The fight for the Phoenix Coyotes is now a showdown between Jim Balsillie and Gary Bettman.
Bettman, the NHL commissioner, said in a declaration filed Tuesday with the U.S. Bankruptcy Court that a group of Canadian and American businessmen, known as Ice Edge LLC, told him they "currently do not intend to participate in the auction" for the financially moribund club. That leaves Balsillie, the co-chief executive officer of Research In Motion Ltd., and the NHL as the only bidders for Friday's court auction.
Daryl Jones, an Ice Edge investor, declined to comment. But a source familiar with the bidding said Ice Edge told the NHL Tuesday that it would not be participating in the auction because it would not be able to get a lease agreement with the suburban City of Glendale in time for the auction.
Ice Edge had expressed confidence in court filings as recently as last Friday that it would be able to reach a deal with the city. Negotiations continued this week but a source said the talks stalled Tuesday after city officials pushed to present an amended lease agreement to council for ratification. Lawyers for Ice Edge said they couldn't agree to the amended deal. The talks have since resumed, but sources say it is unlikely a lease will be in place by Thursday.
Glendale council also discussed an offer of $50-million (all currency U.S.) from Balsillie in exchange for dropping its claim of more than $500-million in damages if the Coyotes break their arena lease. A city spokeswoman said the deliberations would not be made public because it was "an executive session."
One option for Ice Edge is to wait to see if the NHL buys the Coyotes. The league has said it will immediately seek a buyer for the club and Ice Edge is believed to be interested in making an offer to keep the club in Glendale. The group could also make an offer for another club. Sources say it has been approached by several other franchises about a potential sale.
Ice Edge had not officially withdrawn its offer by Tuesday night and its $10-million deposit was still in place.
Bettman also said in his declaration Tuesday that the NHL decided as early as June 24 to be prepared to make its own bid for the Coyotes. This was more than a month before the league's governors voted to reject Balsillie as an owner on character grounds and only a couple of weeks after the commissioner said in a court declaration that as many as four groups wanted to buy the Coyotes.
This could have an effect on one of the key legal issues in the case. Balsillie's lawyers have asked Judge Redfield T. Baum to rule that the NHL cannot act as a bidder and also decide who is allowed to make a bid. They say that means the NHL cannot throw out Balsillie's $242.5-million bid, which is now more than $100-million higher than the NHL's.
That is just one of several legal issues that still have to be determined by Baum.
He has to decide the issues before the fate of the Coyotes can be decided. It is possible the auction will proceed even if all those issues are not decided.
The judge, whose decision on Balsillie's bid is still pending after a hearing last week, will hold a hearing Thursday on the relocation and lease issues. He could proceed with the sale and then issue his decisions later.
The Balsillie forces were also busy Tuesday, one day after they increased their bid to $242.5-million with the offer to Glendale. They asked the court to disallow the testimony of three experts used by the NHL to argue the value of the Coyotes and to decide its proposed relocation fee, which is a range from $101-million to $195-million.
Balsillie's camp said the NHL refused to send it information on the relocation issues until it was too late for Balsillie's expert on relocation and the fee, sports economist Andrew Zimbalist, to use in his report. At the same time, the information was turned over to the NHL's own experts. Zimbalist set the relocation fee between $11.2-million and $12.9-million.
"The NHL misled the court into limiting discovery by [Balsillie]on these issues by claiming burden at a time when the NHL knew it had already given these documents to its [own]experts," the Balsillie filing said.
In Tuesday's declaration, Bettman said it was "categorically untrue" that the NHL abused its position as an insider to acquire the Coyotes for its own benefit.
Bettman said the reason he told the league's board of governors on June 24 that an NHL bid should be considered was that in his experience bids for clubs can fall apart for any number of reasons. Jerry Reinsdorf, the owner of the Chicago White Sox, subsequently withdrew his bid. Bettman also insisted the NHL had the right to accept only bidders its governors approved, "However, the possibility that the league might make a contingent bid was not discussed or considered in any way in connection with the determination of Mr. Balsillie's request … for approval," Bettman said.
The commissioner went on to say "if either of the Reinsdorf or Ice Edge groups had made a qualified bid by Aug. 25, it is unlikely that the NHL would have made a bid at that time."
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