Balsillie, NHL might both end up without Coyotes

PHOENIX — It turns out there’s a surprise third option available to the judge charged with deciding the fate of the Phoenix Coyotes — and it probably won’t be to the liking of either Gary Bettman or Jim Balsillie.

PHOENIX — It turns out there’s a surprise third option available to the judge charged with deciding the fate of the Phoenix Coyotes — and it probably won’t be to the liking of either Gary Bettman or Jim Balsillie.

Judge Redfield T. Baum raised the possibility that he might not award the team to either the NHL or Balsillie’s company PSE as a two-day auction for the bankrupt franchise began Thursday.

The revelation came early in the proceedings and sent a ripple through the courtroom. Jordan Kroop, a lawyer for former Coyotes majority owner Jerry Moyes, was speaking about the potential bids when he was interrupted by the judge.

“There is a third opportunity when we’re done here — no sale,” said Baum.

“Theoretically,” Kroop responded.

“I think it’s more than theoretical,” said Baum. “You all ought to keep that in mind.”

The exchange set an uncertain tone to an auction process that most observers believed would end with a new owner for the money-losing franchise. Evidently, that’s no longer a certainty.

“I’m not going to predict (what might happen),” said Bettman. “We all heard him say it, we’ll all have to see what happens.”

The full-day hearing produced one final surprise just as it was ending, when the NHL’s lawyers informed the judge that they don’t wish to cross-examine Balsillie on Friday morning. He and the commissioner had each been scheduled to take the stand.

There was no reason given for the sudden change in plans.

“You’ll have to draw your own conclusions,” offered Bettman.

The parties will each have the opportunity to tweak their bids before the auction wraps up.

Baum reaffirmed the offers from the two sides at the outset of Thursday’s hearing and asked the court if there was any other bids to be considered in the auction. No one else stepped forward.

It left the only bidders as Bettman and Balsillie — men that were both on the sidelines on the first day of hearings, leaving the floor to lawyers and the stand to a handful of experts from each side.

If what took place is a prelude of what’s to come, it should make for compelling theatre when Bettman is questioned before Friday’s auction.

Balsillie lawyer Jeffrey Kessler and NHL lawyer Shep Goldfein took turns cross-examining economic experts on Thursday, hammering away with probing questions that aimed to undermine declarations and reports they had previously filed in U.S. Bankruptcy court. The exchanges were at times compelling.

Each lawyer managed to pluck some interesting admissions from those on the witness stand — PSE economic expert Andrew Zimbalast conceded that an expansion team could work in Glendale (with a US$15-million yearly subsidy from the city) while NHL experts Franklin Fisher and Michael Rabkoch each admitted that a team in Hamilton, where Balsillie wants to move the Coyotes, would rank in the top five in league revenues by their calculations.

Ultimately, the hours spent asking questions about franchise values and relocation fees is not likely to play into the judge’s decision regarding the auction. Baum even spoke up at one point during the afternoon and expressed concern that the issues didn’t seem to warrant the attention they were receiving.

The judge has seemed reluctant throughout the four-month case to make a ruling that would be precedent-setting for the other major pro sports leagues and it’s starting to look less likely that he’ll break from that pattern this week. Not that any of the principles were speculating on how things might turn out.

“In the final analysis, the judge will make a decision and we’ll all know what it is,” said Bettman. “This is part of me being a lapsed lawyer — I don’t like to second guess judges or prognosticate what they’re going to do.

“This is the judge’s procedure now. He’ll render the decision and conduct the proceedings as he sees fit.”

Balsillie enters the auction with the highest bid, as much as US$242.5 million, but it’s contingent on moving the Coyotes to Hamilton. He upped his offer over the weekend by extending Glendale as much as $50 million in exchange for the city’s claims against a move out of Arena.

The NHL has offered $140 million in a bid that came under heavy questioning from the judge, who seemed unsure of the degree in which it might satisfy the various creditors.

“I can’t approve a bid I don’t understand,” said Baum.

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