March 5, 2010 7:43 PM
The Franchise Ownership Chronicles: Firms Snag Roles on Sports Deals
Posted by Brian Baxter
Weil, Gotshal & Manges partner Glenn West thinks of himself as just another private equity corporate lawyer, except he's developed a "subspecialty" for sports transactions that don't appear on your favorite league's waiver wire.
The Dallas-based West (pictured right) has advised on the sales of the National Hockey League's Tampa Bay Lightning and Major League Baseball's Texas Rangers in recent weeks. He's hoping the spate of sports-related deals continues.
"I've been representing various sports teams for the past ten years or so, such as the Rangers, Dallas Stars, and even Liverpool F.C.," West says. "I'm primarily a private equity lawyer, but this is kind of a natural extension of that."
West's relationship with billionaire Thomas Hicks helped him nab those coveted assignments. The Texas financier tapped West to handle his acquisition of storied English soccer team Liverpool three years ago, and the sale of the Rangers in January for a sum reported to approach $550 million.
"I've probably looked at more [deals] than I've ever done in the sports arena," says West, noting that many of his clients inquire about buying sports teams, but few actually follow through. "But once you've had experience with a couple of these [deals], you tend to be the one that people go to for the next one."
The perks aren't what the average sports enthusiast might imagine. West says that most franchise sales require specialized knowledge that relate to league approvals and approaches to different issues.
"Each league is slightly different, but they all have similar issues," West says. "That in itself is probably the biggest difference between these types of deals and other business acquisitions--the role of the leagues."
The Rangers sale, still awaiting approval by MLB owners, also involved lawyers from Pepper Hamilton, Foley & Lardner, Proskauer Rose, Latham & Watkins, Dallas's McGuire, Craddock & Strother, and Pittsburgh's Sherrard, German & Kelly. (Click here for a full report on the Rangers deal from sibling publication Texas Lawyer.) West says that the leagues and their owners serve their own unique roles in vetting team transactions.
"The owners are like Congress and the leagues themselves are kind of like a regulator," West says. "The league has to approve [of these sales] before they even go to the owners."
On the Lightning sale, which has closed, West and Weil represented an investor group led by Oren Koules and Len Barrie that had purchased the team in 2008 for $206 million. Almost 18 months later, the Lightning are changing hands again, amidst reports of financial troubles and disputes among the investor group.
While the sale price for the Lightning to Boston hedge fund manager Jeff Vinik hasn't been disclosed, estimates put the amount at roughly $170 million. Covington & Burling corporate partner Douglas Gibson in Washington, D.C., advised the NHL on the Lightning sale, West says, while Vinik turned to Hogan & Hartson M&A partner Tyler Harvey in Denver. (Gibson and Harvey did not immediately return requests for comment.)
The Lightning and Rangers aren't the only teams from major North American pro sports leagues changing hands. The National Football League's St. Louis Rams are in the process of being sold to Illinois businessman Shahid Khan. And Butzel Long counsel Oscar Feldman recently told Crain's Detroit Business that the National Basketball Association's Detroit Pistons could soon be on the market. (Feldman once held a minority stake in the team, and served as a long-time attorney and business partner of deceased Pistons owner William Davidson.)
Basketball legend Michael Jordan has also reached an agreement to buy a controlling stake in the NBA's Charlotte Bobcats from BET founder Robert Johnson. Calls to a spokesman for Schiff Hardin, a firm that has a longtime relationship with Jordan, were not immediately returned.
TOUGH TIMES FOR THE EPL
One of the most storied soccer leagues in the world, the English Premier League, lately has found itself in a world of financial trouble. While many of the league's 20 member clubs are owned by some of the world's wealthiest individuals, the influx of money into higher-end teams has pushed lower-tier rivals into insolvency and others onto the auction block.
Weil's West acknowledged he was involved in some of the ownership issues surrounding Liverpool on behalf of Hicks. He referred us to a white paper from Los Angeles-based sports finance boutique Park Lane about investing in European soccer.
This week arguably the most popular sports team on the planet--Manchester United--saw its ownership assailed because fans are upset with its nine-figure debt, according to the Times of London. Legal Week reports that Freshfields Bruckhaus Deringer corporate department chair Mark Rawlinson is part of a group of London financiers known as the Red Knights that are seeking to seize control of the team from U.S. billionaire Malcolm Glazer. (The Glazer family says the team isn't for sale.)
Glazer's takeover of Man U in 2005 was so controversial that the team's fans created an anti-Glazer chant and have unfurled anti-Glazer banners at matches. But Man U isn't the only club in the league with debt troubles. The money problems plaguing the EPL are serious enough that lawyers from several firms are tending to team-related finance matters.
Photo: CARL DE SOUZA/AFP/Getty Images - Manchester United at a 2010 Carling Cup final match at Wembley in London, February 28, 2010.
AROUND THE HORN
Finally, we would be remiss if we didn't note the passing of two legendary sports lawyers in the past month. Katten Muchin Rosenman corporate partner Gerald "Jerry" Penner passed away in late January. He was 69. Penner was a longtime lawyer and confidant to Chicago Bulls and Chicago White Sox owner Jerry Reinsdorf, helping Reinsdorf purchase both teams. Penner served as outside general counsel for both.
Mark Rosenthal, chairman of the national sports group at Jeffer, Mangels, Butler & Marmaro, passed away in early February. Rosenthal represented several sports teams in arbitrations, most notably the Rangers, Los Angeles Dodgers, and Atlanta Braves. He was 61.Make a comment