UPDATE 2-NHL-U.S. judge denies Coyotes sale to RIM's Balsillie

* Bankruptcy judge rules insufficient time to settle case

* NHL says wants owner committed to Phoenix market

* Balsillie: Hamilton market remains team's best option (Adds NHL, Balsillie, Moyes comments, details, byline)

By Tim Gaynor and Ben Klayman

PHOENIX/CHICAGO, June 15 (Reuters) - A U.S. bankruptcy judge rejected the proposed sale of bankrupt Phoenix Coyotes hockey team to the co-CEO of BlackBerry maker Research in Motion (RIM.TO) who planned to move the side to Canada.

Bankruptcy Judge Redfield Baum ruled late Monday that the June 29 deadline proposed by RIM co-CEO James Balsillie did not allow enough time to settle the complex case.

"The court does not think that the unresolved issues can be resolved ... prior to the June 29th deadline," Baum wrote in a 21-page ruling.

"Simply put, the court does not think there is sufficient time (14 days) for all of these issues to be fairly presented to the court given that deadline."

Canadian billionaire Balsillie offered to buy the money-losing hockey team for $212.5 million in May when it filed for bankruptcy protection, on condition it relocate to Hamilton, a Canadian city located between Toronto and Buffalo, N.Y.

But Balsillie, a passionate hockey fan who regularly plays in pickup games, and the Coyotes owner, trucking magnate Jerry Moyes, have been facing off in court with the National Hockey League (NHL), which has said it wants to keep the franchise in Phoenix by finding a local buyer.

An auction for the team had been scheduled for June 22, but has been cancelled.

Baum rejected arguments by Moyes's attorneys that antitrust law allowed the sale and relocation of the Coyotes without NHL approval. He also cited the team's contract to play in the Phoenix suburb of Glendale, saying accepting the sale to Balsillie would violate that deal.

However, Baum also dismissed the concerns of other sports leagues that had warned allowing the Coyotes to relocate would encourage other financially struggling teams to use bankruptcy court to get around league rules.

"Financially challenged sports teams have the same rights and obligations as any business" that seeks bankruptcy protection, he said.

NHL PLEASED

Deputy Commissioner Bill Daly said the NHL was pleased Baum recognized league rules. He added the North American sports league would now turn its efforts to an "orderly sales process" that will result in a local buyer committed to the Phoenix/Glendale market.

"We are confident that we will be able to find such a buyer for the Coyotes and that the claims of legitimate creditors will be addressed," he said in a statement.

Balsillie's offer is the only formal one submitted so far but the NHL has said there are four potential bidders committed to keeping the team in Arizona, including part-time Arizona resident Jerry Reinsdorf, owner of the Chicago White Sox baseball and Chicago Bulls basketball teams.

Thomas Salerno, attorney for Moyes, said they were disappointed with the ruling and evaluating options.

Salerno said Moyes had stood to recoup $50 million to $60 million from the sale to Balsillie, but a new deal with another bidder is likely to be at a far lower price.

The Coyotes have never made a profit since moving to Arizona in 1996 and lost a combined $73 million from 2005 to 2008, according to court documents.

"When the numbers come in, people will be amazed at the material difference between the bids," Salerno said.

However, Balsillie, who failed in previous efforts to buy NHL teams in Pittsburgh and Nashville, Tennessee, and move them to Hamilton did not concede defeat.

"We look forward to hearing from the NHL soon on its view of our relocation application and an appropriate relocation fee, so as to allow the court to determine if that fee is reasonable," Balsillie spokesman Bill Walker said in a statement.

Walker said there is still enough time for the league to approve Balsillie's application and move the team to Hamilton by September, and added Balsillie stands ready to participate in mediation as invited by the court.

The case is: in Re: Dewey Ranch Hockey LLC, U.S. Bankruptcy Court, District of Arizona, No. 09-09488. (Reporting by Tim Gaynor and Ben Klayman; Additional reporting by Phil Wahba in New York and Gina Keating in Los Angeles; editing by Dhara Ranasinghe))