Here We Go Again
The Atlanta Journal Constitution has a story that describes the lawsuit filed by the owners of the Atlanta Thrashers against their own lawyers. Setting aside the merits of the case for a moment, a court case – and this one does seem likely to go to court – will provide the same sort of fodder for the media as the Phoenix Coyotes have for the past couple of seasons. In other words, Gary Bettman is bracing for another series of embarassing disclosures about the financial viability of another one of his zombie franchises.
So far we have learned that the Thrasher ownership group has been forced to pour $130 MM in cash into the franchise since the lockout ended. We’ve also learned that the ownership group believes that the franchise value has plummeted in the past few years. Finally, we learned that the owners have lied to the fans about their plans from the time they bought the Thrashers. Apparently, they always planned to sell (or “otherwise dispose of”) the team after the lockout, basically as soon as Gary Bettman’s CBA drove up the franchise value.
The Spirit filed a $200 million malpractice lawsuit against King & Spalding Friday, saying the law firm’s negligence cost them millions of dollars and made them “unable to sell or otherwise dispose of the Atlanta Thrashers.” King & Spalding’s contract caused the buyout process to “quickly break down into chaos,” costing seven of the partners $14.5 million in legal fees and forcing them to shovel more than $130 million into the Thrashers to keep the franchise afloat, the lawsuit says.
“(The) Plaintiffs inability to buy out Belkin’s interest in a timely manner and the resulting cloud on their title created by the Maryland litigation interfered with operation of the franchises and specifically prevented Plaintiffs from selling the Atlanta Thrashers,” the filing says.
…The seven owners wanted to sell the Thrashers after the 2004-05 lockout was over, the new lawsuit says. According to the document, the labor contract after the 2004-05 lockout would be to the “financial benefit of smaller market franchise such as the Thrashers and thus increase their value. Plaintiffs expected that once the new labor agreement was finalized there would be substantial interest from potential buyers and that they would be able to sell the franchise.”
The seven partners talked with potential buyers while they were entangled in litigation with Belkin, the lawsuit says. Because Belkin still owned 30 percent of the teams, the seven other partners “could not convey free and clear title to the franchise and thus were not in a position to sell,” the lawsuit says.
As to the merits of the case itself, the usual caveats apply. I’m not a lawyer so I can only apply my common sense (and common sense is seldom applicable in a court of law). It certainly appears as if the law firm bungled the case if only because the objective was to arrive at an amicable parting of the partnership and the result achieved was anything and everything but that objective.
Still, I find it hard to believe the damage claim. Unless the partnership can produce somebody who wanted to buy the team but was blocked by the ownership mess, I don’t buy their claims. What prevented a sale? Why wouldn’t Belkin (the disgruntled minority owner) entertain an offer? The ownership issues mess would probably become easier to sort out if the Thrashers were sliced out of the pie and sold.
The Thrashers could have been sold in 2005? Show me the buyer.