Great work by the Mercury News for
continuing to work on this story, which to many isn’t nearly as interesting to most as which station an intro song is going to be played on.
I think it’s fascinating though...
Here’s what we’ve learned/confirmed tonight:
1) AEG has filed a lawsuit against Boots Del Biaggio in regards to the $7 million loan.
Click here for the PDF of the complete document. The suit names Del Biaggio, Scott Caccione and Merriman, Curhan, Ford & Co, as well as Does 1 through 20 (‘doe defendants’ who are unknown and thus being sued under ficticious names)
2) The loan was made to help Boots pay for his share of the Nashville Predators. Section 3(a) of the Promissory Note states:
“The Borrower shall use the proceeds of the Loan evidenced by this Promissory Note solely to pay $7,000,000 of the purchase price for the Borrower’s acquisition of limited liability interests in Nashville Predators, LLC, a Delaware limited liability company, a privately-held company that is the owner of the Nashville Predators of the National Hockey League (the “Transaction”). The Borrower shall not use the proceeds of the Loan evidenced by this Promissory Note for any other purposes.
3) The agreement was signed by Dan Beckerman, who is listed as the Executive Vice President, CFO/COO of the Los Angeles Kings Hockey Club on their website.
4) The collateral pledged in the loan agreement consisted of three accounts, two of which (allegedly) did not belong to Del Biaggio but were altered to appear as if they did. That information is consistent with the other four lawsuits filed to date.
5) Schedule 1 provides a list of Boots’ financial assets, which I don’t believe had been released to date. The list spans page 30-34 of the pdf and lists all his common stock and debentures, including 20,000 shares in ‘National Lampoon Inc.” How appropriate.
Meanwhile, the Metro Sports Authority in Nashville has called a closed-door meeting for Friday to talk about options on how to handle Del Biaggio’s bankruptcy. A closed-door session hasn’t ever been called during the tenure of Chairman Kevin Lavender, which has spanned four years to date.
I know that we’re hearing a lot of ‘don’t worry’ in Nashville but I don’t see how its going to be easy to fill the void left by Del Biaggio in the ownership structure, unless Bruckheimer is brought in with similar arrangement that Boots had with the group.
Remember that Leipold wasn't able to find a significant minority investor in Nashville and that aside from Freeman, the seven other local partners are in for just over 1/3 - almost the same amount as Boots' share (including Warren Woo). It wouldn't be at all surprising to see Woo trying to sell his share, given that he was partners with Boots in the KC deal.
Here's the breakdown:
32.63% Freeman
31.58% Del Biaggio / Woo
35.79% Fritch, Cigarran, Cigarran, Dobberpul, Dobberpul, Thompson, Thompson
Another thing to think about is that assuming the report about Boots' clause that enabled him to purchase the team is true, Freeman and the locals were completely protected in the deal. Now, not so much, especially if they hold onto the team too long and those parties interested in paying $200 mil for a hockey team end up obtaining them elsewhere, through relocation or expansion.
Remember my posting called
‘It’s Wild How Well It All Worked Out’?
Well sometimes things truly are too good to be true.
I count at least three owners/ownership groups who have been deeply affected by this Del Biaggio disaster. That’s 10% of the entire league..
Craig Leipold – owed $10 million
AEG – owed $7 million
David Freeman & local group – aside from a potential default on their agreement with the Sports Authority, the fate of almost 1/3 of their team may be left to a judge in a bankruptcy court. If the conditions contained in the Partnership agreement are deemed to be part of the asset value I would think that they would be transferable as part of the sale of the asset. We’re not there yet – not even close but it’s a possible scenario, depending on what other conditions are contained in the Preds’ agreement and whether a potential buyer comes forward – quick.
As for why AEG was involved in helping Boots to buy the Predators, it’s my opinion that the transaction appears to be the result of an over-aggressive interpretation of section 9.05 in the Kansas City Arena Development Agreement from 2005 between the City of Kansas City and AEG:
“Section 9.05 Attracting a Team. Provided that this Agreement is not terminated prior to Delivery of the Site, Developer, at no cost to the City, shall use all reasonable efforts to attract an NHL or NBA team to Kansas City and enter into an agreement with such team to provide that such team shall play home games during the NHL or NBA's regular season and post-season at the Arena.”
Now when your Company owns an NHL team, is loaning somebody money to purchase another team with the intention of that person relocating the team to your arena that is in a different city from the team that you own a reasonable effort?
Or does it go well beyond the scope of what would be considered reasonable and fall closer into the category of 'by any means necessary'?
Would it violate NHL bylaws?
And does anyone still think that Boots had long-term plans in Nashville or did the yellow brick road lead to that shiny building in KC?
The evidence is all there for anyone who wants to investigate. If you watched "The Wire", you know that Lester Freamon would just follow the money trail. McNulty on the other hand, would probably hit the streets to get quotes - and these quotes are even too good to be made up:
“I’m very good friends with Mr. Anschutz and Tim Leiweke, the guy who runs AEG, and AEG had built a building in Kansas City and they knew I wanted to become a majority owner of an NHL team. So when the Pittsburgh deal didn’t happen I basically partnered with them to try and bring an NHL team to Kansas City.”
- Boots Del Biaggio, December 18, 2007 on the Fan590
"And you have a prospective ownership group that includes Del Biaggio and Warren Woo, who are currently in Nashville, but I think they’ll eventually end up in Kansas City once the Nashville situation either resolves itself and (the Predators) stay or it doesn’t resolve itself and they move. There’s a new lease in Nashville that allows the team to move if they don’t meet their attendance requirements. "
- Paul McGannon, President of NHL21 in Kansas City
“These types of processes take time. I don’t know if anyone thought that the building would have a tenant overnight. The priority was to keep the team in Pittsburgh; everyone understood that. Just as if teams in Kansas City have issues, you’d want to know the league is doing everything it could to keep them there. But Kansas City put itself on the map as an attractive, viable place for a future arena franchise, be it the NHL or NBA. I can’t speak for the NBA, but no doubt if we were considering a relocation or expansion — neither of which we are considering at the time — we would have to consider Kansas City.”
- Gary Bettman told the Kansas City Star
"I believe Boots and his group will step up and get an expansion franchise if there is one to be had. In the meantime we're going to try anybody and everybody that ultimately is in trouble. We're willing to be used a little bit if that's the process it takes to get Kansas City a team."
- Tim Leiweke told the Kansas City Star
Getting used isn’t as much fun as it sounds, is it?
Is anyone going to look into all this?
How about the guy who brought Boots and the local group together in the first place?
Anyone?
Danny –
[email protected]
Join the Discussion:
»