A group led by Chicago businessman Jerry Reinsdorf has made a conditional offer to buy the Phoenix Coyotes for up to $148-million (all currency U.S.) and keep the club in Phoenix.
A summary of the offer was filed in an Arizona bankruptcy court last night and it includes payments to several large Coyotes creditors but nothing for current majority owner Jerry Moyes or co-owner Wayne Gretzky.
The proposal also says that Reinsdorf, who owns the Chicago White Sox and Chicago Bulls, "expects to enter into a new arena management, use and lease arrangement" with the City of Glendale, the Phoenix suburb where the Coyotes play. There are no details, but it is expected Reinsdorf will be seeking concessions worth up to $20-million.
Moyes put the Coyotes into Chapter 11 protection on May 5 and announced a $212.5-million bid from Canadian businessman Jim Balsillie, who wants to move the team to Hamilton. In court filings, Moyes said he has lost more than $300-million since becoming a co-owner in 2001.
Reinsdorf's offer covers only $127.7-million of the club's debts, including nearly $80-million owed to MSD Capital, a finance company tied to computer magnate Michael Dell; $38.8-million owed to the NHL and $3-million owed to the City of Glendale. Another $700,000 will go to pay off money owing to an arena management company and a local broadcaster. Any additional amounts, up to the $148-million maximum, would go toward other unsecured creditors but not Moyes.
The offer is conditional on Reinsdorf reviewing the club's finances and being "satisfied with the results of such investigation".
The NHL has blocked Balsillie's bid and pushed hard to find a buyer who would keep the club in Phoenix. NHL commissioner Gary Bettman has said that he had reached a preliminary deal with Reinsdorf just before Moyes filed for protection.
Bankruptcy Court Judge Redfield T. Baum has scheduled an auction on Aug. 5 for bidders interested in keeping the club in Phoenix. So far Reinsdorf is the only bidder. If the judge rules the offers are not satisfactory, a second auction for bidders who want to relocate the team will be held in September.
NHL deputy commissioner Bill Daly declined to comment on Reinsdorf's offer last night because neither he nor Bettman had had a chance to read it. Both men were at the NHL entry draft in Montreal. However, an NHL source close to the commissioner said the NHL brass are confident Judge Baum will find the offer acceptable even though it is far less than Balsillie's bid.
"The way it's structured, it really takes care of all the unsecured creditors except Moyes, who isn't really an unsecured creditor," the source said.
The NHL has argued that Moyes is not a creditor because he received an ownership stake for the money he sank into the club. Shareholders typically rank behind other creditors in a Chapter 11 process. Moyes has disputed the NHL's claims and he will likely oppose Reinsdorf's bid.
Balsillie's offer would cover much of Moyes's debts and provide up to $22-million to Gretzky, who is the team's coach and owns about 1.5 per cent of the club. Reinsdorf has only said in his proposal that he will honour Gretzky's coaching contract, along with all of the player contracts. Gretzky earns more than $8-million annually but he is owed more than $9-million by the Coyotes, according to court filings.
Bill Walker, a spokesman for Balsillie, said last night that Balsillie's lawyers are reviewing the Reinsdorf offer.
"We wish him well," Walker said. However, he said Balsillie remains committed to his bid. "If anything, we're more determined than ever to just proceed and get to the relocation auction."