Phoenix Bankruptcy/Jim Balsille

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jimmy_clement#8

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Dunno where to put it, ah, a new thread won't hurt that much.

http://tsn.ca/columnists/bob_mckenzie/?id=277696

Bob McKenzie said:
Do you know why I went to journalism school?

Because I was too dumb to become a lawyer or an accountant, yet here I am having to make sense of legal and financial issues that are way beyond my pay grade.

So let's see if we can navigate our way through this maze that is the Phoenix Coyotes, Chapter 11 bankruptcy and Jim Balsillie's $212.5 million (USD) offer to purchase (conditional on the franchise being relocated to southern Ontario).

The first thing you need to know is that NHL commissioner Gary Bettman was in Phoenix today, ostensibly to put the finishing touches on an intent to purchase agreement from Chicago White Sox owner Jerry Reinsdorf, whose intention was to apparently keep the financially-troubled Coyotes in their current home of Glendale, which is also home to Reinsdorf's spring-training baseball facility (a mile away from the Coyotes' Jobing.com Arena). That offer was expected to materialize within the next few days.

We don't know a lot about the Reinsdorf deal but suffice to say it likely wasn't in the $212.5 million range.

In any case, today's events clearly caught everyone, from the Coyotes' staff to the NHL head office, completely off guard.

Coyotes' owner Jerry Moyes, who is in deep debt as a result of his ownership of the franchise, circumvented whatever offer to purchase might have been coming from Reinsdorf by filing for Chapter 11 (reorganization) bankruptcy with an Arizona court. This was obviously done because Moyes was aware that Balsillie was prepared to make an immediate offer to purchase the moment the bankruptcy was filed.

It would seem obvious that Moyes knew that Balsillie's offer of $212.5 million was far more than anything that was coming from Reinsdorf or anyone else who might be interested in keeping the team in Phoenix. As the team's largest unsecured creditor to the tune of more than $100 million - unsecured creditors only get proceeds from the sale after secured creditors are looked after – Moyes knew his best chance of getting remuneration was with a bankruptcy-induced sale proposal from Balsillie.

Balsillie's bid of $212.5 million is what is known as a ''stalking horse bid.'' All that effectively means is that Balsillie's bid officially kicks off an official auction process. If anyone chooses to outbid Balsillie, they must do so by at least $5 million. The bankruptcy court is obliged to accept the highest offer that provides the best financial relief to the secured creditors, which ironically includes the NHL as the second largest ($35 million). It is unfathomable to think anyone would make the $217.5 million offer to keep the team in Phoenix.
But where this starts to get confusing is the conditional aspect of the offer. Balsillie is only prepared to pay $212.5 million as long as the franchise is moved to southern Ontario.

And that is not something, it would appear, that Moyes or Balsillie can arbitrarily achieve on their own.

The question then becomes, can a bankruptcy court in Arizona mandate the NHL to relocate or transfer a franchise in order to satisfy the needs of the Coyotes' secured creditors?
Click to expand...

That's only half the article, but this is a pretty good summary of it.

Such an interesting story. When ol' Jimmy boy tried to relocate the Predators to Hamilton, he didn't have that much of a leg to stand on. They were struggling Nashville, and all it was was an offer to buy it and move it greener pastures.

This time, we're dealing with a broke Phoenix franchise in desperate need to satisfy creditors with a sale deal. In these times, you're not going to get a better offer than the 200 odd mil Balsille's offering. And this time, the courts deal with the sale somewhat, as far as I can understand.

Look forward to seeing this one pan out.
 
Oh, if it happened, which somehow I just can't see how it will, it'd be such a mess realigning divisions.

Think about this, off the top, you'd have to move the Bruins out of the Northeast. Then you'd have to shuffle the East around to send one of their teams to the West somehow. It'd completely mess up the current system. They might have to resort to a new format just to clean it up a bit.

But yeah, I just can't envisage Balsille buying and relocating a team for a while, if ever, even if this is his best chance so far. Third time lucky? Nah, just can't see this going through. Would love to see it [www.makeitseven.ca], but its not gonna happen.
 

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Just reading more about this in the Caps/Pens intermission, a couple more interesting things:

-Crucially, as the Coyotes have filed for bankruptcy, the courts have more power over the sale of the Yotes than the Board of Governers. The priority is the satisfaction of creditors as opposed to solving the issue of a sporting team's prosperity.

-Therefore, money talks. Very clearly if the Board of Governers had all the say in this, this deal in all likelihood would be scoffed at, but because the courts hold significant power in the legal process now bakncruptcy has been filed, they may have to resile on their preferences if they want to sort out the mess. The fact is Phoenix is broke, and they need a buyer. Balsille might be all they've got - succumbing to his clause might be elementary.

-And according to bankcruptcy law, if Balsille's it, and the court on behalf of the creditors accepts the deal, if he's ready to dance and has a rink he can use, the Yotes could have played their final game at Glendale ALREADY. It could all happen that quick. Long story short, hypothetically, if Bettman agrees to the merit of Balsille's deal, then the Coyotes franchise plays in Southern Ontario for 2009-10.

Amazing stuff.
 
Thanks for the summary. I actually sort of understand what's going on with this now.

If Balsille does get his way, does this mean he "inherits" Gretsky's stake in the club as well or is he just buying out Moyes's?
 
ed don said:
Thanks for the summary. I actually sort of understand what's going on with this now.

If Balsille does get his way, does this mean he "inherits" Gretsky's stake in the club as well or is he just buying out Moyes's?
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Good point. Dunno.

On one hand, this is Moyes' mess, but then the whole organisation has been filed bankrupt under Ch. 11 so perhaps when/if JB buys the franchise, he becomes the sole owner. Really dunno.

Leafs Lunch has become a worthwhile download, Dreger and Watters disecting an issue rather close to home. Dreger makes an interesting point in that, in theory, the judge should award the franchise to the highest bidder, ie. Balsillie, the BoG should vote Balsille in because it immediately raises revenues across the league, but is unsure whether they will vote in favour of the relocation.

Even though the process to which Balsille has done it is shocking to say the least, I think most would vote for the relocation because a Southern Ontario franchise would increase revenues again (Sabres, Leafs and Sens apart maybe).

On the issue then of struggling team owners following suit and choosing the relocate to already-served territories because Balsille got his way here, they still need to go through the BoG, so its not like this will start a domino effect.

Personally I think it should happen, that all three stages (bankruptcy hearing, then both BoG votes, acceptance of ownership then relocation), but I reckon he'll stumble at one of them.

What a slap in the face this is for Bettman and the NHL.
 
Yeah this really is a complete mess.

I think Balsille's bid would make him sole owner. It's the only way it would work. Gretsky would probably lose his stake and even perhaps his job. It seems to be the general view that Gretsky isn't the coach we all thought he'd be, and being an absolute legend doesn't necessarily make you one. With the talent and draft picks Phoenix have had, his time is probably well and truly up.

You can't move Boston out of the Northeast, really. The rivalry with the Habs and Leafs is awesome. Especially now that they're making playoffs again. You could just about get away with zoning a Hamilton team in the west. Maybe.

Oh, and off the top of my head. What happens to Glendale? 180 mill down the drain there.
 
Nah, the Suns play at America West Arena, which is in central Phoenix. The Yotes used to play there.

From what I've read on other forums, a lot of the hockey fans (who tend to be more affluent) used to have problems in that area of the city so the new owners in the early 2000s committed to build a purpose-built hockey stadium slightly out of town.

Without a hockey team there isn't much of a use for the place at all.
 
The Yotes are currently the only tenants of the place, and concerts and the like all go to the America West so, yeah, total waste of cash there.

The divisional realignment if Balsille gets his way would just be torrid. Let's wait till he gets his franchise first.

This will drag out. The NHL has to try and argue the hearing shouldn't even be happening, then we gotta have the numerous sittings to decide the franchise's future if the judge decides the Ch. 11 filing was indeed just.
 
Oh, boy. Now the Thrashers are in trouble.

http://sports.yahoo.com/nhl/rumors/...oks-to-move-Thrashers-to-Canad?urn=nhl,162349


Vancouver group looks to move Thrashers to Canada

The Coyotes may soon be out of Phoenix and there is a chance the Thrashers could be out of Atlanta according to a report on TNS.ca.
According to The Hamilton Spectator, city mayor Fred Eisenberger will meet with a Vancouver-based group on Monday to discuss a proposed lease for Copps Coliseum, which would become the home of the Atlanta Thrashers as soon as 2010.
Eisenberger would not disclose any details of the second group, but a source confirmed to The Spectator that Vancouver developer Tom Gaglardi is leading the charge.
''By next Tuesday we will have a clearer picture of where we are'' Eisenberger told The Spectator. ''We're in the middle of discussions with Mr. Balsillie and his group and I will be meeting with the second group. We need to understand their intentions. It's fair to say I will be talking to that second group," Eisenberger said.
Source: TSN.ca
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It's a shame, but seeing the near-empty crowds they play to it's maybe not that surprising that rumours like this are popping up.
 

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Bettman alledged to prefer moving the Dogs back to the Peg as opposed to Southern Ontario. Bring back the Jets?

Who knows where this franchise will end up? Certainly looks less likely that it will be Phoenix.
 
And it so this interesting and rather fascinating chapter in the NHL culminates. We think.

The judge has ruled against Balsille, and that's that as far as the Hamilton idea is concerned. The approach was illegal (by NHL Laws), and there wasn't enough time to sort everything out, so Balisille's offer is rejected.

However.

From what I can gather, if no-one jumps up and buys it now, and who would want to really, there'll be an auction down the track and whoever wins that will be allowed to do whatever, as by then the interest for keeping the Coyotes in Az will have hit zero.

Can't see why Jim can't pop up again then.

But apart from that option, Balisille wasn't third time lucky, and once again Hamilton is the bridesmaid.
 
Oh gosh, this is still going.

Seems the creditors have swayed to the lesser NHL bid, as opposed to Balsille's, as they can see the mess accepting the higher bid would create, even if they do get a bit more out of it.

The judge clearly loves JB's bid more, but he's only gotta feel the favouritism of the creditors to the NHL bid, and bang, the league will own the Yotes before you know it.

Can you say Expos? This is such a farce.
 
Listen, I understand, to an extent, the NHL's reasoning for wanting to keep the team in Phoenix. I also understand, to an extent, the NHL's desire to stretch the league beyond its traditional markets. In some cases, this has worked. But, it angers me that there are so many teams in these markets. There NEED to be a teams in Quebec City and Winnipeg.

I was in QC in November last year and went to see the Quebec Remparts of the QMJHL in a nearly sold out Colisee Pepsi. 12,000 people watching 16-20 year olds, think about an NHL team there, in a modern arena. You can try to keep a team in Phoenix if its viable, but the team is bankrupt for a reason, take the team somewhere it will be appreciated.
 
The whole thing is absurd, and mostly on the NHL's part.

Bettman wants the team to remain in Phoenix for one reason - if it moves, it will be seen has his "southern expansion experiment" as failing, which, let's be honest, short of Stanley Cups in Tampa and Carolina, it is. One just needs to look at attendance, and the financial situations of most clubs in the south to determine that.

When one looks at things logically, the team should be awarded to Balsillie. He's put up the larger sum of money (in an auction, no less), and he's willing to move a team to a known hockey market. The NHL moved the team from Winnipeg to Phoenix, and it just hasn't worked out. It will continue to lose money in Arizona, so why keep it there?

And who's to say Bettman won't move the team in 3-4 years to Kansas City, or Vegas? Or find someone who will?

It's blatantly obvious that Bettman and the rest of the NHL owners pretty much have it in for Balsillie, but the facts remain that he has the money to bankroll a successful 7th team in Canada, and that he's actually passionate about owning a team. To say he'd invest as much into as possible to ensure it succeeds would be an understatement.

My gut feeling now is that the NHL gets up, even though it looked the other way a mere few days ago. I think the Glendale backing will help a lot. One has to wonder how that works, however. Surely Balsillie has put up more than enough money to cover the creditors, but yet they take the NHL's side. Doesn't make much sense.
 
Funny thing here, and perhaps the sad thing also, is that if Balsille became an owner, he'd probably be the best owner in the league. But egos will prevent that from happening, and the good of the league will be sacrificed as a result.

Although, his original advance was a little unethical. But Moyes is the real clown here, not JB.

Really hope Judge Baum sticks it up Bettman and his mates and awards the Dogs to Balsille, really do. He won't, but boy it'd be nice.
 
It's funny that the parallels are not more obvious here. Phoenix is obviously West Sydney/Gold Coast while Hamilton is Tasmania. Even as a fan in a non-traditional market, I'm rooting for Hamilton. Our fans have come out and responded to the sport while those in Arizona have not. Some expansion efforts work and some don't. Time to move on.
 
The difference here is that we haven't gone to the Gold Coast or Western Sydney, whereas we've been to Phoenix, and we know it doesn't work.

The AFL will cry that GC and WS will work, have faith. Bettman can't tell us hockey fans with a straight face that the Dogs will work medium and long term. They have to move now.

And franchising is merely that, relocation ain't as big a deal in the States like it is here. To move a team here is simply massive.

But I like your Hamilton parallel, that city would be great if it had its own NHL team, just like Tassie in the AFL.
 
Hamilton ticks all the boxes. The city is ready, there's an arena ready for the short-term and ready to be upgraded, they'll probably sell out every game of the inaugural season.

The only two reasons for the NHL wanting to remain in Phoenix is a) Bettman's love of the south, and probably not wanting to be proved a moron and b) Toronto and Buffalo bitching and moaning about it.

But it makes sense. The southern expansion is a joke. I mean, look at it, what would be the smarter business decision, teams in a warmer climate where hockey isn't tremendously popular, like Florida, Atlanta, Nashville. Or teams up north that have hockey history, like Hamilton, Quebec City, Winnipeg, Hartford, Seattle, Portland, even a second Toronto team. Winnipeg and Quebec moved when the Canadian dollar was so down, and there was no revenue sharing. That's not the case anymore.

It's obviously the latter. The mistake was that the NHL hit its peak of popularity before the first lockout, hired an NBA guy as its Commissioner, and suddenly decided due to its popularity that it needed to be in every corner of the USA.

And obviously that didn't work. It's hard to attract new fans - especially younger fans - in climates where it's easier to just go out and throw a football or shoot some hoops.
 
Crosby87 said:
But it makes sense. The southern expansion is a joke. I mean, look at it, what would be the smarter business decision, teams in a warmer climate where hockey isn't tremendously popular, like Florida, Atlanta, Nashville. Or teams up north that have hockey history, like Hamilton, Quebec City, Winnipeg, Hartford, Seattle, Portland, even a second Toronto team. Winnipeg and Quebec moved when the Canadian dollar was so down, and there was no revenue sharing. That's not the case anymore.
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Thank you.

Also, if I remember correctly, about 6 months ago the NHL was exploring putting a 2nd team in/near Toronto since it was the league's largest market. Doesn't a Hamilton team provide that?

To think how successful the NHL could be if it only played to its strengths and its largest markets, its criminal that there are teams in certain places and not others.
 
Bettman's main priority is to not look a real dick by going back on his word and admitting defeat in the south. He probably knows that the south's not working, but he can't come out and admit it, let alone go about making changes, that's shocking PR.

Although, the dumbass that he is, he basically did admit it by saying he'd rather look at Winnipeg than Hamilton. Argh, I know you want to promote hockey in the 'south' Gary, but Winnipeg is in 'south Manitoba', whoops...

Just hurry up and move the Dogs to Hamilton, don't care how, just do it, so we can all move on more importantly.
 

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Phoenix Bankruptcy/Jim Balsille

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