Judge rules against Jim Balsillie’s bid to move Coyotes to Hamilton

The Phoenix Coyotes are staying put for now, Hamilton is still on the outside looking in, and the NHL has managed to turn away Jim Balsillie once again.

The Phoenix Coyotes are staying put for now, Hamilton is still on the outside looking in, and the NHL has managed to turn away Jim Balsillie once again.

Arizona bankruptcy Judge Redfield T. Baum rejected the Canadian billionaire’s bold bid for the insolvent team Monday, saying in a 21-page ruling that there wasn’t enough time to deal with all the unresolved issues raised by the unprecedented case.

Balsillie had sought to buy the Coyotes out of Chapter 11 protection with a US$212.5 million offer that was conditional on being able to move the team to Hamilton. He had set a June 29 closing date for the sale in an attempt to speed through the process and have the club in place for the 2009-10 season.

But Baum wouldn’t have it.

There were a myriad of legal issues to deal with, including how much the NHL would get as a relocation fee, and not much time to sort them out. There was also a tentative auction set for June 22 looming.

“Simply put, the court does not think there is sufficient time (14 days) for all of these issues to be fairly presented to the court given that deadline,” Baum wrote.

The ruling is a victory for the NHL, which had argued that the bid was designed to skirt league rules on the transfer of ownership and relocation and should be rejected for that reason.

The league also believes the Coyotes are still viable in Phoenix, even though the team has lost over $300 million since moving to the desert in 1996, according to court documents.

“We’re pleased the Court recognized the validity of league rules and our ability to apply them in a reasonable fashion,” NHL deputy commissioner Bill Daly said in a statement. “We will turn our attention now toward helping to facilitate an orderly sales process that will produce a local buyer who is committed to making the Coyotes’ franchise viable and successful in the Phoenix/Glendale area.

“We are confident that we will be able to find such a buyer for the Coyotes and that the claims of legitimate creditors will be addressed.”

Hamilton, which had lined up behind Balsillie and was ready to welcome him with open arms, ends up a jilted bridesmaid once more, its hopes of becoming home to the seventh Canadian NHL team falling short just like several other previous attempts.

And Balsillie must settle for a public relations victory with his intelligent and successful Make It Seven marketing campaign after failing to close the deal just like in his previous attempts to buy the Pittsburgh Penguins and Nashville Predators.

Not that he was ready to give up just yet.

“Jim Balsillie’s bid to bring a seventh NHL team to Canada continues,” spokesman Bill Walker said in a statement.

“The court still controls the sale process. As a result, we look forward to hearing from the NHL soon on its view of our relocation application and an appropriate relocation fee, so as to allow the court to determine if that fee is reasonable.

“We still think there is enough time for the NHL to approve Mr. Balsillie’s application and move the team to Hamilton by September. The court invited mediation on these issues and Mr. Balsillie is willing to participate in such mediation if the NHL is also willing to do so.”

The decision puts an end to more than a month of intense legal wrangling over the team’s future, put into motion when Coyotes owner Jerry Moyes surprised the NHL and filed for Chapter 11 protection on May 5.

A ruling was expected last week after a nearly seven-hour hearing June 9 ended with Baum telling the parties he wanted to sleep on the matter before deciding how they should proceed.

Baum offered hints of where his thinking was at during the hearing when he said he believed the NHL was entitled to a relocation fee if the Coyotes are moved to Hamilton, and put the league on notice that it may be ordered to work quickly to determine exactly how much that would be.

There were suggestions the sides go to mediation for the matter, but Thursday the court issued a notice saying Baum “will not be setting a separate hearing on the relocation and fee issue. It will be dealt with in the court’s ruling from the (June 9) hearing.”

That raised speculation a decision was imminent.

The relocation fee became critical since it would eat away from the money available to creditors, making Balsillie’s bid virtually worthless to them should he decide not to pay it.

One of the lawyers for the co-CEO of BlackBerry maker Research in Motion let slip during the hearing that they believe the NHL would charge $100 million for the move — a figure redacted from court documents and not confirmed by the league.

There may also have been some sort of indemnity fees demanded by or due to the Toronto Maple Leafs and Buffalo Sabres as compensation for the incursion into their territory, and it’s unclear whether Balsillie would have been willing to ante up.

Richard Rodier, his representative, noted outside the courthouse last Tuesday that the deal allows Balsillie to walk away if there’s a relocation fee, but the billionaire said in a statement Wednesday that he was one step closer to his goal of a seventh NHL team in Canada.

The NHL had steadfastly stuck to its view that there can be no relocation fee discussion until both an owner and the move have been approved by its governors.

The NHL had said it has received four expressions of interest from potential buyers interested in operating the Coyotes in Phoenix — including Toronto Argonauts owners Howard Sokolowski and David Cynamon, and Chicago White Sox and Bulls owner Jerry Reinsdorf.

But lacking a firm offer prompted Baum to dismiss them as little more than hearsay.

The true test of their interest comes now.

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