From the start of the Phoenix Coyotes' financial meltdown to his departure from the team yesterday, Wayne Gretzky presented himself as just as much a victim as the dozens of small creditors left hoping to see even a few dollars from the mess.
But court documents show that, behind the scenes, the now former managing partner, director of hockey operations and head coach continually played hardball with the Coyotes, dragging his contract negotiations out for years.
Through his long-time lawyer, Ron Fujikawa, Mr. Gretzky wound up with a salary of $8-million (U.S.), far more than any other NHL head coach. That came after years of talks in which hockey's most famous personality demanded such perks as a veto over any potential buyer, a right of first refusal on any offers, and a requirement that the Coyotes continue to pay his salary if he died.
The contentious negotiations were outlined by Jeff Shumway, former Coyotes chairman and governor, and Earl Scudder, one of team owner Jerry Moyes's lawyers, in declarations filed with the U.S. Bankruptcy Court. The statements paint a picture of a star coach who assiduously cultivated his beloved public image but mercilessly squeezed his employer in private.
Court filings reveal that Mr. Gretzky and his lawyers spent nearly three years negotiating a complex employment contract with Mr. Moyes, but Mr. Gretzky never signed it.
"I didn't think the team could be viable under the current agreement with Wayne," Mr. Shumway said in a deposition.
Mr. Gretzky, who owns a small piece of the Coyotes, has claimed he is owed more than $9-million, largely from unpaid compensation. He had two years remaining on his employment deal and was to receive $6.5-million this season and $8-million next year. He has also claimed to be owed $8-million in deferred salary.
It is unclear if he will receive anything. He has no formal employment contract and has been working under a "deal memo" since 2006.
Several creditors, including the City of Glendale, have argued that Mr. Gretzky's claim should be thrown out because he is a shareholder not a creditor. Under bankruptcy laws, shareholders typically rank below other creditors and rarely receive any proceeds from a sale of assets.
Lawyers for Glendale and other creditors also argue that if Mr. Gretzky is owed any money, it should be paid by Mr. Moyes because he guaranteed Mr. Gretzky's employment agreement.
Court filings show Mr. Gretzky began negotiating a new employment contract in mid-2006, just as Mr. Moyes was in the middle of breaking with business partner Steve Ellman. Mr. Gretzky, who acquired a 1.5-per-cent ownership stake when Mr. Moyes took control, wanted his employment contract personally guaranteed by Mr. Moyes, court filings show. The negotiations dragged on for years as Mr. Gretzky's lawyers made more demands.
According to Mr. Shumway, "every time we would turn around a new draft of the [deal]memo, [Mr. Fujikawa]would add new and exciting things that we would then spend months fighting about." He said that, at one point, "Ron put in a provision that if Wayne died while the contract was still in force, that we would continue to pay him his salary. I said no. … I mean, that's what life insurance is for. Go buy life insurance."
The team was willing to buy a life insurance policy on Mr. Gretzky, but only if it was the beneficiary, which is a common business practice. If he died, the insurance proceeds would have been used to buy his equity in the Coyotes from his estate. But Mr. Gretzky wanted to be paid in full for whatever salary remained on his contract, a much more expensive proposition.
E-mails filed in court show that in 2008, Mr. Gretzky planned to make an offer for the team and demanded that Mr. Moyes be blocked from accepting any other bids without first consulting him. Eventually, they agreed to put an escape clause in the deal if Mr. Gretzky did not want to work for a new owner.
Mr. Gretzky also wanted to buy a 5-per-cent stake in the team, but his lawyers insisted the purchase price should be based on a two-year-old appraisal of the club, filings show.
The two sides negotiated for years, but Mr. Gretzky never signed the final document. "There is a fully negotiated, fully drafted employment agreement between the team and Wayne, which Wayne never executed," Mr. Shumway said.
Negotiations over Mr. Gretzky's contract continued until weeks before Mr. Moyes put the club into Chapter 11 protection on May 5 and agreed to an offer from Jim Balsillie. According to court filings, Mr. Gretzky's lawyers demanded a veto power over who bought or invested in the club, and insisted Mr. Moyes cover any shortfall in money owed to Mr. Gretzky.
Mr. Shumway declined to comment on the court filings or Mr. Gretzky's departure, other than to say he "was an asset" to the team and the community.
At one point, the source said, Mr. Gretzky sent Mr. Shumway a text message, asking that they settle the contract between them. A meeting was quickly held and the issues were worked out, but Mr. Gretzky still would not sign the contract.
He eventually signed an amendment to the deal memo on April 20 that recognized he had been an employee of the Coyotes since 2006.
Mr. Gretzky also made a last-ditch attempt to buy the Coyotes on April 25, a deposition from Mr. Scudder says. According to Mr. Scudder, Mr. Gretzky was part of a group that offered $120-million for the Coyotes. The bid never materialized.
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