I believe the $120M estimate is if the team stayed put and all secured creditors were made whole. Moyes is an unsecured creditor.
Understand that this is complete speculation on my part. I am nowhere near a legal expert.
I suspect, given that the NHL will continue to fund the team, that two options may exist: (1) the NHL could push the angle that they have control of the team and pull the team from bankruptcy (this was never forcibly pushed to the point of obtaining a ruling to my knowledge), or (2) the NHL itself could potentially buy the franchise provided they cover the creditors.
Both options also effectively remove the team from bankruptcy and allows the NHL to fully control the next steps with the team.
One story I read/posted in the last couple of days was an estimate of $120m to satisfy the creditors (for a stationary asset).
But the judge is trying to maximize the return for all the creditors. That number is pointless.
The key number is that the franchise is worth less than what it owes in debt, without including the city. With the way the judge seems to be leaning on fees, the unsecured creditors are going to be taking a bath.
Unsecured creditors taking a bath in a bankruptcy is certainly nothing new. And the $120M is not pointless. It needs to be the floor for bids if all secured creditors are going to be made whole. No one is going to bid more than $120M unless if they have to.
Moyes made the decision to put the team into bankruptcy, and the league later agreed it was the best venue for auction. Both have to live with that now.
A great example of how one can get what they want when they play by the rules.Ah, yes, makes sense Mouser.
Hypothetically, the judge approves Reinsdorf (if he in fact puts in a bid) as the owner of the team in Phoenix. Reinsdorf or the NHL has allegedly already negotiated lease concessions for him with Glendale. Naturally Reinsdorf's bid SHOULD include a 2 or 3 year escape clause otherwise I doubt he bids at all. So Reinsdorf looks like the saviour but in two years he too moves the team, to Vegas, pays the buyout of the lease to Glendale and triggers the escape clause when attendance/revenues don't improve (which quite a few seem to think they won't). Not much of a saviour in my opinion.
He's basically doing the same thing as JB but getting around the hypothetical court ruling/relocation by waiting a year or two. It's out of the courts jurisdiction at that point.
Everyone knows if Reinsdorf applies to the NHL BOG for relocation in two years, and Vegas has an arena by then it'll be unanimous, unless Phoenix is suddenly turning a profit by then, which is doubtful.
Pardon my ignorance on this, but is there latitude in the determination of what the COG is entitled to if relo occurs?
It's up to the judge.
A great example of how one can get what they want when they play by the rules.
Here is an interesting set of predictions with some analysis of the latitude of the bankruptcy judge by a sports economist at Stanford.It's up to the judge.
http://www.thespec.com/News/Business/article/582130Roger Noll, Professor of Economics, Emeritus, who studies the business side of sports, believes the Waterloo billionaire will eventually emerge from a protracted bankruptcy hearing with the franchise.
But Noll, who is also a member of the advisory board at the American Antitrust Institute and is following the case closely, believes an eventual NHL appeal will mean the Coyotes won't come to Hamilton until the start of the 2010 season.
"I think the most likely result is that he (Balsillie) gets the team, plays next year in Phoenix and then moves to Hamilton the year after," Noll said, adding the delay would result from the expected appeal of the bankruptcy court ruling.
"The second most likely event is he gets the team and moves it to Hamilton this year. The least likely event is that he doesn't get the team and it stays in Phoenix permanently," Noll said.
Noll said the danger for the NHL is that if it produces a relocation fee that is exorbitant, the bankruptcy court judge may rule the NHL rules and constitution don't apply.
"The NHL rules are just another contract and one of the powers a bankruptcy court has is to declare a contract void. He could just say: 'The NHL rules don't apply, I can do anything I want. They (the NHL) lose their whole ability to control the location of the team."
Here is an interesting set of predictions with some analysis of the latitude of the bankruptcy judge by a sports economist at Stanford.
http://www.thespec.com/News/Business/article/582130
On the issue of the relocation fee:
The way I read Professor Noll's analysis is that he is not disputing that a fee may be payable - he is just saying if the NHL makes it exorbitant they run the risk of the judge tossing it completely. If you read the complete article I think that is pretty clear.In the interview on FAN 590 with Balsillie's legal team (Susan Freeman primarily), they acknowledged relocation fees and indemnity to the Leafs and Sabres were payable.
They also did so in their economic impact analysis in the briefs.
They marginalized them on the basis of goodwill not being worth much - roughly to that effect.
Both relocation and indemnity are covered in Bylaw 36.6 which is attached to the consent agreement Moyes signed with the NHL. In other words, unlike the Raiders, it's basically in his contract.
So Noll may have a point in case law but the facts and circumstances of that case are quite clearly different as reflected by Balsillie's legal team's response.
To date, indemnity or no indemnity isn't in dispute in this case. How much they'll be asked to pay for indemnity and relocation fees is about to be depending on the numbers the NHL comes back with and whatever else transpires in this case (ie if Reinsdorf bids close to what was suggested in his letter of intent and Glendale's claim is regarded as substantial as the judge implied in the hearing, then Balsillie is effectively done because his bid simply can't compete to overcome Glendale's high claim).
In the interview on FAN 590 with Balsillie's legal team (Susan Freeman primarily), they acknowledged relocation fees and indemnity to the Leafs and Sabres were payable.
They also did so in their economic impact analysis in the briefs.
They marginalized them on the basis of goodwill not being worth much - roughly to that effect.
Both relocation and indemnity are covered in Bylaw 36.6 which is attached to the consent agreement Moyes signed with the NHL. In other words, unlike the Raiders, it's basically in his contract.
So Noll may have a point in case law but the facts and circumstances of that case are quite clearly different as reflected by Balsillie's legal team's response.
To date, indemnity or no indemnity isn't in dispute in this case. How much they'll be asked to pay for indemnity and relocation fees is about to be depending on the numbers the NHL comes back with and whatever else transpires in this case (ie if Reinsdorf bids close to what was suggested in his letter of intent and Glendale's claim is regarded as substantial as the judge implied in the hearing, then Balsillie is effectively done because his bid simply can't compete to overcome Glendale's high claim).
The way I read Professor Noll's analysis is that he is not disputing that a fee may be payable - he is just saying if the NHL makes it exorbitant they run the risk of the judge tossing it completely. If you read the complete article I think that is pretty clear.
Noll seems to think the judge is trying to force a negotiated settlement - a not unusual strategy for a judge.
The NHL, which was granted more time to think about its position by Judge Redfield T. Baum yesterday, had better be careful just how much it demands in relocation and indemnification fees for moving the Phoenix Coyotes.
Otherwise, says an expert in sports economics and law from Stanford University, the U.S. Bankruptcy Court could let Jim Balsillie move the Coyotes to Hamilton and leave the NHL empty-handed.
Roger Noll, an economics professor at Stanford, said indemnification fees, which may be paid to teams when another team enters its territory, are not allowed under U.S. law. That was proven in the landmark antitrust case in which Oakland Raiders owner Al Davis moved his NFL team to Los Angeles in 1982 without paying the fee.
"The NHL rules are just another contract and one of the powers a bankruptcy court has is to declare a contract void. He could just say: 'The NHL rules don't apply, I can do anything I want. They (the NHL) lose their whole ability to control the location of the team."
I noticed in court that Freeman kept using the term "Goodwill" rather than saying territorial or indemnity fees.
I'm familiar with what Goodwill means from a financial bookkeeping standpoint, however that couldn't be the same use in this situation. I got the impression from their comments in court that PSE anticipated arguing that the NHL should only be compensated for the league's "prior investment" in the territory and were using the term Goodwill in preparation for that. Something along the lines of "how much $ has the NHL invested in Hamilton"?
She likely used that term because it came up about 19 times in Gary's sworn affidavit earlier this week. He went on and on about goodwill in relation to paying the league and specifically paying other teams (Tor and Buf), but called that "goodwill", probably because it sounded better than "mandatory territory infringement fee" or "extortion".I noticed in court that Freeman kept using the term "Goodwill" rather than saying territorial or indemnity fees.
A great example of how one can get what they want when they play by the rules.
"What he's done is give the league and the team reasons to think they need to consider a compromise, a way to reach a resolution," said Schaffer. "It's possible the judge would say that delay creates more pressure on all concerned to reach an agreement because if you don't have this resolved reasonably soon, you have fewer options going forward.
"The judge could also be delaying things based on communications from the parties that they continue to make some progress and they'd like to have more time."