Fate of NHL club could hinge on relocation fee

A relocation fee demanded by the National Hockey League could scupper Canadian billionaire Jim Balsillie's effort to buy the Phoneix Coyotes and move them to Canada.

The fee was a major issue in a bankrutpcy court hearing on the case on Tuesday, with judge Redfield Baum saying his understanding of the matter was that the league owns the right to the Hamilton, Ontario, region where Balsillie wants to put the club and would be entitled to a fee if such a deal goes through.

League lawyers told the judge it would be hard to come up with a figure for the fee, which is normally determined by the NHL Board of Governors as part of the relocation process.

Baum said he might force the NHL to come up with a number by ordering an auction of the team on June 22, which would suit Balsillie's timeline.

Balsillie has offered 212.5 million dollars to buy the Coyotes, contingent on moving the team to Hamilton and sealing the deal by the end of June.

But if the relocation fee is too big, Balsillie may withdraw his bid, leaving the league to try to sell the club to an owner who would keep it in Arizona.

"I did have a brief discussion with Jim about it this morning," Balsillie representative Richard Riordan said. "And the contract gives us the right to walk away if there's any transfer fee at all."

If Baum approves a fee that promts Balsillie to walk away, Baum would be able to avoid dealing with issues that could set legal precedents, such as whether he can order the team to be moved despite the objections of the league.

"He's obviously struggling with the issues," deputy NHL commissioner Bill Daly said. "I think he openly admitted that it's an unprecedented case and there are difficult legal issues and a lot of different areas of law that are conflicting and he's got to work that out."

Coyotes owner Jerry Moyes filed for Chapter 11 bankruptcy protection on May 5. The NHL have questioned whether he had the authority to do so, saying they had been funding and running the financially strapped club.

NHL officials also claim that commissioner Gary Bettman was in a car on his way to deliver a letter-of-intent for a group of buyers when they heard of the filing.

The league says four prospective buyers who would keep the team in Arizona have filed preliminary applications.