Tuesday, May 19, 2009

Reviewing The Day In Court

Having never paid much attention to a bankruptcy court, I wasn't sure what to expect today. What I learned, more than anything else is that the court will be moving at it's own speed, making some decisions, clearly looking to punt others and generally disappointing everyone who was looking for a quick solution to a nasty situation.

The judge clearly doesn't know or seemingly care that we've got tickets to sell, players to draft and sign and a schedule to draw and promote? Guess he's just another one of those 4 million or so Phoenicians who has never been to a Coyotes game.

It was a busy, interesting and even confusing day. Let's take a look at the highlights...

1. Who's in control? Well, much like the old who's on first comedy routine, it was interesting, even a little funny but at the end of the day, you still really don't know what is going on. The NHL and the Moyes camp both claim control of the franchise; the NHL by virtue of the proxy that came with $32MM in secured loans and Moyes with his investment and ownership stake that's cost him somewhere in the neighborhood of $300MM. If Moyes loses here it's pretty much game over for him and his sizable investment. Paraphrasing the judge, why fight so much over who's driving the car when it's going to be sold in 60 days. He sentenced both sides to arbitration to work things out and get back to him next Wednesday.

The NHL and Moyes both have good reason to want those car keys because their respective position would largely determine whether the process goes on to next steps or goes away. Mediation meetings this week will be a treat. Lots of lawyers doing lots of railing, billing lots of hours and little chance of a compromise. There are some people in Phoenix who would rather buy a ticket to listen to those meetings rather than a hockey games. The participants have vastly different agendas -- Team Moyes wants to maximize the return they receive and the NHL wants the team to be sold to owners who will keep the team in Phoenix. At this point, those goals do not seem to be compatible.

Look for Judge Baum to break the tie next week and seeing the way the Judge keeps talking about the eventual sale of the team, I'm thinking he is leaning towards letting the bankruptcy play out which means advantage to the Moyes camp.

2. Moving Vans Anyone? The relocation issue has to be solved before the franchise can be sold and June 22nd was set as the date to make that determination. The NHL wanted that issue called today. The judge did speak to the compelling amount of support the NHL has from other major sports leagues as well as citing the Oakland Raiders case which he felt set a precedent that the league does have control over where their teams play. Remember that all leagues changed their by-laws in the face of the Raiders first move to LA and the subsequent changes have been upheld several times in court. If Judge Baum ruled that a bankrupt team could move anywhere regardless of league bylaws and competing teams, you can be sure the NHL will drag this to a higher court and fight the ruling to preserve its authority over where teams play.

One possibility between now and June 22nd is if Moyes is awarded control of the franchise, he may approach the NHL and formally ask to move the team. That request would likely be rejected. At that point, you have to question whether the Balsillie offer still would have legs since it is conditioned on the franchise being relocated.

3. And the high bidder is? Depends. If the court decides that laws and by-laws be dammed and the franchise can be relocated, Balsille's $212MM is in the lead. Keep in mind however that other Canadian groups might come out of the woodwork if the team is sprung loose. If there's no relocation and no conditional bid, then the issue of who gets the team probably comes down to who among the local candidates has the best offer. The Reinsdorf-Kaites group clearly has a dog in the hunt. They may have company though...a group that is rumored to be being formed by Coyotes minority owner John Breslow.

4. And Glendale? That iron clad lease hasn't been heard from yet. They didn't seem to get a word in today. Depending on how things work out over the next few weeks, they may open a legal flank that asserts the sovereignty of the arena lease. When the moment is right, they will be heard from.

5. And finally...Wayne's World Closing? It was reported today by the Toronto Sun that if the Reinsdorf-Kaites group gets the team, they want to retire Wayne as the Coyotes coach, managing partner and chief payroll drain. That won't bother most Valley hockey fans who love Gretzky but hate the way he coaches. Gretzky's value as a gate attraction never panned out here and his departure wouldn't be much of a loss. In fact, the chance to bring in an established coach (former New York Ranger coach Tom Renney will become a leading candidate) could revitalize the franchise.

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