Canadian businessman Jim Balsillie was unanimously rejected by the NHL's board of governors in his bid to become an NHL owner at a meeting Wednesday afternoon in Chicago.
The board convened a special meeting in Chicago to evaluate each group's applications before an eventual sale of the Coyotes, who were taken into Chapter 11 bankruptcy on May 5 by current owner Jerry Moyes.
"The Board was obviously very uncomfortable with approving Jim Balsillie as an owner. As a result, they rejected his application unanimously," NHL deputy commissioner Bill Daly told ESPN.com in an e-mail.
A spokesman for the Balsillie camp said the league's vote has no impact on Balsillie's pursuit of the Coyotes, which may be decided next week in a Phoenix courtroom.
"We do not think that Jim Balsillie's qualification to be an NHL owner is an issue in this case given his 2006 approval as an NHL owner," Balsillie's spokesman Bill Walker said in a statement released late Wednesday.
Balsillie, head of the BlackBerry empire, has long sought to purchase an NHL team that he could move to Ontario. He was previously approved as an owner of the Pittsburgh Penguins, but that deal fell apart when the league imposed a series of restrictions on his ownership.
The Penguins remained under the control of a group led by Mario Lemieux. A new arena is being built for the team in Pittsburgh.
Bettman said the process was necessary to comply with the NHL's constitution and bylaws, as well as an order by U.S. Bankruptcy Court Judge Redfield T. Baum.
"We will so advise the bankruptcy court and we will move this process forward," Bettman said.
An application by a third group, led by Anthony LeBlanc of Thunder Bay, Ontario, was deemed "incomplete," Bettman said. That consortium, however, was encouraged by the board to continue with the application process.
Representatives of each group met Wednesday morning with the NHL board's executive committee, which took its recommendations to the entire board for a vote.
The Reinsdorf group has told the NHL it wants to buy the Coyotes for $148 million and keep the team in Arizona. Balsillie has offered $212.5 million for the Coyotes, but his proposal is contingent on moving the franchise to Hamilton, Ontario.
"This had nothing whatsoever to do with the relocation issue," Bettman said "All that was considered was the suitability of the applicants of the owners."
More than money is involved, Bettman stressed.
"The criteria set forth in the [NHL] constitution and bylaws relates to financial wherewithal, character, integrity and the view whether or not the other owners would deem you a good partner," Bettman said.
Balsillie hoped to buy the team and move it to hockey-crazed southern Ontario. However, the NHL wants the Coyotes to remain in Arizona and continue to play at the Jobing.com Arena in Glendale, a Phoenix suburb.
The team has lost money in Arizona each season since moving there from Winnipeg, Manitoba, in 1996.
When asked why Reinsdorf's group's application was approved, Bettman said, "That's a question better directed to the governors because they're the ones who vote.
"But I think based on Mr. Reinsdorf's experience and reputation as an owner of two very successful franchises in other sports leagues, it's no surprise that his application would be endorsed."
Walker pointed out in the Balsillie news release that Baum, who is presiding over the Coyotes' case in Phoenix, previously stated that: "Absent some showing by the NHL that there have been material changes in [Balsillie's] circumstances since 2006, it appears to the court that the NHL cannot object or withhold its consent to [Balsillie's company] PSE becoming the controlling owner of the Phoenix Coyotes."
Information from ESPN.com's Scott Burnside and The Associated Press was used in this report.