Houston Aeros 1994-2013: Thank you for all the great memories and two decades of great hockey and entertainment.

Thursday, May 28, 2009

More From Chapter 11: The Strange Case of the Phoenix Coyotes and Some Other NHL Oddities

There was a bankruptcy court hearing in Phoenix yesterday regarding the attempt of Jerry Moyes to put the Phoenix Coyotes into Chapter 11 Bankruptcy while selling the team to Canadian billionaire Jim Balsillie who wants to move the team to Hamilton, Ontario. And in 12 days, we should all have some idea of where the Coyotes will be playing next season.

The judge yesterday ordered all parties to file briefs by June 5, 2009, and he ordered a hearing for June 9, 2009, in which he stated he hopes to offer a ruling on whether putting the Coyotes into bankruptcy allows the team to be relocated without approval, per NHL bylaws, of the owners. The NHL, with the support of the NBA, NFL, and MLB, is arguing that the bankruptcy court doesn't have the power to order a move that contradicts league bylaws. Moyes and Balsillie say that the court can void whatever contracts it wants and ignore whatever internal bylaws it wants in order to set whole the creditors.

According to the Toronto Globe & Mail, the judge expressed reluctance to order the move, and says he's not sure that he has the power to rewrite NHL bylaws. He might be reluctant, but I call bullshit on his argument about NHL bylaws. If bankruptcy courts can void union contract after union contract after union contract when mismanaged corporations go into Chapter 11, then he can ignore NHL bylaws.

The judge stated that if he rules in favor of relocation, the bankruptcy auction for the club will be held on June 22. If he rules that there can be no relocation, then the bankruptcy auction will be held on September 10.

Balsille has stated that if there is no decision regarding relocation by June 29, he will withdraw his bid for the team. And the Globe & Mail is also reporting that the NHL will be spending about $17 million over the next several weeks to keep the team running -- most of that money will be going to one Wayne Gretzky.


The Wall Street Journal yesterday mentioned that one of the teams closely following the Coyotes matter is the Atlanta Thrashers. Without citing any sources, the Journal reported that if the Chapter 11 relocation is allowed, then the same thing would probably be happening with the Thrashers. It also stated that the Nashville Predators are also in the mix for this type of relocation since the team has a clause in its contract that allows it to get out of its lease if the team averages under 14,000 per game in attendance for a season.

The Columbus Blue Jackets, meanwhile, are heading up an effort to sell Nationwide Arena to Franklin County, the county where the Blue Jackets arena is located. The purpose of the sale would be to help the Blue Jackets, who are having financial difficulties that are partly originated from the lease the team has with the arena.

Apparently, the County's assuming of the arena would result in a better lease for the team. As it stands, the Blue Jackets lease the arena and pay for its operations, but arena revenue isn't covering the operating costs. The club states that this forces the team to take money from hockey operations to make up the rest of the operating costs.

The sale of the arena to the county would be funded by, of course, the taxpayers, who would pay increased tax costs on alcohol and tobacco sales. The puck is now in the zone of the state politicians who are debating whether to grant the county the authority to impose the tax, or else giving the county the approval to hold an election on the issue.

Oh, and the Blue Jackets stated that if the lease problems aren't resolved in their favor, they will relocate to another city.

Charles Wang, the owner of the New York Islanders, announced last week that unless the Town of Hempstead, NY approves of an arena project for the Islanders by October 3, then the Islanders will be relocating when the team's lease expires in 2015. The franchise, apparently, makes the Coyotes look like a financial success, having lost between $15-20 million last season alone. And among the suitors mentioned for the Islanders, should relocation result, are all of the usual suspects: Hamilton, Las Vegas, Kansas City, and Houston.

And things are getting interesting up Dallas way where today Tom Hicks, owner of the Dallas Stars and Texas Rangers, announced that he is now selling a majority interest of the Rangers. It was not long ago that Hicks defaulted on loans to the creditors who made the purchase of the Stars and Rangers possible, saying that the default was just a negotiating tactic to get better terms on the loans. At that time, Hicks also stated that he was willing to sell a minority interest in the Stars and Rangers.

Now he's on the record as saying that he's up for selling a majority interest in the Rangers. It appears, for now, that the Stars are safe. But then again, Hicks appears to be having some real financial difficulties, no matter the PR spin, so I wouldn't count out Hicks putting a majority interest in the Stars up for sale soon.


Forecheck said...

If the economy doesn't pick up, NHL contraction looks like a certainty.

I don't see where Franklin county will be able to raise enough money. The economy in Ohio (where I have relatives) is DOA, and the taxes are getting to be as ridiculous as in the Northeast. More taxes on a depressed economy? Sounds like something out of Washington, D.C.

If Balsillie wants to do some good, why not buy GM (which could in the near future be had for not much more than what the Yotes are worth now) and use his bidness skills to turn that mismanaged fiasco around? It would certainly be easier than making the Yotes profitable (not to mention good on the ice).

B2Bomber said...

The time has come that team owners can't hold cities "hostage" on arenas and bailouts. There isn't any money to do so in this economy. The NHL had soon realize this and let the team relocate or let it be dismantled.