The good news is that by 4 p.m. Pacific time Friday the Phoenix Coyotes will be sold. The bad news is that does not mean their fate will be settled.
Too many legal issues have yet to be decided in the bankruptcy case, which has pitted Coyotes owner Jerry Moyes and would-be buyer Jim Balsillie against the NHL for a smooth ending. It is entirely possible that Balsillie could win the auction Friday and then have his bid tossed out by U.S. Bankruptcy Court Judge Redfield T. Baum a week or two later, after which the club would belong to the NHL, which has bid $140-million (all currency U.S.).
All that is certain right now is which of the legal issues will be heard in a hearing Thursday and that the judge has decreed Friday's auction will end at 4 p.m. He has also said he will make his rulings before the NHL's regular season starts in early October. Then the inevitable appeals will drag this out even longer.
The judge still has to issue decisions on: whether the court can accept Balsillie's bid after he was rejected by the NHL as an owner; whether the Coyotes can be relocated by Balsillie; a relocation fee; and whether the suburban City of Glendale is entitled to as much as $500-million (all currency U.S.) in damages if the Coyotes break their arena lease.
Lawyers for Balsillie, Moyes, the NHL and the suburban City of Glendale, where the Coyotes play, have agreed that only the relocation, relocation fee and arena lease issues will be argued Thursday. They have also agreed to time limits for the arguments so the auction can proceed as scheduled.
Thursday's hearing will include testimony from experts hired by the NHL and Balsillie to give their opinions on the relocation fee. Balsillie's $242.5-million offer is conditional on moving the Coyotes to Hamilton.
The auction will begin on Friday morning when Judge Baum asks the debtors, as the court refers to Moyes and his various corporate entities listed as the Coyotes' owners, which bid it thinks is the best. Moyes has already told the court he thinks Balsillie's bid is the best because it pays the most to the creditors, including him. The NHL's bid has no payment for Moyes because the league insists the money he put into the club represents equity not debt, which is yet another issue for Baum to decide. There is also no firm commitment by the NHL to pay Coyotes part-owner and head coach Wayne Gretzky, who is owed at least $9.5-million.
After lawyers for Moyes make the argument in favour of Balsillie's bid, the judge will hear arguments from the NHL's lawyers about why the league's bid is the best. Then it will be up to Judge Baum to announce the winning bid at the end of the day.