After many years of potential buyers, sale rejections, court hearings, arguments, and millions in money losses, the Phoenix Coyotes may finally be sold by their current owner, the National Hockey League, to former San Jose Sharks CEO, Greg Jamison.
The Winnipeg Jets Become the Phoenix Coyotes
The Phoenix Coyotes moved from Winnipeg where the team played as the Winnipeg Jets. It is said that the team has built up several hundred millions of dollars in debt since the move. The NHL secretly took over control of the team on November 14, 2008 after firing CEO, Jeff Shumway. At the time, it was reported that the Coyotes had lost $73 million in the past three years, including $54 million in 2008 alone. On December 23, 2008, the team pledged all of their assets to SOF Investments LP, a New York Company, to cover a projected debt of $80 million.
Coyotes File for Bankruptcy
On May 5, 2009, Dewey Ranch Hockey LLC, the Coyotes’ holding company, filed for Chapter 11 bankruptcy. The initial bankruptcy hearing was held on May 7, 2009. The team’s owner, Jerry Moyes, submitted court documents listing thirty creditors, including an amount to be paid to himself for over $103 million. However, the NHL denied this amount, stating that Moyes should not have paid himself in such excess and agreed to only $14 million.
The NHL vs. Owner, Jerry Moyes
Moyes had originally agreed to sell the team to Canadian billionaire, Jim Balsillie, who intended to move the Coyotes to Hamilton, Ontario. Unfortunately for Moyes, who would have received a significantly higher amount if he had successfully sold the Coyotes to Balsillie, the NHL Board of Governors voted 29-1 to reject Balsillie’s offer under bylaw 35 of the NHL Constitution. The bylaw allows the Board to reject applications from persons that the NHL believes to lack “good character and integrity.”
At a hearing on June 9, 2009, bankruptcy judge Redfield Baum agreed with the NHL in their attempts to demand a relocation fee in their selling agreement. It was suspected that the fee could be set as high as $100 million.
Coyotes Officially Sold to the NHL
On September 24 2009, Wayne Gretzky resigned as head coach, and on October 26, Moyes reached an agreement to sell the Coyotes to the NHL for $140 million. The NHL committed to stabilize the team’s operations and to resell the Coyotes to an owner who will keep the team in the Phoenix market. On November 3, 2009 the sale was finalized with a price that promised $80.7 million in secured claims, $11.3 million in cash to the seller, and $36.3 million already owed to the NHL.
The City of Glendale Lends a Hand
Though the NHL was determined to keep the Coyotes in Phoenix, the league announced that if the team was not sold by July 1, 2010, they would re-consider moving the team. In May of 2010, the Glendale City Council agreed to fund the team’s losses for the 2010-11 season to extend the sale period. The NHL was prepared to move the team to Winnipeg as a back-up plan, but Glendale came through, wiring the $25 million ten minutes before the 5pm deadline. On May 6, 2011, it was announced that Glendale would pay an additional $25 million to keep the Coyotes for the 2011-12 season.
Will Tonight’s Playoff Game Bring Good News?
On August 19, 2011, it was revealed that Greg Jamison, former San Jose Sharks CEO, was forming a group with intent to buy the Coyotes and keep them in Arizona. Though nothing has been finalized, it has been reported by The Arizona Republic that an announcement of a sale may be made tonight at the Coyotes playoff game against the Nashville Predators. If the Coyotes win tonight, they will secure a spot in the Western Conference final. A majority has already given informal support to pay as much as $20 million in an area management fee annually, which is a crucial deal point in Jamison’s lease agreement with the City of Glendale. As the final terms of the sale may take some time, Glendale approved another $25 million to keep the team for the 2012-13 season.
It remains to be seen what the future holds for the Phoenix Coyotes, but my hopes are that tonight brings them good fortune—both in their playoff progression and their impending ownership. If you have accumulated a large amount of debt and are considering filing for bankruptcy, contact a knowledgeable and successful Arizona bankruptcy attorney. Bankruptcy can help those drowning in debt get their finances back on track. Call (480) 648-8975 to schedule a FREE bankruptcy consultation with me, AZ attorney, Benjamin Skinner today.