May 6, 2010 4:52 PM
The "For Sale" Chronicles: Every Team Must Go!
Posted by Zach Lowe
We cannot remember a time in which more sports teams--especially basketball teams--were on the block at once, and all of that means a ton of work for deal lawyers and those plugged into the sports world. In the past two months alone, we've written about the sales or pending sales of the Charlotte Bobcats, Washington Wizards, Texas Rangers, Dallas Stars, Phoenix Coyotes,Tampa Bay Lightning, and the Liverpool club in the English premier league.
Now, we've got three more to tell you about. Let's start with basketball, since nearly a third of the National Basketball Association's teams have either just changed owners or likely will in the next year or two. The hot team right now: The New Orleans Hornets. George Shinn, the only majority owner the club has ever known since its birth as the Charlotte Hornets in 1989, has agreed to sell his stake in the team to minority owner George Chouest for an undisclosed sum. Chouest owns an energy company that does business with the offshore oil and gas industry, and, more importantly for Hornets fans, he's a Louisiana native who presumably wants to keep the team in New Orleans, according to ESPN.com. The team is believed to be worth around $285 million, and the two sides will likely announce a deal next week, according to ESPN.com and a source familiar with the matter.
The legal work is also an all-New Orleans affair. Blake Bennett, a shareholder of the firm Liskow & Lewis, is representing Shinn in the deal, according to two sources familiar with the matter. Bennett declined to comment when we reached him today. Hoops junkies know that Shinn became something of a reviled figure in Charlotte after his unsuccessful agitation for a publicly funded arena and a well-publicized sexual assault trial. Shinn eventually won the trial, but the accusations embarrassed him and the haggling over the new arena drove the team out of Charlotte and to New Orleans, according to this article in the Charlotte Observer.
Chouest isn't as well-known among Hornets die-hards. His lead lawyer on the deal, Lee Adler, a partner at the New Orleans firm Phelps Dunbar, did not return a call seeking comment.
The NBA's Golden State Warriors, based in Oakland, Calif., will draw a bigger purchase price than the Hornets, though the exact amount current owner Chris Cohan is seeking remains unclear, according to the San Jose Mercury News. What does appear certain: Oracle chief Larry Ellison will pursue the team aggressively, and long-suffering fans of the Dubs are probably rooting for Ellison and his deep pockets to win the bidding. Covington & Burling is advising Cohan in the sales process, according to a source on the deal. That source tells us talks between the Warriors and Ellison haven't advanced to the point that lawyers from the two sides have spoken to each other.
For our money, the most interesting ongoing ownership saga is that of the National Football League's St. Louis Rams, a proud franchise going through a string of miserable seasons. Chip Rosenbloom and Lucia Rodriguez, the siblings who own 60 percent of the franchise, want to sell their stake and have retained Irell & Manella partner emeritus Milton Hyman to advise them on the potential deal, according to a source familiar with the matter. Hyman, who is based in the Rams' former home in Los Angeles, did not return a call seeking comment. The siblings have what appears to be a willing buyer in Shahid Khan, a Pakistani immigrant who struck it rich in the auto parts industry, according to Forbes and the St. Louis Post-Dispatch. Khan also has played his cards right in retaining sports law powerhouse Proskauer Rose as his lead counsel. It never hurts for prospective buyers, who need approval from the league and most team owners in order to join the club, to hire a legal team friendly with the league. Proskauer will be lead counsel for all four major U.S. professional sports leagues as they renegotiate their collective bargaining agreements with players unions over the next 18 months. Proskauer lawyers declined to comment on the Rams deal.
So we've got a buyer and a seller--let's just sign the papers, right? It's not that simple, because Stan Kroenke, who owns 40 percent of the Rams, has the right to match any bid for the Rosenbloom/Rodriguez chunk of the team. And this is where it gets really interesting. The NFL's rules prohibit controlling NFL owners from owning baseball, basketball, or hockey teams in other NFL cities. Kroenke owns the NBA's Denver Nuggets and the National Hockey League's Colorado Avalanche. So how can Kroenke take control of the Rams without running afoul of this rule? He either needs a waiver from the NFL or he could tweak the ownership structures of the Avalanche and Nuggets, including perhaps transferring or selling those teams to family members, the Post-Dispatch says. Kroenke has told the NFL he won't seek a waiver, indicating he'll go down the latter path, the paper reports.
Guiding Kroenke though this process will be Sonnenschein Nath & Rosenthal partner Alan Bornstein, according to a source close to the deal. Bornstein didn't return our calls seeking comment.Make a comment