An Arizona bankruptcy judge has reportedly raised the prospect of rejecting the only two bids on the table for the National Hockey League's bankrupt Phoenix Coyotes franchise. Coyotes owner Dewey Ranch Hockey LLC began a two-day auction on Thursday, evaluating the prospects of separate bids from the NHL and PSE Sports & Entertainment LP, an entity controlled by Jim Balsillie, the founder and co-CEO of BlackBerry maker Research In Motion Ltd. (NASDAQ:RIMM).
Though Balsillie's $242.5 million bid is much higher than the NHL's $140 million offer, the former is conditioned on moving the struggling franchise to Hamilton, Ontario, against the league's wishes. The NHL wants to acquire the Coyotes and quickly sell it to a league-approved owner.
Chief Judge Redfield Baum of the U.S. Bankruptcy Court for the District of Arizona called the possibility of rejecting both bids "more than theoretical," according to The Associated Press. Baum must approve any sale of the Coyotes.
Many outside observers are closely monitoring the auction because if Baum approves Balsillie's bid -- a windfall for creditors compared to the alternatives -- some worry it would set a precedent for other sports franchises to easily relocate without approval of their league by filing Chapter 11 protection.
Indeed, the National Football League, Major League Baseball and the National Basketball Association have all filed briefs with the bankruptcy court opposing a sale that would move the franchise against the leagues' wishes. Perhaps if Baum does follow through on his threat to reject both bids, another entity -- maybe even Ice Edge Holdings LLC, which withdrew its $150 million bid for the Coyotes -- will swoop in to buy the team. If not, it could spell the end for a franchise that had to take a $37 million payment from the NHL just to stay afloat last season. - John Blakeley
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