Moyes, collusion and saving face in Glendale

by James Mirtle on Aug 18, 2009 8:45 AM CDT Comment 34 comments

More photos » Ross D. Franklin - AP

There was another pile of documents filed yesterday (we're up to 666 now) in the Coyotes bankruptcy case, and two of the attachments on record include emails between the Jim Balsillie and Jerry Moyes camps both before and soon after the sale agreement was put into place on May 5.

One of the more interesting segments involves Moyes's lawyer Ed Scudder explaining to Balsillie's lawyer Richard Rodier why the Moyes camp did not want to (publicly anyway) criticize public subsidies for a new owner. This message is from three days after the bankruptcy filing (click for a larger view):

Essentially, what Scudder says to Rodier is that, while Moyes never received "a firm proposal" from the City of Glendale on subsidies, their side was aware of the fact that the city manager felt he could likely raise an additional $14.6-million via a special tax on purchases in the area.

Scudder adds, however, that Moyes "is concerned that aiding an effort to prevent the city... from offering a subsidy could 'chill the bidding' that he has publicly said he endorces." He ends the email with a sentence that suggests the Balsilie camp may have had some contact with the Goldwater Institute watchdog group in terms of alerting them to potential subsidy negotiations that had taken place.

(The NHL brought these emails forward, and it's not hard to see why. If the league wants to build a case that there was collusion between Balsillie and Moyes, this is a decent place to start, as it appears Rodier was attempting to get information detrimental to the Jerry Reinsdorf bid out into the open.)

Three days into this mess, it seems fairly clear that Moyes had wanted to stay in good standing in the community, something he has said previously he believed he was doing by buying this team in the first place. Since that point, my guess is the ugliness has progress far, far further than he had anticipated, and three months later, his home was for sale with a likely eye on making an exit from his long-time hometown.

It makes me wonder if Moyes believed the Balsillie bid might result in a local offer that was greater than Reinsdorf's, a situation that would result in more cash for himself and the team staying in Glendale. His early attempts to preserve his reputation speak to a desire to save face while making this sale — a strategy that apparently had to be abandoned early on.

Something to ponder anyway. And if you want to get some insight into the genesis for his partnership with the Balsillie camp, this bit of email squabbling from late April is a little eyeopening.

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Your coverage on this is unreal. This is how I see it…

It’s kind of hard to for Moyes not to strongly consider Balsillie’s cash… if I were him, I’d be having closed door talks, too – especially with how much cash he’s lost over his tenure as owner.

Now, his hand is being forced by the league to take a deal that’s “not fair” to any of the creditors, the owner or the city.

All the while, there’s a deal on the table that pays out the creditors, the owner, the league (potentially, whatever that “moving fee” will be), and probably helps the City of Glendale deal with its massive arena debt.

Bettman can’t tell us this situation hasn’t gotten personal. It definitely isn’t good business.

by wlittle on Aug 18, 2009 9:32 AM CDT reply actions 0 recs

Bettman can’t tell us this situation hasn’t gotten personal. It definitely isn’t good business.

If the NHL Board of directors doesn’t think Balsille would be a good partner (and it’s pretty clear that he won’t be a good partner for them, as he’s tried to undermine them in at least 3 different scenarios and the only thing he seems to want more than a hockey team is to get one without following the NHLs rules.) then Bettemen and Co. are probably under the impression that the long term problem caused by Balsille will not be worth the short term solution to this problem that he provides.

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by Jibblescribbits on Aug 18, 2009 10:04 AM CDT up reply actions 0 recs

1) Good analysis Jibble. Regardless of one’s stand on Balsille, its the NHL/ board of governors who have the say so of whom joins their exclusive club. Throwing stones at their glass house won’t endear Mr Balsille even if his bid makes them a few bucks in the short run.
2) If they (the NHL) want to add a franchise in southern Ontario in the future there won’t be a shortage of potential folks lining up to pay the expansion fee anyway.

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sometimes I find it's better to be somebody else

by Fauxrumors on Aug 18, 2009 12:10 PM CDT up reply actions 0 recs

I’m sure someone like Gerald will correct me if I am wrong on the numbers, but I think Moyes was set to receive about $100 million out of Balsillie’s bid. He would get nothing out of Reinsdorf’s.

So, if you are all of the other creditors, Balsillie offers $112.5 million to the collective, while Reinsdorf offers $140ish.

The higher number is not automatically the better bid. The creditors have their say, and will decide what is best for them.

Also, Balsillie’s bid offers $0 to the league in a relocation fee, and a similar $0 to the city of Glendale. The goal of bankruptcy, from Balsillie’s POV, is to bypass these two rather tricky issues.

by Resolute on Aug 18, 2009 11:05 AM CDT up reply actions 0 recs

I believe I read that the largest creditor has already endorsed Reinsdorf’s bid. Is it not just a formality that the rest of the creditors will all fall in line, eventually?

I've seen enough to know that I've seen too much.

by Smoboy41 on Aug 18, 2009 11:52 AM CDT up reply actions 0 recs

They have reached an agreement with Reinsdorf (and are, I believe, on record previously stating Balsillie’s bid was the only that paid them out), however Reinsdorf’s bid still requires concessions from the city.

But yeah, if he gets what he’s looking for out of Glendale, Id bet we have a winner.

by Resolute on Aug 18, 2009 12:46 PM CDT up reply actions 0 recs

REs, the JB bid is such that the oft-cited $100 mil for Moyes comes about in the reverse of the way you noted.

The secureds get paid first. The NHL gets paid #1, and SOF gets paid #2.

The Moyes $100 mil became part of the common understanding because the secured creditors get about $100-110 mil combined, which left $100-112 mil for the unsecureds, of which Moyes was one. Based on the theory that the City’s claim is minimal, Moyes’ claim constitutes about 90% of the unsecured creditor total – hence the ~$100 mil-for-Moyes calculation.

THe rest of your post is spot on.

I would add that, under the JB offer, even assuming the best for that offer (that the city gets only a ~$5 mil claim), the unsecureds get a percentage of their claim

Undder th eJR offer, most of the trade creditors get paid in full, as JR needs them to continue to operate and his offer accordingly so provides.

by Gerald on Aug 18, 2009 12:23 PM CDT up reply actions 0 recs

that would explain it. Thanks.

by Resolute on Aug 18, 2009 12:48 PM CDT up reply actions 0 recs

didnt Balsillie’s camp say, at some point in this mess, that he’d be willing to pay a relocation fee?

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by poploser on Aug 18, 2009 1:56 PM CDT up reply actions 0 recs

Yes, Rodier’s been on record saying they want that figure to be named. I don’t think they have a major issue with the fee, although that would depend on its size.

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by James Mirtle on Aug 18, 2009 10:54 PM CDT up reply actions 0 recs

t’s kind of hard to for Moyes not to strongly consider Balsillie’s cash… if I were him, I’d be having closed door talks, too – especially with how much cash he’s lost over his tenure as owner.

Nobody has said that Moyes and Balsillie shouldn’t talk about JB buying the team or even making a formal offer and presenting it to the league. You seem to forget that Moyes and JB decided that declaring bankruptcy and cutting the league out of the decision-making process on relocation was the way to go.

I’m not saying the league was any more likely to approve a transfer of ownership that was completely above-board and legal because of Balsillie’s involvement, but they sure as hell aren’t going to go quietly into the night when Moyes and Balsillie throw down the gauntlet in a US Court.

Now, his hand is being forced by the league to take a deal that’s "not fair" to any of the creditors, the owner or the city.

Two things: He mis-managed the HELL out of the whole business prior to the bankruptcy so I have no sympathy for him not making his money back. Also, unless his lawyers are complete idiots, he was well aware that there was at least a slim likelyhood that the court proceedings could determine that going a non-Balsillie route was the better option. Essentially, once you invoke the court, you are basically telling them to force you to do something to get the debt of your books.

The posts above this one do a good job of breaking down how the Reinsdorf deal is as fair to the creditors as JB’s, but it provides a little less cash in Moyes’ pocket.

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by Mike @ MHH on Aug 18, 2009 2:02 PM CDT up reply actions 0 recs

(we’re up to 666 now)

Insert Bettman/Balsillie/Moyes is the devil joke here.

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by saskhab on Aug 18, 2009 10:16 AM CDT reply actions 0 recs

More good stuff, James. I had posted the links and some lesser commentary on this last night over on HFBoards as well.

Just in case anyone gets the wrong impression about things, I think I can assure all that I shared the mortified reaction of Moyes’ own counsel to Rodier’s conduct in both strings of email. I think I can say with confidence that any reputable counsel in any country would share that reaction as well.

Regarding the comment above about Bettman making it personal, the court filings of late have included emails between Bettman and JB himself. If it is supposedly so “personal” for Bettman, there is a remarkable lack of rancour. In fact, the emails were trying to be quite helpful to JB (they date back to the Nashville deal).

by Gerald on Aug 18, 2009 10:17 AM CDT reply actions 0 recs

And here I thought Moyes and Balsillie colluding on the bankruptcy scheme was as obvious to everyone as the NHL chilling all bids aside from Reinsdorf.

by Resolute on Aug 18, 2009 11:01 AM CDT reply actions 0 recs

Me too.

2008-2009 Colorado Avalanche: Dry Humping Mediocrity

by Mike @ MHH on Aug 18, 2009 2:03 PM CDT up reply actions 0 recs

Clicking on that e-mail "squabbling" link...

Very entertaining.

I know that his full name is A. Richard Rodier, but I will always think of him as A. Dick.

You are validating my inherent mistrust of strangers.

by zyllyx on Aug 18, 2009 11:20 AM CDT reply actions 1 recs

That chain of emails from Rodier are great. I love people who think their poop don’t stink.

Similarly, I don’t care if you are a practicing attorney in the US, Canada, Russia, or on Jupiter, or any other person for that matter. Scudder’s comment that “if you promise not to quote Jerry or me”… is simply something you never put in an email. If you aren’t comfortable saying something in public when challenged, don’t put it in an email. Its amazing how stupid experienced, educated, business people get when it comes to email.

Glen Sather is a Hockey Genius.

http://glensathersucks.com/
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by poploser on Aug 18, 2009 12:02 PM CDT reply actions 0 recs

Yeah, no doubt. The minute someone types, “Promise me that…” in an e-mail, especially one that has to do with business, you can pretty much be assured that whatever the promise is won’t be honored.

Seriously, though. Rodier and Balsillie KNEW that this was going to go to court… what on earth could have made them think this kind of exchange would help their cause any? Maybe my buddy from Toronto is right – some people at this level of business are so sure they won’t get caught that they get careless.

You are validating my inherent mistrust of strangers.

by zyllyx on Aug 18, 2009 12:23 PM CDT up reply actions 0 recs

Agreed, poploser. Simply amazing.

As a side point, zyllyx, I have a suspicion that JB/Rodier had/have no intention of disclosiing their email, hence maybe no chance in their minds of the email coming to light. Unfortunately for them, Scudder disclosed his emails. I suspect Moyes is not quite as bruising, hamfisted and outright defiant of the law as Rodier seems to be.

by Gerald on Aug 18, 2009 12:27 PM CDT up reply actions 0 recs

I LOL'd:

Since your [Rodier’s] behavior would be a blatant violation of Arizona ethical rules, I assumed you were not licensed to practice here. […] You can also be assured that I am not concerned about any consequences you may suffer, so there is no need to thank me.

I think Christopher D. Johnson won that round.

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by JoshCVT on Aug 18, 2009 1:24 PM CDT up reply actions 0 recs

he didnt have to say anything, and he still won the battle. but overall, he won the round, the war, the right to pillage the town afterwards, and the ability to give himself a cool nickname like “Chris the Marauder”

Glen Sather is a Hockey Genius.

http://glensathersucks.com/
http://twitter.com/ThGeneralissimo

by poploser on Aug 18, 2009 1:47 PM CDT up reply actions 0 recs

What’s the other right that feudal lords got? Oh yeah, they get to bed all the new brides on their wedding nights. I’m pretty sure Chris the Marauder got that right too!

2008-2009 Colorado Avalanche: Dry Humping Mediocrity

by Mike @ MHH on Aug 18, 2009 2:05 PM CDT up reply actions 0 recs

No offence, Gerald, but some of those discussions sound like a whole bunch of Geralds tossing bombs at each other.

Blogging on hockey at fromtherink.com

by James Mirtle on Aug 18, 2009 10:57 PM CDT up reply actions 0 recs

Yeesh, how could I POSSIBLY take offense to that?

Richard Rodier is no Gerald, and vice versa. Based on his emails, our styles of doing business are as diametrically opposed as they could possibly be. You can be as surprised as you want, but pretty well anyone who does business with me would report that as well.

Mr. Johnson’s response was very measured. I laughed at it, as apparently did others. Most good lawyers have an array of verbal devices that they have at the ready to deal with unpleasant gentlemen like Rodier, with different ones for different circumstances. Mr. Johnson decided to deploy the “gentlemanly screw-you” device. Always a favourite for those playing along at home.

by Gerald on Aug 19, 2009 12:37 AM CDT up reply actions 0 recs

Daamnn....

If I ever need a lawyer, I’m gett Christopher D. Johnson (who completely deserves being called by his full name from here on out).

by Forsch31 on Aug 19, 2009 3:16 PM CDT up reply actions 0 recs

At this point, I think we can say that, if Glendale, or, more accurately, the city manager ends up not being able to deliver the necessary concessions, we have a giant clusterfuck of monumental proportions here. I also think that, as the Balsillie bid collapses, the city has less incentive to compromise.

by J. Michael Neal on Aug 18, 2009 1:39 PM CDT reply actions 0 recs

…as opposed to the current enormous clusterfuck we’re already in? :P

You are validating my inherent mistrust of strangers.

by zyllyx on Aug 18, 2009 1:42 PM CDT up reply actions 0 recs

even more enornmouser

by yrmom on Aug 18, 2009 4:51 PM CDT up reply actions 0 recs

We clearly have different definitions of clusterfucks.

2008-2009 Colorado Avalanche: Dry Humping Mediocrity

by Mike @ MHH on Aug 18, 2009 2:06 PM CDT up reply actions 0 recs

This would be the mother of all messes for the league if the deal that the city manager is trying to cut fails. They’d have to take the team over for at least one more season (they in essence already have control of the team now) and with no concessions on the lease, who knows how long they may be stuck running the team.

I mean seriously, without a new lease agreement, why would someone want to guarantee themselves millions in losses with financing so difficult to get?

by oilerdago on Aug 18, 2009 3:08 PM CDT up reply actions 0 recs

Read all the emails..including the ones after the jump and

my reaction – who cares – just typical back and forth between what appears to be a willing seller and willing buyer both trying to appear as not so interested or rushed at times…for my 2 cents it sure seems that Moyes and his attorneys at least from these emails are playing by the rules. I don’t think it’s news that Moyes was looking to sell the team and talking to folks including JB and camp about same though so I don’t think it’s r3ally substnanative to the whole current situatiuon/decision process. My gut says the Judge wants to get the creditors (whoever he decides fits under that tent) the most $$$. And while there’s stuff like this floating around, there’s certainly enough of similar stuff on the NHL side that if the judge wants to ignore their preference to keep the team in Glendale he can “make or really more accurately, accept, the argument to do so.”

by markbona-capsfan99 on Aug 18, 2009 2:28 PM CDT reply actions 0 recs

Rodier is an arrogant suit, who knew?! As I understand it, bankruptcy runs rather differently than any other type of federal court action. One of the significant differences is that, typically, showing that one party is a bunch of dirty rotten scoundrels is of limited value. Rather, the court is supposed to focus only on obtaining maximum value for all claimants (creditors, employees, etc.), and will therefore typically view such matters as largely irrelevant. So, in other words, who cares about this email thread? I doubt the court will …

by Max Currie on Aug 18, 2009 7:03 PM CDT reply actions 0 recs

Whose face doesn't need saving?

by William Daniels on Aug 19, 2009 4:13 PM CDT reply actions 0 recs

Moyes getting out of town

All this is very entertaining and informative. One clarification: While the Moyes property near Camelback Mtn is indeed up for sale, it does not mean Moyes is skipping town. Moyes owns several properties in the Phoenix area. Not sure this is his primary residence.

by Brahm Resnik on Aug 20, 2009 10:28 AM CDT reply actions 0 recs