After nearly a year of battling in and out of court, the NHL and Phoenix Coyotes owner Jerry Moyes have reached an agreement that will hand ownership of the club to the league.
Lawyers for the NHL and Moyes reached the deal during an hour-long meeting yesterday outside an Arizona bankruptcy court in Phoenix. The agreement, worth about $140-million (all currency U.S.), still has to be approved by Judge Redfield T. Baum, and that is expected within a few days.
"From [Moyes']perspective, it's important to have this phase of the case over given the significant cash needs of the team which are not being generated from operations," said Tom Salerno, a Phoenix lawyer representing Moyes.
NHL deputy commissioner Bill Daly said the league hopes to have the deal closed by Nov. 2. "It remains the NHL's intention upon taking control of the club to stabilize the club's operations and, as quickly as possible, to resell the club to a new owner who is committed to operating the club in the [Phoenix]market," he said in a statement.
Ice Edge Holdings, a group of eight Canadian and U.S. businessmen, has already indicated that it plans to submit a bid to the NHL as soon as the league has control of the club. Ice Edge investors met with NHL commissioner Gary Bettman yesterday in New York to go over their proposals, which include playing some games in Saskatoon. The league has yet to approve the plans.
Ice Edge withdrew from bidding for the club in September, saying it did not have time to arrange a new lease with the City of Glendale, the Phoenix suburb that owns the arena where the Coyotes play. However, Ice Edge investor Daryl Jones has said the group has been working with the city recently and has an agreement in principle on a new lease.
It's not clear where the NHL's deal with Moyes leaves Wayne Gretzky, who owns a small piece of the Coyotes and quit as coach last month. Gretzky has claimed in court filings that he is owed more than $9-million but the NHL has not recognized his claim. Lawyers for Gretzky were in court yesterday but did not take a position on the NHL's offer. If Gretzky objects, he could delay closing of the deal.
Last month, Baum rejected the NHLs bid and a rival $242.5-million offer from BlackBerry billionaire Jim Balsillie, who planned to move the club to Hamilton. The judge ruled that Balsillie's bid faced too many legal obstacles, however, he said the NHL could revise its bid to make it acceptable. Those revisions, the judge added, had to include concessions to Moyes and Gretzky.
The NHL had taken the position that neither was a legitimate creditor because they were owners. Under Chapter 11 proceedings, owners usually rank below other creditors and rarely receive any of the proceeds from asset sales. Gretzky and Moyes, who is owed more than $100-million, had argued that their claims were legitimate debts that should be paid out of the sale proceeds.
It's not clear exactly how much of the league's $140-million will go to Moyes. Salerno declined to provide details other than to say the amount has been worked out.
The tentative deal ends a long-running dispute between Moyes and the NHL. Court filings show Moyes was never keen to own the Coyotes. A trucking magnate, Moyes grew up in a small town in Utah and had no interest in hockey. He acquired control of the club in 2006 after falling out over a real estate development with former business partner Steve Ellman. From then on, Moyes tried to find a buyer for the Coyotes, frequently chafing at what he believed was the league's interference in his attempts.
A year ago, Moyes told Bettman and other league officials that he would stop funding the club, which was losing more than $40-million annually. The league agreed to provide emergency funding but Bettman demanded Moyes sign over his voting control.
The battle broke open publicly last May when Bettman and Daly came close to selling the Coyotes to Jerry Reinsdorf, owner of the Chicago Bulls and Chicago White Sox. When Moyes got wind of the deal on May 5, he promptly put the Coyotes into Chapter 11 bankruptcy protection and announced a plan to sell the club to Balsillie. Moyes also filed a lawsuit against the NHL, alleging the league was an "illegal cartel." Bettman was furious, arguing the league had been blindsided and that Moyes did not have the authority to put the club into bankruptcy protection.
The court fight has dragged on for months.
Meanwhile, the Coyotes are still under court protection, employees have quit, the club's season ticket base has been cut sharply and ticket prices slashed. So far this fiscal year, which began on July 1, the Coyotes have lost more than $10-million.Report Typo/Error