All leagues watching Coyotes’ case

The outcome of the NHL’s battle in the desert over the ownership of the Phoenix Coyotes could send a cold shiver through other major professional sports leagues in North America.

The outcome of the NHL’s battle in the desert over the ownership of the Phoenix Coyotes could send a cold shiver through other major professional sports leagues in North America.

The right to retain the final say over who can, and maybe more importantly, who cannot own a team is something the people running pro hockey, football, basketball and baseball are loath to relinquish, according lawyers and sports insiders.

“The sports leagues are sort of a self-selected, closed group,” said Eric Schaffer, a senior bankruptcy partner at the Pittsburgh law firm Reed Smith. “They decide who is going to be admitted to their league, they police themselves.

“They also want to make sure they retain the ability to be the exclusive arbiters of who is going to be in their membership.”

Canadian billionaire Jim Balsillie, co-CEO of BlackBerry maker Research In Motion, has offered US$212.5 million to buy the Coyotes but the deal is contingent on moving the team to Hamilton. The NHL wants to keep the team in Arizona and favours a US$148-million bid from Jerry Reinsdorf, who owns baseball’s Chicago White Sox and the NBA’s Bulls.

The NFL, NBA and Major League Baseball have all filed documents asking the court to respect the NHL’s authority over ownership transfer and relocation.

“All the leagues are vitally interested in this,” said one former longtime sports executive. “I think (baseball commissioner) Bud Selig would be apoplectic if he didn’t have the right to reject an ownership bid, as would (NFL commissioner) Roger Goodell.”

The NHL owners voted 26-0 to reject Balsillie as an owner, saying he was perceived to be untrustworthy.

Bankruptcy judge Redfield T. Baum has scheduled a hearing for Sept. 2 in Phoenix to determine whether to uphold the NHL’s rejection of Balsillie. If Baum decides to ignore the vote, Balsillie could participate in a Sept. 10 auction for the Coyotes.

Schaffer said if Balsillie is successful in taking control of the Coyotes and move them to southern Ontario, it would put a huge dent in the armour professional leagues have coated themselves with.

“If someone can force his way in through the bankruptcy process, it goes to the fundamental nature of the league and how it governs itself,” said Schaffer, who was involved in the Pittsburgh Penguins bankruptcy case.

“What is potentially at risk here is the ability of an outsider to force his way in. Or the ability to turn a sport franchise into just another commodity that can be bought and sold without the control of the league.”

While the NHL is adamant it does not want Balsillie as an owner, a bankruptcy judge may be more interested in which potential buyer can satisfy the team’s creditors, said Schaffer.

Reinsdorf may have gained the upper hand in this area by reaching a deal to pay a large portion of the US$80 million owed to the Coyotes’ largest secured creditor.

Schaffer said the judge may also have concerns that Balsillie’s purchase hinges on relocating the team.

Time is running out on moving the team for this season. Also, if Balsillie does win this court fight, it sets the stage for more litigation.

“At some point that is a problem Balsillie has,” Schaffer said. “The test that is applicable under the bankruptcy code is, what is the highest and best offer.

“The highest is usually the best but not always. If the highest is an offer that can’t close, or it can’t close without a year or two of litigation, it may not be the best.”

News of the court case has even reached Australia where it came up as part of a sports law class being taught at the University of Sydney by visiting Penn State professor Stephen Ross.

Ross, a sports law and antitrust scholar, said a victory by Balsillie would be a good thing because the major professional sports leagues have too much power over ownership.

“Sports leagues have illegal monopolies by preventing new entry from deserving clubs,” he said. “Sports leagues harm consumers by being run by the clubs themselves, in their own self-interest, instead of the best interests of the league as whole.”

Many Canadian hockey fans would probably be thrilled if the Coyotes are reincarnated in Hamilton. But they may want to be careful what they wish for. If leagues lose their power over franchise ownership, teams could begin switching cities like cars changing lanes on the freeway.

Just Posted

PHOTO: Rainbow Block Party at Red Deer’s West Park

The Trans and Non-Binary Aid Society hosted a Rainbow Block Party at… Continue reading

Blood donations needed in Central Alberta: Canadian Blood Services

357 donors are needed before Aug. 26 at the Red Deer clinic

WATCH: Annual Family Picnic at Central Spray and Play

Blue Grass Sod Farms Ltd. held the Annual Family Picnic at the… Continue reading

Photos: Smoky conditions in Red Deer

Red Deer and area is experiencing high risk air quality.See related: Red… Continue reading

Committee to decide how millions in Humboldt Broncos donations are split

SASKATOON — Lawyers for the families of some of those who died… Continue reading

Boy, 11, dies after being struck by payloader on southern Alberta ranch

BOW ISLAND, Alta. — A boy has died after an accident on… Continue reading

Liberals look at creating federal holiday to mark legacy of residential schools

OTTAWA — The federal Liberal government wants to establish a holiday to… Continue reading

Thousands of police officers expected at regimental funeral in Fredericton

FREDERICTON — Thousands of police officers and first responders from across the… Continue reading

B.C. declares state of emergency over wildfires

VICTORIA — The British Columbia government has declared a provincial state of… Continue reading

As service refusals make headlines, experts say businesses usually in the wrong

Two Canadian businesses that recently made headlines for refusing customers have learned… Continue reading

Irregular asylum claims increased in July after two months of decline

OTTAWA — The number of irregular border crossers in Canada went up… Continue reading

Most Read

Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month