Dewey Ranch asks court to disregard league's stance on Coyotes sale; NHL looks to block relocation

By Caroline Salls

Pittsburgh, Aug. 19 - The battle over Dewey Ranch Hockey, LLC's potential sale of the Phoenix Coyotes continued Tuesday when the National Hockey League asked the U.S. Bankruptcy Court for the District of Arizona to rule that the team cannot relocate for the 2009-2010 season and the company asked the court to declare that its interests in the team can be transferred to PSE Sports & Entertainment, despite the league's refusal to consent.

According to the company's motion, the NHL has told the court from day one that it would reject PSE's bid because of James Balsillie's desire to relocate the team. PSE is led by Balsillie.

"In an effort to avoid the briar patch of relocation, however, the NHL now claims the board of governors closed its eyes to the relocation issue and rejected PSE's ownership transfer application solely because James Balsillie allegedly is the first ownership applicant in history to lack the good character and integrity required of all NHL owners," Dewey Ranch said in its motion.

"This claim is specious, a poor disguise for the NHL's bad faith application of its rules, and a pretextual rejection violating fundamental bankruptcy and non-bankruptcy law."

The company said the league continues to argue that PSE's bid for the team must be denied "simply because the NHL says so."

In addition, Dewey Ranch said the NHL's consent is unnecessary because under section 365(f) of the Bankruptcy Code the league cannot prevent assignment by invoking anti-assignment or consent provisions in its constitution and by-laws.

League argument

Meanwhile, according to the league's motion, the court has already rejected the argument that the NHL's consent rights relating to relocation "can be excised from the contract" because it is illegal under the antitrust claims alleged by company and advocated by PSE.

As a result, to obtain an order forcing a relocation for the 2009-2010 season, the league said Dewey Ranch and PSE would need to prove that relocation is actually possible given the limited time that remains between now and the beginning of the season and that the league's decision not to change its schedule to allow the Coyotes to play their home games in Hamilton, Ont., for the upcoming season was made in bad faith or the NHL's decision not to schedule the Coyotes in Hamilton for the upcoming season constitutes a violation of the antitrust laws.

Since the auction date is only three weeks before the start of the season and the schedule has already been set, the league said Dewey Ranch and PSE cannot prove that the relocation is possible.

"Second, PSE and the debtors cannot seriously contend that the league's decision was made in bad faith when attempting to accommodate a last minute move would cause substantial and indisputable disruption to the league, its member clubs and its business partners, and irreparable damage to the league's relationship with its fans," the NHL said in its motion.

Even if PSE is the high bidder at auction, the NHL said the court should order the team to play its home games in Glendale, Ariz., this season.

Hearings on both motions are scheduled for Sept. 2.

Dewey Ranch and Arena Management Group, LLC, Coyotes Holdings, LLC and Coyotes Hockey, LLC are the owners of the Phoenix Coyotes NHL team. The owners filed for bankruptcy on May 5. Their Chapter 11 case number is 09-09488.

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