Controversy around hockey team's Chapter 11 filing

Submitted by Jen Jones on Thu, 05/14/2009 - 6:11pm

Controversy around hockey team's Chapter 11 filing

A combination of ownership debates, threats to relocate the team, and seriously deep debt is creating quite a scramble for the puck as it relates to the recent Chapter 11 bankruptcy filing by the Phoenix Coyotes, one of the NHL's most challenging franchises. If someone isn't knocked into the boards soon, this has the potential to go on longer than the league playoffs.

On May 6th, the owner of the Coyotes, Jerry Moyes, filed for bankruptcy on behalf of his team, which has been bleeding money for several seasons. One problem: according to the NHL, Moyes doesn't have the authority to do so. In fact, the league removed him from all positions of authority with the team when they found out about the bankruptcy filing.

A spokesman for the NHL said the league would be representing the Coyotes in any court dealings regarding bankruptcy and that they are aiming to have the bankruptcy petition dismissed. This is because back in February, the league loaned the team a substantial amount of money for it to remain operational and a component of that loan included the league having the authority to take over the team should it continue to operate on thin ice. Additionally, the NHL has been actively pursuing additional investors to alleviate the team of its consistent financial setbacks.

Owning a hockey team is not always a very profitable venture and is widely considered the most difficult type of major professional sports franchise to operate. For the majority of teams, especially those in "new" hockey markets like Phoenix, making the playoffs means the difference between operating in the red or the black. So a team better know how to play in front of the blue line. Given that the team has not skated into the playoffs for the last seven seasons, it should come as no surprise that they are reaching a break point.

The Coyotes have already been through a similar struggle. In 2001, it took another miracle from The Great One, Wayne Gretzky, who stepped in to coach (and as some say, to provide "legitimacy" to the franchise) when Moyes and a real estate developer purchased the team for $90 million. Before the purchase, the team was preparing to move to Portland, OR.

Now, a potential suitor wants the team in Ontario, Canada. Gary Bettman, NHL commissioner, is forechecking that idea as well. Jim Balsille, the owner of Research in Motion, makers of the omnipresent and apparently highly addictive Blackberry series of mobile devices, has reportedly offered Moyes and his partners (Gretzky also owns 1.5 percent of the team) $213 million for the team. He would immediately begin efforts to create a second team in Ontario and a seventh NHL franchise in Canada. The sale is part of the bankruptcy plan submitted by Moyes.

Bettman also communicated doubt that Balsille could get majority approval from other league owners. However, Bettman may be simply introducing the idea to bolster the league's stance should the matter reach a courtroom. Which may very well happen because Moyes' attorney is arguing the league's position in the team is not valid.

The relocation debate and aggressive posturing by Balsille, who has tried to purchase and relocate two other NHL teams, is shining more light on the perpetual argument from longtime hockey fans and professionals that NHL hockey has no place in desert locations like Phoenix, AZ or in southern cities like Raleigh, where three years after winning the Stanley Cup, the Carolina Hurricanes are currently in the second round of the playoffs, tied with the Boston Bruins three games a piece.

For now, it looks like the debate will continue careening around the boards for a while. Better keep your head on a swivel.

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