Et Tu, Wayne: More On Chapter 11 And The Strange Case of the Phoenix Coyotes

Things continue to get interesting in the bankruptcy controversy of the Phoenix Coyotes.

Before I get further into that, let's further address an issue that arose on Saturday when I noted there were reports that the Atlanta Thrashers were being sold to Canadian interests who would move the team to that same Southern Ontario region that the Phoenix Coyotes are hoping to relocate to. But representatives for the Thrashers announced over the weekend that the team was not for sale and that it would not be relocated.

So that aside, what about the Phoenix Coyotes?

The really interesting news came yesterday when the judge in the bankruptcy court ordered the NHL to produce all documents relating to the possible sale of the franchise to Chicago White Sox owner Jerry Reinsdorf (or any other parties who have been in discussions about buying the franchise). This was requested by current (?) Coyotes owner Jerry Moyes. And the judge rightfully granted the motion.

It's one thing for the NHL to state that Jim Balsillie's bid to purchase the team in bankruptcy should be denied because they've got another lined up. But at some point in the proceedings, the NHL has to demonstrate that a valid bid was actually made because the Court's concern is setting whole the parties, particularly the creditors. And if Balsillie's bid will do more to set the whole the creditors than Jerry Reinsdorf's bid, then the judge is going to go with Balsillie. NHL objections be damned.

But the NHL has petitioned the Court to stay that order until after the Court has made a ruling as to whether Jerry Moyes actually has enough control of the club to put it into bankruptcy. The NHL is stating that Jerry Moyes gave all control of the franchise to the NHL in return for financing that would keep the club operating (it's somewhat ironic that the NHL is now making this argument considering that they spent most of this season arguing that the Coyotes were in fine financial shape and that the NHL was exercising no control over the team). But there are also reports that part of an agreement between Moyes and some of the minority owners (including one Wayne Gretzky) overrides any agreement between Moyes and the NHL. (I reiterate what I stated last week: I think this argument is a loser for the NHL).

And the NHL is further arguing that exposing the details of the Reinsdorf bid would actually harm the sale and the value of the club. Once again, I think that's a losing argument. If there's a valid bid that sets things right, then I don't really think a judge will give a damn if a lesser bid is harmed -- especially if that bid was never going to come close to eclipsing the larger bid.

The Toronto Globe and Mail took a more in-depth look into the matter, and it's got a bunch of legal experts saying that the NHL will win because they don't think a judge will dare to go against internal NHL rulings regarding relocation. Most of the experts think the Oakland Raiders matter was just a hiccup, but I still disagree with that. The guys they talked to seem to know the workings of the leagues, but none of them discussed the antitrust aspects, and I firmly believe that that Raiders decision is firmly on point when it comes to the Coyotes -- and if that decision is followed, then the NHL loses and the Coyotes are in Hamilton come this time next season.

There was another expert who made a point, based in bankruptcy law, that the bankruptcy courts can void legal and legitimate contracts to protect creditors. And the franchise agreement between the NHL and the franchises are contracts that can be voided to protect the creditors. Could this harm the league (and all leagues) should the court void that contract? Yes, it could. But damn it, this is the fault of the NHL and Gary Bettman who have let this situation get to where it is now.

The interesting thing, to me, is some stuff I read earlier which is stating the trigger to this whole thing is one Wayne Gretzky. Gretzky's a minority owner of the Coyotes, and supposedly he's the one who forced Moyes to file for bankruptcy and accept the deal with Jim Balsille. It seems that, despite the NHL supposedly assuming control of the franchise, neither Gretzky (in his role as head coach), the team ticket sellers, nor nearly 400 other team employees have been paid recently, so it's alleged that Gretzky is forcing this deal and might be the man responsible for the demise of Gary Bettman.

And finally, last month I wrote about the situation with the Dallas Stars and Tom Hicks, who put the team into default to its debtors by refusing to make debt payments. Well there are people out there who think that Tom Hicks is carefully paying attention to the Coyotes situation because the Stars could be next to take the Chapter 11 route.

There's a long time to go before this matter is settled. But right now, I just think the NHL is a loser on this. Especially if this stays in bankruptcy court, and especially if the antitrust argument begins to come into play. I love hockey, and I really want the NHL in Houston some day, but the NHL deserves what it's getting. It's a poorly run league with a poor TV deal and almost no national coverage in the country where most of its teams are located while the country that longs for hockey is almost shut out.