Phoenix Coyotes to Hamilton or thereabouts in Canada?

Jim Balsillie, the CEO of RIM (the makers of the legendary CrackBerry BlackBerry), has made a formal tender off to purchase the NHL’s Phoenix Coyotes (formerly the Winnipeg Jets) from majority owner Jerry Moyes conditioned on relocation to Southern Ontario. This surprised no-one as Balsillie has several times tried to purchase NHL teams only to be thwarted by the NHL (Penguins) and a flaky owner (Predators).

There are tons of news articles, and some commentary on my message boards. Here’s my analysis in case anyone cares:

  1. The NHL is opposed to the move and the bankruptcy because it violates the league’s bylaws. (This is not a statement of legality, just their position. This is a business matter that is secondary to the bankruptcy case. A legal dispute between two businesses is always secondary to a federal case. Bankruptcy is a federal case.)
  2. Please remember that United States law applies to this because the company (team for our purposes) is based and operated wholly within the United States. The NHL is a US based league with operations in two countries (USA and Canada) but that is irrelevant for this matter because this is a matter between two USA companies.
  3. The NHL’s position is that the majority owner of the Phoenix Coyotes who filed (or actually signed off on — one assumes his crack legal team did the work) the bankruptcy did not have the legal authority to file the bankruptcy. (This IS a legal position. This is interesting. I am not sure of the NHL’s angle because, in theory, the majority owner of an enterprise has the absolute legal authority to file for bankruptcy if all conditions are met, and you cannot subjugate that right easily — unless, for instance, the documents with the league require him to offer the team to the league before filing.)
    There isn’t a lot of doubt from media reports over the past few years that Phoenix is ailing and bleeding money at an extraordinary rate.
  4. The NHL believe this bankruptcy was not legitimate and used SOLELY to get the RIM deal through. (This is a legal claim of fraud and one of the few things they can do to get a judge to reject the bankruptcy filing)
    However, according numerous reports, the NHL recently paid off a debt to keep the team running, that will make it hard for them to prove the team was solvent if they had to step in to cover a debt I do not feel that this argument is going to hold water.
  5. RIM — whether one likes the Blackberry or not — is a financially stable and viable company that proposes to move the team to a far better market for attendance and TV than Phoenix provides. There is a lot of talk about TV market size but that’s absolute bullshit because, quite honestly, our local Miami market is a huge
    TV market but the percentage that watches hockey is minuscule. In absolute numbers the Canadian market is better by any measure in a non-traditional market. This argument works well in the hockey belt of the USA but is worthless south of the Mason-Dixon line. (For example, would you rather have 20% of a million people or 1% of three million? That’s approximate numbers there and here for the TV market for comparison.)
  6. The league has, for years, done everything in its power to keep teams out of bankruptcy (ch 7, 11, or 13) because the bankruptcy court can impose its will and there is nothing the league can do. A federal judge wins over a private company all the time. Appealing to the Supreme Court is costly and likely will do no good because there are precedents: If you want to ask if the team can move without league approval, I refer you to the NFL teams that have done it. The NFL sued and lost. If the NFL can’t win, the NHL can’t win. And a court always looks at these precedents to see what has happened before. The NHL will lose and RIM knows it.


    My opinion is that, yes, the bankruptcy was sped up to help the RIM deal along because it had some operational cash along with the tender offer. That is suspicious. The fact that RIM is already offering up websites to sway public opinion before the league has had a chance to review it is also unusual. I also think a lot of the NHL’s objections are because they were not kept in the loop and are (as they indeed stated) surprised by this unexpected development.

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