NHL Enters Bid To Buy Coyotes

August 25, 2009 by Tyler  
Filed under Hockey Columns, NHL Business

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?

Banning Balsillie

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 groupsone 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.

Outbidding Balsillie

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!

Comments

6 Comments on "NHL Enters Bid To Buy Coyotes"

  1. tracytran (Tracy Tran) on Tue, 25th Aug 2009 10:06 pm 

    Twitter Comment


    I’m rooting for Balsillie to get the Coyotes if this happens RT @nhldigest: NHL Enters Bid To Buy Coyotes [link to post]

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  2. BlueJacketsBuzz (Eric Smith) on Tue, 25th Aug 2009 10:33 pm 

    Twitter Comment


    RT @nhldigest: NHL Enters Bid To Buy Coyotes [link to post] As The Yotes Howl! Will it never end?

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  3. kingscast (kingscast) on Tue, 25th Aug 2009 10:34 pm 

    Twitter Comment


    RT @nhldigest: Breakdown of the NHL’s bid for the Coyotes and how you could see it coming a mile away – [link to post]

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  4. jessicahanson (Jessica Hanson) on Tue, 25th Aug 2009 10:35 pm 

    Twitter Comment


    RT @kingscast: RT @nhldigest: Breakdown of the NHL’s bid for the Coyotes and how you could see it coming a mile away – [link to post]

    Posted using Chat Catcher

  5. rockarts (Steven Rockarts) on Tue, 25th Aug 2009 10:40 pm 

    Twitter Comment


    @nhldigest Do you think the NHL’s board of governor’s will approve the NHL as an owner? ;)

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  6. IceColdNews on Wed, 26th Aug 2009 8:45 am 

    This is a horrible move by the NHL, to use league money to simply outbid the Balsillie devil. Using league money this way does nothing to strengthen the NHL brand or help introduce hockey to the masses in order to grow the game.

    There is currently only one other suitor for the Coyotes and that is Balsillie does the league really think that if they own the team, when they go to sell a plethora of bidders will jump on the chance to purchase a money losing franchise without possibility of moving them to recoup the cost of the franchise?

    On top of that does the League think it will get its $200 million purchase price back? I highly doubt they will. Instead they will have to sell the Coyotes off at a loss. Another great move by the NHL just to prevent a legitimate passionate owner from actually owning an NHL team.

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