Thursday, May 07, 2009

NHL, Team in Bankruptcy Showdown -

Another sports story with finance ties, or a finance story with sports ties, you decide:

The case centers on Jim Balsillie (he of Blackberry fame) wanting to buy the team and move it to Southern Ontario. But to do this he has to 1. buy the team 2. get the league to approve 3. get out of Dodge (or Phoenix in this case).

To that end, he has made an offer that is contingent on being allowed to move the team. This got sudden urgency this week as the owner of the team he is trying to move, the Phoenix Coyotes, is in bankruptcy.

From the WSJ: NHL, Team in Bankruptcy Showdown -
"... lawyers for the NHL and one of its 30 teams, the Phoenix Coyotes, will face off in U.S. Bankruptcy Court in Phoenix two days after the franchise's parent company...filed for protection under Chapter 11 of the U.S. Bankruptcy Code. The filing came after months of speculation that the team's owner, trucking magnate Jerry Moyes, was running out of cash to cover ongoing losses that, according to court documents, totaled nearly $30 million last year. Mr. Moyes owns Swift Transportation Co. and is coping with a severe downturn in the U.S. shipping industry a year and a half after taking on $2.5 billion in debt to take the company he founded private....

The Coyotes have a 30-year lease at the arena that calls for a $700 million termination fee. Given that, the only way for Mr. Balsillie to take over the team and move it was for Coyotes Holdings to file for bankruptcy, which nullifies all ongoing contracts, including leases."

As a Sabres fan, this also hits to home as the potential owner (Jim Balsillie) wants to move the team close to Buffalo (Southern Ontario). Which will likely hurt the Sabres as well as the Toronto Maple Leafs. From the Buffalo News:
"Buffalo Sabres minority owner Larry Quinn … who said 20 percent of the Sabres' revenues come from southern Ontario …."Obviously, the southern Ontario market is part of our [area of dominant influence]. It's very important to our fans. It's something we have the right to promote and market as only the Buffalo Sabres'. If we were to sell our team by promising somebody the rights in another market, we wouldn't be able to do that, so I'm assuming that other people in the league will follow those same rules.
Stay tuned.

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