1 #
After the glory of the Stanley Cup Finals concludes and a Pittsburgh skates off into the sunset with their shiny new grail for a summer of parties, it will be back to reality for the NHL, Phoenix Coyotes, Jim Balsillie, and the fans. Last Tuesday’s six-hour bankruptcy hearing laid the groundwork for the heart of the case and the forthcoming ruling will decide the future of the Phoenix Coyotes.
A Capable Judge
It’s becoming clear that this case is in capable hands with Judge Baum. This recent profile from the Globe and Mail makes clear that Baum is pragmatic, equal-handed, and a sports fan. His decision will not be the culmination of a perceived “Canada v US” struggle for the soul of the NHL. Like any judge, Baum’s goal is to make as many creditors whole as possible. As a practical matter for all parties, including himself, he will be making that decision in a timely manner. A ruling could come at any time, though Judge Baum will wait until after the Cup has been presented as a matter of courtesy not to interrupt hockey’s most sacred night.
Opposed to Relocation
One of the interesting revelations during the June 9 hearing was that Judge Baum is not philosophically opposed to franchise relocation. Citing the Baltimore Colts, he noted that the NHL’s claim of irreparable damage doesn’t always occur. However, it’s clear that Jim Balsillie or any other potential owner wishing to move the franchise will face additional financial responsibilities. A $100m figure was floated, but that is not legally binding at this point.
Furthermore, an owner wishing to place a franchise in southern Ontario will not have the rights of the Toronto Maple Leafs and Buffalo Sabres (depending on team’s location) invalidated. This is consistent with what the Judge mentioned during the May hearing. These costs will likely take a $212 million bid to a real cost of $400m+. Is Balsillie or another owner willing to pay a figure close to the “market value” of a southern Ontario team?
Richard Rodier, lawyer for Balsillie, quickly told the court that the bid included an opt-out clause if a relocation fee was imposed. This is either another attempt to control the direction in court like trying to push through a timeline unfair to any other competitive bids, wanting TV rights, and imposing a deadline for revoking the bid in full. More likely, it’s the opening salvo in the larger negotiation in an attempt to minimize these fees. Interestingly, these additional costs won’t be factored into the cost of the bid and the amount to which each bid repays creditors. They’re just a part of the cost of doing business in general.
The NHL Constitution
The other interesting revelation for law geeks with vivid imaginations revolves around the NHL constitution and tiptoes into anti-trust law (potentially Balsillie’s biggest ally). Unlike the other leagues, the NHL hasn’t revoked veto power from its franchises. In real terms, the Toronto Maple Leafs have the power to reject any deal to bring a team to Southern Ontario unilaterally. There will be a tension between the court and the Leafs if the team is moved via bankruptcy court without the Leafs giving their approval.
For those with vivid imaginations, think of the ramifications if a court invalidates any part of the NHL constitution, even a part rarely invoked. The sovereignty of the NHL to run its operations would seriously be in doubt and any future owner could easily make a legal assault upon a weakened league. Again, this is a doomsday scenario but food for thought.
During the hearing, the City of Glendale continued to assert a $500m claim, though the Judge has given a range of $7-550m. The determination of that claim alone can tip the scales in favor of a certain bid. In the eyes of the court, there has only been one bid so far- Jim Balsillie’s.
Other Potential Bids
The Judge went as far as to call other expressions of interest hearsay, a damaging blow to the NHL’s case. For the other potential bidders, it’s time to put up or shut up and welcome the Hamilton Coyotes!
This post was developed by a legal analyst source exclusively for NHL Digest. This source wishes to remain anonymous due to privacy and security clearance issues. Please direct all questions to the comment form below.
You can find a breakdown of the first hearing here.