Part II: Bankruptcy Court Yet to Rule on Phoenix Coyotes Case

CoyotesBy Dan Canavan

Here is Part II of our observations from yesterday’s hearings in Bankruptcy Court concerning the prospective sale of the Phoenix Coyotes:

Did the Coyotes Really Need to File for Bankruptcy Protection?

Yes, it certainly appears that the Phoenix franchise should be in bankruptcy.  The franchise has rumored to have lost in excess of $300 million since it relocated from Winnipeg in 1996.  The NHL has openly admitted that it took over the Coyotes largely due to the franchise’s inability to meet its obligations, and is now seeking to effectuate a transfer of ownership.  

Why is the NHL So Opposed to Moving the Coyotes?

Although frustrating to many fans in Phoenix and Southern Ontario, the NHL has a legitimate interest in protecting its business model, league opportunities and the collective and individual interests of its current franchises.  Allowing Jim Balsillie to make an end-run around the NHL’s Constitution by way of the Bankruptcy Court would undermine the league’s ability to manage its own operations.  The Bankruptcy Court may be unwilling to take that step, even if it is persuaded that it has the power to unilaterally rewrite the NHL’s Bylaws.  Of course, this does nothing to change the fact that the NHL is investing significant time, energy and capital to float a franchise that, by all accounts, has failed in its current location.

The question remains: would if the league be better off with Balsillie in Hamilton, or a financially challenged franchise, without an owner, in the desert?  Judge Baum did not rule from the bench yesterday, but stated he will decide this very issue by the end of the week.  That is, of course, if the NHL and Balsillie don’t resolve this issue among themselves first.

dan_canavan1Dan Canavan, Connecticut Sports Law’s resident hockey expert, is an attorney at Updike, Kelly & Spellacy in Hartford, Connecticut and fan of the former Hartford Whalers. He has appeared as a guest with regard to the NHL and the Phoenix Coyotes bankruptcy proceedings on CBC Radio’s World Report. Dan can be contacted at dcanavan@uks.com or 860-548-2672

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