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Lawyers expected to grill NHL commissioner Add to ...

The showdown between Jim Balsillie and Gary Bettman is now a one-man show.

Only Bettman, the NHL commissioner, will take the stand today when the U.S. Bankruptcy Court hearing on the Phoenix Coyotes will conclude with the auction of the team. Balsillie was let off the hook at the end of yesterday's hearing when lawyers for the NHL and the suburban city of Glendale, where the Coyotes play, told Judge Redfield T. Baum they did not need to cross-examine the would-be buyer of the Coyotes.

Bettman is sure to face a rough ride from Balsillie's high-profile anti-trust lawyer, Jeffrey Kessler, and Tom Salerno, a lawyer for Coyotes owner Jerry Moyes. He will face questioning over whether the NHL's decision to reject Balsillie as an owner was made in good faith or as a pretext for the league to avoid a legal war with the Toronto Maple Leafs over relocating the Coyotes to Hamilton.

Kessler or Salerno will almost certainly bring up the NHL's dual role as a bidder for the Coyotes and the gatekeeper that wants to deny Balsillie's bid for the team.

However, Judge Baum raised a third possible outcome early in yesterday's hearing - no sale at all.

"I would say that's more than a possibility," the judge added, as an audible stir went through the courtroom. That came out in the morning while one of Moyes's lawyers, Jordan Kroop, was arguing that the financial penalties owed to Glendale if the arena lease was terminated should be capped under bankruptcy law.

If there is no sale, presumably the Coyotes would remain in Glendale indefinitely with the NHL continuing to pay the losses, which were in excess of $60-million (all figures U.S.) last season.

"We heard him say it," Bettman said of the judge's pronouncement. "We'll have to see what happens."

Balsillie declined to comment as he left the courtroom.

What will be argued this morning before the sale in the afternoon are the issues of relocating the team (Balsillie wants to move it to Hamilton), a relocation fee and the question of whether the NHL is acting in good faith.

Bettman said he was not worried about facing Kessler, who has been involved in some of the biggest anti-trust cases in sports.

"It wouldn't be the first time," Bettman said. "He took my deposition and we've crossed paths before."

Some previously confidential information came out during the day's testimony. The information with the most direct bearing on the case was that the NHL set a value between $271-million and $279-million on a franchise in Hamilton. That was almost $100-million more than the estimate of Balsillie's own economic expert, Andrew Zimbalist, who pegged a Hamilton team at $174.9-million.

This made it appear the NHL was contradicting itself over its opposition to a move. That valuation would place a Hamilton franchise among the most valuable in the NHL while the Coyotes are currently among the league's least valuable teams.

Bettman, though, said no one should jump to conclusions. "This is not like covering one of our games," he said of the case. "This is a lot more complicated than that."

However, the commissioner did confirm a Globe and Mail story from last fall that was widely denied by league officials. That was that some NHL governors have informally discussed adding a second franchise in Hamilton or Southern Ontario.

"It's not a question we haven't considered, wouldn't consider," Bettman said. "It hasn't been right."

The hearing opened with NHL lawyer Gregory Milmoe facing some tough questions from Baum about the league's $140-million bid for the Coyotes. The judge said his reading of the offer showed that once all of the major creditors such as SOF Investments and the NHL were paid, there could be as little as $2-million left for the estate, or the Coyotes, to pay a large number of unsecured creditors. He raised an issue that has been hammered at by Moyes's lawyers, that the NHL was trying to pick and choose which creditors got paid.

"One of the fundamental principles in this process is the equality of treatment of the creditors," Baum said. "That seems to run smack into that fundamental principle."

The judge also rapped the NHL for dismissing Moyes's claim as a creditor. While Balsillie's offer initially set aside $104-million for Moyes, which could drop to $84-million if Glendale takes a $50-million payment in lieu of damages, the NHL made no provision for him. The league and Glendale's lawyers say Moyes's claim is equity in the team not a loan, so he is not a creditor.

Baum will not rule on Moyes's status until after the sale, but he told Milmoe that if Moyes wins the decision, it would mean a lot less money would be available for the other creditors. The first witness of the day was former CFL commissioner Tom Wright, who wrote Balsillie's relocation application to the NHL. Shep Goldfein, one of the NHL's lawyers, tried to take issue with Wright's assertion that the Coyotes would never be successful in Glendale. He tried to get Wright to admit that if the Coyotes, who have missed the NHL playoffs for six consecutive seasons, were a consistent winner on the ice, they would be successful financially.

Wright replied that any team that relied on making the playoffs and winning the Stanley Cup every year was not using a sound business plan.

"So teams with losing records can make money?" Goldfein said.

"Given the city I live in, I can state that with confidence," said Wright, who lives in Toronto, home of the Maple Leafs.

The afternoon was taken up with the NHL and Balsillie's lawyers pounding away at the other side's economic experts.

Follow on Twitter: @dshoalts

 

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