A group headed by Jerry Reinsdorf has pulled out of the possible purchase of the Phoenix Coyotes just as the NHL filed a bid in U.S. Bankruptcy Court to buy the team and keep it in Arizona.
A group headed by Jerry Reinsdorf has pulled out as a potential buyer of the Phoenix Coyotes just as the NHL filed a bid in U.S. Bankruptcy Court to purchase the team and keep it in Arizona.
Reinsdorf's group said it was unable to meet Tuesday's court deadline for submitting a firm offer. It also complained of an "unwilling seller" and "an organized publicity effort designed to provide negative and misleading information to interested parties."
The Reinsdorf group said in a statement that those tactics were a factor in the inability to reach an agreement with the city of Glendale on an acceptable lease to play in Jobing.com Arena.
The NHL bid apparently was the only one filed by the deadline that would keep the team in Arizona. Canadian billionaire Jim Balsillie filed an amended purchase agreement on Monday offering $212.5 million, contingent on moving the franchise to Hamilton, Ontario.
If Judge Redfield T. Baum throws out Balsillie's offer because the NHL board of governors rejected his application, by a 26-0 vote, to own the Coyotes, that could leave the league with the only bid. Balsillie wants the judge to overrule the NHL's vote based on bankruptcy law and the fact that he says his offer would provide the most money to creditors.
The NHL did not say how much the league was offering to buy the team, which is scheduled to be sold at auction on Sept. 10.
Thomas Salerno, attorney for the debtors group headed by Coyotes owner Jerry Moyes that took the team into bankruptcy, said that "debtors are analyzing and evaluating the NHL offer. It was just received this afternoon."
Daly said in a statement released by the NHL that if the bid is successful, the league intends to sell the team to a third party outside of the bankruptcy process. Presumably, that could include the group headed by Reinsdorf, owner of baseball's Chicago White Sox and the NBA's Chicago Bulls.
"We believe this step is necessary at this time in order to best preserve and maximize the value of the club asset for the benefit of the club's creditors and for the community of Glendale," Daly said.
The move marks a significant shift in the NHL's tactics. The league had backed Reinsdorf's planned $148 million offer. Another group of investors, under the name Ice Edge, was considering making a bid but apparently missed the deadline.
Daly said the NHL would "remain supportive of the other efforts that have been made and are being made to purchase and operate the Coyotes in Glendale."
The Reinsdorf group said it had accomplished a great deal in its effort to buy the team.
"Our capital structure is negotiated, and we have negotiated acceptable deals with the secured creditors as well as a number of unsecured creditors," the group said. "We have developed a solid business plan that would result in keeping the Coyotes in Glendale and in a relatively short period of time turning the team into a successful and viable NHL franchise."
The group took a shot at Moyes, calling him "an unwilling seller" who "created an expensive litigious environment that has had the effect of chilling the negotiations with the city."
The Reinsdorf group wasn't finished.
"We have faced an organized publicity effort designed to provide negative and misleading information to interested parties," it said. "Not only has this stymied negotiations, but it has eroded local market demand for Coyotes tickets, luxury boxes, and sponsorships."
The NHL also cited ongoing harm to the franchise as the bankruptcy proceeding drags on.
"The bankruptcy petition and subsequent events have been incredibly damaging to the club's business," Daly said, "and the sooner the club can be extricated from the bankruptcy process, the sooner club personnel can begin to restore the team's vitality and local fan base."
The announcements from Reinsdorf and the NHL came as another flood of documents were filed in the case, including one by Balsillie challenging the league's stand that it would be impossible to move the team for the coming season.
Balsillie's amended purchase agreement includes a provision allowing him to walk away from the sale if the contentious issues in the case aren't resolved in his favor by Sept. 14, one day before the team's first preseason game.
Not only does Balsillie want Baum to overturn the owners' vote, he also wants the court to establish an appropriate relocation fee if the NHL refuses to do so. The league says the relocation issue is moot because Balsillie has been rejected as a potential owner.
A hearing on those issues and others is set for Sept. 2.
The NHL and Balsillie have been locked in a bitter court fight since Moyes took the team into Chapter 11 bankruptcy, to the surprise of the league, on May 5, with the plan to sell the team to the Canadian.
The NHL and city of Glendale contend the move was done in a "scheme" to sidestep the normal league rules for transfer of ownership and relocation of a franchise. Balsillie has failed in previous efforts to buy the Pittsburgh Penguins and Nashville Predators.