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Bankruptcy Court Approves Sale of Coyotes to NHL

So it has happened and another chapter in the story that won’t die is opened. This could have two very interesting angles to it based on preliminary reports.

First is that the NHL is left holding the franchise for a few months until a buyer could be secured. This seems to raise some particular conflict of interest issues for me. Specifically, how can the league own a team that is operating with a player budget anywhere but at the cap floor? Fortunately for them, the Coyotes are already at the bottom of the barrel in that department so it is currently a non-issue. One must think, however, that until the league sells the team there will be a freeze on signings outside of locking up guys in the minors that they currently have rights to. Where this could become an issue is if the league is left holding the bag up to the trade deadline. What do you do in the case where you’ve got a few UFA’s you could trade for picks? Will the management be able to do so for the betterment of the team down the line while ostensibly working directly as an employee of the other 29 owners? This would be the league directly making player personnel moves that could influence standings. Taken further, as the Coyotes are now, in effect, property of the other 29 teams via their financial investment in the team, would it not be the case that any other team would in the legal sense be trading with themselves?

The question is, however, is such a thing likely to happen? The answer: probably not. But if this process has taught us anything it’s that we can expect the unexpected, and angle two here has a flavor of this. Rumblings out of the GTA have bids coming in on two fronts for the franchise now owned by the league. The first is the Ice Edge Holdings group, an earlier collection of individuals who were going to make a bid for the bankruptcy hearings but missed the deadline. The second group is comprised of two former members of the Ice Edge Holdings group: Howard Sokolowski and David Cynamon. Some CFL fans will recognize these fellows as the current owners of the Toronto Argonauts, who bought the team out of bankruptcy in 2003. Well, they actually got help from David Braley, owner of the BC Lions of the CFL, in buying the Argos out of bankruptcy. Total amount required to get the Argos out of bankruptcy? Five million Canadian dollars. And they needed help. Total projected cost of the Coyotes? Reasonable estimate is between $140 to $160 million. I think they’ll need help, and thankfully so do they, stating they’ve assembled a group of 12 other investors to cover the cost. But you couldn’t afford five mill six years ago, rumours persist that you’re still requiring Braley’s help just to keep the team afloat, that they have their fingerprints all over the teams recent failures by effectively neutering their GM and making personnel decisions themselves (i.e., hiring oif a new coach), and you think you can jump into the NHL arena? Don’t get me wrong, I feel that they measure up to NHL standards in many respects, but it’s become quite apparent that those standards are very flawed!

Should this bid get along into the serious consideration stage I think there’s reason to worry seriously about the state of the league as currently structured (as if there wasn’t enough already). You’ll fight tooth and nail to block J-Balls for not following the rules, and that’s your perogative. But he had two things going for him: loads of cash and loads of passion. In the Sokolowski/Cynamon bid you’d have two guys who may be quite into the game and may be willing to play by the rules, but cannot possibly have the funds. Check these numbers out: If these guys, hypothetically were able to put up five million, that would leave approximately 10-12 million for each of the remaining investors to throw in. Makes them more figureheads for the bid, doesn’t it? Are there others who want to make a bid but are doing it under this umbrella such that their names aren’t front and center? Given the cash that would be involved one has to wonder as under any bid structure there would have to be at least one person throwing in significantly more than the boys whose faces are attached to the application. Makes me wonder, especially in light of how poorly the vetting process has gone within the NHL in recent years when it comes to new owners.

Again, this isn’t even a reality yet, but surely something to consider given the intent to bid that has been raised. Is the circus over? Nah, it’s just another act coming on, and the potential for the group bid clown car to empty out and end up leaving the NHL with pie on its face is certainly there.

Cheers!

Shawn Gates
shawn.gates@hockeybuzz.com
Twitter: ShawnHockeybuzz
Facebook: Shawn Gates
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