September 3, 2009 / 1:09 AM / in 8 years

NHL, Balsillie spar in court over bids for Coyotes

<p>Research In Motion Co-Chief Executive Officer Jim Balsillie addresses the audience about 'Entrepreneurship and Innovation' during the National Summit at the Renaissance Center in Detroit, Michigan June 17, 2009.Rebecca Cook</p>

NEW YORK/PHOENIX (Reuters) - The National Hockey League and Canadian billionaire James Balsillie battled in court on Wednesday, arguing over whether Balsillie's bid for the bankrupt Phoenix Coyotes team should be included in an auction set for next week.

Balsillie, the co-chief executive of Research in Motion Ltd, offered to pay $212.5 million for the money-losing Coyotes in May when the team filed for bankruptcy protection, on condition that he be allowed to move the franchise to the Canadian province of Ontario.

But Balsillie and the NHL, who locked horns both inside and outside the courtroom, will have to wait at least a few more days before finding out how the judge rules.

Judge Redfield Baum of the U.S. Bankruptcy Court in Phoenix asked both parties to send briefs to Flagstaff, Arizona, for him to review over the long Labor Day weekend. Baum did not specify when he would make his decision.

The judge had called the hearing to decide whether to include Balsillie's bid in an auction for the Coyotes scheduled for September 10 over the wishes of the NHL and team owners.

"I'm reluctant to discourage anybody from making a bid," Baum said at a hearing attended by Balsillie and NHL Commissioner Gary Bettman.

In a typical bankruptcy auction, a judge tries to encourage many bids in an effort to recover as much money as possible for creditors.

The judge asked early in the hearing whether a sports league had ever been forced to accept an owner it had rejected. Balsillie's attorney said this would be a first.

In July, the NHL deemed Balsillie's offer inadmissible, saying he lacked the "good character and integrity" to own a franchise according to a court filing. NHL owners voted 26-0 to reject Balsillie as a potential owner.

The question of Balsillie's fitness as a potential owner took up a large part of the day's proceedings.

"It's clear based on Mr. Balsillie's interactions with the owners and the NHL through his dealings in Pittsburgh, Nashville and beyond, they have real questions about his suitability to be a partner," Bettman told reporters outside the courthouse after the hearing was adjourned.

Balsillie had clashed with the NHL in attempts in recent years to buy the Pittsburgh Penguins and Nashville Predators franchises to move a hockey team to Canada.

Moments after Bettman spoke, Balsillie shrugged off the discussion of his character.

"I'm just not going to characterize what anybody said, or the context that they said it in. I mean, I love the game, you respect the process, and all I want to be is a bidder to serve the fans of the best unserved hockey market in the world," he said.

Earlier, lawyers for the NHL told the court that with only weeks before the start of the 2009-2010 season, it is an "impossibility at this point" to redo a schedule that would reflect a Coyotes move to Hamilton.

But Balsillie's lawyers hinted at being open to keeping the team in Arizona for a final season.

"If we were to prevail, we would be willing to split the losses, if the league thought it was impossible to move it, to keep it here for one more season," Jeffrey Kessler said.

So far, the National Hockey League, Balsillie and a group called Ice Edge Holdings LLC have submitted bids for the auction.

The NHL placed a $140 million bid for the Coyotes last week in an effort to take the team out of the oversight of the bankruptcy court and gain control of the sale's process.

If it wins the auction, the NHL said it would resell the team and all profits would be given to the creditors. However, it also previously said in court documents that it didn't expect a profit in a potential sale.

Ice Edge includes current Coyotes coach and part owner Wayne Gretzky, hockey's all-time leading scorer. Its $150 million offer would keep the Coyotes in the Phoenix area, but have them possibly play a few "home" games in Saskatoon, Saskatchewan; Quebec City; or Halifax, Nova Scotia.

The team has never made a profit since moving from Winnipeg in 1996.

The case is in Re: Dewey Ranch Hockey LLC, U.S. Bankruptcy Court, District of Arizona, No. 09-09488.

Reporting by Phil Wahba in New York, Tim Gaynor in Phoenix, and Ben Klayman in Chicago; editing by Gerald E. McCormick, Carol Bishopric and Bernard Orr

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