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Showdown over future of Phoenix Coyotes looms with hearing set for Tuesday

The Canadian Press
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The Hockey News
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Showdown over future of Phoenix Coyotes looms with hearing set for Tuesday

The Canadian Press
By:

PHOENIX - The Detroit Red Wings can win the Stanley Cup for the second straight year on Tuesday night but their clash with the Pittsburgh Penguins may not even be the biggest game of the day in the hockey world.

Hours before the puck drops in Game 6 of the final, the latest battle over the future of the Phoenix Coyotes between the NHL and Jim Balsillie, who is seeking to buy the insolvent team for US$212.5 million and move it to Hamilton despite the league's opposition, will play out in an Arizona bankruptcy court.

It's unclear when Judge Redfield T. Baum intends to rule on what has become a bitter court fight or how it will turn out, and it's also uncertain if his word will be the final one. Both sides can appeal his decision, potentially extending the matter for months if it comes to that.

"You've got an experience judge, who I'm guessing wants to create enough uncertainty that people try and make a deal," said Eric Schaffer, a senior partner at Reed Smith who worked on the Penguins' bankruptcy a few years back. "Balsillie may be the odd man out, but the league could try and enhance the offer of someone else to try and make it better for the creditors, and an experienced judge may try to create enough uncertainty that it drives some sort of consensual resolution."

Either way, Tuesday shapes up as a drama-filled day for the sport, with Hamilton, like Detroit, trying to win its championship by finally landing its very own NHL team, and Phoenix, like Pittsburgh, attempting to stave off elimination to play another day.

The judge had previously set two tentative dates for the auction of the team, depending on how he rules on the relocation issue - June 22 if Balsillie gets his way and Sept. 10 if the NHL prevails.

The arguments both sides intend to make Tuesday were spelled out in documents filed with the court ahead of a midnight Friday deadline and dissected publicly over the weekend.

The NHL pulled out the biggest surprise with commissioner Gary Bettman, who will head to Pittsburgh once court adjourns in case he needs to present the Cup to Detroit, declaring in his brief that four potential buyers intent on keeping the team in Phoenix, including Toronto Argonauts owners Howard Sokolowski and David Cynamon, had filed preliminary applications with the league.

While that created a buzz, the NHL's main argument will be that Balsillie's bold bid - conditional on the move to Hamilton - is a "scheme" to circumnavigate the league's by-laws and constitution preventing him from unilaterally deciding to move the squad, and that all of the club's creditors "will be satisfied if the Coyotes are sold to a purchaser committed to operating the team in Glendale."

Lawyers for Balsillie, who is in his third attempt to buy an NHL team, disagree, saying the Coyotes are "worth considerably more if relocated than if kept in Glendale, Arizona, and would enable a substantially greater recovery to the debtors' creditors."

Current owner Jerry Moyes says the team has lost more than $300 million since moving from Winnipeg in 1996 and has never made a profit in the desert.

The Balsillie camp also argues that it has already met all of the NHL's criteria for both approval of the co-CEO of BlackBerry maker Research in Motion as an owner, and for relocation.

They dispute the notion that Balsillie must pay the league a relocation fee for moving to Hamilton and the right of the Toronto Maple Leafs and Buffalo Sabres to compensation.

Their court brief also states that the Maple Leafs hold veto power over the entry of a another team into their territory and that such a veto and other relocation restrictions contravene antitrust laws.

The NHL denies such a veto exists and says a forced relocation without proper study and board approval would wreak havoc on its schedule and divisional alignment, causing harm to the other 29 teams.

Signalling that gloves are off, the NHL also raised Balsillie's settlement of misconduct complaints by the Securities Exchange Commission and Ontario Securities Commission as a reason why its board needed the proper time to hold "full and proper investigation" into his background.

That aside, the NHL contends Balsillie's offer is really worth $165 million to creditors once $25 million due to the league for its cash advances and $22.5 million owed to Wayne Gretzky, the team's coach and minority partner, is factored in.

The league adds that the offer doesn't contemplate payments due to the City of Glendale, where the Coyotes lease their arena, or to the NHL "and/or it's members for unilaterally usurping the Hamilton NHL franchise opportunity."

And that's only the tip of the iceberg.

Still, all the debate over precedents, by-laws, constitutions and antitrust is meaningless to fans in Hamilton and Phoenix who are anxiously awaiting the outcome.

In Phoenix, a small handful of fans behind the Save The Coyotes Coalition will take in the events from a viewing room at the court and relay updates via their website, savethecoyotes.com.

Bettman pointed to the website in his declaration as evidence of the passion the community has for its team, and Monique Reaux, the coalition's vice-president, said Canadian fans who believe the Coyotes don't belong in Phoenix need to think again.

"Just because they don't see us doesn't mean we're not here, it doesn't mean we're not hurting," she said. "It just means there's a limit to what we can say and what we can do (due to the court proceedings).

"I hope the fans in Hamilton get a team, I just hope it's not my team."

Their campaign was launched about five days after word of Balsillie's plan leaked out, and is a collaborative affair with a few other fellow season-ticket holders and team bloggers. She estimates it has about 2,000 legitimate members through a Facebook page and other online groups.

"Our coalition is grassroots group, we don't have any backing from anybody, we don't have any money, we don't have any official status," said Geroux, who described herself as a black woman in her 50s who fell in love with hockey growing up in Southern California. "We're just hundreds and hundreds of fans that love our Coyotes.

"Have some empathy for us, relocation is a horrible thing for any fan to have to go through."

Their efforts attempt to contradict the notion that no one cares about hockey in Phoenix, but their numbers pale in comparison to the Make it Seven campaign accompanying Balsillie's bid.

His makeitseven.ca website is a slick piece of marketing, complete with a patriotic hockey pitch, big-time corporate sponsors, and even an online store. Get the T-shirt or hat for C$12.99, the pro-knit jersey is C$48.99, with net proceeds donated to minor hockey across the country.

It boasts about 120,000 supporters.

"I have been convinced for several years that one of the most important contributions I can make to my country and my community is to bring a seventh NHL franchise" to Hamilton, Balsillie wrote in his declaration to the court. "To this end, I would like to invest in the Coyotes franchise on behalf of those fans."

The showdown looms.

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Showdown over future of Phoenix Coyotes looms with hearing set for Tuesday