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Coyote Ugly: A call for 10 depositions

Well, things are getting fun.

David Shoalts has all of the details in handy article form, focusing mainly on Richard Peddie and the call for the Maple Leafs executive to be put "on the hot seat." He'll have some company though, as 10 different individuals are being requested for depositions — five from the debtors' side and five from the league's side. To this point, No. 1 through 4 and No. 6 have agreed to be questioned.

Both groups present their reasonings for wanting to depose their choices, something that gives us some insight into what they're looking for from those depositions:

Who Balsillie/Moyes want to question and why

1. Deputy commissioner Bill Daly
"Debtors intend to question Mr. Daly regarding the substance of his declaration, the process by which the Board came to this conclusion, and other associated matters raised by the NHL’s motions."

2. Wild owner Craig Leipold
"Debtors intend to question Mr. Leipold regarding the substance of his declaration, his statements made to the executive board of the NHL as reflected in the NHL’s July 29, 2009 report regarding the information considered with respect to PSE and Mr. Balsillie’s transfer application, as well as any additional personal knowledge he has related to the consideration of the transfer application by the NHL’s executive board and board of governors, and other associated matters raised by the NHL’s motions."

3. Bruins owner and chairman of NHL board Jeremy Jacobs
"Debtors intend to question Mr. Jacobs regarding the substance of his declaration, his presence and recollections of the executive committee meeting he attended where Mr. Balsillie was interviewed, as well as any additional information he has related to the consideration of the transfer application by the NHL’s executive board and board of governors, and other associated matters raised by the NHL’s motions."

4. Commissioner Gary Bettman
"In open court on August 11, 2009, the NHL represented that Mr. Bettman was available to testify as to the reasons the Coyotes could not relocate for the 2009-2010 season. Mr. Bettman was also involved in the process by which the NHL denied PSE and Mr. Balsillie’s transfer application. Debtors seek to depose Mr. Bettman regarding his personal knowledge supporting the NHL’s position that the Coyotes cannot be relocated for the 2009-2010 season, the process by which PSE and Mr. Balsillie’s transfer application was considered and denied, and other associated matters raised by the NHL’s motions."

5. MLSE president Richard Peddie
"He has been quoted as saying that he/the Toronto Maple Leafs would not allow the NHL to move an existing team or an expansion team into the exclusive territory of the Maple Leafs. Debtors seek to depose Mr. Peddie as to his involvement in the process by which PSE and Mr. Balsillie’s transfer application was denied, the discussions he had with other NHL member teams and/or NHL representatives regarding PSE and Mr. Balsillie’s transfer application, any attempts by Mr. Peddie or the Toronto Maple Leafs to exercise the veto rights teams have accorded to them through the NHL By-Laws and Constitution regarding a team moving into the exclusive territory of another team, and other associated matters raised by the NHL’s motions."

Star-divide

Who the NHL wants to question and why

6. & 7. Jim Balsillie and his lawyer Richard Rodier
"The NHL proposes to examine Mr. Balsillie and Mr. Rodier on (i) the grounds for the NHL's denial of PSE's ownership application, (ii) possible collusion between PSE, Mr. Moyes, and the Debtors regarding this bankruptcy action and the Debtors' attempts to market and sell the Phoenix Coyotes, and (iii) the terms of his proposed APA and the contingencies set forth therein."

8. & 9. Coyotes owner Jerry Moyes and his lawyer Earl Scudder
"The NHL proposes to examine Mr. Moyes and Mr. Scudder regarding (i) the NHL's control of the Club since November 2008, (ii) possible collusion between PSE, Mr. Moyes, and the Debtors regarding this bankruptcy action, (iii) attempts both before and after the filing of the bankruptcy petition to market and sell the Phoenix Coyotes, (iv) Mr. Moyes' management of the Club, and (v) Mr. Moyes' financial transactions with the Club.

10. Coyotes president Doug Moss
"The NHL proposes to examine Mr. Douglas Moss regarding the operation of the Phoenix Coyotes both before and after the filing of the bankruptcy petition."

The NHL's objection to deposing Peddie

"The NHL has offered to make available all four witnesses that PSE has requested on transfer of ownership issues. The NHL objects, however, to PSE's request to depose Mr. Richard Peddie, an owner of the Toronto Maple Leafs. Mr. Peddie is not relevant to the ownership transfer issue. He is not a member of the NHL Executive Committee. He did not attend the interview of Mr. Balsillie, the NHL Executive Committee meeting on July 29, 2009, or the Board of Governors meeting later that same day. Moreover, the Maple Leafs abstained from the vote on Mr. Balsillie's application. PSE and Debtors seek to depose Mr. Peddie solely on relocation-related issues, specifically PSE's theory that the Maple Leafs have "veto rights" under the NHL Constitution regarding a team potentially moving into the Maple Leafs' home territory. In sum, there is no need for his deposition at all, and certainly not right now. (We also note that Mr. Peddieis not a party to this action.)"

Reading the tea leaves

When it comes to the Peddie business, here was what the Moyes camp filed in early May in relation to the offending quote (under the heading "The NHL's Conspiracy to Oppose Relocation of the Coyotes Club"):

In 1993, Richard Peddie, President of the Toronto Maple Leafs, dismissed the relocation of the Ottawa Senators to Hamilton as something that "would not be acceptable to us." Mr. Peddie elaborated that because "franchises are a function of the market they're in, the size, the demographics," and "part of the value of the Maple Leafs is the territory," permitting the relocation of another NHL franchise to Hamilton "would be giving away a lot of our territory or sharing a lot of our territory, so that would be unacceptable."

I know that's a ton of stuff there, so I'll leave you with this: If you want to take a look at the antitrust argument that may be coming, it's all already been laid out right here. It seems unlikely to me that they'll get into all of this in this particular court battle, but I'll let some of our resident legal experts weigh in on that.

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Fight, fight, fight!

Fight for our love!

The population of Pominville keeps rising!

by Blackcapricorn on Aug 13, 2009 8:14 AM CDT reply actions   0 recs

1) Have to agree with some that that Balsille’s attempt to circumvent NHL rules made him less appealing to the league, but the way its making Bettman/the NHL brass squirm, and allow information to become public that we would have never known about how the NHL operates is priceless
2) We also find it a tad hypocritical for the NHL to bash Balsille when more than a handful of the board of governors have had past legal issues that would make them less than trustworthy ‘business partners’. We suppose Boots Delbaggio was a good potential owner but Mr. Blackberry is not? Laughable!
3) We do not like this Balsille attempt to have the judge force the NHL to say why they didn’t want him as an owner. Comes off as childish. We can’t forsee any situation where the NHL would allow Balsille to own an NHL team even if they were forced to fold the Yotes!

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

by Fauxrumors on Aug 13, 2009 8:15 AM CDT reply actions   0 recs

Faux, it is the case that none of the NHL owners who have had legal difficulties had them BEFORE they became owners. It is also true that none of said owners have been permitted to remain in control of their franchises after incurring those difficulties.

It is a red herring.

by Gerald on Aug 13, 2009 12:43 PM CDT up reply actions   0 recs

On 2…I think the operating tense agreement is “was v. is”. After the Boots debacle and the current circus in Tampa, I would think the board of governors would be more leery of questionable candidates, especially given the current economic times that were not pressing back then. Also, if Leipold’s allegations are true (he claims to have documents backing up his statements), then Balsille is a potential owner who actually managed to break the NHL constitution already, something that the other two embarrassments at least managed to avoid.

by Forsch31 on Aug 13, 2009 3:12 PM CDT up reply actions   0 recs

Anti-trust Argument?

Balsillie doesn’t have one. Under US law, he must show financial damages. They are none.

by bobbop on Aug 13, 2009 11:17 AM CDT reply actions   0 recs

If they sell to Reinsdorf, I imagine Moyes will feel there are some.

Blogging on hockey at fromtherink.com

by James Mirtle on Aug 13, 2009 11:25 AM CDT up reply actions   0 recs

BTW James, I think you found your Headline tag for the rest of the Summer for this story with “Coyote Ugly”. Now if there was only some way to get Piper Perabo involved with this story…

The population of Pominville keeps rising!

by Blackcapricorn on Aug 13, 2009 11:29 AM CDT up reply actions   0 recs

Yep. You’ve got to feel for Moyes, what with his attempt at collusion with Balsillie and his use of the Coyotes as his own personal ATM, being beaten down by the NHL’s cartel.

As far as the antitrust stuff, can someone cite US or Canadian competition law that would apply in this case? Is it a question of refusal to deal or consumer welfare or what? How does the NHL franchising system affect the interpretation of that law? I have looked at the general summary of antitrust law but I’m not a lawyer, just a fan. However, it seems like any antitrust lawsuit would be an enormous stretch of the laws’ intent.

You are validating my inherent mistrust of strangers.

by zyllyx on Aug 13, 2009 11:45 AM CDT up reply actions   0 recs

Did he only make deposits at that ATM? From all I’ve seen, Moyes just kept putting more and more money into the Coyotes, which is why he A) owns them and B) wants to sell them.

by RyanV on Aug 13, 2009 12:01 PM CDT up reply actions   0 recs

Hmm, so Moyes’ overcharging the Coyotes for office space, transportation, and other services from his other companies doesn’t factor into anything?

Making Moyes a martyr is as apt as making Balsillie a patriot.

You are validating my inherent mistrust of strangers.

by zyllyx on Aug 13, 2009 12:12 PM CDT up reply actions   0 recs

I have seen the ATM reference in a couple of different places now, and in my view it is inappropriate. Although technically Moyes had other shareholders with miniscule holdings, the use of the term “personal ATM” is inappropriate when one owns ~99% of the shareholdings. It is more appropriate to use it if you are the chief executive of a company the shares of which are held by others. It is usually used in contexts where you are taking money that does not belong to you, as opposed to simply taking money from your own company.

It is certainly true that Moyes’ losses are significantly overstated (I wrote on this over at HFBoards before anyone else did), but that term is not fair.

by Gerald on Aug 13, 2009 12:40 PM CDT up reply actions   0 recs

Thanks GC,

that’s a most educational read.

(I continue to be in awe of your posting on this and other hockey topics. 5,000 postings on HFBoards! I’m retired and I don’t have the time to be so prolific. You’re still working.)

I’d love to see you start your on site. Call it “On The Bench: A Legal-Eye Perspective On Sport”. If nothing else you could save your clicker finger so much wear from moving from site to site!

On effort alone I think you desrve your on forum.

Just my opinion, of course.

by William Daniels on Aug 17, 2009 4:14 PM CDT up reply actions   0 recs

I appreciate the sentiment. I have had an offer from another site to host one for me, but I don’t know much about this website stuff.

by Gerald on Aug 19, 2009 8:10 PM CDT up reply actions   0 recs

That’s the best objection you have to the idea?

This website stuff is easy. Talk to a pro.

Lots of guys here have one: jibblescribbits, hockeyanalysis,…oh and some guy named James Mirtle…I think he knows some faces at that SBNation. You know him?

There isn’t a site that deals with your special knowledge and perspective. It’s almost an obligation. SBNation could use you.

Bet if I did a FanPost poll asking would FTR people check your site daily James would be the first to click on yes. And me and JMN and yrmom and zyllyx and….

It’s downright logical Spock.

by William Daniels on Aug 20, 2009 4:58 PM CDT up reply actions   0 recs

Heck, I’d love it if guys like Gerald opined in the FanPosts once in a while. I guarantee you’d be well read there, and there’d be no obligation to post regularly as with your own site.

Blogging on hockey at fromtherink.com

by James Mirtle on Aug 20, 2009 6:51 PM CDT up reply actions   0 recs

I have thought about the FanPost option as well.

Admittedly, the obligation about posting regularly has given me cause for hesitation too on the personal website angle.

by Gerald on Aug 20, 2009 7:27 PM CDT up reply actions   0 recs

The Coyotes fans are all portraying Moyes’s expenses as completely outlandish, but they just aren’t. $85-million is not a lot to run an NHL franchise, especially when Wayne Gretzky pulls down $8-million or so of that. It’s not a tight ship, but it’s also not a profligate one.

The team just has hardly any revenues. They’re way, way, way too low, even with a huge revenue sharing cheque. If you want to blame Moyes for something, it’s on that end of the equation.

Blogging on hockey at fromtherink.com

by James Mirtle on Aug 13, 2009 12:47 PM CDT up reply actions   0 recs

Outlandish, James, certainly not.

However, the city’s consultants noted that in several financial areas the Coyotes’ spending was well in the upper half of the league.

I more focus on the fact that the related-party dealings indicate that the losses attributable to the related-party dealings are not cash losses, which are what really matter in operating a privately-held sports franchise.

Examples include, of course, the $2.7 mil office space lease payments, the non-cash allocations of admin costs from other Moyes businesses, the payments to Shumway, possibly the mysterious “other management expense”, the interest on his own debt and – to a lesser extent – the air travel (well only to the extent that it does not cover the expenses of Swift Air in providing the services) all play a part.

Certainly they don’t add up to $27 mil, but I can say that PHO’s $85 mil in expenses are $15 mil higher than Nashville’s budgeted expenses, and that turns a biting loss into a huge one. It makes a difference.

by Gerald on Aug 13, 2009 12:56 PM CDT up reply actions   0 recs

FYI, in the above first line I intended to convey that the expenses are not “outlandish” – agreeing with you on that adjective, in other words

by Gerald on Aug 13, 2009 12:57 PM CDT up reply actions   0 recs

The only thing I’ll say on that is that they’d still be well, well in the hole even with expenses the likes of the Predators’. (And getting there of course would mean a more forgivable lease than the one the Coyotes have.) Phoenix only generated about $44-million without revenue sharing, which is $26-million shy of breaking even at $70-million expenses (which have to be by far the lowest in the league).

Blogging on hockey at fromtherink.com

by James Mirtle on Aug 13, 2009 1:52 PM CDT up reply actions   0 recs

Outlandish? Not really. Stupid and unnecessary? You bet your maple leafs. The big issue has been the size of the debt, and while I accept that revenues are basement-level the head-scratching level of the team’s expenses exacerbates the debt greatly.

One of the biggest pet peeves I have is how Moyes can possibly paint himself as a victim in this mess, given that he created a large part of it himself. I may despise Jim Balsillie and his tactics but one thing I’ll give him – he’s a far better and more shrewd businessman than Moyes, and the ease with which he suckered Moyes into sending the Coyotes spiraling down the poopchute is evidence of that. Not to mention how he got left out to dry by Ellman…

You are validating my inherent mistrust of strangers.

by zyllyx on Aug 13, 2009 3:47 PM CDT up reply actions   0 recs

James, one interesting thing about the exchange of filings is that JB is now taking the position that Rodier is his counsel. Interestingly enough, there is correspondence on file in the case frlom JB’s counsel (Kaye Scholer, a fine US firm) responding to a query about Rodier’s role. In that, JB’s counsel on his behalf states about five different but crystal-clear ways that Rodier is not his counsel and will at no time ever be his counsel. He is to be a consultant only, and they describe his role and future role.

Funny how the story changed.

This reminds me of the recent JB counsel correspondence stating unequivocally that neither he nor Rodier retain any files of documents, yet in his interview with the NHL on the 29th he stated that he had every draft of his letter of intent with Leipold.

Hmm.

by Gerald on Aug 13, 2009 12:49 PM CDT reply actions   0 recs

I’m confused Gerald. Are you implying that there is something amiss in the Balsillie camp? Who would have thought that such an upstanding person could possibly be talking out of both sides of his mouth!!!

Good catch on the council bit. I missed the early assertions that Roddy Rodier wasn’t his council. I just figured since he had his fingers in the whole Preds debacle that he was still chummy with JB.

2008-2009 Colorado Avalanche: Dry Humping Mediocrity

by Mike @ MHH on Aug 14, 2009 10:19 AM CDT up reply actions   0 recs

Oh, he is (mind you, it’s “Rowdy Roddy Rodier”, thank you very much!!). He was simply described as JB’s “consultant”. The assertions came out fairly recently, buried in one of the attachments to the many filings.

by Gerald on Aug 14, 2009 9:00 PM CDT up reply actions   0 recs

Phoenix Bankruptcy

What we are all forgetting is that the Judge cannot sell something the debtor does not own at auction. The buyer at a bankruptcy auction buys the rights being sold and the obligations of the entity being sold unless the entity itself is the debtor. Put briefly, the buyer obtains the same right of removal of the franchise as was possessed by the debtor and no more at an auction sale. The NHL, also one of the creditors, will still have its rules for moving a team as they did before the sale, because that right is built into the franchise agreement. The only way for the buyer to obtain the right to move the team to Hamilton, Kansas City or Moscow will be to go through the NHL franchise agreement rules or negotiate such a move with the NHL as a part of a bankruptcy plan in Chapter 11 bankruptcy. An auction cannot convey those rights as the debtor did not have them. The cash generated from the sale will pay costs first and the remainder goes to the unsecured creditors. Secured creditors have to rely upon their security and for any remainder become unsecured. Equity owners and investors are sol unless the unsecured creditors are paid in full and there is money remaining. Ergo, if Balsille wins the auction, the NHL cannot prevail because they do not want him to hold an NHL franchise; however, they can block his move to Hamilton. Balsille can buy the franchise, but, like any other franchise holder is subject to the existing franchise agreement. He may become Glendale’s newest investor.

by Thomas Allen on Aug 13, 2009 5:40 PM CDT reply actions   0 recs

This is where you get to Gerald’s and my arguments over LA Coliseum v. NFL.

by J. Michael Neal on Aug 13, 2009 8:40 PM CDT up reply actions   0 recs

the cash generated from the sale will pay costs first and the remainder goes to the unsecured creditors. Secured creditors have to rely upon their security and for any remainder become unsecured.

You have that mixed up a bit. The secured creditors come before the unsecured creditors.

by Gerald on Aug 13, 2009 8:43 PM CDT up reply actions   0 recs


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