The Work

March 19, 2010 4:57 PM

The G.O.A.T. Chronicles: A Cigar-Chewing, Bet-Making Look at Sports and the Law

Posted by Zach Lowe

Michael_Jordan Michael Jordan's acquisition of a controlling stake in the Charlotte Bobcats was a more Wachtell, Lipton, Rosen & Katz-heavy affair than we'd previously thought. The greatest basketball player of all-time (a man our all-time favorite athlete, Larry Bird, once called "God disguised as Michael Jordan") turned to a Wachtell team led by partner David Silk to negotiate the purchase of most of former owner Robert Johnson's stake for $275 million, according to lawyers on the deal. 

Johnson's legal team, led by Richard Gale at Arent Fox, was negotiating down to the line with Jordan and one rival bidder: George Postolos, a former NBA attorney and top executive with the Houston Rockets. Postolos also is a former associate at Wachtell. Postolos lost out despite putting together what was widely viewed as a competitive offer. And if you ask Postolos why he lost, he'll point you right back to the legal work Silk and Wachtell did for Jordan when MJ bought a minority stake in the Bobcats in 2006. As part of that deal, Jordan received certain exclusive preferential negotiating rights in the event Johnson ever decided to sell a large chunk of the team. "One of the main reasons Michael Jordan owns the team today is because of the preferential rights" Wachtell negotiated for him in 2006, Postolos told us via e-mail. "Michael chooses his advisors very well." As for what those advantages were, three sources who worked on the deal tell us Jordan had a right of first negotiation which gave him an exclusive window to bid alone. (All three sources say Johnson was free to choose a competing bidder who put up a better offer, but that he could not cleanly pick someone offering less money than Jordan.)

How did Jordan end up choosing Wachtell as his go-to advisor? The firm had advised Jordan's longtime agent, David Falk, during a series of deals involving Falk's agency, Silk says. One of Falk's partners, Curtis Polk, has also served as Jordan's financial advisor, according to CNNMoney. Jordan and Wachtell hooked up initially through the Falk/Polk connection, and the relationship has lasted, Silk says. Silk won't get into the exact rights Jordan secured for himself in 2006, but he says reports that Jordan recently negotiated additional matching or preference rights in order to beat back Postolos aren't accurate. Whatever advantages Jordan had, he negotiated them in 2006, Silk says. 

We wondered whether either Postolos (who has been a Wachtell client at times) and Silk felt any nostalgia working against each other. Says Postolos: "I feel nostalgia when my old firm is on my side of a transaction. When they are on the other side, I have no time for nostalgia."

You've not heard the last of Postolos, which is good news for Douglas Bland, Postolos's deal counsel at Vinson & Elkins in Houston. "I am committed to becoming an NBA owner," Postolos says. Bland did not return messages.

Meanwhile, a couple of other major sports franchise deals aren't going quite as smoothly as Jordan's acquisition of the Bobcats.

• We reported last month that Pepper Hamilton partner Charles "Chuck" Greenberg and his investor group successfully inked a deal to buy baseball's Texas Rangers from owner Tom Hicks and the Hicks Sports Group for about $530 million. Hicks, who also owns the Dallas Stars of the National Hockey League and the Liverpool Football Club in England, owes various banks at least $500 million in debt, and those banks are threatening to hold up the Rangers sale, according to The Wall Street Journal. The issue, according to the WSJ: Creditors say Hicks is not entitled to $90 million Greenberg's group has offered to pay Hicks for a parcel of land between the Rangers stadium and the new Dallas Cowboys football stadium in Arlington. The creditors believe the land is worth less than $90 million, and that Hicks is not entitled to keep that money, the WSJ says. 

Major League Baseball is mediating the dispute and hopes to arrange a settlement, the WSJ says. The Rangers sale is scheduled to close April 1. 

Glenn West of Weil, Gotshal & Manges advised Hicks on the Rangers sale and is continuing to advise Hicks in negotiating with the bank group. He declined to comment on the matter. Latham & Watkins partner Ronan Wicks is advising the bank creditors, according to lawyers on the deal. He did not immediately return a message seeking comment. 

Incidentally, West says he is also advising Hicks on what to do with Hicks's stake in the Liverpool club. That situation is not going well. A New York-based hedge fund, the Rhone Group, has offered Hicks about $150 million for a 40 percent stake in Liverpool, an offer that values the team at about half the amount of a prior offer Liverpool's ownership turned down two years ago, according to The Independent. The team owes the Royal Bank of Scotland about that same amount, and RBS wants its money by April 6

West declined to comment on that situation. 

• Remember the Phoenix Coyotes, the bankrupt National Hockey League team whose former owner, Jerry Moyes, had the team file for Chapter 11 and then tried to sell it through bankruptcy court to a Canadian businessman (Jim Balsillie) who wanted to move the team to Ontario? The NHL (represented by Skadden, Arps, Slate, Meagher & Flom) didn't much like that idea, and they claimed that Moyes was trying to use bankruptcy court to skirt league rules requiring that the NHL approve any franchise relocation. The judge hearing the case ultimately agreed, disqualified Balsillie's bid, and approved a separate deal in which the NHL purchased the Coyotes for $140 million. 

But the NHL isn't done with Moyes. Last week, the league filed suit against Moyes in New York state court. In the suit, the NHL (represented here by Proskauer Rose) claims Moyes breached his agreement with the league when he began negotiating with Balsillie to relocate the team to Ontario, the Phoenix Business Journal reports. Moyes' attorney, Peter Sorensen of Jennings, Strouss & Salmon in Phoenix, says Moyes will file a counterclaim against the league early next month. 

The league, meanwhile, is still in talks to sell the Coyotes to a bidding group called Ice Edge Holdings represented by Cadwalader, Wickersham & Taft, sources say. The league hopes to sell the team for about $160 million, the Phoenix Business Journal says. Skadden is advising the league on the possible sale, which is running up against some financing problems, the Phoenix Business Journal says.

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