Judge Redfield T. Baum decided he must wrestle with "the 10,000-pound elephant" sooner rather than later, which means Jim Balsillie and Hamilton will find out in 13 days if they have a chance to get an NHL team.
It also means the U.S. bankruptcy court judge can change the course of North American professional sports history on June 9 at a hearing to decide whether the Phoenix Coyotes can be moved if no local buyer is willing to match or come close to Balsillie's $212.5-million (all currency U.S.) offer, which is conditional on moving the club to Hamilton. The NFL, NBA and Major League Baseball have all filed arguments with the court, supporting the NHL's position that a move should not be allowed because it does not comply with league bylaws and would take control of the franchises away from the league.
However, during a hearing yesterday, the judge did not seem to relish the thought of overriding the NHL's rules by allowing the Coyotes to break their arena lease with the suburban City of Glendale.
"If I do that, I am essentially rewriting their constitution for them and I'm not sure I have the power to do that," Baum said. But he promised to make a ruling quickly.
While the famous case of Oakland Raiders owner Al Davis successfully winning a court fight with the NFL to move his team to Los Angeles in the 1980s is often cited, Baum said the Coyotes case bears no relation to that one, nor does any other.
Not one, the judge said, "has a fact scenario remotely close to this case."
The hearing was originally scheduled for June 22 but Baum moved it ahead nine days because the relocation issue must be decided before the bankruptcy petition from club owner Jerry Moyes and an auction sale can proceed. The decision also recognized Balsillie's statement that he will withdraw his bid, which will be used to start the auction, if the process is not completed by June 29.
"It's the 10,000-pound elephant in the room," Baum said yesterday in overruling the scheduling requests of both Moyes and the NHL to get to the relocation issue quickly. He also ordered that if he decides the Coyotes can be moved, the auction for the club will be June 22. If his decision is that the team must stay in its suburban Glendale arena, the sale will be put off until Sept. 10. Legal arguments for the June 9 hearing have to be filed by June 5.
Those dates are much earlier than even Moyes and Balsillie asked for in their requests from the court. They wanted the sale on June 24 with approval from the NHL's board of governors to come no later than June 29 or, the court was told, Balsillie would withdraw his bid. Balsillie, the co-founder of Research In Motion, said he needs to set his plans in action by June 29 in order to move the team for the coming NHL season because he does not want it to stay in Phoenix for another year, considering how much money the club loses annually.
The NHL, which argues that Balsillie cannot move the club, had asked that the process be extended to the end of August. It said even if Baum rules the club can be moved, the league has ownership approval procedures to follow, which mean it cannot be moved in time for the 2009-10 season.
Both sides have expressed confidence they will prevail. But if the NHL loses, the case may drag on because NHL deputy commissioner Bill Daly said the league will appeal.
"We're confident in what the law says," Daly said, "and the law is pretty clear with respect to our rights to control both the identity of our owners and the location of our franchises."
Balsillie declined to comment on the latest move by the court. But his spokesman, Bill Walker, said, "We're confident in the strength of our proposal as the best outcome for hockey fans in … Southern Ontario."
During the court hearing yesterday, NHL lawyer Tony Clark said he will argue on June 9 that the judge does not have the legal power to force the NHL and its 29 other teams to allow one club to break its rules. Moyes and the Coyotes counter that under U.S. bankruptcy law, they can break contracts with both the league and Glendale.
The judge ordered the adoption of an agreement between Moyes and the NHL about how the team will be run until the sale. Moyes and the team executives will remain in charge although each side will appoint one person to oversee the operations.
Meanwhile, the name of Tony Tavares, president of Sports Properties Acquisition Corp., surfaced in connection with the letter of intent to purchase the Coyotes, which was signed by Chicago White Sox and Bulls owner Jerry Reinsdorf and registered with the court under seal.
The Arizona Republic reported that Tavares is "collaborating with Reinsdorf's investment group to buy the hockey team," and implied Sports Properties is involved, but sources close to the company said that is not the case. A banking source, who said on previous occasions that Sports Properties declined requests to look at buying the Coyotes, said again yesterday the company has no involvement in any bid for the club.
The only other mention of Tavares, a former president of the NHL's Anaheim Ducks, comes in an e-mail from NHL commissioner Gary Bettman that was filed with the court.
In the e-mail to two other NHL executives, including Daly, Bettman said he "arranged for Taveras [sic]to do due diligence for Reinsdorf." It appears Tavares was hired independently of Sports Properties.
If Tavares was hired for due diligence on Reinsdorf, who has yet to make an official offer to buy the Coyotes, then he would not have any part of an offer for the team. Since due diligence is essentially an investigation of any prospective owner, the investigator must be independent.
With reports from Bloomberg and The Associated Press