NHL spills its secrets in court
http://www.thestar.com/sports/hockey/article/646901
When the closely guarded NHL constitution becomes a public document, hockey icon Wayne Gretzky becomes a target and even the Toronto Argonauts are drawn in, you know the gloves are off in the battle for the Phoenix Coyotes.
The increasingly messy business of saving or relocating the bankrupt team – which in some ways is overshadowing a highly entertaining Stanley Cup playoffs – has allowed an unprecedented look behind the scenes at the NHL.
The league's constitution has historically been kept hush-hush, but it's now available at thestar.com after the Coyotes' legal team filed a marked-up version of it yesterday as evidence.
The legality of that constitution – the backbone of the old boys' club which BlackBerry billionaire Jim Balsillie desperately wants to join – is at the heart of the conflict over whether the Coyotes can relocate to Hamilton.
Among the legal slings and arrows let fly in the cascade of documents filed yesterday:
Argos co-owners David Cynamon and Howard Sokolowski are among four groups interested in buying the Coyotes.
Coyotes' lawyers maintain the league constitution proves the Toronto Maple Leafs hold a veto – in violation of the Canadian Competition Act – that prevents another team from moving to Hamilton.
According to the NHL, the $212.5 million (all figures U.S.) offer from Balsillie to buy the Coyotes is more like $165 million.
The Phoenix suburb of Glendale, desperate not to lose the anchor tenant at the arena it went $200 million in debt to build, suggested Gretzky, the Coyotes' coach, is overpaid and should have his annual salary slashed by $6 million.
The NHL is threatening to charge a "substantial" fee if the Coyotes are moved to Hamilton.
Balsillie, NHL Commissioner Gary Bettman, Coyotes' owner Jerry Moyes, their lawyers and various other minions and allies filed dozens of documents – some as long as 100 pages – into the wee hours of yesterday in support of their respective causes.
Judge Redfield T. Baum has until Tuesday to go through the legal arguments on relocation and who actually controls the team. He'll make his decision shortly thereafter.
It will be the culmination of a months-long battle, which has turned into what almost seems a personal war between Bettman and Balsillie over whether Moyes is allowed to sell the insolvent team to an owner the NHL might not want and move it to another market against the NHL's wishes.
The NHL, which late last year advanced Moyes funds to keep the franchise afloat, argues it has final say. Balsillie calls that position an unreasonable restraint of trade.
The marked-up parts of the constitution filed yesterday are targeted for legal challenges, namely the veto rights, found at the bottom of article 4.3: "No franchise shall be granted for a home territory within the home territory of a member, without the written consent of such member."
Hamilton is considered part of the Leafs' territory since it's within a 50-mile (80-kilometre) radius of Toronto.
Coyotes' lawyers say the Leafs have prevented relocations to Hamilton before – the last was an attempt by Ottawa – and aren't likely to approve this one. The Leafs refer all calls to the NHL.
Coyotes' lawyers say the NHL's constitution violates Canadian competition laws and U.S. antitrust laws and implored the judge to ignore it.
Till now, Gretzky – a minority owner and hockey deity – has been treated with kid gloves in these proceedings. Although the Great One is also a creditor in the bankruptcy, his name is rarely invoked. So it's quite a shock Glendale would take aim yesterday at the man who has been the face of the franchise.
The city says Gretzky is overpaid and should have his salary slashed by $6 million as part of a $15 million cost-saving measure. Glendale says that could turn the Coyotes into a money-making team, thus negating the need for relocation.
"Reduce compensation to Wayne Gretzky from $8 million to $2 million," concludes a report from Gerald Sheehan of Beacon Sports Capital Partners, hired by the city to go over the books.
Glendale, which is said to be willing to offer tax breaks to a new owner, says mismanagement by Moyes is the only reason the team is losing $30 million a year.
For his part, Bettman cited bylaw 35 of the NHL constitution, which says league rules require a seller to exhaust all avenues before considering relocation. He says the Coyotes haven't done that.
Bettman said Cynamon and Sokolowski are among four groups who've asked to be approved as owners in the bankruptcy auction, set for June 22. Both declined to comment, referring questions to the NHL. It's unclear whether they would keep the team in Glendale.
Bettman said others interested are Chicago sports magnate Jerry Reinsdorf, Coyotes' minority owner John Breslow and an anonymous Phoenix businessman. All would keep the team in Arizona.
Their interest and Glendale's willingness to help in restructuring "all indicate that relocation may well be unnecessary," Bettman wrote.
Balsillie reminded the judge his job is to get the best deal possible for creditors, and believes his $212.5 million offer will do just that.
Bettman thinks otherwise, and believes Balsillie's offer is more like $165 million.
As for how much Balsillie would have to pay as a relocation fee for moving into the Hamilton market, those numbers were confidential, but Bettman said it would be equal to the difference between the purchase of the Coyotes and the value of a team in southern Ontario.
Some have estimated that could be $100 million.
