NHL lawyers headed to Phoenix for bankruptcy court showdown with Coyotes

NHL plans court showdown over Coyotes’ bankruptcy

PHOENIX — The National Hockey League is planning a showdown in court over the Phoenix Coyotes’ filing for Chapter 11 bankruptcy and the proposed sale of the team to Blackberry boss Jim Balsillie.

League spokesman Frank Brown said attorneys for the NHL would appear in federal bankruptcy court in Phoenix on Thursday. He would not say what action the league would take, but commissioner Gary Bettman said Wednesday that whether Coyotes owner Jerry Moyes had the authority to file for bankruptcy “is something we’re going to look into.”

Moyes’ attorney, Thomas Salerno, said any challenge by the NHL would have no merit.

“They are mistaken,” Salerno told The Associated Press.

Balsillie, co-CEO of Blackberry maker Research In Motion, said his $212.5 million offer is contingent on moving the team to southern Ontario.

The NHL says it removed Moyes from all positions of authority with the team after the league was caught by surprise by the bankruptcy filing on Tuesday.

Bettman wants to keep the team in Arizona.

“This is more about the tactic and I think a challenge to league rules than it is about economic condition of the club, which we believe can with new ownership and with the accommodations the city of Glendale is prepared to make, we think can succeed,” Bettman said.

The team plays at Jobing.com Arena, a state-of-the-art facility that opened in December 2003 in the west Phoenix suburb of Glendale.

Glendale city manager Ed Beasley told the AP that an offer to buy the team and keep it in Arizona will be made soon. Beasley said a group that includes Jerry Reinsdorf, owner of Chicago White Sox and Bulls, is working with the NHL on a proposal.

“I will say we are very confident that an offer will be made,” Beasley said.

Salerno said Moyes would welcome another bid, but the top offer would get the team.

“Our job is to maximize the value of the asset,” Salerno said. “We will sell this team to the highest and best bid.”

Moyes has lost more than $200 million in equity and more than $100 million in debt with the Coyotes, Salerno said, although some of debt will be paid as part of the bankruptcy settlement. Moyes is owner of Phoenix-based Swift Transportation, a trucking company that has suffered in the bad economy.

This is Balsillie’s third attempt to buy a team and move it to Canada. Previous efforts in Pittsburgh and Nashville fell apart over his insistence that the team be moved.

Balsillie established a Web site, www.makeitseven.ca, to solicit support for the Coyotes move from Canadian hockey fans.

“We want those Canadian voices who want a seventh NHL team in Canada to be heard throughout the North American NHL market,” Balsillie said in a news release.

The Coyotes have struggled, on the ice and especially at the bank, since the franchise moved from Winnipeg in 1996. The team never has made it past the first round of the playoffs since coming to Arizona and has not advanced to the postseason since 2002.

Meanwhile, crowds have dwindled and debts have mounted.

The franchise nearly moved to Portland, Ore., before hockey star Wayne Gretzky stepped in as managing partner in 2001 when developer Steve Ellman and Moyes bought the team for $90 million. Gretzky has coached the team for four seasons, failing to make the playoffs each year. He owns 1.5 percent of the team, according to bankruptcy documents. Gretzky has not been available for comment.

A successful bankruptcy filing could allow the Coyotes to avoid the $750 million penalty for breaking its 30-year lease with Glendale. But Beasley said that when the lease was forged with Moyes and Ellman it was worded with just such a possibility in mind.

“We’re comfortable that we have put in the safeguards to get a very strong position out there to keep the team in the city of Glendale,” Beasley said.

The bankruptcy filing lists the franchise’s 40 top unsecured creditors. Moyes topped the list, claiming $103.8 million. BWD Group LLC, of Jericho, N.Y., an insurance and risk management company, is owed $1.3 million.

The city of Glendale is owed just under $900,000 and the NHL $271,000. Bingham McCutchen LLP, a Boston-based legal firm, is owed $423,000.

Bettman said he isn’t sure the league’s owners would permit a move of the Coyotes to the Hamilton, Ontario, area.

“I don’t know whether or not he could get approved,” he said Wednesday during a discussion of commissioners from the four major U.S. pro sports leagues sponsored by The Wall Street Journal. “That’s, as I said, something I don’t get a vote on. If in fact it becomes an issue for board consideration, the board of governors of the league will make that decision.”

One powerful opponent would be the Toronto Maple Leafs, who have seen any proposed move as interfering with their geographical base.

“We generally try to avoid relocating franchises unless you absolutely have to,” Bettman said. “We think when a franchise is in trouble, you try and fix the problems. That’s what we did in Pittsburgh and Ottawa and Buffalo prior to our work stoppage. That’s what we did when the perception was that five out of the six Canadian franchises around the turn of the century were in trouble. We fixed the problems. We don’t run out on cities.”

Moyes’ attorney, Salerno, though, challenged the NHL’s authority to block the franchise’s move.

“Restrictions on movement violate antitrust law,” he said.

AP sports writer Ronald Blum in New York contributed to this report.