Wednesday, May 27, 2009

Cut To The Chase!

So what did we learn today? Well, we now know that Judge Redfield Baum can shake up the lines pretty well. By moving the hearing on the possible relocation of the team from June 22 to June 9, he surprised both sides, stripped away most of the other issues and set up a win or go home scenario for Jim Balsillie. Baum set earlier deadlines for the filing of briefs, moved the oral arguments up almost two weeks and promised that he would rule on the core issue of whether the team can be moved as part of the bankruptcy procedure shortly after the June 9th hearing.

For Balsillie to get control of the team and leave Phoenix behind, he'll need a favorable ruling from Judge Baum. If the judge rules that movement of the franchise cannot be considered as part of his bid to buy the team out of bankruptcy, it's game over for Balsillie. Thanks for playing Jim, drive home safely.

On the other hand, if he rules in favor of the Canadian, it will set off a series of court tests that could last for years and years. The NHL and the City of Glendale will appeal any ruling that does not give them what they want out of this deal. The NHL wants to preserve their constitution and bylaws that give the owners territorial protection and the right to pick their partners. The City of Glendale wants to keep their major tenant. Both the appeals and the injunctions that are certain to follow in rapid sequence would almost certainly keep the team in Arizona for at least the short term and would likely take years to resolve.

It's hard to get a line on Judge Baum. On one hand, he noted that Balsillie's offer is the only offer he's seen or heard of to this point. Conversely, he made it clear to Moyes' legal team that they will need some pretty strong arguments to overcome some of the bankruptcy issues that may not give Moyes a clear title to do what he pleases with the franchise. He would also be getting into an area -- franchise law -- where bankruptcy courts have long respected the contractual rights of the franchisor. That's why he makes semi-large judge bucks, I guess.

One of the issues settled today was the control of the team. Essentially the NHL and the Moyes group agreed to joint management of the asset and agreed to let the bankruptcy play out. With the team certain to be sold, there was less to gain by trying to establish control of the franchise. Interestingly, Toronto newspapers initially trumpeted this as a big win for Moyes and Balsillie but later pulled down those stories. The judge has made it clear that relocation, not control, is the primary issue. If anything, Balsillie lost a chance to be a part of the conversation because a mediator was not used and he was not invited to the control conversation.

Earlier today, the Arizona Republic broke major news that Sports Properties, a New York base investment firm was deep in negotiations with Glendale and the NHL to purchase the franchise when Moyes slipped the team into bankruptcy. Sports Properties has a blue chip leadership team that includes former Disney Sports CEO Tony Tavares, former New York Governor Mario Cuomo and baseball legend Hank Aaron. Sports Properties has been on the prowl to buy a major sport franchise after raising $215MM in a public offering last fall. Sports Properties will not be bidding Blackberry dollars for the franchise but assuming they are still interested, they offer the hope of stable, well financed ownership as well as manager (Tavares) with a strong arena management background.

June 9th will be a huge day for the future of hockey in Phoenix. The hearing, and the determination that follows will either help maintain a hockey presence in The Valley (hopefully for many years to come) or set off a legal war that will ultimately wind its' way to the United States Supreme Court. I'd love to bet on the good guys here but as I've often been told, there is no sure thing in the courts.

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