The bankruptcy proceedings that have enveloped the Phoenix Coyotes have put the NHL in the unprecedented position of bidding for one of its own teams.
Why does the fate of a hockey team in the desert Southwest matter? Because it could be a harbinger for pro sports teams throughout North America as they sell their product in a struggling economy. Already, there are reports of NBA teams hemorrhaging cash. Major League Baseball’s free-agent market tanked last winter and isn’t likely to improve much.
Plus, it’s a fascinating case. The Coyotes moved to Arizona in 1996 from Winnipeg and eventually built a new arena in the western suburbs of Phoenix in 2003. But in its desperation to get into a new building, the team signed a lease with the suburb of Glendale that has crippled it financially. Reports have Phoenix now losing upwards of $40 million per season and the league has stepped in to prop it up.
Owner Jerry Moyes filed for bankruptcy when the economy decimated his trucking business. He agreed to sell the Coyotes to Canadian businessman Jim Balsillie — whose company developed BlackBerry smartphones. But Gary Bettman and the NHL want no part of Balsillie, who is determined to move a team to southern Ontario and has been stymied in previous efforts to buy the Pittsburgh Penguins and Nashville Predators.
Instead, the league wanted the team sold to an investment group led by Chicago businessman Jerry Reinsdorf. For his part, Moyes wants Balsillie’s $212.5 million offer — far higher than any other bid so far — approved by the bankruptcy court.
Reinsdorf’s group pulled out of the bidding process late Tuesday when it became clear neither Glendale nor Moyes would agree to terms. Unwilling to cede the team to Balsillie, the NHL is now bidding against him in court and hopes to then sell the Coyotes to a third party — likely Reinsdorf again.
Think this nightmare scenario is limited to the NHL? Major League Baseball has already floated loans to Texas Rangers owner Tom Hicks and the NBA reportedly loaned millions to 15 teams facing financial issues last winter. The Coyotes won’t be the last pro sports team to find itself in bankruptcy court.
