NHL Seeks Control Of Bankrupt Phoenix Team

The Coyotes, owned by trucking magnate Jerry Moyes, filed for bankruptcy in Arizona on Tuesday.

The National Hockey League is seeking to overturn a bankruptcy filing by the owner of the Phoenix Coyotes that is intended to facilitate a sale of the team and a move north of the border.

The Coyotes, owned by trucking magnate Jerry Moyes, filed for bankruptcy in Arizona on Tuesday, saying Jim Balsillie, the co-chief executive of Canadian smartphone maker Research in Motion, had offered $212.5 million for the club.

Balsillie plans to move the team to southern Ontario. The Coyotes have never made a profit since moving to Arizona in 1996 and lost a combined $73 million from 2005 to 2008, according to court documents.

A hearing has been set for May 19 to determine who runs the club. Moyes' attorneys have said a decision is needed by the end of June if Balsillie is to move the team before the 2009-2010 NHL season begins.

The NHL has moved to block the bankruptcy as well as a sale to Balsillie, who has tried twice before to buy an NHL team.

In addition, the North American sports league won court approval on Thursday to continue funding the team rather than allow Balsillie to provide debtor-in-possession financing that bankruptcy experts said would give the Canadian executive greater influence on the process.

The NHL is a secured creditor of the team, along with a private equity fund controlled by Dell Inc Chief Executive Michael Dell.

"It's our position we're in control of the club," NHL Deputy Commissioner Bill Daly said. He pointed to NHL rules as well as documents Moyes signed before the bankruptcy filing turning control of the team over to the league.

NHL officials have called the filing a move to skirt league rules governing franchise sales and relocation, which must be approved by a majority of the 30 NHL clubs.

However, attorneys for Moyes, who took Phoenix-based trucking company Swift Transportation private in May 2007 in a deal worth $2.6 billion, dismissed the NHL's motion to control the Coyotes as a power grab.

"I call it the Al Haig motion; the 'I'm in charge here' motion," attorney Thomas Salerno said, referring to a statement by the then U.S. secretary of state after an assassination attempt on President Ronald Reagan in 1981.

Salerno, of the firm Squire Sanders & Dempsey, said the NHL's interests would conflict with those of the creditors.

While several bankruptcy attorneys and sports law officials said the bankruptcy judge likely cannot rule on whether Balsillie can move the Phoenix team, Salerno said he believes the court can find the NHL has engaged in anti-competitive behavior and allow the transfer to occur.

Balsillie has made attempts in recent years to buy teams in Pittsburgh and Nashville, Tennessee, and move them to Canada.

A passionate hockey fan who regularly plays in pickup games, Balsillie said on Thursday he respected the Arizona court's ability to rule on the NHL's motion for control.

HEADING BACK HOME?

The Coyotes joined the NHL as the Winnipeg Jets in 1979, after the World Hockey Association folded. In 1996, the team moved to Phoenix and renamed itself the Coyotes. In 2001, it was sold to a group that included Moyes, who assumed majority control five years later.

If the judge decides the team must remain in bankruptcy, getting the best price becomes key, bankruptcy experts said.

"The role of the court is to get the best possible deal for the creditors," said Jim Quinn, a senior partner with law firm Weil, Gotshal & Manges who has been involved with sports law for more than 35 years.

However, "best" may not be the highest bid, as the judge also would want to avoid approving a deal with contingencies that could lead to the deal's collapse.

"A contingent offer for more money, if the contingency is likely to not happen, is not as good as a lower offer that's certain," said Stephen Lubben, a bankruptcy law professor at Seton Hall University School of Law.

NHL officials have said the league is committed to keeping the team, valued last October by Forbes magazine at a league-low $142 million, in Phoenix.

Jerry Reinsdorf, owner of the Chicago White Sox baseball and Chicago Bulls basketball teams and a part-time Arizona resident, is part of a group the NHL was negotiating with on a lower bid. Reinsdorf has declined to comment.

Even if Balsillie wins court backing, the NHL still could make life difficult by withholding the team's share of league revenue or even dissolving the squad, said analysts and attorneys who follow the league.

"He may have burned his last bridge," said Robert Boland, professor of sports management at New York University.

The case is in Re: Dewey Ranch Hockey LLC, U.S Bankruptcy Court, District of Arizona, No. 09-09488.