So I Guess I've Got To Write Something

The court hearings are over. Mercifully. We now wait for Judge Tom to return his decision.

I am sorry but I am past the point of being worked up about this process. It sucks. It sucks for the fans, it sucks for the players, it sucks for the Coyotes staff members that have not yet bailed out and it sucks for anyone remotely connected with the Coyotes.

As I remember it, only one person (Jerry Moyes) had any interest in having Jim Balsillie stick his ample nose and bald head into our mess. Nothing would make me happier than to see Mr. Balsillie get run out of town by Judge Tom, followed closely by the moving van carrying Jerry Moyes' furniture. And nothing will make me happier than not seeing one more stock photo of Balsillie wrapped up in a Canadian flag.

Most of the people who attended the hearing this week have reported that Judge Baum has dropped several hints that he sees no precedent in bankruptcy law anything close to what Jim Balsillie is proposing.

As I pointed out earlier this week, reading his June 15th decision make it clear he understands and respects legal precedent. His prior judgement quoted a number of legal decisions relating not only to bankruptcy code but also to franchise law. The Judge, if not quick to pull the trigger, does seem to be thorough before making any call.

Let me expound a little on the bankruptcy code. Bankruptcy laws were overhauled in 1978 and the bankruptcy code is the same across the country. There is no different treatment from one state to another. Accordingly, there is a 31 year history of bankruptcy rulings that form the precedent that Judge Tom will lean on to make his decision. Something you may not know is that the legal community that handles bankruptcies is relatively small. It is a legal specialty. While even ambulance chasers like Lerner and Rowe will do a bankruptcy filing for you, most people who go this route rely on the lawyers who practice bankruptcy law extensively. And with a relatively small number of judges and attorneys, it is a close knit community that knows what is and is not good bankruptcy law.

There's also another large body of law at work here called franchise law. While franchise law does vary from state to state, there is much common ground in the franchisee/franchisor relationship and the legal covenants and commitments that come with this process. Having spent much of my professional career in franchising, I saw very clear indications from Baum's June 15th ruling that he understands franchise law and how that works to protects all franchisees of a company or association. He understands that you just can pull up the McDonald's in El Dorado and move it to Times Square.

There are 5MM people in the Toronto metropolitan area. For the uneducated, Hamilton is part of that market. This is not Phoenix and Tucson. If a business considers an area to be under served, their first step is to talk to the existing franchisee about expanding their service or modifying their agreements to allow additional franchisees. There is no law or precedent that allows another franchisee to buy a bankrupt business and drop it into a protected territory.

As a Phoenix hockey fan, I really could care less whether Southern Ontario is over or under served by the NHL. That is not my problem. What I do care about is that if the Coyotes moved to Hamilton, Kansas City or anywhere else, Phoenix and the surrounding area would become the second largest television market in the United States without professional hockey. Oh and did I mention that Phoenix, even during tough times, is still the fastest growing major market in the US and projected to be the 4th largest metropolitan area int he country in the next 25 years.

So given all of the precedent, hundreds of pages of filings and what seems like weeks of testimony and posturing, where do we end up?

There seem to be three possible scenarios;

First is the award of the team to Balsillie, direction to the NHL to approve Jimberry as an owner and the move to Hamilton and an all purpose screwing of the City of Glendale, hockey fans in Arizona and the National Hockey League. Chances of happening? Highly unlikely. My bankruptcy expert tells me that there is simply not enough precedent nor latitude within existing laws for this to happen. That also seems to be the consensus of many who have covered the recent hearings.

The backside of this ruling would be that Glendale and the NHL will both be in the 9th District Court immediately to get stays. Then the long drawn lawsuits will commence. How long could this drag on? I know of one complicated bankruptcy that is in its' 6th year of court action. No kidding. And once a decision gets stayed, payments to creditors get frozen. That's another complication that Judge Tom wants to avoid.

The second option is to send Balsillie on his way and award the team to the NHL. Certainly the cleanest outcome for the franchise and Phoenix hockey fans. If there is any hope of hockey pulling a dramatic revival in Arizona, a clear path to new ownership is necessary as quickly as possible. NHL control, which by no means makes everything perfect, will help move the focus back on the ice and give the league the latitude to make the necessary deals with new owners the City of Glendale and other creditors. All of which need to happen quickly.

And finally, there a chance that Judge Tom will rule no sale to any party. That of course leaves the NHL in control of the franchise as debtor in possession and likely sets off another legal battle as the league officially repossesses the franchise from Moyes. Not sure of all the ramifications here but it is essentially NHL ownership without clarity. That doesn't sound too promising to me.

No matter what happens, grievous damage has been done to the short term prospects of the Coyotes. We don't know who the coach is, players face uncertainty over what is really important -- their families -- and ticket sales are so far behind, there's no telling when they may catch up. One can only pray that the team has a good road trip before the home opener. A lousy start by the Suns (who by the way have season ticket renewal problems of their own) wouldn't hurt either.

Oh, I can add one additional thing. If Jim Balsillie doesn't win this legal battle, he is dead forever as a potential NHL owner. After the costs the NHL has incurred over this mess and the resulting damage to the Coyotes franchise, he'll never get into the league. Ever.

Of course, that may prove to be a pyhrric victory for those of us following this mess.