The saga continues in Phoenix
- From today's Toronto Star:
Balsillie has a strong case, but NHL has `the tradition of sports,' legal expert reasons
Jun 08, 2009 04:30 AM
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Former NHLer Dave Scatchard is owed $1 million, the only player caught up in the Phoenix Coyotes' bankruptcy mess.
It's a mess that could blow up in the NHL's face in court tomorrow, according to one legal expert who believes Canadian billionaire Jim Balsillie has a strong enough case to win because his offer of $212.5 million (all figures U.S.) for the team ought to carry a lot of weight with Judge Redfield Baum.
"(If) Judge Baum is focused on helping creditors, (it) means Balsillie should win," says Penn State law professor Stephen Ross. "But many judges are reluctant to challenge the tradition of sports, which helps the NHL."
Scatchard is listed as an unsecured creditor, meaning he'd be among the last in line to collect money from the sale of the team. He's in the same category as Coyotes coach and minority owner Wayne Gretzky, who is owed $9.3 million in deferred compensation.
The money due Scatchard is listed as a debt by the team because he was bought out by the Coyotes for $2.1 million in 2007.
Gretzky came under fire from the city of Glendale, which is opposing the relocation of the team in court this week, in court filings over the weekend. According to city documents, Gretzky's salary is one of the reasons the team is losing money.
A consultant who went over the Coyotes' books for the city attributed $15 million to mismanagement by Coyotes owner Jerry Moyes, with Gretzky's compensation the biggest part.
The consultant said Gretzky ought to have his salary slashed from $8 million to $2 million as part of a reorganization that would help turn the team into a financial success, thereby negating the need to relocate.
The NHL went on the offensive in court filings as well, saying four suitors - including Toronto Argonauts owners David Cynamon and Howard Sokolowski - were interested in buying the team. Three of them - White Sox owner Jerry Reinsdorf, minority owner John Breslow and an unnamed Phoenix businessman - said they'd keep the team in Phoenix.
But the NHL went farther, painting a picture of chaos if the Coyotes left town, disrupting schedules, broadcast rights and forcing realignment with a ripple effect on rivalries.
"The fundamental essence of the NHL venture is who the members are and where the teams play," commissioner Gary Bettman said in his declaration to the court. "Both aspects have an integral and direct correlation to the overall business success of the league."
Ross, who specializes in sports antitrust suits at Penn State University, believes the NHL will have trouble with that argument.
"The NHL overstates the need for cooperation among clubs," Ross said in an email exchange." This league is run like the United Nations, not McDonald's. Clubs vote their own interest, not the interests of the whole league."
The NHL believes its method for approving ownership and relocation - through a vote of the board of governors - will withstand a court challenge.
Not so fast, said Ross.
"They have a conflict of interest," Ross said. "Courts need to closely scrutinize sports league decisions where there is a serious risk that the NHL decision is not being made in the best interest of the league but just to protect individual owners."
Balsillie argues league efforts to stop the move to Hamilton are anticompetitive, protecting the Maple Leafs and Buffalo Sabres from healthy competition. Precedent set in the NFL case of Raiders owner Al Davis's successful move from Oakland to Los Angeles helps Balsillie.
"The Raiders' trial lawyer persuaded a jury that the NFL's justifications for refusing to allow the move were bogus and that the only logical explanations were personal malice directed at the Raiders' owner and a desire to protect the L.A. Rams from local competition," Ross said. "Balsillie is basically making the same argument here."
Another leader in the antitrust field, Michael Kelly, said he wouldn't be surprised if Balsillie won given the Raiders' legal precedent. But the former lawyer for Major League Baseball said antitrust laws "have evolved," giving hope for the NHL.
"It would take guts for a bankruptcy court judge to foist a new owner or new territory upon a league," Kelly said.
Whatever the judge decides following tomorrow's airing of legal arguments, this case is far from over.
"The decision is sure to be appealed to the Ninth Circuit Court of Appeals and who knows what the three-judge panel of that court will think about?" Ross said.
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- Cynamon and Sokoloski are not interested in owning the Phoenix
Coyotes. They're interested in owning the Downsview Developers or the
North York Bleachmakers or what have you.
As Stephen Brunt writes in today's Globe and Mail:
"But there is also a far more plausible explanation: Cynamon and
believe that by allowing their names to be placed before the
among those who “have indicated an interest in operating the franchise
they can curry favour with the league and gain the inside track on a
team, whether it’s the Coyotes, another ailing club or an expansion
"If that’s the true story, Bettman is being at the very least
misleading, if not
disingenuous, by suggesting Cynamon and Sokolowski have any real
operating in Phoenix – beyond perhaps swallowing losses for a season
before being granted permission to move to Ontario. ...
"So let’s get this straight: The NHL believes wholeheartedly that
can survive in Glendale and is absolutely opposed to the team being
relocated to Southern Ontario, but is now open to offers for the team
individuals who the commissioner knows have been planning to do
Full column here:
As far as Reinsdorf's bid is concerned, I'll see it when I believe it.
Seems to me Breslow has had ample chance to convert his 3 percent
stake in the team into the whole megillah. And as for "an unnamed
Phoenix businessman," unless it's Bennett (Campbell's Soup) Dorrance,
the Sperling family (University of Phoenix), or Arte (L.A. Angels of
Anaheim) Moreno, I don't want to hear about him. Why do I get the
feeling it'll turn out to be another real estate agent or Pontiac
On 8-Jun-09, at 4:40 AM, Craig quoted:
> The NHL went on the offensive in court filings as well, saying four--
> suitors - including Toronto Argonauts owners David Cynamon and
> Howard Sokolowski - were interested in buying the team. Three of
> them - White Sox owner Jerry Reinsdorf, minority owner John Breslow
> and an unnamed Phoenix businessman - said they'd keep the team in
- On Jun 8, 2009, at 10:09 AM, Lloyd Davis wrote:
> As far as Reinsdorf's bid is concerned, I'll see it when I believe it.I agree with your statement.
> Seems to me Breslow has had ample chance to convert his 3 percentBreslow probably believes he can either (1) get the franchise for a
> stake in the team into the whole megillah.
lot less money during bankruptcy than before bankruptcy, or, failing
that effort, (2) get paid from Balsillie.
> And as for "an unnamed Phoenix businessman," unless it's BennettI thought mystery buyers only existed in the Canadian Football League,
> (Campbell's Soup) Dorrance,
> the Sperling family (University of Phoenix), or Arte (L.A. Angels of
> Anaheim) Moreno, I don't want to hear about him.
United States Football League, the World Hockey Association, etc.
Mystery buyer is more for show by columnists and power by
commissioners than anything real and tangible. At this pint, the
mystery buyer is most likely Keyser Soze.
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- Lloyd Davis wrote:
> Cynamon and Sokoloski are not interested in owning the PhoenixI don't think that is any big surprise. That's how most leagues work in
> Coyotes. They're interested in owning the Downsview Developers or the
> North York Bleachmakers or what have you.
this type of situation, a tactic that Jim Balsillie has never learned.
Maybe if he would have tried to work with the league, instead of
fighting against it constantly, he would have the inside track on a
relocation (or expansion).