AHL Franchise Shake-Up

The word out of Winnipeg is that the group that owns the Manitoba Moose has purchased the NHL's Atlanta Thrashers and will be moving the team to Winnipeg.

The Thrashers have long been one of the NHL's failing franchises, and they've been propped up by an ownership group that, along with owning the team, also owned the arena and were willing to keep them so as to keep the building occupied. But the losses have just been too much, and nobody in Georgia has expressed any interest in buying the team, thus the Winnipeg group has swept in and purchased the team.

The deal isn't official -- there's no announcement from the NHL yet -- but Gary Bettman will probably be banned from Canada should he attempt to stop this deal. It's also not sure when the team would actually move to Winnipeg, whether to start the upcoming 2011/2012 season or if they would hold off for the 2012/2013 season.

This does, of course, mean that the AHL could be down a franchise at some point, kind of like how the Edmonton Oilers held onto the ownership rights of their Edmonton AHL franchise but refused to actually put a team on the ice until placing their franchise in Oklahoma City this past season. So the Manitoba group could just not field a team, they could move the Moose to another city since they will still own the rights to the franchise, or they could sell the rights to another group.

The odds are the Moose will be relocating, it's just a question of when or where. And once that happens, we'll probably see more division and conference shake-ups.

UPDATE: Okay, according to True North, the group that is supposedly buying the Thrashers, this is not a done deal.

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.

AND SOME MORE NON-HOCKEY NHL NEWS:

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.

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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.

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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.

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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.

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.

More On The Strange Case of the Phoenix Coyotes

I find this whole thing with the Phoenix Coyotes to be fascinating. So if you don't mind, I'll keep blogging on it awhile.

First, to address one of the comments from my earlier post: supposedly, the only out in the lease agreement between the Coyotes and Glendale, AZ regarding the use of Jobing.com Arena is bankruptcy. And since the city is seen as one of the creditors because of the money that the team owes on the lease, the Coyotes argument will be that the sale and relocation will allow the team to pay off what it owes on the lease. The city and the NHL are expected to argue that while past debts will be paid off, future income from the team that will be lost by the move will not covered. I don't think a bankruptcy judge cares that much about lost future income. I could be wrong, and we'll be getting an answer to that over the next several months.

Next, I'd like to address a response to this whole issue by a deputy of NHL commissioner Gary Bettman. Jim Balsillie is threatening to take the league to court and charge it with violations of antitrust law if the NHL attempts to stop the relocation of the team to Hamilton, Ontario.

NHL Deputy Commissioner Bill Daly stated: "If I didn't know any better, I would think I was living in a time warp. It's as if the complaint was drafted 30 years ago. Since that time, case after case after case has established a sports league's right to control the location of its franchises. Maybe they haven't been paying attention."

Now maybe it's just me, but I tend to follow these things rather closely. And as much as I can recall -- and I took multiple classes on antitrust and sports law while I was in law school -- there's been only one major court opinion that is on point to this issue. And the league lost. And it lost badly. That case happens to be known as Los Angeles Memorial Coliseum Commission v. NFL ("Raiders I"), 726 F.2d 1381 (9th Cir)., cert. denied, 469 U.S. 990 (1984). And for those who don't recall the matter by that name, it's the case that found the NFL in violation of the U.S. Antitrust laws because it would not allow Al Davis to move the Oakland Raiders to Los Angeles. And as we all know, the Raiders won the case, moved to L.A., then ended up moving back to Oakland.

I suggest Mr. Daly give that a read before mouthing off.

Now here's the thing. I don't think there are have been anymore cases regarding franchise relocation like this one where a particular owner was attempting to move his franchise and the league wouldn't allow it. The Baltimore Colts moved to Indianapolis in the middle of the night without league approval and the league did nothing. The NFL made no attempt to stop Art Modell and Bud Adams from moving their franchises. Los Angeles Raiders moved back to Oakland. The St. Louis Cardinals moved to Phoenix. The Los Angeles Rams moved to Anaheim and then to St. Louis. And the law suits that have been filed in these matters weren't from the team's owners fighting the NFL. They were from Houston and Cleveland and Los Angeles trying to stop the moves. So whatever decisions came from those moves aren't on point.

Meanwhile, do you know why there is a baseball team in Seattle? Because the Mariners were part of a court settlement brought by various Seattle officials after the Seattle Pilots moved to Milwaukee and became the Brewers after just one year in Seattle. And do you know why Tampa Bay has the Rays? Because in 1992 the San Francisco Giants were sold to interests who were going to move the team to Tampa Bay, but MLB and Bud Selig stepped in, found a local owner, and forced the team to stay in San Francisco. So with the Tampa Bay region threatening to sue, MLB caved and granted the city an expansion franchise.

So the NHL can huff and puff all that it wants, but the law is on the side of Jim Balsillie when it comes to franchise relocation.

Oh, and before I go, another NHL team that is in serious financial trouble is suddenly being rumored as to be heading to Hamilton for next season. The Atlanta Thrashers, whose ownership group has been suing each other from almost the moment they brought the team, may have found a Canadian owner who wants to relocate the team to Hamilton. It's all just rumor and innuendo, of course, but there it is.