Balsillie ups offer for Coyotes, extends deadline

 

Jim Balsillie is sweetening the pot in his bid to buy the Phoenix Coyotes just days before the bankrupt National Hockey League team is scheduled for auction.

 
 
 
 
 

Jim Balsillie is sweetening the pot in his bid to buy the Phoenix Coyotes just days before the bankrupt National Hockey League team is scheduled for auction.

In documents filed in a U.S. bankruptcy court Monday evening, lawyers for the co-CEO of BlackBerry maker Research in Motion said his group -- PSE Sports and Entertainment -- will offer up to $50 million (all figures US) to the city of Glendale, Ariz., as part of an amended bid for the team. PSE would then reduce its original $212.5 million bid by $20 million. The end result is an offer worth up to $242.5 million, but is still contingent on the ability to move the franchise to Hamilton.

“PSE’s offer acknowledges the city’s significant damages, and provides a much greater recovery than the city would receive under the NHL’s bid when the (Jobing.com Arena) lease is rejected at the end of the season, as is likely,” the lawyers for Balsillie wrote.

The revised offer requires the city to accept the money in exchange for dropping its other claims before the court including any fees associated with PSE breaking the lease at Jobing.com Arena and moving the team to Hamilton.

“PSE cannot force Glendale to sell its claims, of course, but is willing to buy them for $50 million,” the PSE lawyers wrote.

The amended offer also extends the deadline to complete the deal by a week from Sept. 14 to Sept. 21. The NHL would have 10 days following the agreement of the sale to appeal the court’s ruling -- if PSE wins Thursday’s auction -- which means the quickest the deal could close is Oct. 2.

Further, if PSE wins the auction and the NHL appeals -- as the league has vowed it will -- PSE will put $25 million in an interest-bearing bank account “so that the unsecured creditors will recover the time-value of money when the court’s decision is upheld.”

The NHL, PSE and a third group, Ice Edge Holdings, are expected to participate in the court-supervised auction, but before that can take place Judge Redfield T. Baum must rule on an NHL request to bar Balsillie’s group from the proceedings. The NHL voted against approving Balsillie as an owner at a board of governors meeting in July, citing character and integrity issues, and believes the court should not impose an owner on the league.

The NHL is willing to pay $140 million for the club, but plans to resell the team to a person or group favourable to the league. Ice Edge, a group of Canadian and U.S. businessmen, has offered $150 million for the team and keep it in Phoenix, and hopes to bring five regular season games and some playoff games each year to Saskatoon.

The latest PSE proposal supposes the Coyotes will have to play at least some games at Jobing.com Arena in Glendale this season and the $50 million is intended to in part offset the costs of game day operations as well as the lease-break fee when the team eventually moves. Originally, Balsillie wanted to relocate the team to Hamilton in time for the 2009-10 season -- now less than a month away -- but his lawyers told the court last week they would be amendable to moving the team either midway through this season or in time for the 2010-11 campaign.

The new offer only guarantees Glendale $40 million as up to $10 million could be taken away depending on the relocation fee PSE will be ordered to pay if it wins. Balsillie’s camp believes $11.2 million to $12.9 million is a reasonable fee for moving the club, while the NHL counters it should be between $101 million and $195 million.

In court filings over the weekend, outgoing owner Jerry Moyes appeared to be engaging in wishful thinking when he asked the NHL to increase its offer to $220 million.

NHL deputy commissioner Bill Daly was to the point when asked in an e-mail by Canwest News Service if the league will be upping the ante before Thursday’s auction.

“No,” was his one-word response, but the league is expected to table more documents later this week.

Moyes put the team in bankruptcy protection in May and is trying to recoup some of his losses. He claims to have lost upwards of $300 million since he first invested in the club in 2001.

“If the NHL really wants to avoid the parade of horribles that it claims will befall it (if Balsillie wins), all it has to do is propose a bid that is better for the one proposed by PSE,” Moyes’ lawyers wrote. “It’s really that simple.”

Chicago sports mogul Jerry Reinsdorf had a $148-million offer, but took it off that table in August when he was unable to renegotiate the team’s lease at Jobing.com Arena with the city of Glendale. Reinsdorf was also upset some of the details about his negotiations with the city were leaked by Moyes’ legal team and both he and Glendale city manger Ed Beasley said it put a “chilling effect” on the process.

Moyes’ lawyers don’t appear to be taking the Ice Edge bid seriously.

“After months and months of multiple participants trying to negotiate a sale there are two offers, PSE and the NHL,” the lawyers wrote, completely ignoring the third bidder. “It strains credulity for the City (of Glendale), and the NHL to continue to proclaim the process had been ?chilled’ by anyone.

“All the parties who have, at one time or another, been at the negotiation table are sophisticated and have extensive experience with the purchase and sale of major league sports teams. If any other deal had been viable, the check books would have surfaced.”

 
 
 
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