The NHL's board of governors rejected Jim Balsillie as a potential owner of the Phoenix Coyotes, but he vowed to continue his pursuit of the team.
Balsillie, the co-CEO of Research In Motion Ltd., who is seeking to buy the Coyotes out of bankruptcy and move them to Hamilton, was given a hostile reception Wednesday morning by the governors' executive committee, which questioned him about his bid before a meeting of the full board.
The NHL later released a statement saying Balsillie's bid was rejected while one from Chicago White Sox and Chicago Bulls owner Jerry Reinsdorf was accepted. Reinsdorf and his partners plan to keep the Coyotes in the Phoenix suburb of Glendale.
NHL deputy commissioner Bill Daly said in an e-mail message that Balsillie was rejected under bylaw 35 of the NHL's constitution. That section says the league can reject potential owners if it does not believe they are of "good character and integrity" as well as for financial reasons. Daly did not immediately respond when asked to be more specific.
The U.S. Bankruptcy Court has an auction scheduled for Aug. 5 for bids from groups committed to keeping the Coyotes in Glendale. If the court does not accept Reinsdorf's bid, which is the only one filed so far, there will be a second auction for bidders who plan to move the team.
Balsillie's spokesman, Bill Walker, questioned the NHL's motives for rejecting him as an owner and said his $212.5-million (all currency U.S.) bid will be filed again with the bankruptcy court. Reinsdorf's bid is for $148-million.
A second group which plans to keep the Coyotes in Glendale was also given a hearing by the NHL governors on Wednesday. NHL deputy commissioner Bill Daly said in an e-mail message that a decision on the group of Canadian and American businessmen known as Ice Edge was deferred.
Daryl Jones, the leader of the Ice Edge group, told The Globe and Mail he and his colleagues came away hopeful the NHL will help them get into next week's auction if they can nail down their financing and other details.
In the meantime, Walker said the NHL had no concrete reason to reject Balsillie as an owner, especially since it accepted him three years ago when he attempted to buy the Pittsburgh Penguins. He noted that bankruptcy court judge Redfield T. Baum had told the NHL in June it could not now reject Balsillie unless there was a material change in the circumstances of PSE Sports and Entertainment, the company Balsillie formed to handle both bids.
"We do not think that Jim Balsillie's qualification to be an NHL owner is an issue in this case given his 2006 approval as an NHL owner," Walker said. He also said a legal precedent was established in the fight between Oakland Raiders owner Al Davis and the NFL when a federal court ruled the other league owners had to make decisions in good faith.
"Presumably the onus will be on the NHL to demonstrate a material change in PSE's circumstances, although no such change was raised with us today," Walker said. "Beyond that we have confidence in, and respect for, Judge Baum and the legal process as this case unfolds."
Full NHL statement below:
National Hockey League Commissioner Gary Bettman issued the following statement following today's Board of Governors meeting:
"The National Hockey League's Board of Governors met this afternoon to review the ownership applications of three prospective ownership groups for the Phoenix Coyotes. The Board's process today represents the League's best efforts to comply with the League's review procedures pursuant to NHL Constitution Article 3.5 and NHL By-Law 35 within the timetable imposed by the ongoing court process.
"There were three applicant groups that were interviewed by the Executive Committee and considered by the Board. One was Jim Balsillie's. The second was a group headed by Anthony LeBlanc, involving Mr. LeBlanc, Keith McCullough, Todd Jordan and Daryl Jones. And the third group, headed by Jerry Reinsdorf, included as well Tony Tavares and John Kaites.
"After interviewing all of the applications, the Executive Committee brought forward recommendations to the full Board of Governors.
"Mr. Reinsdorf's application was unanimously approved by all those Board members present and voting, subject to the League's completion of its due diligence and review of the final transaction. In Mr. Balsillie's case, it was the unanimous vote of all members present and voting that his application not be approved. With respect to the LeBlanc group, it was determined that, at this stage, since they've only recently begun the process, the application was incomplete and could not yet be acted on by the Board. However, the Executive Committee reported favorably on the LeBlanc group's interview and endorsed the group's continued efforts to complete a bid to purchase the franchise.
"We will so advise the Bankruptcy Court and we will move this process forward."
Balsillie camp statement below:
PSE Sports and Entertainment, the company which represents Jim Balsillie's $212.5-million bid to purchase the Phoenix Coyotes and relocate the team to Hamilton, Ontario, issued a statement today regarding the NHL's position on Mr. Balsillie's ownership application.
"We do not think that Jim Balsillie's qualification to be an NHL owner is an issue in this case given his 2006 approval as an NHL owner," said PSE spokesman Bill Walker.
"We note that the bankruptcy court Judge Hon. Redfield T. Baum ruled in his June 15 decision that:
'Absent some showing by the NHL that there have been material changes in PSE's circumstances since 2006, it appears to the court that the NHL can not object or withhold its consent to PSE becoming the controlling owner of the Phoenix Coyotes.'
Walker noted that Judge Baum cited the legal precedent of Memorial Coliseum v. National Football League (known as the "Raiders" case) as showing that 'a right of approval or disapproval or a discretionary power… must be exercised within the parameters of the duty of good faith.'
"Presumably the onus will be on the NHL to demonstrate a material change in PSE's circumstances, although no such change was raised with us today," Walker said. "Beyond that we have confidence in, and respect for, Judge Baum and the legal process as this case unfolds."Report Typo/Error