September 2, 2009 / 3:52 PM / 8 years ago

NHL, Balsillie spar in court over bids for Coyotes

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

<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. REUTERS/Rebecca Cook</p>

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.

Judge Redfield Baum of the U.S. Bankruptcy Court in Phoenix could decide as soon as Wednesday whether to include Balsillie’s bid over the NHL’s wishes. However, attorneys in court said a decision is more likely to come later in the week because the judge asked for a complete set of depositions to review.

“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.

A lawyer for Balsillie questioned the validity of NHL’s bid as the league is also a creditor and controlling the owner approval process.

“When you have got a conflict of interest, you can’t be the judge and jury,” Susan Freeman told the court.

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.

Neither Balsillie nor his spokesman were immediately available to comment, but Balsillie’s attorneys have previously said in court documents that the NHL is “hostile” to their client.

So far, the National Hockey League, Balsillie and a group called Ice Edge Holdings LLC have submitted bids for the auction, which is scheduled for September 10.

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

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 and Carol Bishopric

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