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NHL Bids for Coyotes

The long and winding story of the Phoenix Coyotes just got more interesting. While the group led by White Sox and Bulls owner Jerry Reinsdorf dropped its bid for the 'Yotes, saying it couldn't reach a satisfactory agreement with the City of Glendale over a lease of Jobing,com Arena, the NHL jumped in before the bankruptcy court imposed deadline to offer a bid of its own. That bad blood between Gary Bettman and Jim Balsillie must really be something awful, because Bettman is just not going to let Balsillie have this team if there is any way under the sun to prevent it.

There is one other group now bidding for the team, a collection of Canadian-American investors. Both their bid and the NHL's is projected to be some $60 million below Balsillie's which puts the Bankruptcy Court judge in a bit of quandary. Does he go with a lower bid that the league will obviously approve or with the bid that produces the highest return for the creditors but which the league has already disapproved? In short, does the Bankruptcy Court have the power to void that section of the league bylaws? If so, that would be precedent setting across the major professional leagues landscape and wreck havoc on the ability of any league to control the relocation of franchises.

Bankruptcy courts have a great deal of leeway in setting aside contract provisions that are detrimental to maximizing the return to creditors, especially where, as here, those provisions could be seen as favoring one bidder over another to the harm of the bankruptcy estate. While that by no means should be interpreted as saying he will overrule the NHL bylaws, it does give Balsillie an argument.

Full post as published by Sports Biz on August 28, 2009 (boomark / email).