NHL Enters Bid To Buy Coyotes
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!