October 6, 2010 12:00 PM

Shearman Leads Red Sox Into Premier League

Posted by Zach Lowe

Sports ownership deals are coming fast these days, and we've got one today that is bound to be contentious and might result in some delicious courtroom litigation. The deal: New England Sports Ventures, the John Henry-led company that owns the 2004 and 2007 World Series champion Boston Red Sox, has agreed to purchase the struggling Liverpool Football Club for a sum believed to be between $400 million and $500 million, according to The New York Times, The Wall Street Journal, and Legal Week. One wrinkle: the soccer team's current owners, Tom Hicks and George Gillett, oppose the deal, arguing it undervalues the club. 

Here's the law firm break down, courtesy of Legal Week and some of our own reporting: Weil, Gotshal & Manges is advising the Hicks/Gillett side. Weil has long represented Tom Hicks, a legendary Texas magnate who has owned a bundle of sports teams over the last 20 years. The firm recently advised Hicks in the ultracontentious sale of the Texas Rangers to a group led by Hall of Fame pitcher Nolan Ryan and former Pepper Hamilton partner Chuck Greenberg, according to our prior reporting. Weil's Glenn West, one of Hicks's go-to attorneys, did not immediately return a call seeking comment. 

Legal Week reports Slaughter and May is advising the Liverpool board, which supports the proposed deal as a way of erasing the team's crushing debt load that mostly resulted from the transaction through which Hicks and Gillett took control of the team in 2007. The co-owners tried late Tuesday to squeeze out at least two board members who favored the Henry bid, according to news reports. Hicks and Gillett stand to make zero profit should the Henry bid proceed, but they are on a tight timetable; the Royal Bank of Scotland has given the soccer team until Oct. 15 to refinance its huge outstanding debt or sell the team, the WSJ and NYT say. If Hicks and Gillett fail to do either, RBS could seize the club and sell it to a preferred bidder--a move that would likely cheer Liverpool's fans, who have mounted a nasty public relations campaign against Hicks.

Back to the proposed buyer: A Shearman & Sterling team led by London-based partner Creighton Condon is advising NESV and John Henry. Condon, who did not immediately return a call seeking comment, is Henry's longtime go-to counsel. He advised Henry's group on its landmark $700 million deal to acquire the Sox in 2002, according to this fantastic rundown of the deal from a 2003 story in The American Lawyer. That sale resulted in accusations that Major League Baseball (represented by regular outside counsel Foley & Lardner) had rigged the deal in Henry's favor as the last step in a series of team ownership transactions that took place throughout 2001 and 2002. It also cost Bingham McCutchen its decades-long status as the Sox's top outside counsel, a role Shearman has since assumed. Buyers who participated in the Red Sox auction complained that Bingham "succeeded in alienating just about everyone" by acting in a manner one source described as "aggressive and obnoxious" in the 2003 story referenced above. Buyers complained that, among other things, the firm refused to let potential buyers speak to the team's outgoing ownership.

Obviously, this latest deal is in flux. We'll be following any developments closely.

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