Phoenix Coyote Bankruptcy Presents Many Interesting Issues for Businesses
Leaving aside the fact that I am a hockey fan – one of my lifetime highs was being at Madison Square Garden on June 14, 1994 – what is going on with the Phoenix Coyotes should be of interest to anyone who deals with franchises, bankruptcy, has received taxpayer financing, or has professional sports marketing deals.
For those who don’t follow hockey, the Coyotes filed for bankruptcy this week and are trying to have the court approve the sale of the club to the founder of Research in Motion, who presumably would move the team from Arizona to southeastern Canada. The NHL, which for years has seemed to think that playing ice hockey in the sunbelt is better than having it played in Canada, had a different purchaser in mind. So, it stripped the current owner of his right to run the team, and the Commissioner says that he doesn’t think that the other owners would approve the sale proposed by the Coyotes.
Because the current owner and the NHL appear to have declared war, it seems that the Bankruptcy court will have to deal with some interesting issues. A few come to mind immediately. After a bankruptcy, who controls where a franchise goes, who controls who owns it, who operates it – the league, an appointed trustee or the current owner as debtor in possession? Can a league prevent a member from filing for bankruptcy? What is the effect on a league if a member files for bankruptcy? What happens to taxpayer financed facilities? I’m sure there are many more issues that will develop as this case works its way through the bankruptcy process. Will Wayne Gretzky leave the sun to return to coach in Canada. (I guess that isn't a legal issue.)
Here are what the Wall Street Journal, ESPN, the CBC, and the New York Times have to say about this, so far.
