An Arizona bankruptcy judge has ruled that an auction for the Phoenix Coyotes should be open to all bidders, even those who want to move the team.

Judge Redfield T. Baum specifically said that will include the US$212.5 million bid from Canadian billionaire Jim Balsillie, who wants to move the team to Hamilton.

The ruling once again sets up a potential battle between Balsillie and the NHL, whose board of governors rejected him as a potential owner.

The auction will take place on Sept. 10.

"As the only bidder with a firm offer before the bankruptcy court to purchase the Phoenix Coyotes, we obviously agree that Jim Balsillie belongs in the September 10 auction," Balsillie spokesman Bill Walker said in a statement.

"From the time his bid was launched, Jim Balsillie has said that all he is asking for is a chance to bid for the Coyotes at auction through the bankruptcy court process on a level playing field and let the best bid win. That's fair and transparent. It's the best outcome for creditors and for the future of the franchise."

As it currently stands, Balsillie has easily submitted the best offer for creditors.

A group headed up by Chicago Bulls and White Sox owner Jerry Reinsdorf has submitted an offer of US$148 million. That offer would keep the team in the desert.

The Phoenix Coyotes have lost money consistently since moving to Phoenix from Winnipeg in 1996.

Howard Bloom of Sportsbusinessnews.com says that with the ruling, Balsillie has to be considered the frontrunner for ownership of the franchise.

"I really think that when all is said and done, Jim Balsillie has moved from the outside to the inside," Bloom told CTV News Channel Wednesday evening. "He probably has to be considered almost the favourite."

Bloom says he expects other bids for the franchise to fall apart in the next month.

"The NHL's nightmare scenario is likely to unfold," he said.

If Balsillie does manage to win the team, the NHL could have a few tricks up its sleeve to keep him out, Bloom said.

He said the NHL could charge an exorbitant relocation fee of over $100 million or attempt to find another bidder who would move the team elsewhere.

With files from The Associated Press