Brunt: Bettman's Coyote ugly could be costly

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As a small, tense drama played out in a Phoenix courtroom Thursday, a question leapt to mind.
Understanding the grave consequences, how could the NHL have allowed the Phoenix Coyotes to fall into bankruptcy?
Could it be that commissioner Gary Bettman badly overplayed his hand?
The perils for the league are self-evident. When Coyotes owner Jerry Moyes filed for Chapter 11 bankruptcy protection, it opened the door for Canadian businessman Jim Balsillie to make an offer to purchase the club, knowing that no one else would match it, knowing that it would be by far the best deal for the creditors, and knowing that he might be able to walk away from the club's arena lease in Glendale and move to Hamilton, Ontario in return for paying a modest penalty -- perhaps as little as one year's rent.
At the same time, there would be a very public airing of the NHL's dirtiest laundry, opening the books on a franchise that from the moment it arrived in Arizona has been drowning in red ink.
One of the myths of the post-lockout era is that the cap-and-floor system now in place is failsafe, that it protects even the weakest franchises through revenue sharing, while restricting the amount spent on player salaries to a level everyone should be able to afford.
Apparently, that's not quite true. In the past three seasons alone, the Coyotes lost upward of $73-million, which isn't the kind of picture you'd want to paint in a business in which franchise values -- and, more significantly, the money borrowed against them -- might be called into question.
Without the bankruptcy, for all of the speculation, no one would have known any of that for certain.
So what was Bettman thinking?
Some time last winter, Moyes, who was being squeezed in his main trucking business thanks to collapsing economy, tired of paying the Coyotes' bills. As was reported in this newspaper (and as was vigorously denied by league executives), the NHL began advancing future revenues to the club in order to keep it solvent.
The NHL could have allowed Phoenix to miss payroll and then revoked the franchise, putting the Coyotes directly under league control. But that would have been impossible to keep quiet, and it would have been terribly embarrassing, an admission of failure that might lead to panic, with several other franchises teetering on the brink.
That would have also headed off the possibility of Moyes declaring bankruptcy.
Bettman decided to gamble. The league advanced/lent the Coyotes $35 million, keeping the club afloat, with Moyes still officially in charge. Meanwhile, Bettman began beating the bushes in search of a new owner. Once he located an investor/sucker, the NHL could frame it as an orderly transition, suggest that real money changed hands, and preserve the illusion of business as usual.
Problem was, Bettman couldn't find anyone to buy the Coyotes. A succession of tire-kickers came and went, scared away by the terrible past performance, the minimal prospects for improvement, and the long-term lease in Glendale. Meanwhile, Moyes' own situation continued to deteriorate, and he began to understand that all of the money he'd sunk into the Coyotes was about to vanish into thin air.
Somewhere in there, he contacted, or was contacted by, representatives of a Canadian billionaire intent on buying an NHL team and moving it to Hamilton. Since being outflanked by Bettman when he attempted to buy first the Pittsburgh Penguins and then the Nashville Predators, Balsillie had gone into stealth mode, understanding that time was on his side. The economy was tanking. Already shaky franchises were going to be pushed to the brink. Owners who might have originally resisted his advances were going to start heading for the lifeboats. The only question was who would get there first.
It turned out to be Moyes.
In the end, Bettman finally managed to come up with a cash-poor offer from Chicago Bulls owner Jerry Reinsdorf (who earlier had said no thanks when he was asked to consider buying the Coyotes).
Moyes could take that, take his lumps, and play the good soldier for a league from which he was going to be happily freed in any case.
Or he could enter into a plan that must have been carefully vetted by both his and Balsillie's lawyers, taking the team into Chapter 11 with Balsillie's offer to purchase right there on the table.
Bettman sure didn't see that one coming. He rolled the dice, largely for the sake of appearances, and he lost.
And now, as he argues before the bankruptcy court that Moyes really isn't the owner, as he pleads with individual governors to fight this battle to preserve the sanctity of their own territorial rights, as he sets them up for what could be a protracted, wildly expensive legal battle, it might just occur to them that Bettman was playing this game with their money.

(Contact Stephen Brunt at sbrunt(at)globeandmail.com.)

(Distributed by Scripps Howard News Service, www.scrippsnews.com.)
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