Wednesday, August 26, 2009

If The Deal Breaks Up

A few months ago, this page speculated that the nuclear meltdown scenario for the owner of the Cubs was the league itself, Major League Baseball. Further speculation was that an 11th hour higher bid could be accepted by the bankruptcy court against the wishes of the other MLB owners who have to approve a sale.

The idea was scoffed at by others, including a WGN radio host who stated as fact that the vote of MLB owners would supersede that of a bankruptcy judge. Ivy Chat found that hard to believe that a court would put the wishes of a group of high net worth business executives ahead of creditors actually owed money.

Well, it's looking possible that the Phoenix Coyotes may provide a test case:

A group headed by Jerry Reinsdorf has pulled out as a potential buyer of the Phoenix Coyotes just as the NHL filed a bid in U.S. Bankruptcy Court to purchase the team and keep it in Arizona.
The NHL bid apparently was the only one filed by the deadline that would keep the team in Arizona. Canadian billionaire Jim Balsillie filed an amended purchase agreement on Monday offering $212.5 million, contingent on moving the franchise to Hamilton, Ontario.

If Judge Redfield T. Baum throws out Balsillie's offer because the NHL board of governors rejected his application, by a 26-0 vote, to own the Coyotes, that could leave the league with the only bid. Balsillie wants the judge to overrule the NHL's vote based on bankruptcy law and the fact that he says his offer would provide the most money to creditors.

The NHL did not say how much the league was offering to buy the team, which is scheduled to be sold at auction on Sept. 10.

This really bears watching. If the team ends up in the hands of Balsillie, so much for the voting to hand one franchise to another.

The ownership clubs would have a neat little hole ripped in their walls.

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