And the soap opera that is the Phoenix Coyotes will continue just a little while longer. The bankruptcy court judge -- who had earlier said he would hold a hearing regarding the possible relocation fee that Jim Balsillie would pay to move the club to Hamilton -- issued a statement yesterday that he will not hold a hearing regarding the relocation fee and will instead issue one ruling on all matters that were heard by the court earlier this week.
There are two possible explanations for this: one, the judge has decided that the team can't move without NHL approval, so the relocation fee issue is moot; or, two, the judge did a little research and discovered that relocation (or indemnification) fees are not allowed under U.S. law -- for which Balsillie would owe a big debt of gratitude to one Al Davis. And indeed, looking at past NHL relocations, it has been determined that all indemnification fees paid were voluntary. And also of importance, the last time a NHL team invaded the territory of another NHL team, an indemnification fee was not paid.
The NHL expanded in 1993, and one site of the expansion was a place called Anaheim which was part of the territory of the Los Angeles Kings. The Walt Disney Company paid $50 million for the rights to the expansion franchise, and Michael Eisner, the man who was running Disney, refused to pay an indemnification to Bruce McNall, the owner of the Kings. To make up for this, the NHL gave McNall half of the $50 million expansion fee. And McNall has confirmed that this is what happened.
All of this would play into Balsillie's contention that he is not legally obligated to pay a territorial rights or indemnification fee. And all thanks to the NHL's own ineptitude.
The NHL is now claiming that, if Balsillie's court bid fails, that it will hold an auction to be supervised by the bankruptcy court for the franchise. Only qualified bidders will be allowed, and to be a qualified bidder, the bidder must agree to keeping the team in Phoenix. A $10 million deposit deposit and bids must be submitted to the court by August 10, with the auction on September 10, and the bids must be in $2 million increments.
The NHL has declared that $120 million will cover most of the team's creditors. But if the NHL does not get a bid that good to keep the team in Phoenix, it will hold a second auction for the purpose of relocating the team, and they will allow Balsillie to enter that auction.
The judge has not indicated when he will deliver his ruling, but it is expected to come before June 22, which is the date that Balsillie has indicated is his drop dead date.
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