NHL's Phoenix Coyotes Filing for Bankruptcy
The Phoenix Coyotes of the National Hockey League have
recently filed for Chapter 11 bankruptcy, meaning that it is seeking government
protection as it reorganizes its financials in order to satisfy its
creditors. The Phoenix Business Journal reports that as of May 6, however, the
status of this filing is very much up in the air, as the NHL itself has asked
the court to dismiss said filing.
A number of somewhat contrasting contracts make the
situation difficult to follow. According
to the bankruptcy papers turned into the court by team owner Jerry Moyes, the
Phoenix Coyotes should be arranged to be sold to a Canadian businessman for
$213 million. However, as of the filing
on Tuesday, May 5, the league took control over the franchise. Wanting to assert its own power over the
future of the franchise, the league has asked for a stay of this original
request, likely as it considers all available moves.
Hockey may not be the most popular sport in the country,
with the NFL and baseball often trumping headlines, but it remains a legitimate
moneymaker when established in the right market, and the NHL likely wants to
make sure that this bankruptcy filing is in the best financial interest of the
team and the league.
Furthermore, the NHL is currently in the midst of its playoff
season, and any escalation of this news could obviously turn attentions to
negative developments that the league does not want to highlight. Even in cities where the team fan base is
relatively small, there can be a very loud uprising when the possibility that
the team will leave the city arises.
According to the commissioner’s office of the NHL, the
Phoenix Coyotes may not even possess the authority to file for bankruptcy in
the manner that the team did. The league
ostensibly loaned money to Phoenix in February with the understanding that the
NHL would take over if finances remained a problem. According to commissioner Gary Bettman, “This
is more about the tactic and I think a challenge to league rules than it is
about economic conditions of the club, which we believe, with new ownership and
with accommodations the city of Glendale is prepared to make, we think can
succeed.”
The city of Glendale, Arizona -- where the Coyotes play
their home games -- are preparing for a legal battle of their own in order to
prevent the economic blow that the departure of a major sports franchise could
bring. The Coyotes do have a 30-year lease
on Jobing.com Arena, which is owned by the city of Glendale. There is a $750 million penalty for breaking
the lease.
The Phoenix Coyotes moved to Glendale from Canada in 1996,
where they were known as the Winnipeg Jets. One of hockey’s great stars Wayne Gretzky is currently a part-owner of
the team, as well as head of hockey operations and the head coach.
Whether or not this franchise moves again may very well rest
in the outcome of this bankruptcy development, with the government likely
having to decide whether Coyotes management has the right to sell the team to
its prospective Canadian buyer, or whether the NHL is allowed to override this
move and take control of any major decisions.