Post by Zoom Waffles on May 6, 2009 12:00:14 GMT -5
We're talking about this on the other thread, but it's really two different stories. Before Balsillie can even think about purchasing or moving the franchise, the franchise needs to be for sale!
I'm not exactly a finance genius, so forgive me if I give vague or inaccurate details of the situation. I'm going off TSN articles and Wikipedia. Anyone who knows more about it should chime in.
Basically, Phoenix has filed for chapter 11 bankruptcy protection. This would give the franchise protection from its creditors (the city of Scottsdale, for instance, to whom the Coyotes owe $400 million), and would provide the opportunity for low-interest loans from banks or private entities. Basically, it's like a second chance. If the owners provide a bank with good enough evidence that there will soon be a turnaround, a bank may supply them with enough money to hold them over until then.
In this particular situation, that might be the case. Everyone knows that a franchise is more successful financially when it's more successful on the ice. And it's generally agreed that Phoenix has a very bright future with young stars like Tikhonov, Boedker, and Mueller. I'm sure this will be the franchise's primary argument in filing Chapter 11 and seeking funding from a bank.
Here's the catch: a bankruptcy court is not going to protect the Coyotes if they don't need protection. If, for example, someone were to throw an offer their way (say, $212 million), why would they need protection? So by making this offer, Balsillie has put the Coyotes in a situation where they potentially have no choice but to sell. He has also offered to give $17 million to hold them over until the deal is finalized.
So Balsillie has made it impossible for the Coyotes to get bankruptcy protection. Without that protection, no bank or private entity will give them a loan, except Balsillie himself. He'll only give them the loan if they agree to sell to him. And he'll only buy if the NHL allows him to move the team to Southern Ontario.
This is a very aggressive and sneaky move by Balsillie to literally grab the NHL by its balls. It's Balsillie vs. Bettman... a battle that's been building over the past several years. It's going to get nasty.
I'm not exactly a finance genius, so forgive me if I give vague or inaccurate details of the situation. I'm going off TSN articles and Wikipedia. Anyone who knows more about it should chime in.
Basically, Phoenix has filed for chapter 11 bankruptcy protection. This would give the franchise protection from its creditors (the city of Scottsdale, for instance, to whom the Coyotes owe $400 million), and would provide the opportunity for low-interest loans from banks or private entities. Basically, it's like a second chance. If the owners provide a bank with good enough evidence that there will soon be a turnaround, a bank may supply them with enough money to hold them over until then.
In this particular situation, that might be the case. Everyone knows that a franchise is more successful financially when it's more successful on the ice. And it's generally agreed that Phoenix has a very bright future with young stars like Tikhonov, Boedker, and Mueller. I'm sure this will be the franchise's primary argument in filing Chapter 11 and seeking funding from a bank.
Here's the catch: a bankruptcy court is not going to protect the Coyotes if they don't need protection. If, for example, someone were to throw an offer their way (say, $212 million), why would they need protection? So by making this offer, Balsillie has put the Coyotes in a situation where they potentially have no choice but to sell. He has also offered to give $17 million to hold them over until the deal is finalized.
So Balsillie has made it impossible for the Coyotes to get bankruptcy protection. Without that protection, no bank or private entity will give them a loan, except Balsillie himself. He'll only give them the loan if they agree to sell to him. And he'll only buy if the NHL allows him to move the team to Southern Ontario.
This is a very aggressive and sneaky move by Balsillie to literally grab the NHL by its balls. It's Balsillie vs. Bettman... a battle that's been building over the past several years. It's going to get nasty.