UPDATE 1-NHL's bankrupt Coyotes to go to auction Aug or Sept

* Judge sets Coyotes auction for August or September

* First auction will be for bidders committed to Arizona

* Balsillie has no plans to bid in first round (Adds comment from Balsillie spokesman)

CHICAGO, June 23 (Reuters) - The Phoenix Coyotes may be sold in an August or September auction after a bankruptcy judge outlined a schedule to address whether the bankrupt hockey team will play its future games in Arizona or possibly Canada.

Judge Redfield Baum of the U.S. Bankruptcy Court in Arizona on Monday ruled a sale of the team -- for which BlackBerry maker Research in Motion Ltd RIM.TO co-Chief Executive Jim Balsillie has offered $212.5 million -- will proceed along two tracks, according to Thomas Salerno, attorney for the National Hockey League team's owner, Jerry Moyes.

Under the judge’s schedule, an auction for the Coyotes will be held on Aug. 5 for bidders willing to keep the team in the Phoenix suburb of Glendale, Salerno said.

The NHL has said it wants to keep the team in Arizona and four potential bidders are committed to that.

If the August auction fails to attract a suitable offer, a second auction -- open to other bidders, including Balsillie, who could move the team -- would be held on Sept. 10, Salerno said. The Coyotes, which filed for bankruptcy in May, have never made a profit since moving to Arizona in 1996.

“The judge is ‘two tracking’ it, but is accelerating the process such that a relocation bid, if approved by the NHL or the court, could still happen for the 2009-10 season,” he said in an email.

The money-losing Coyotes are one of the less valuable NHL franchises. On Saturday, the Molson family tentatively agreed to buy control of the storied Montreal Canadiens club in a deal a source previously valued at almost $575 million.

Balsillie has no plans to bid in the first round in August, a spokesman for the avid hockey fan said.

“Mr. Balsillie has been very clear that his plan is to relocate the team to southern Ontario,” Bill Walker said. “We don’t see value in keeping a team that’s losing $35 (million) to $40 million a year where it is.”

Balsillie failed in previous efforts to buy NHL teams in Pittsburgh and Nashville, and move them to Hamilton, Ontario.

NHL officials said the league was prepared to adopt the two-tier approach to the auction.

“We are confident ... there’s a viable offer that will make this team viable in Glendale,” Deputy Commissioner Bill Daly said in a statement.

The NHL said it will discuss the Coyote’s bankruptcy at a league owners’ meeting on Wednesday.

In a filing on Monday prior to the judge’s ruling, the NHL had sought an auction limited to bidders committed to keeping the team in Arizona for at least one year and had expected to make a decision on ownership transfer by the end of July.

The NHL’s original proposal would have left Balsillie free to bid on the Coyotes and possibly later move the team.

Baum last week ruled a June 29 deadline set by Balsillie for his offer did not leave enough time to settle matters.

Also in the Monday hearing, an attorney for Jerry Reinsdorf, owner of the Chicago White Sox baseball and Chicago Bulls basketball teams, said the part-time Arizona resident should submit an offer for the Coyotes by the end of the week.

Balsillie will look at Reinsdorf’s bid to see if he really intends to keep the team in Arizona for good or eventually move it, Walker said.

The case is: in Re: Dewey Ranch Hockey LLC, U.S. Bankruptcy Court, District of Arizona, No. 09-09488. (Reporting by Ben Klayman; Additional reporting by Phil Wahba in New York; Editing by Richard Chang)