DALLAS - U.S. Bankruptcy Judge Redfield T. Baum will consider next month whether the Phoenix Coyotes can move from their $180 million bond-financed hockey arena in the suburb of Glendale, but first the parties in the team's Chapter 11 filing must determine who controls it in bankruptcy.
Baum on Tuesday told attorneys in the case to be prepared to argue for or against the move in a June 19 hearing.
Team owner Jerry Moyes filed the bankruptcy petition on May 5 after reaching an agreement to sell the team to Jim Balsillie, co-chief executive of Research in Motion Ltd., maker of the Blackberry wireless communication device. Balsillie agreed to buy the team only under the condition that he could move the team to Ontario, Canada. Moyes' plan would allow other bidders to outbid Balsillie and possibly keep the team in Glendale.
But the National Hockey League contends that its loans to the team and its position as administrator of the league trumps Moyes' stake in the Coyotes. The NHL wants to keep the team in Glendale, as does the city.
League attorney Anthony W. Clark told Baum that the NHL would finance the team's operations to keep it in Glendale's Jobing.com arena. Balsillie said he would also lend the Coyotes funds in advance of an auction but would move the team to Hamilton, Ontario, if he succeeds in buying it.
Joining the NHL in opposing the move were the National Football League, the National Basketball Association and Major League Baseball, which fear the precedent that a unilateral sale and move without consent from other team owners would create.
Clark said the Coyotes owner cannot sell the right to play against the other teams as part of the NHL. The professional leagues have jealously guarded their authority over individual franchises. After the Chapter 11 filing, the NHL filed a statement that it had "removed Moyes from all positions of authority to act for or on behalf of" the Coyotes.
"It is of fundamental importance for any sports league to determine the identity of its members and to select the locations in which its member teams will play," the NBA said in its filing in support of the case styled as Dewey Ranch Hockey LLC, 09-09488, U.S. Bankruptcy Court, District of Arizona (Phoenix).
The Coyotes have never made a profit since their 1996 move to the Phoenix area from Winnipeg, Manitoba, where they were the Winnipeg Jets. The team lost $73 million from 2005 through 2008.
Moyes was a minority partner in a group known as Dewey Ranch Hockey led by Steve Ellman that purchased the Coyotes from Richard Burke in 2001. Moyes and his companies bought out Ellman in 2006.
Losing the team would leave Glendale with a six-year-old arena that would be hard to fill with other events, given Arizona's deeply troubled economy. The team's loss would also endanger the commercial development known as Westgate that was designed to feed off the events held at the arena that was named "Jobbing.com" after a job listings Web site.
To build the arena in 2003, Glendale issued revenue bonds backed by sales taxes as well as general obligation bonds for roads, sidewalks and other infrastructure around the Westgate area. The city issued $155 million of taxable Series 2003A and B bonds in July 2003 for the bulk of the financing under the name Glendale Municipal Property Corp.
Glendale receives $42,000 per month in rent from the Coyotes and $2.50 for every ticket sold, along with sales tax revenue from purchases at the arena.
Other costs, such as arena maintenance and security, are shared with the team. In a comment on the bankruptcy, Moody's Investors Service said that the bonds are securely backed by sales taxes, regardless of what happens to the team. It assigns an underlying rating of Aa3 to the bonds.
However, "should the Coyotes succeed in leaving Glendale," Moody's analysts wrote, "this loss of rental and ticket surcharge revenues, along with diminished sales tax revenues generated by the retail establishments in and around the arena which comprise the Westgate development, will add to the budgetary pressure the city is experiencing as a result of the recession."
