Coyotes file for bankruptcy

[Andy_S]

http://www.azcentral.com/business/ar...yotes0506.html

Coyotes file for bankruptcy

The Phoenix Coyotes have filed for Chapter 11 reorganization to implement a court-approved sale of the team under the federal bankruptcy code, the team announced Tuesday.

The filing included a proposed sale of the franchise to PSE Sports & Entertainment, LP, a Delaware limited partnership ("PSE"), which would move the franchise to southern Ontario, Canada.

"Extensive efforts have been undertaken to sell the team, or attract additional investors, who would keep the team in Glendale," said Coyotes' Chief Executive Officer and Managing Member Jerry Moyes,

Creating a process under the supervision of a judge assures that anyone wishing to purchase the team will have the opportunity to bid, Moyes added.

"Likewise, the City of Glendale, which has been very cooperative with efforts to keep the team in Glendale, will be able to provide potential buyers assurances of the City's willingness to offer incentives to keep the team as a tenant in the Jobing.com arena, the lease for which is subject to rejection in bankruptcy," Moyes said. "The process assures that the identities of the new owner and the team's location will be known by June 30, 2009, thus enabling the NHL to include the team in its 2009-10 schedule."

[Andy_S]

Glad I don't live in Glendale. What do you do with an empty hockey arena in the middle of the desert?

[AmareIsGod]

What do you do with an empty US Airways Center for the majority of the year? You host other events, something that has taken place at Jobing.com arena since it's inception. There are concerts amongst other things. Though likely, it isn't certain that the Coyotes will relocate. They will definitely be sold to a new ownership and hopefully the city of Glendale will be able to work something out with the new group of owners. If you haven't been to the Jobing.com arena area, you probably aren't aware of a little something called Westgate that is and has been pretty much packed any weekend I've been there. There's also University of Phoenix Stadium. You should think about checking out Glendale sometime Andy. I'm sure you'd find something you'd like there.

[Andy_S]

On most nights, USAC sits empty. It makes the vast majority of it's money off the 16% of the year (roughly) it is booked for either Suns or Mercury games, followed by supplementary income from concerts, shows, and so on. The concerts and shows do not bring in nearly the volume of the Suns and Mercury, though. Bad comparison. Without the Suns and Mercury (and by that, I really mean without the Suns 41 game regular season schedule), USAC would be a complete bust.

Glendale paid a lot of money for that arena and now it's most likely going to lose the lion's share of its income. Check out their upcoming schedule -- 3 events in May, 3 in June, 7 in July, 5 in August, 2 in September...then nothing, since they need to work around the Coyotes' schedule. So, an average of 6 events a month in the off-season. I would guess it is easily double that when the Coyotes are playing.

I've been up around Westgate. It's nice. If I lived in Glendale, I'd go there just to hang out. But it's not convenient for most of the valley and it doesn't offer much beyond the two arenas to get people to drive out there -- there are a dozen areas like Westgate around the city. Westgate's going to be hurt by this too, because people who WOULD have been driving up there for a game and then hanging out will now be staying closer to home. Of course, the eight Cardinals home games will continue to be a draw, but you have to be kidding if you don't think this is a huge blow to Glendale if they move.

What is really tragic is that the Arizona Sting, our beloved lacrosse team, already folded back in 2007. Maybe the place is cursed?

[Andy_S]

This is Bickley, but still...some hope?

http://www.azcentral.com/members/Blog/DanBickley/52563

Whispers on the wind: Jerry Reinsdorf may be interested in purchasing or investing in the Coyotes.

This is interesting.

Reinsdorf has a home in Paradise Valley. He has connections with the city of Glendale, having brokered a deal to move his baseball team out of Tucson and into the new Camelback Ranch facility. One of his attorneys, John Kaites, is an Arizona lobbyist who has done business with Glendale city manager Ed Beasley.

Reinsdorf is also a super shrewd businessman, which raises a significant question: Why would he be interested in a team that many business leaders in town wouldn't buy for $1?

Answer: Reinsdorf would have to get serious concessions from the city to make it work. And then he could attempt to become the first owner in sports history to win championships in the NHL, the NBA and Major League Baseball.

Reinsdorf has won six championship with the Bulls, courtesy of Michael Jordan, and also won a World Series title with the White Sox. The late Bill Davidson won titles in the NBA (Pistons), the NHL (Lightning) and the WNBA (Shock).

As of this posting, Reinsdorf's camp had not returned a phone call. Meanwhile, the Glendale city council scheduled an executive session this afternoon regarding the Coyotes' lease, and don't be surprised if there's a Gary Bettman sighting in town.

Stay tuned.

[Superbone]

Glad I don't live in Glendale. What do you do with an empty hockey arena in the middle of the desert?

My brother would be devastated if they move the team. He's a huge Coyotes fan. Season tickets and all that. Probably why he lives in Avondale/Glendale. Let's hope they can keep them local.

[Indy]

I'm sure they can if Glendale wants to pony up a ton of tax payer's money.

[Andy_S]

The thing is, they aren't making any money here. While Coyote fans are pretty passionate about their team, there also aren't enough of them to keep the team profitable. Even with a huge infusion of money to solve their current crisis, where would the fans come from? I think the NHL would rather see the team in Canada

[Superbone]

Here's a link my brother sent me that explains the situation:

http://www.tsn.ca/columnists/bob_mckenzie/?id=277696

Situation with Coyotes will be Messy
by Bob McKenzie

Do you know why I went to journalism school?

Because I was too dumb to become a lawyer or an accountant, yet here I am having to make sense of legal and financial issues that are way beyond my pay grade.

So let's see if we can navigate our way through this maze that is the Phoenix Coyotes, Chapter 11 bankruptcy and Jim Balsillie's $212.5 million (USD) offer to purchase (conditional on the franchise being relocated to southern Ontario).

The first thing you need to know is that NHL commissioner Gary Bettman was in Phoenix today, ostensibly to put the finishing touches on an intent to purchase agreement from Chicago White Sox owner Jerry Reinsdorf, whose intention was to apparently keep the financially-troubled Coyotes in their current home of Glendale, which is also home to Reinsdorf's spring-training baseball facility (a mile away from the Coyotes' Jobing.com Arena). That offer was expected to materialize within the next few days.

We don't know a lot about the Reinsdorf deal but suffice to say it likely wasn't in the $212.5 million range.

In any case, today's events clearly caught everyone, from the Coyotes' staff to the NHL head office, completely off guard.

Coyotes' owner Jerry Moyes, who is in deep debt as a result of his ownership of the franchise, circumvented whatever offer to purchase might have been coming from Reinsdorf by filing for Chapter 11 (reorganization) bankruptcy with an Arizona court. This was obviously done because Moyes was aware that Balsillie was prepared to make an immediate offer to purchase the moment the bankruptcy was filed.

It would seem obvious that Moyes knew that Balsillie's offer of $212.5 million was far more than anything that was coming from Reinsdorf or anyone else who might be interested in keeping the team in Phoenix. As the team's largest unsecured creditor to the tune of more than $100 million - unsecured creditors only get proceeds from the sale after secured creditors are looked after – Moyes knew his best chance of getting remuneration was with a bankruptcy-induced sale proposal from Balsillie.

Balsillie's bid of $212.5 million is what is known as a ''stalking horse bid.'' All that effectively means is that Balsillie's bid officially kicks off an official auction process. If anyone chooses to outbid Balsillie, they must do so by at least $5 million. The bankruptcy court is obliged to accept the highest offer that provides the best financial relief to the secured creditors, which ironically includes the NHL as the second largest ($35 million). It is unfathomable to think anyone would make the $217.5 million offer to keep the team in Phoenix.

But where this starts to get confusing is the conditional aspect of the offer. Balsillie is only prepared to pay $212.5 million as long as the franchise is moved to southern Ontario.

And that is not something, it would appear, that Moyes or Balsillie can arbitrarily achieve on their own.

The question then becomes, can a bankruptcy court in Arizona mandate the NHL to relocate or transfer a franchise in order to satisfy the needs of the Coyotes' secured creditors?

It's an interesting legal question and without putting words in anyone's mouth – no one is commenting anyway – the safe bet is that Balsillie's group believes that's a possibility while the NHL doesn't believe a bankruptcy court can tell it how to conduct its affairs.

In fact, based on the press release issued by the NHL in the wake of the bankruptcy filing, it's clear the league questions even more than that.

The wording of the NHL press release suggests the league believes Moyes was perhaps not within his rights to file the bankruptcy claim and that he, by virtue of the NHL monies forwarded to the team since October, may not have been in control of the franchise. In any case, the league said it has now ''removed'' Moyes as an official of the club.

Clearly, the league is at odds with Moyes and vice versa.

We don't need to provide a history of Balsillie's relationship with the NHL, but twice he has attempted to purchase, and relocate, NHL franchises and twice he has failed to accomplish that. Balsillie has demonstrated he's committed to putting a second team in southern Ontario.

For now, the next big development would appear to be coming out of the bankruptcy court, which convenes on Thursday. Although it's quite possible the NHL will mount a legal challenge even before then to challenge Moyes' authority to file for Chapter 11 bankruptcy

But let's assume the case does get to bankruptcy court. If the bankruptcy court deems that it cannot enforce the ''relocation'' aspect of the Balsillie offer, then it would be obliged to take the best ''unconditional'' offer. In other words, if someone else – Reinsdorf? – came in and made a lesser financial offer than Balsillie but attached no conditions on location or financing, that offer would ultimately have to be accepted.

But if the bankruptcy court deems it can enforce the ''relocation'' or ''transfer'' of the franchise from Phoenix to southern Ontario, then the sale to Balsillie can be accepted, although you would have to believe the NHL would legally challenge the validity of a court claim of that nature.

Whether the Coyotes' reportedly ''iron-clad'' lease with the city of Glendale is a factor is another issue entirely.

The potential for this to be a legal quagmire appears to be extremely high.

In the meantime, Balsillie will mount a massive and no doubt highly successful public relations campaign to add a seventh Canadian franchise. In fact, as soon as the story broke, Balsillie already had a website – www.makeitseven.ca – up and running. Balsillie will drape himself in the flag and with rampant backing from the majority of Canadian hockey fans, and probably the unofficial support of the NHL Players' Association, beat the drum for the NHL to endorse the move of a financially-troubled sunbelt franchise to a more revenue-friendly venue in the home of hockey.

Where precisely in southern Ontario Balsillie would put the Coyotes remains to be seen. In the past, it has always been Hamilton, but Balsillie's bid this time carefully omitted a specific location and only identified ''southern Ontario'' and an ''unserved'' market. How all that plays out in terms of the Toronto Maple Leafs and Buffalo Sabres remains to be seen.

The NHL, meanwhile, is likely to battle Balsillie on the issue of ''control.'' While the league will get destroyed in the court of public opinion in Canada, it is quite likely to exert what it perceives to be its legal rights on how it does business. That is, the league believes it ultimately controls who owns NHL franchises and where they are located.

To do that, NHL commissioner Gary Bettman will ultimately require the backing of the board of governors, but he has had it in the past. It remains to be seen whether he has it this time, but this has all the makings of a battle royale.

The battle lines are clearly drawn. While Bettman and the NHL will take a beating in that court of public opinion in Canada, one suspects this situation will ultimately be decided in a legal court.

[Andy_S]

This is getting ugly. But I'm glad to see that I was (apparently) wrong about the league.

http://www.azcentral.com/business/ar...yotes0509.html