Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Richard Rodier answers questions as he leaves U.S. Bankruptcy Court after a hearing on the Phoenix Coyotes hockey team in Phoenix on June 9, 2009. (AARON J. LATHAM)
Richard Rodier answers questions as he leaves U.S. Bankruptcy Court after a hearing on the Phoenix Coyotes hockey team in Phoenix on June 9, 2009. (AARON J. LATHAM)

Balsillie v. Bettman

How it all went wrong Add to ...

Jeff Shumway felt uneasy as he sat down for dinner with Richard Rodier in a New York restaurant.

It was September of 2008, and Shumway, the chief executive officer of the Phoenix Coyotes, was in New York for another meeting with NHL commissioner Gary Bettman to discuss the Coyotes' sorry finances.

Shumway knew Rodier represented Canadian billionaire Jim Balsillie and that they had been trying for years to buy an NHL club and move it to Hamilton, enraging NHL brass. Shumway was no fan of Bettman, but he wasn't impressed by Rodier's approach. During dinner he offered some advice.

More Related to this Story

"I believe my exact words were that they had to learn to play nice in the sandbox," he recalled in a deposition filed in court. "Running around to every team that may or may not be in financial trouble and trying to strike a back-door deal didn't seem to me the way to handle it."

Shumway's words proved prophetic. Over the next year, Rodier and Balsillie kept up their pursuit of the Coyotes in the face of fierce resistance from Bettman. They finally conceded defeat this week after Arizona bankruptcy court judge Redfield T. Baum threw out their bid and essentially handed the Coyotes to the league. Balsillie said he won't appeal and Rodier has backed away, heading off for a holiday in Montreal and declining to comment. Everyone else involved in the saga also declined to comment or was unavailable.

But the details of how Balsillie's deal came together are outlined in hundreds of pages of court filings. They portray a behind-the-scenes struggle filled with mistrust, betrayal and secret deals.

The story begins long before Balsillie offered to buy the Coyotes. It starts in September of 2006 with a feud.

* * *

Jerry Moyes knew nothing about hockey when he invested in Steve Ellman's real estate venture in 2002. Ellman planned to build a $1-billion (all currency U.S.) office, shopping and entertainment complex in Glendale Ariz., a Phoenix suburb. He'd just acquired the Coyotes, along with Wayne Gretzky, and the complex included a new arena for the team, financed by the city.

Moyes grew up in a small town in Utah and he'd been in the trucking business in Arizona since 1966. "I jokingly say I don't know how to spell puck," he said in a court filing.

The partnership didn't last long. Moyes disagreed with Ellman's plans and in September of 2006 they split. Moyes took the team plus a payment from Ellman.

Moyes went to few games, rarely visited the Coyotes' office and put Shumway in charge even though his real job was managing Moyes's investments.

Moyes did weave the Coyotes into his web of companies. The team leased office space from one Moyes entity, flew to games on a plane owned by another Moyes business, and Gretzky made personal appearances on behalf of yet another Moyes outfit. Gretzky technically worked for Moyes, not the Coyotes, even though he was the team's coach. Gretzky's employment arrangement, which included earning up to $8-million annually, was governed by a "deal memo" he signed with Moyes in 2006. Shumway spent years trying to negotiate an employment contract between Gretzky and the Coyotes, but Gretzky never signed it.

Moyes did not want to hang on to the Coyotes. In late 2007, he asked his lawyer, Earl Scudder, to find a buyer. Scudder tried a dozen people. None made an offer.

Shumway suggested hiring Citibank to drum up bids, but Bettman balked. According to Shumway, Bettman said the league was negotiating a new line of credit with Citi and he wanted to use the work with the Coyotes "as a carrot, to try to help to get the credit line closed."





Then there was Rodier. He'd been calling for weeks during the summer of 2008, proposing Moyes sell the Coyotes to Balsillie through bankruptcy and sending the Hamilton Bulldogs of the American Hockey League to Phoenix as compensation.

One potential buyer finally surfaced, Jerry Reinsdorf. He owned baseball's Chicago White Sox and the NBA Bulls and had a house in Phoenix. Glendale had just built a spring training complex for the White Sox and officials asked Reinsdorf to help the Coyotes. Reinsdorf met Shumway in August but said he wasn't interested.

Shumway knew the club couldn't survive. The Coyotes were losing more than $30-million annually and had already tapped the NHL for financial assistance. Moyes cut off funding in October. A month later Bettman extended more league money, but Moyes had to hand over voting control.

On Jan. 23, 2009, Shumway went back to managing Moyes's money. Moyes told Scudder to keep looking for buyers. It wasn't long before Rodier called.

* * *

In many ways Moyes and Balsillie were a perfect match. While Moyes was desperate to unload his NHL team, Balsillie had been trying to buy a club for eight years. He'd looked at the Montreal Canadiens and Ottawa Senators and made bids for the Pittsburgh Penguins and Nashville Predators.

Balsillie, co-chief executive of Research In Motion Ltd., was such a hockey fanatic he named RIM's boardrooms after hockey legends. "I have been convinced for several years that one of the most important contributions I can make to my country and my community is to bring a seventh NHL franchise to [Hamilton]" he said in a filing.

Rodier had worked with Balsillie for four years and developed a strategy of using the bankruptcy court to get around the league's rules on relocation. He'd been following the Coyotes' fortunes since his dinner with Shumway in New York. With Shumway gone, Rodier moved in.

He called Scudder on April 1, offering $190-million, but only if Moyes filed for protection in Canada and Arizona. Scudder mentioned the pitch to Bettman a couple of days later and got an ear full. Bettman told him to stop talking to Rodier, stressing that moving the club was a league responsibility. He reminded Scudder that the NHL had voting control over the club, not Moyes.

Bettman was having his own problems finding a buyer. He'd been talking to Reinsdorf, but in an e-mail to deputy commissioner Bill Daly on April 4, he said "this is looking more and more difficult since no one seems to be excited about a team losing 40mm."

Scudder and Moyes were fed up with the NHL and kept talking to Rodier. But Moyes wasn't keen on bankruptcy and he was skeptical about Rodier's strategy. A brief meeting with Balsillie in Dallas smoothed things over, but by late April, no deal was in sight.

Everything changed on May 1. Bettman called Scudder and told him the NHL had a potential offer from Reinsdorf. Bettman also said he would be in Phoenix on May 5 with Daly and they wanted to meet Moyes.

Moyes was spooked. He was convinced Bettman had cut a secret deal and was going to leave him with nothing. Negotiations with Rodier ramped up. Moyes dropped his reluctance to file for Chapter 11 and Rodier agreed to pursue a filing only in Arizona. But mistrust was building.

Rodier infuriated Scudder by making a direct pitch to Moyes. "I don't need your permission to talk to your client or anyone else," Rodier said in an e-mail to Scudder. "Nor do I care that, at your meeting with [Balsillie]in Dallas, you were crying to him that I was abrasive. I've been working with him for 4 years. He knows. He likes it. You haven't seen abrasive from me yet, and I hope you don't." Scudder shot back, questioning Rodier's credibility while another lawyer for Moyes called Rodier unethical.

Rodier felt Moyes was getting cold feet and he warned him that Balsillie could go elsewhere.

The deal finally came together just before the meeting with Bettman. Moyes put the Coyotes in Chapter 11 and announced Balsillie's bid to buy the club for $212.5-million and move it to Hamilton.

Bettman arrived at Moyes's office and handed him a letter announcing the NHL had taken control of the Coyotes.

Over the next four months, the battle raged in court. Bettman attacked Moyes, alleging he ran the team into the ground and lined his own pockets. He accused Balsillie of being a liar and pulled together a 21-page internal memo on why he shouldn't be an owner. Moyes, Balsillie and Rodier fought back, alleging the NHL was an "illegal cartel" and claiming the league undermined the sale process.

It's not clear what will happen to the Coyotes. The NHL hopes to find a local buyer but most observers doubt that will happen, meaning the league will either relocate or kill the franchise. Meanwhile, Moyes remains the majority owner, the NHL funds daily operations and fan support plummets.

Follow on Twitter: @PwaldieGLOBE

 

In the know

Most popular video »

Highlights

More from The Globe and Mail

Most Popular Stories