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Phoenix Coyotes owner Jerry Moyes speaks to reporters as he leaves U.S. Federal Bankruptcy Court in Phoenix, Arizona Sept. 23. (JOSHUA LOTT/Joshua Lott/Reuters)
Phoenix Coyotes owner Jerry Moyes speaks to reporters as he leaves U.S. Federal Bankruptcy Court in Phoenix, Arizona Sept. 23. (JOSHUA LOTT/Joshua Lott/Reuters)

Judge rejects both bids for Coyotes Add to ...

After five months of legal warfare, name calling and patriotic flag waving, Jim Balsillie has given up his fight to buy the Phoenix Coyotes and move the NHL team to Hamilton. Balsillie, co-CEO of Research In Motion Ltd., threw in the towel last night, after a bankruptcy court judge in Arizona rejected his bid to buy the Coyotes for $242.5-million (U.S.).

"From the beginning, my attempt to relocate the Coyotes to Hamilton has been about Canadian hockey fans and Canadian hockey," Balsillie said in a statement. "All I wanted was a fair chance to bring a seventh NHL team to Canada, to serve the best un-served hockey fans in the world."

"I believe I got that chance. I respect the court's decision, and I will not be putting forward an appeal."

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Judge Redfield T. Baum also threw out the only other bid for the Coyotes, a $140-million offer from the NHL. But he left the door open for the league to make suitable changes. And he confirmed the league's right to select owners and control where clubs play.

The ruling is a clear victory for NHL commission Gary Bettman. who has bitterly opposed Balsillie, calling him misleading in court filings and blaming him for ruining the Coyotes and sabotaging the league. At one point this summer, the league prepared a 21-page internal memo outlining why Balsillie lacked the "character and integrity" to be an NHL owner.

Throughout months of legal wrangling, Bettman and NHL lawyers have argued Balsillie was trying to circumvent league rules by attempting to buy the Coyotes out of bankruptcy and move the club to Hamilton without the league's consent. The league backed up its arguments by noting the NHL board of governors rejected Balsillie as a potential franchise owner during a meeting on July 29.

The league stuck to its position resolutely, even rejecting calls for mediation by Baum. Several creditors sided with the NHL, fearing a win by Balsillie would tie up the Coyotes in litigation for years and delay payments from the sale proceeds.

Last night, NHL deputy commissioner Bill Daly welcomed the ruling and said the league will consider how to change its offer to satisfy Baum's concerns. "It remains our goal to secure the long-term stability of the Coyotes in Glendale," he said, referring to the Phoenix suburb where the team plays.

Just how that will happen remains unclear. The league has said it plans to run the club this season, and look for a local buyer. If one can't be found, the league said it will relocate the team.

Finding a local buyer won't be easy. Current majority owner Jerry Moyes spent two years trying to sell the club without success and the NHL could only find a couple of potential buyers this spring, before both backed out. Chicago White Sox owner Jerry Reinsdorf demanded as much as $23-million in annual subsidies from the City of Glendale before he abandoned his bid for the Coyotes in late August.

Baum noted the Coyotes have never made money since moving from Winnipeg in 1996, and lost nearly $400-million in total over the past five years.

If the NHL moves the club it could face a huge bill from Glendale, which paid for construction of the arena where the Coyotes play. Throughout the court process, the city has claimed it would be owed as much as $500-million if the Coyotes broke their 30-year arena lease. Neither the league nor the city, which backed the NHL's purchase bid, has explained how that claim would be resolved if the club moves.

The NHL also has to deal with claims from Moyes, who has said he is owed more than $100-million, and former head coach Wayne Gretzky, who owns a piece of the team and says he is owed more than $9-million.

The league has challenged the legitimacy of those claims, arguing that, as co-owners, Moyes and Gretzky are shareholders not debtors. Under U.S. bankruptcy law, shareholders rank below creditors and rarely receive proceeds from a court-supervised asset sale. However, Baum said the claims have not been properly assessed and he ruled the NHL's bid cannot go ahead as it stands without "first providing all involved a fair trial on their claims."

Despite that glimmer of hope, Baum's ruling was a blow to Moyes, a Phoenix businessman who had never seen a hockey game before he ended up controlling the Coyotes in 2006, after a fallout with his partner in the club and a real estate development, Steve Ellman.

Moyes put the club into Chapter 11 protection on May 5, largely at the behest of Balsillie's lawyers, who convinced him to pursue the legal strategy of using the bankruptcy court to sell the club. For months, Moyes has railed against the NHL for blocking Balsillie. He also filed a lawsuit against the NHL, with Balsillie's backing, alleging the league was an "illegal cartel."

Last night, a spokesman for Moyes called the ruling "disappointing" and said he was reviewing his options.

It's not clear if Balsillie will now end his quest to own an NHL team in Hamilton. Several other clubs are rumoured to be for sale and those close to Balsillie are not sure if other offers will be made.

During a recent court hearing, a lawyer for the NHL speculated that if Balsillie changed his ways and agreed to follow NHL rules, he could succeed in acquiring a franchise.

But, last night, Balsillie signalled he will be a spectator, not an owner.

"Nobody can deny that we are now a big step closer to having a seventh NHL team in Canada," he said. "It doesn't matter who owns that team. When that day comes, I will be the first in line to buy a ticket to the home opener."

There was no immediate comment from Glendale Mayor Elaine Scruggs, but the city issued a statement later in the evening: "Glendale is extremely pleased that the court has denied the bid that would have moved the team and pending further legal analysis of the ruling, looks forward to working with the NHL to keep the Coyotes playing in Glendale, Ariz., for years to come."

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