Coyotes could cost Balsillie an extra $100M: lawyer
Published Tuesday, June 9, 2009 9:05PM EDT
The NHL may ask businessman Jim Balsillie to dish out an extra US$100 million to move the moribund Phoenix Coyotes to Hamilton, a hefty price tag that could put the Blackberry billionaire's deal on ice.
Though the exact amount was blotched out of court documents, Balsillie lawyer Susan Freeman said Tuesday the league's relocation fee could be nearly half of her client's current bid for the team.
Arizona bankruptcy judge Redfield Baum agreed that the NHL should be paid a fee for the team, but he said the exact amount will be an important factor in deciding if the team can be moved.
The judge's comments came despite concerted legal arguments by Balsillie's lawyers against any such fee. It is believed that a relocation fee would be used to pay off some of the Coyotes' debts, and Baum said he wants to ensure that the team's creditors aren't left in the lurch if the team is moved.
Last month, Baum asked the NHL and Coyotes majority owner Jerry Moyes to resolve issues over who controls the team. Baum will hear further arguments from both sides Tuesday.
The key issue in the dispute is whether Moyes had the authority to file for bankruptcy and negotiate the team's sale, or if the NHL had control of the Coyotes.
Earlier in the day, Baum said he would not make a final decision until later this week as to who has the right to control the team. The decision had initially been set for Tuesday.
But the big relocation fee could end the deal, according to Richard Rodier, a member of Balsillie's legal team.
He added that Balsillie's deal has a clause which would allow him to back away if the relocation fee is too large.
On May 5, Moyes announced he had put the team into Chapter 11 protection. That same day, Balsillie made a $212.5-million offer to purchase the team -- but only if he could relocate it to Ontario.
NHL commissioner Gary Bettman, who was in Phoenix Tuesday, alleges in court filings that he had control of the team -- not Moyes -- and any talk of selling or moving the franchise should have been directed to him.
Gordon Kirke, a sports and entertainment lawyer, said implications of the judge's decision will be widespread because the team is a franchise.
But Kirke said Moyes had only been given the right to operate a team "in Phoenix."
He said the question is whether the judge will grant a "greater right" than the terms of the franchise by allowing the team to be moved to Ontario.
In a court filing, Bettman said there are four groups interested in buying the franchise and keeping it in Arizona. One of the groups listed in the filing involves Toronto Argonauts co-owners David Cynamon and Howard Sokolowski.
Eric Schaffer, a lawyer who worked on the Penguins' bankruptcy, said it looks like Baum is trying to create enough uncertainty that the parties involved will try making a deal.
"Balsillie may be the odd man out, but the league could try and enhance the offer of someone else to try and make it better for the creditors, and an experienced judge may try to create enough uncertainty that it drives some sort of consensual resolution," Schaffer told The Canadian Press.
Baum previously set two tentative dates for the team to be auctioned off -- June 22 if Balsillie prevails or Sept. 10 if the NHL succeeds.