January 21, 2011 7:15 PM
The Score: Clifford Chance, Reed Smith See That Sid the Kid Gets Paid
Posted by Brian Baxter
Two Am Law 100 firms--one of whom got the work through a key lateral hire--are advising on a $115 million secured syndicated revolving credit facility for the National Hockey League's Pittsburgh Penguins.
The Penguins, winners of the 2009 Stanley Cup, employ Sidney Crosby, the 23-year-old superstar considered by many hockey fans to be the league's most dominant player. (And it's not just fans who afford Crosby extra respect; The New York Times reported Friday that some NHL officials are considering revisions to league rules governing hits to the head as a result of Crosby missing time recently due to a concussion caused by such a hit.)
Crosby signed a $43.5 million extension with the team in 2007 and is due to make $9 million this season. With the Penguins currently in fourth place in the Eastern Conference standings, making sure the team has the working capital necessary to pay its top players and other key personnel is a top priority.
"Whatever it takes to get [Crosby] on the ice and keep him there, I'm all in favor of it," jokes Reed Smith finance partner Frank Guadagnino, a former head of the transatlantic financial services practice at the firm, which was founded in Pittsburgh. Guadagnino advised the Penguins in negotiating the new credit facility with PNC Bank along with associates Richard McMahon and Peter Kogan.
Guadagnino says Reed Smith has periodically done work for the team over the years--Penguins general counsel Travis Williams was once a partner at the firm--but matters really picked up last summer when the former head of Pepper Hamilton's sports practice, Charles "Chuck" Greenberg, joined the firm.
Greenberg made headlines last year for leading an ownership group that eventually took control of Major League Baseball's Texas Rangers through a somewhat contentious bankruptcy proceeding. Greenberg, who is now of counsel with Reed Smith given his role with the Rangers, brought with him corporate counsel Kristin Wells. The two helped save ice hockey in the Steel City a decade ago when they advised former Penguins player Mario Lemieux when he bought the franchise out of bankruptcy in 1999.
Negotiations over a new credit facility crop up every few years, Guadagnino says, and the current structure will be up and running for the next few years. Clifford Chance banking and finance partner Jason Young in New York advised Pittsburgh-based PNC as arranger and placement agent for the credit facility, along with associates Owen Zingraff and Daniel Drabkin.
Having represented the Penguins's previous lenders, Société Générale and Sumitomo Mitsui Banking Corporation, Young and Clifford Chance were familiar with the underlying documents for the PNC deal.
The $115 million credit facility also includes a $15 million increase option for the Penguins and is substantially secured by all of the team's assets, including the franchise itself (Forbes estimates the team's value at $235 million), its intellectual property, and a mortgage on the team's sublease at its brand new 18,000-seat arena, the CONSOL Energy Center. Certain holding companies and affiliates of the borrowers are also providing secured guarantees for additional credit support.
As for Guadagnino, he says he's looking forward to the NHL playoffs, having already been to "six or seven games" this year at the CONSOL Center. Besides singing the praises of the Pens' new playpen, Guadagnino says he thoroughly enjoyed HBO's recent inside look at the team's season through its 24/7 television series.
"I think that's the next advancement in sports broadcasting, where you just mike everybody up," says Guadagnino, who laughs when asked if he might consider an Am Law version of the program. "I don't know how exciting it would be sitting in and listening to those conference calls. I'm afraid it might not be as colorful."
ESPN, UT Ink $300 Million TV Deal
Already boasting one of the wealthiest collegiate athletic programs in the country, the University of Texas has secured another revenue stream by announcing a 20-year, $300 million deal with ESPN this week for a new television network, according to The Associated Press.
The deal calls for a 24-hour station that will exclusively broadcast Longhorns sports, including at least one football game and eight basketball games per season, The AP reports. The network will also feature other sports and academic content when it launches in September, and more than 80 percent of its revenue will go to UT.
Having already reported on the Am Law 200 firms advising on other big-money college sports TV deals, we wondered who might have advised on this transaction. Barry Burgdorf, general counsel for the University of Texas System and a former partner at Vinson & Elkins, was traveling on Friday but told us in an e-mail that Vinson corporate partner William Volk and tax partner Donald Wood advised the university on the deal.
The school was also advised on IP matters by Louis Pirkey and Shannon Vale, partners at Austin firm PirkeyBarber, and associate Steven Espenshade. The firm has represented UT before on other matters. (Name partner Pirkey serves as an adjunct professor at UT's law school.) Patricia Ohlendorf, chief legal counsel for UT's Austin branch, handled the bulk of the in-house work for the school, while Burgdorf and Kyle ZumBerge advised the university's regents.
Ohlendorf says in an e-mail that UT has a contract with Cleveland-based sports media and marketing agency IMG to handle third-tier rights distributions and sponsorships. She says Covington & Burling corporate partner Peter Zern advised IMG on the deal with ESPN. Last year Zern was part of a Covington team advising Turner Broadcasting on a $10.8 billion deal to televise the NCAA's annual March Madness college basketball tournament.
IMG associate general counsel Emily Mooring and consultant Douglas Perlman of Sports Media Advisors also played a critical role on the deal for IMG, whose team was led by senior vice president and managing director Thomas Stultz. (Perlman once worked at Proskauer Rose.) Ellis "Skip" Prince III, a commissioner of the United States Hockey League and University of Virginia law grad, served as a consultant for UT.
Around the Horn
-- After being fired earlier this year by ESPN for allegedly making inappropriate comments to a female colleague, sportscaster Ron Franklin is suing his former employer for wrongful termination. Thomas Nesbitt, a name partner at Austin's DeShazo & Nesbitt and a Fulbright & Jaworski alum, is representing Franklin in the suit filed in Travis County District Court in Texas. Nesbitt says that Wendi Kemp, a former McCarter & English partner and assistant general counsel at ESPN, has been handling the case as outside counsel for the company have not yet been appointed.
-- A breach of contract claim filed last year by former Texas Tech football coach Mike Leach has been tossed by an appeals court in Texas, according to the AP. Dicky Grigg, a name partner at Austin firm Spivey & Grigg representing Texas Tech in the case, told the AP that "we won" because the court had held that Leach "has no monetary claims against the school." Texas Tech fired Leach, who holds a law degree from Pepperdine and now works as an announcer for CBS, last year after the school suspended him over his treatment of a former player. Houston's Paul Dobrowski of Dobrowski LLP is representing Leach in the suit. He told the AP his client plans to appeal the decision to the Texas Supreme Court.
-- The National Football League's Oakland Raiders surprisingly fired head coach Tom Cable two weeks ago after the team finished without a losing record for the first time since 2002. This week, the team's owner, 81-year-old Al Davis, lambasted Cable in a press conference called to announced his successor.
Davis revealed that the Raiders withheld $120,000 from Cable's paychecks while he was coaching the team because of civil suits stemming from litigation filed by a former assistant coach and ex-girlfriend of Cable's. Cable, according to The AP, has filed a grievance against the team with the league. The Raiders, of course, have some experience with coach-related litigation. A dispute with former head coach Lane Kiffin, who sought more than $300,000 in back wages, was resolved in the team's favor by an NFL-appointed arbitrator late last year.
-- Finally, two former MLB All-Stars are continuing their legal fight to clear their names. Lawyers for Barry Bonds--including newly minted Skadden, Arps, Slate, Meagher & Flom partner Allen Ruby--were in federal district court in San Francisco on Friday arguing that evidence federal authorities plan to present against the ex-San Francisco Giants slugger at a March trial should be excluded, reports The Recorder, a sibling publication. U.S. district court judge Susan Illston found for Bonds' legal team on the bulk of the evidentiary rulings, but testimony by several former players will be allowed.
Meanwhile, former flamethrower Roger Clemens, who is also facing a perjury charge in addition to five other criminal counts, is making a new push to have an indictment against him thrown out, according to sibling publication The Blog of Legal Times. Houston’s Rusty Hardin and Cooley’s Michael Attanasio are representing Clemens, although the BLT and New York Daily News report that federal prosecutors claim in court papers that Hardin could have a conflict over his brief representation of Andy Pettitte, a former teammate of Clemens's expected to be called as a government witness.
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