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Balsillie puts in $212.5 mil offer for the Coyotes

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Fugu said:
Strachan isn't a legal expert. It's all theoretical too as I don't believe any of this has been tested since Davis. I could be wrong on that, but if I am, I want to know exactly what the constitution says with expert legal comment by antitrust lawyers, not Strachan's one sentence blurb on the NHL constitution.
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You can't really Davis proof your constitution since the core of Davis's case really can't be changed. NHL franchises aren't like McDonald's franchises because at law NHL franchises are competing businesses -- and accordingly can run into antitrust trouble for combining together in restraint of trade. Davis could only bring an antitrust case because the court decided as a threshold matter that there were multiple entities (the various teams) conspiring against him, as opposed to a single entity.

The competing businesses in a league can get together for the purposes of setting the rules of the competition they're selling and other minor exceptions to the antitrust laws. When you start talking about a claim that your right to restrain trade supersedes the rights of creditors in bankruptcy and dictates that a business has to stay in a particular territory even if another territory is much better economically, you're very close to the Davis principle. Tweaking a few words in your by-laws is never going to overcome the underlying principle.
 
CapsWolverinesUSA said:
But he can only become owner through the bankruptcy process (based on his current offer) if the Court first goes through the lengthy and complicated process of determining that the NHL's prohibition on relocating franchises without approval is a violation of anti-trust laws. That isn't some triviality. It could literally take many months, if not a year or more, to get to that conclusion. We're talking tons of experts, potentially vast discovery efforts, significant pre-trial motions practice, etc. And then there's the likely appeal that the NHL would file (along with injunctive relief to block the relocation pending the appeal). That could drag things out for another year or two.

What I believe to be ironclad fact is that the bankruptcy judge isn't just going to award the franchise to Balsillie and say "we'll deal with the other stuff later." An award to Balsillie cannot occur until AFTER a judge determines that the NHL cannot stop a relocation. Otherwise, the award would be made based on a contingency that the court might not have the authority to enforce or alleviate.

Do you disagree with this?
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When the asset is worth $75 million or more under the conditional contract, you have established bankruptcy laws that say the high bid wins an auction, and you have lined up against it a bunch of fellow competitors saying they want to have a say over the territory in which the business operates, it's easy to see a bankruptcy judge approving the sale, maximizing the return to creditors, and getting the case off his docket.
 
Territorial limits

The only information I've found on NHL territorial rights places it at 80km(50mi). If a team is placed in the Golden Horseshoe and it is 80km from both arenas (ACC and Buffalo) no fees would have to be paid. I remember during the Nashville attempt that JB purchased some land in the K-W area right off the 401 which would be outside the territorial limits but still allow good access from the GTA, London and Hamilton.
 
Fugu said:
Strachan isn't a legal expert. It's all theoretical too as I don't believe any of this has been tested since Davis. I could be wrong on that, but if I am, I want to know exactly what the constitution says with expert legal comment by antitrust lawyers, not Strachan's one sentence blurb on the NHL constitution.
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The closest I've seen to this was the National Post reporting from when Balsillie was looking to move the Preds:

http://www.nationalpost.com/news/story.html?id=18c34495-8adc-491e-b73e-e70e1fa02456&k=0

According to insiders familiar with events, the bureau made the decision because the NHL provided written assurance that while "relocations generally had required a unanimous board vote," the league has enacted bylaw 36 in response to a series of U.S. court decisions in the 1980s that ruled sports league franchise relocation rules were in violation of American anti-trust laws.

The NHL's bylaw 36 deals with transfer of locations outlined in section 4.2 of the league's laws and provides that in the event that a specific proposed relocation raised anti-trust or competitive concerns, the issue could be determined by a majority vote of the league's board of governors.

Apparently, the competition bureau decided that if the NHL were to confirm in writing its position that a proposed move to Southern Ontario would be subject to a majority vote - not a unanimous one - it would discontinue its investigation and recommend against further action.
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The league adopted Bylaw 36 in response to the Al Davis / Raiders litigation. Whether that change is sufficient to pass US Anti Trust muster, no one knows until it is challenged. That change, though, was sufficient to satisfy the CCB.

kdb209 said:
Moobles said:
This year didn't the BOG agree also to make it so all 30 would have to unanimously agree on a future transfer, essentially making it impossible for the team to leave? =p No source on that, just think I saw it on Sportsnet in earlier in the year.
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No - quite the opposite.

The league has "officially" watered down their restrictions on relocation.

Originally, Sec 4.2 & 4.3 gave a team an effective veto power over a franchise move to within their 50 mi territorial limits.

In the aftermath of the Al Davis / Oakland Raiders lawsuits in the 80's, the league adopted a new rule, Bylaw 36, which stated that if any anti trust issues were raised, only a simple majority vote was needed to approve a move and no team would hold a veto.

The Canadian Competition Bureau looked into the NHL's policies in 2006 and again last year - and upheld them, on the condition that the looser restrictions in Bylaw 36 were in effect.

Cut-an-pasting from one of the other CCB threads.

kdb209 said:
Gnashville said:
I though he needed 24 out of 30 approval votes to get in?? Usually the sellers vote is automatic but in Nashville's case it might not be.
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The league adopted a change (Bylaw 36) to it's relocation rules in the wake of the Al Davis / Raiders anti trust suits against the NFL. The Canadian Competition Bureau also relied on this Bylaw when they ruled that the league's relocation policies did not constitute an anti trust violation.

Bylaw 36 states that if a relocation raised anti-trust issues, it would be approved by a simple majority of the BoG, and no single team could hold a veto.

Cutting-and-pasting from one of the CCB threads here:

kdb209 said:
It's covered in the League Constitution and Bylaws - which unfortunately for us BoH wonks are not public documents - but the relevant portions have been reported in the media last year when the Canadian Competition Bureau was rumored to be looking at the league.


http://www.nationalpost.com/news/story.html?id=18c34495-8adc-491e-b73e-e70e1fa02456&k=0

However, sources told the Post the Competition Bureau is reviewing a section of the NHL's constitution that deals with the "territorial rights" of the league and its member clubs.

According to Article 4.1 of the league's constitution, "each member shall have exclusive territorial rights in the city in which it is located and within 50 miles of that city's corporate limits," known as the club's "home territory."

Section 4.2 of the NHL's rules sets out an absolute prohibition over the proposed relocation of existing franchises by declaring that "No member shall transfer its club and franchise to a different city or borough."

Section 4.3 also grants each team exclusive control over its "home territory," and each club can prohibit hockey games from being played in its "home territory" without their consent.

More importantly, section 4.3 states that "no franchise shall be granted for a home territory within the home territory of a member, without the written consent of such member." In other words, existing hockey teams have the individual right to veto the relocation of other clubs within an 80-kilometre radius of their own market.

...

In July, 2006, the bureau launched a similar investigation into the NHL's relocation practises and expressed interest in "how those procedures might be applied with respect to a proposed relocation to southern Ontario," sources say.

However, after meeting with NHL officials to discuss the territorial rights, the watchdog discontinued its probe and recommended against further action last December.

According to insiders familiar with events, the bureau made the decision because the NHL provided written assurance that while "relocations generally had required a unanimous board vote," the league has enacted bylaw 36 in response to a series of U.S. court decisions in the 1980s that ruled sports league franchise relocation rules were in violation of American anti-trust laws.

The NHL's bylaw 36 deals with transfer of locations outlined in section 4.2 of the league's laws and provides that in the event that a specific proposed relocation raised anti-trust or competitive concerns, the issue could be determined by a majority vote of the league's board of governors.

Apparently, the competition bureau decided that if the NHL were to confirm in writing its position that a proposed move to Southern Ontario would be subject to a majority vote - not a unanimous one - it would discontinue its investigation and recommend against further action.
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edit: as a followup. The CCB issues a determination in March that the leagues policies did not violate anti trust law - with the caveat that Bylaw 36 was in force.
kdb209 said:
jkrdevil said:
The Canadian Competition Bureau did look in to it and ruled that the NHL's By-Laws did not violate Canadian law specifically the Competition Act.


http://www.competitionbureau.gc.ca/epic/site/cb-bc.nsf/en/02641e.html
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Note that that ruling was made with the assumption that Bylaw 36 would be invoked over Sections 4.2 & 4.3 of the league constitution and that any relocation would be subject to a simple majority and not to the veto of a single team.

The Bureau's investigation established that under the NHL's rules and procedures, the proposed relocation of a franchise to Southern Ontario would require a majority vote by the NHL Board of Governors. The NHL would not permit any single team to exercise a veto to prevent a franchise from entering into Southern Ontario.
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CapsWolverinesUSA said:
But he can only become owner through the bankruptcy process (based on his current offer) if the Court first goes through the lengthy and complicated process of determining that the NHL's prohibition on relocating franchises without approval is a violation of anti-trust laws. That isn't some triviality. It could literally take many months, if not a year or more, to get to that conclusion. We're talking tons of experts, potentially vast discovery efforts, significant pre-trial motions practice, etc. And then there's the likely appeal that the NHL would file (along with injunctive relief to block the relocation pending the appeal). That could drag things out for another year or two.

What I believe to be ironclad fact is that the bankruptcy judge isn't just going to award the franchise to Balsillie and say "we'll deal with the other stuff later." An award to Balsillie cannot occur until AFTER a judge determines that the NHL cannot stop a relocation. Otherwise, the award would be made based on a contingency that the court might not have the authority to enforce or alleviate.

Do you disagree with this?
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I'd also add that you can pay off the NHL for any economic damage it says it will incur from the inability to enforce its constitution -- damage to its brand, etc. Indeed, the restriction on the free use of the asset -- the team -- is essentially a lien on the asset, just like the ones the secured creditors and Glendale have.

Problem for the NHL is that this lien is a junior lien that can be either paid off or eliminated in bankruptcy. Balsillie should just tell the judge he's perfectly willing to buy out any damages the league says it will incur.

There's really no authority to give the league the equivalent of specific performance -- the team staying in town -- for its claim. This is a bankruptcy.
 
one minute into the proceedings and they go into recess. So the lawyers of the NHL and Moyes can work out a schedule.
 
Greschner4 said:
When the asset is worth $75 million or more under the conditional contract, you have established bankruptcy laws that say the high bid wins an auction, and you have lined up against it a bunch of fellow competitors saying they want to have a say over the territory in which the business operates, it's easy to see a bankruptcy judge approving the sale, maximizing the return to creditors, and getting the case off his docket.
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Judges like clearing dockets. But this doesn't clear the docket in any shape or form.

For a judge to simply ignore the issue of its authority to prevent the NHL from blocking the move would be lunacy. Balsille isn't going to hand over $212.5 million when he knows full well that nothing has been decided with regard to his right to relocate. Once that money is in the hands of the creditors, he's never getting it back. So what happens when the day after he pays up, the NHL says "No" to his proposed move? He's ***** out of luck. He now has to go through the whole anti-trust litigation process, after having gambled a big chunk of that $212.5 million that he'll win. Why on earth would he do that?!? Nobody is so dumb to end up in that situation.

Given that he obviously isn't going to tender payment prior to some sort of declaration from the court saying in one form or another that he has the right to do what he wants with the franchise, what good does it do for the judge to say "Balsille wins!" and pretend like that ends the matter? It's patently obvious that nothing has been resolved. Nobody is getting paid. Creditors are still out their money. The franchise is still in limbo. The NHL has no idea who owns the team. Balsillie has no recourse. It's a giant quagmire and the whole thing will be tied up in litigation for 3 years.
 
Alberta Yote said:
I expect they will all present a whole pile of paper, make their arguements and the judge will adjourn to take things under advisement and prepare a ruling on the legitimacy of the filing.
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red devil said:
one minute into the proceedings and they go into recess. So the lawyers of the NHL and Moyes can work out a schedule.
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I may have overestimated how much will get done today.
 
The problem that I see right now is that if this matter ends up in limbo for lets say 2 years. Who gets to operate the team? Who covers the inevitable losses that the team will generate next season? I can't see how this could work. The league would definitely need to finance the Coyotes until the whole thing is over and they risk losing whatever money they throw into the pot at the end anyways.
 
CapsWolverinesUSA said:
But he can only become owner through the bankruptcy process (based on his current offer) if the Court first goes through the lengthy and complicated process of determining that the NHL's prohibition on relocating franchises without approval is a violation of anti-trust laws. That isn't some triviality. It could literally take many months, if not a year or more, to get to that conclusion. We're talking tons of experts, potentially vast discovery efforts, significant pre-trial motions practice, etc. And then there's the likely appeal that the NHL would file (along with injunctive relief to block the relocation pending the appeal). That could drag things out for another year or two.

What I believe to be ironclad fact is that the bankruptcy judge isn't just going to award the franchise to Balsillie and say "we'll deal with the other stuff later." An award to Balsillie cannot occur until AFTER a judge determines that the NHL cannot stop a relocation. Otherwise, the award would be made based on a contingency that the court might not have the authority to enforce or alleviate.

Do you disagree with this?
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Consider the Al Davis timeline:

1981: 1st trial in US District Court - hung jury & mistrial

May 7, 1982: 2nd trial in US District Court - jury verdict for Davis

May 1983: Separate damages trial awarded Raiders & LA Coliseum Commission ~15M (trebled to $~45M)

April 7, 1983: Appeal of trial verdict to US 9th Circuit Court of Appeals

February 28, 1984: 9th Circuit ruling upholding trial courts ruling and enjoining the NFL from preventing the Raiders from relocating in Los Angeles.

Later 1984: Appeal to the US Supreme Court - not accepted.
 
http://slam.canoe.ca/Slam/Hockey/News/2009/05/07/9386636-cp.html

CP story on Balsillie's reps meeting with Copps Coliseum folks.
Eisenberger says the city is only interested in a long-term agreement in exchange for exclusive hockey use of the arena.

He says the arena needs upgrades, including private boxes, that would cost about $100 million - and it would be up to Balsillie to come up with the money.
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Another twitter report says the judge has already decided this won't be settled before the draft. Can anyone confirm this?

If that's the case the Coyotes will be playing out of Glendale at least next year for sure.
 
Stranger said:
Notice that I didn't say that Balsillie removed his deal. His offer expired after he failed to put more money down on the deal. After that, Leipold moved on to the local group. It is quite simple really.

Are you telling me Bettman FORCED Balsillie to not put down more money?
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Put more money down? Balsillie had the biggest offer! The deal expired because Leopold didn't want to complete it. There wasn't much point in resubmitting a rejected bid. It's all semantics, but it's easy enough to extrapolate was is really going on out of the public view. It seems silly that Leopold was really upset that Balsillie was taking season ticket deposits inorder to fulfill a league requirement to show market viability....
 
Alberta Yote said:
Another twitter report says the judge has already decided this won't be settled before the draft. Can anyone confirm this?

If that's the case the Coyotes will be playing out of Glendale at least next year for sure.
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The guy from the Toronto star who is in the courthouse hasn't said anything.
 
Fugu said:
Can I ask how you arrived at this conclusion, and if you actually have a copy of the NHL by-laws?
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Bill Daly has stated exactly that several times in interviews.

Large portions of the by-laws have been published on the web.

I would NEVER use Strachan as a source. If he said that the sun came up this morning, I would require verification from three other sources.
 
Here's a thought:

How would the court view an offer of $212.5 million contingent upon moving versus an offer of $160 million that includes continued execution of the lease in Glendale. I am assuming the City of Glenville will attempt to be included in the proposed filing as a secured creditor.

How would a deal like that make Glendale whole be viewed by the court?
 
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