Coyotes bankruptcy proceedings: No, they're not over

by James Mirtle on Nov 16, 2009 11:54 PM CST Comment 34 comments

It was a fun summer, picking through bankruptcy documents, arguing with a few hockey fans from Phoenix and, in the end, watching as Jim Balsillie retreated yet again after failing to get an NHL hockey team by any means necessary.

In the interim, there's been news — mostly just attendance watches, really — but what we haven't heard is that the documents just keep rolling in and the arguments being heard. Judge Redfield T. Baum, at this point, is probably wishing he had never heard of this woebegone hockey team.

They're up to 1,109 filings now, with many of the latest surrounding the team's troubling lease agreement. Commissioner Gary Bettman went to Glendale on Monday to talk to the city about finding new ownership that can fix what ails the lease, something that won't be an easy task:

Glendale leaders have been open to talks, but maintained the city would not forfeit revenue it uses to pay off its $182 million arena investment.

The commissioner said he did not expect the NHL would be the one to re-negotiate the lease.

"I don’t envision it as necessary for us to be negotiating, but a new owner will have to be satisfied," he said.

Getting to that point is going to be interesting.

The city doesn't really receive all that much in terms of rent directly from the hockey team, so there's just not a lot for them to give up on that front. And it remains an impossibility for a new owner to assume this team, especially in its current state, without some sort of guarantee as to limiting the losses.

Jerry Moyes's camp recently filed a document calling for the rejection of the lease altogether, something that I believe is aimed at limiting the city's claim against him as to damages:

"... the Debtors respectfully request that the Court enter an Order: (a) estimating the City's claim against the Debtors to be zero dollars for purposes of distribution under a prospective Chapter 11 plan; and (b) granting any other relief that is just and proper."

Moyes's lawyers also argue that because the city didn't take Balsillie's guaranteed $25-million compensation, they aren't eligible for damages when it comes to breaking the lease.

Who knows how that all plays out — or even how much we'll hear about it. All the legal experts and bankruptcy analysts aren't anywhere to be found lately, as with the stars of these proceedings having moved on, there's no more glitz to be found.

At this point, they're just fighting over the table scraps.

0 recs | Comment 34 comments | Add comment | Share

Story-email Email Printer Print

Comments

So can Bettman/the NHL/any potential new owner get blood from a stone?

I find sometimes it's easy to be myself
sometimes I find it's better to be somebody else

by Fauxrumors on Nov 17, 2009 7:50 AM CST reply actions 0 recs

Depends on how interested the stone is on owing $180 million on an empty building – and what their expectations are if they go after Moyes and Balsillie in that regard.

by Resolute on Nov 17, 2009 11:12 AM CST up reply actions 0 recs

We're still talking about Phoenix?

I thought that the consensus had been established that Phoenix would be gone by April and that everyone had moved on to Florida.

You are validating my inherent mistrust of strangers.

by zyllyx on Nov 17, 2009 9:25 AM CST reply actions 0 recs

If a tree falls in a forest...

… and no one is there to hear it…

by HockeyinHD on Nov 17, 2009 2:08 PM CST up reply actions 0 recs

… then it will be Gary Bettman’s fault for having failed to properly market the falling of the tree event, AND for having planted it in a non-traditional forest. Plus, everyone knows that Bettman is really a shrub guy and knows squat about trees.

Cheap shots are apparently irresistable to some posters.

by Gerald on Nov 17, 2009 5:02 PM CST up reply actions 0 recs

Gerald, do you think the NHL has made some mistakes in Phoenix?

Blogging on hockey at fromtherink.com

by James Mirtle on Nov 17, 2009 5:10 PM CST up reply actions 0 recs

Yes, I do.

by Gerald on Nov 17, 2009 7:36 PM CST up reply actions 0 recs

Please elaborate…

Blogging on hockey at fromtherink.com

by James Mirtle on Nov 18, 2009 12:07 AM CST up reply actions 0 recs

You want a list?

by Gerald on Nov 18, 2009 10:20 AM CST up reply actions 0 recs

I think we get your list from the other side fairly often. I know you’re just trying to bring “balance” to the situation, but I’m curious what someone who defends the NHL’s position sees as their missteps here.

Blogging on hockey at fromtherink.com

by James Mirtle on Nov 18, 2009 11:09 AM CST up reply actions 0 recs

Not sure why “balance” is in quotation marks, but fine, here you go:

[Note that some of these are mistakes that are identifiable in retrospect only, even though the actions seemed prudent at the time]

1. In retrospect, the NHL should have definitively taken over from Moyes when he abandoned his asset. i think they could have deflected the publicity by pointing to the fact that he ws admittedly out of liquidity. It got a lot tougher to do so in post-October when the financial world was coming to an end, but it would have been better than the alternative. As i said, in retrospect …

2. I would have pressed harder on the proxy issue. Much harder. Their position was a winner.

3. Rather than using a proxy document (a standard legal document), it might have been better to customize a different form for Moyes.

4. They evidently made a mistake in trusting Moyes (again, in retrospect). Anyone who would try to modify his own constating documents to get around his own signed agreements is heinous. nothing more need be said.

5. They tried to press Baum J. for decisions, but they kept letting him off the hook on their interlocutory proceedings. They should have pressed him harder.

6. They are at this point goosing the interest of the bidders to get every last dollar from them. I might instead favour speed over getting every last dollar.

7. I don’t know that I would have let Moyes off the hook on half of his $30 million personal guarantee. That seems like unnecessary largesse on their part.

8. After his bid was blown out of the water, I would have sued JB for tortious interference with contractual relations by now.

9. After the proceeding was completed, I would have reported Rodier to the Law Society of Upper Canada.

That is based on a few minutes of thought.

by Gerald on Nov 18, 2009 5:12 PM CST up reply actions 0 recs

So, in your view, all of the NHL’s mistakes consist in not having been tough enough, rather than any basic strategy problems. Is that correct?

by J. Michael Neal on Nov 18, 2009 11:20 PM CST up reply actions 0 recs

As noted above, those are the obvious ones that come to mind when considering the question for a few minutes. Indeed, a basic theme is that they treated Moyes upfront as a partner and a gentleman businessman when he was clearly anything but. Blowing ihm out of the water would have been better – well before JB sniffed around.

by Gerald on Nov 19, 2009 5:07 AM CST up reply actions 0 recs

As an NHL backer

In this case, and in southern expasion, I think they made a number of monumental mistakes that have contributed to the weak markets in the south. The biggest being:

Instead of using the expansion fees to invest in local hockey and building a fanbase in those markets they just pocketed the expansion fees and left them to go it alone. Some places with good management did well because they understood the need to go in the community and build a fan base (San Jose, Dallas, Anaheim, and Tampa for a while) and others floundered.

The NHL should have taken those expansion fees and used them to invest in the community and in hockey. Roller leagues and “learn to skate” initiatives. they didn’t, for the most part.

They also tried too many southern markets too quickly. Putting a franchise in those locations requires a lot of effort and investment to build something profitable, much more than a northern team. Expanding to ~10 southern markets in the course of a decade would have stretched the NHL’s resources to thin even if they were willing to invest into building fanbases there.

The New Improved Avalanche. Now with Real Coaches!
Jibblescribbits: C'mon over and waste some time

by Jibblescribbits on Nov 19, 2009 10:35 AM CST up reply actions 0 recs

It’s obvious there have been some successes down there. But there have been abysmal failures, too.

The league has to decide if it wants those markets or not, and if it does, they’re going to need to be propped up via revenue sharing probably for a long, long time.

Blogging on hockey at fromtherink.com

by James Mirtle on Nov 19, 2009 11:22 AM CST up reply actions 0 recs

Agree

I think the league could have minimized the failures had they had a better strategy towards expansion there. They seemed to just want the expansion fees and didn’t really wanted to build those markets up they way they should have.

The New Improved Avalanche. Now with Real Coaches!
Jibblescribbits: C'mon over and waste some time

by Jibblescribbits on Nov 19, 2009 11:45 AM CST up reply actions 0 recs

Well, I think that’s the central criticism most people make of that expansion strategy. It’s the intelligent one anyway.

Blogging on hockey at fromtherink.com

by James Mirtle on Nov 19, 2009 11:51 AM CST up reply actions 0 recs

I don't know

I hear a lot of “(Southern City) isn’t a hockey market and never will be”

The New Improved Avalanche. Now with Real Coaches!
Jibblescribbits: C'mon over and waste some time

by Jibblescribbits on Nov 19, 2009 1:48 PM CST up reply actions 0 recs

jibble, there are two problems with that analysis:

1. It contemplates that the NHL is bound to invest in a local market instead of the team itself. One can make a pretty sound argument that it is the team that should be making the investment; and

[MUCH more importantly]

2. It makes the age-old assumption among devout hockey fans that people plunking down actual money (or getting their company to do so) on hockey tickets/suites/sponsorships is dependent on or related to playing the game. It astounds me that many bright commentators simply accept this as part of the Canon of Conventional Wisdom of Hockey Fandom. There is not a whit of evidence to support that, other than the thought process of people who have played the game and are fanatics about it. Do people actually think in their heart of hearts that the people who go to games are ex-players? Is it the case in football? The NBA? Decidedly not, yet somehow hockey is different, and the audience is full of people who played the game as a kid.

There i go, rocking the boat again.

by Gerald on Nov 19, 2009 4:00 PM CST up reply actions 0 recs

1. I think the argument can be made both ways, especially with revenue sharing. All the other markets have an interest in seeing every other market succeed, as well as churning out as many hockey fans as possible, as it creates more revenue for the sport overall. Some Northern fans may secretly enjoy watching southern markets struggle, but it doesn’t help their team or their league at all. I think it’s in the NHL’s best interest to invest in markets they are in.

2. I wasn’t clear, but as a longtime soccer player I realize that playing the sport doesn’t automatically translate to fandom, and while there is certainly that bias in my argument, it’s more besides the point.

I point out youth hockey not because hockey players = hockey fans, but because if the NHL invests in youth hockey leagues then they are essentially advertising twice. Once by having their names on equipment and facilities that are used, and two by getting their name on something that is community oriented. Also spreading individual team brands by allowing youth teams to use the NHL team sweaters & names for their uniforms (like baseball does). The participation in hockey is a distance third.

I think the NHL should sponsor local “Race for the cure” runs in their Hockey fights cancer month, adopt highways, and other community projects as well. I know some teams do that (The Avs actually do a fantastic job there). Building hockey fans through hockey players is a tertiary concern here.

I wasn’t precise in saying that, but I think it takes more than setting up hockey leagues, it’s lending your name to community projects that’s the key goal. (It looks less self-serving if they are doing it through youth hockey though)

The New Improved Avalanche. Now with Real Coaches!
Jibblescribbits: C'mon over and waste some time

by Jibblescribbits on Nov 19, 2009 6:51 PM CST up reply actions 0 recs

Instead of using the expansion fees to invest in local hockey and building a fanbase in those markets they just pocketed the expansion fees and left them to go it alone.,/i>

Aside from Gerlad’s points which (shockingly) I largely agree with, it’s also the case that, without the opportunity to pocket a lot of cash quick, expansion wouldn’t have happened. I think that we would have at least four fewer teams in the league without that element. That was the primary motivation for the owners when they authorized expansion: they wanted some quick money. The idea that they were going to funnel the expansion fees into building the market, in whatever fashion, was never in the cards.

by J. Michael Neal on Nov 19, 2009 10:49 PM CST up reply actions 0 recs

Agree completely. The only way the owners agreed to expansion was a way to make a quick buck, and the only way those teams were going to be successful is if they used those expansion fees to actually invest in the market.

And you could make a strong argument that the NHL would be a lot more successful right now had they used expansion fees to invest in local markets and had 4 fewer teams at the moment. (Which is kind of my argument, that the NHLs mistake is that they grew too quickly, too fast, in too many markets that needed more effort than they were really willing to give. )

The New Improved Avalanche. Now with Real Coaches!
Jibblescribbits: C'mon over and waste some time

by Jibblescribbits on Nov 20, 2009 8:15 AM CST up reply actions 0 recs

I think everyone’s idea of “balance” has a different reference point. Yours isn’t the same as mine, and vice versa.

The NHL is in some ways paying for not being more involved in this Phoenix situation earlier on. Letting the team sign on for that brutal arena deal in a small suburb was obviously a poor idea from the get go, and Moyes was left to flounder for far, far too long. The league (and obviously Moyes, etc.) made mistakes that go way, way beyond the issues you bring up (i.e. how to fight Balsillie).

I also think they should have appeased Balsillie somehow by entertaining the idea of Hamilton from the get go (pre-Pittsburgh). Sure as hell beats what’s happened since then.

Blogging on hockey at fromtherink.com

by James Mirtle on Nov 18, 2009 11:42 PM CST up reply actions 0 recs

You are sure bang on about balance. I am pretty sure you think of your approach as balanced (you may even take some pride in it).

I would add allowing Moyes to flounder is a mistake. That being said, we don’t know if the NHL offered up their advisory services team to Moyes; it was in place. If they ddi and Moyes declined, there is really nothing they can do to affect the way he is running the team, as long as he is complying with his obligations and paying his bills.

As for the lease, I don’t know that I have ever bought the idea that the lease is so onerous or “brutal” as you call it. Most locals who post on the web strongly reject the “small suburb” meme, as well, and I regard their rejection of an excuse like that as credible, because (i) normally fans jump at such excuses, and (ii) they know the real logistics better than us.

As for appeasing JB, they did. JB was trying to run a relocation con job on the NHL from the beginning, and they sniffed it out. Trust was an issue right from the jump. Without that, you are doomed as a potential partnership. It sounds like you are suggesting they try with Bettman what they did with Moyes – that is, “work” with him. Surely you realize the folly of doing do opposite someone who will stop at nothing in the end.

by Gerald on Nov 19, 2009 5:18 AM CST up reply actions 0 recs

Well the fans that exist aren’t going to complain about where the team is. Those that are no longer fans and live in Scottsdale? They may have a beef or two.

I fundamentally agree that the team Balsillie wants would be a great thing for the NHL, and the league disagrees entirely. I also think that the NHL’s opposition to a Hamilton team the past 20 years is what’s set this course.

There’s not really a lot of common ground there.

Blogging on hockey at fromtherink.com

by James Mirtle on Nov 19, 2009 10:23 AM CST up reply actions 0 recs

Why do you think that’s a cheap shot?

by HockeyinHD on Nov 17, 2009 6:45 PM CST up reply actions 0 recs

Self-explanatory.

by Gerald on Nov 17, 2009 7:36 PM CST up reply actions 0 recs

Obviously not.

by HockeyinHD on Nov 18, 2009 7:15 AM CST up reply actions 0 recs

Why do you think that’s a cheap shot?

Any shots taken on the Phoenix market’s attendance this year are pretty much cheap shots after the fiasco of the summer.

Whether or not you think Phoenix is a hockey market or not there’s absolutely no denying that the fans that are down there got taken for a ride on the shitcoaster this summer. The ownership (Moyes) for the team essentially told season ticket holders not to buy tickets. Then, as an added incentive not to buy them, he told them they may not get a refund on their season tickets back if the team ends up moving. I’m amazed that there’s even one season ticket holder in Phoenix with a franchise like that.

It was obvious to anyone who watched this that Phoenix would have attendance problems this season. In fact 28 markets would probably have similar issues had they gone through what Phoenix went through this summer.

There are plenty of reasonable arguments that Phoenix is not a good hockey market, the attendance from this season isn’t one of them.

The New Improved Avalanche. Now with Real Coaches!
Jibblescribbits: C'mon over and waste some time

by Jibblescribbits on Nov 18, 2009 10:44 AM CST up reply actions 0 recs

So you’re saying we should go with “if a tree falls in the forest, and nobody’s in the forest to hear it because of unbelievable amounts of ownership incompetence…”

According Twomey

by hawksfan21 on Nov 18, 2009 12:29 PM CST up reply actions 0 recs

This is true, but the losses the Coyotes sustain over the course of this year are still real money. They will come into play as the NHL tries to generate a return on its investment.

by J. Michael Neal on Nov 18, 2009 4:14 PM CST up reply actions 0 recs

Agree

I’m not saying the story isn’t worth following at all, but I think remarks that are meant to disparage the Phoenix market because of this years attendance are cheap shots.

The New Improved Avalanche. Now with Real Coaches!
Jibblescribbits: C'mon over and waste some time

by Jibblescribbits on Nov 18, 2009 7:17 PM CST up reply actions 0 recs