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March 30, 2012 4:32 PM

The Score: Davis Polk on Deck for Mets on Minority Stake Sales

Posted by Brian Baxter

Citi_Field_2011

While the Los Angeles Dodgers have kept dozens of Am Law 200 firms busy amid bankruptcy proceedings and a frenzied auction process that ended Wednesday with a historic $2.15 billion deal, another National League team turned to its longtime outside counsel for advice on a more modest transaction.

Davis Polk & Wardwell is advising the financially strapped New York Mets on the sale of 12 minority stakes for $240 million in cash, some of which is earmarked to repay loans made to the team by Major League Baseball and Bank of America, according to news reports.

While the Mets have declined to identify the new stakeholders, reports indicate that the team's current owners bought at least three of the minority shares, the SNY cable network—which is co-owned by the team, Comcast, and Time Warner—snagged one, and SAC Capital hedge fund billionaire Steven Cohen grabbed another. (Cohen, who was among those bidding for the Dodgers, was advised by Munger, Tolles & Olson and Willkie Farr & Gallagher in that unsuccessful endeavor.)

All told, the 12 minority stakes represent 4 percent of the franchise, valuing the team at roughly $950 million. At least one prominent sports business consultant has said publicly the record-setting price paid for the Dodgers could prove to be a boon to Mets' finances.

Davis Polk M&A cohead David Caplan, corporate partner John Butler, employee benefits partner Edmond FitzGerald, capital markets partner Joseph Hall, tax partners Neil Barr and Kathleen Ferrell, and credit partner Lawrence Wieman led the team advising the Mets on the sales, which were completed earlier this month.

Davis Polk is well known to Mets brass, having helped guide majority owners Fred Wilpon and Saul Katz to a $162 million settlement this month with the court-appointed trustee for Bernard Madoff's massive Ponzi scheme. The settlement sum is far short of the $1 billion liability figure that some were suggesting Wilpon and Katz might be facing only a year ago.

Davis Polk has also worked with Mets ownership on its other efforts to shore up the team's finances over the past year and a half, including the ultimately ill-fated sale last May of a $200 million stake in the team to hedge fund honcho David Einhorn. Davis Polk's Caplan and Butler took the lead for the Mets on the negotiations with Einhorn, which collapsed in September. Bingham McCutchen advised Einhorn.

The firm also advised Wilpon's group ten years ago on its $135 million acquisition of the chunk of the Mets it didn't already own. The Davis Polk team working on that matter included then-partner Lewis Kaden, who is now vice-chairman of Citigroup. The global banking giant serves as the official sponsor of the team's 41,800-seat stadium, Citi Field, which opened in 2009 after the Mets vacated their longtime home, Shea Stadium, which was named for legendary New York lawyer Bill Shea.

Mets general counsel David Cohen—not to be confused with former Mets pitcher and noted Supreme Court scholar David Cone—has also played a role in the team's efforts to get its finances in order. Gregory Nero serves as general counsel of Wilpon's Sterling Equities, the entity that serves as parent company of the team and owns 70 percent of the SNY cable network.

The Mets have not solved all their financial problems. The team, which lost about $70 million in 2011, hopes to break even this year fielding a team that appears, on paper, unlikely to vie for the playoffs. Wilpon, Katz, and the rest of the Sterling Equities ownership group are also carrying an estimated $500 million debt load connected to the team and SNY. The bulk of that debt comes due in 2014.

Lawyers representing the Mets did score one unqualified win in court last month. The team prevailed in a suit filed by vendor Kosher Sports, which was seeking to sell its hot dogs and other kosher delicacies at Citi Field on the Jewish Sabbath.

Represented by Boies, Schiller & Flexnerwhose founding partner is known for representing the Mets's crosstown rival, among others—Kosher Sports argued that under its ten-year, $750,000 contract it should be allowed to sell its wares at all home games, even those played on Friday night or Saturday afternoon.

But a federal judge in Brooklyn tossed the suit on summary judgment motions filed by the team's lawyers from Herrick, Feinstein, according to Reuters.

In criminal court, meanwhile, former longtime Mets equipment manager Charlie Samuels was sentenced last month to five years probation after pleading guilty to charges of tax fraud and stolen property as a result of selling pilfered Mets memorabilia.

NFLPA Reveals Some Legal Fees as Longtime GC Retires

Dewey & LeBoeuf may be navigating some rocky financial shoals these days, but the firm continues to make waves in the sports world, thanks to a formidable litigation practice led by Jeffrey Kessler, who is set to join Dewey's new, five-partner "office of the chairman."

The National Football League Players Association, for one, has long relied on Kessler as its legal warrior of choice, and Dewey reaped $2.9 million in fees from the union in the year prior to the league's labor lockout, according to our previous reports. This month the NFLPA filed its annual operating report for 2011, revealing $104,325 in payments to Dewey for its work negotiating a new collective bargaining agreement with the league.

If the sum seem small, it's because the report only covers expenses incurred by the union between March 1 and March 11, 2011. On the latter date, the NFLPA voted to decertify itself as part of a legal strategy that included filing an antitrust suit against the NFL. The two sides eventually settled their differences and the 2011 season proceeded without delay.

Other legal line items on the union's ledger for the period in question include $59,654 to Washington, D.C.'s the Groom Law Group, $10,000 to Madison's Garvey McNeil & Associates, and $7,500 to Philadelphia's Willig, Williams & Davidson.

While the labor dispute has been resolved, many former NFL players—onetime Chicago Bears quarterback Jim McMahon and a group of former Atlanta Falcons, among them—are pursuing litigation against the league over injuries they suffered during their playing days. (Separately, two active Denver Broncos players sued the NFL this month over what they claim were unfair suspensions for violating the league's policy on the use of performance-enhancing drugs.)

All those matters will proceed without the helping hand of Richard Berthelsen, who joined the NFLPA as an in-house lawyer in 1972 and became the union's general counsel in 1983. Berthelsen, who spoke to sibling publication Corporate Counsel three years ago when he briefly served as the union's interim executive director, announced last week that he plans to retire on May 15.

The date marks Berthelsen's fortieth anniversary with the NFLPA, which will entirely be losing the services of its longtime GC. Berthelsen will take a senior consulting role with the union, whose rank-and-file members this month gave their blessing to extending the reign of executive director DeMaurice Smith, a former litigation partner at Latham & Watkins and Patton Boggs, through 2015.

One Would-Be PSU Trustee Makes His Case

As a Pennsylvania judge delayed former Penn State assistant football coach Jerry Sandusky's child sex abuse until June, the individuals vying to join the university's board of trustees continue to make their respectives for why they belong on the body.

Duane Morris associate Adam Taliaferro, a former Penn State football player who heroically battled back from a serious spinal injury, is one of the would-be trustees. Taliaferro joined Duane Morris two years ago and since then has worked to launch a political career He picked up his first victory last November, just as the scandal involving his alma mater erupted.

This month, as the Pennsylvania press corps revisited Taliaferro's triumphant story of recovery, the former football player was forced to, because of where he works, defend himself against allegations that he might have a conflict of interest. When Penn State disclosed its Sandusky-related legal bills in February, Duane Morris was revaled to have received more than $65,000.

The firm is also the former home of Penn State's first-ever general counsel Cynthia Baldwin, who announced her resignation earlier this year as questions arose about what role she played in the scandal. Taliaferro has said publicly that a "Chinese wall" has been put up at Duane Morris to separate him from whatever legal work the firm does on behalf of Penn State.

Voting for Penn State's 32-member board of trustees will take place next month, with the winners to be announced at a board meeting on May 4.

Around the Horn

—The Penn State scandal is hardly the only sports-related story pushing the subject of child sexual abuse to the front of the public's consciousness. This week, for example, brought the revelation that Mets pitcher R.A. Dickey was sexually abused as a child. The Am Law Daily also noted this week that another sex abuse suit, this one involving a deceased football coach at at a prominent Brooklyn private school, received some additional attorney firepower when Pillsbury Winthrop Shaw Pittman agreed to join the plaintiffs' legal team. One of the nine men suing Poly Prep Country Day School is a current Simpson Thacher & Bartlett partner who spoke to The Am Law Daily at length two years ago about his decision to join the litigation.

—Tim Tebow's trade to the New York Jets has sparked a legal battle between sports apparel giants Nike and Reebok. With Nike slated to take over a licensing agreement with the NFL from Reebok on April 1, the Beaverton, Oregon–based company, represented by New York's Tannenbaum Helpern Syracuse & Hirschtritt, filed suit against Reebok to prevent it from cashing in on the sale of Tebow Jets jerseys. On Thursday, a federal judge in Manhattan granted Nike a temporary restraining order barring Reebok from selling Tebow-related Jets merchandise.

Nike is poised to cash in on another sports figure whose rabid following has at times rivaled Tebow's. New York Knicks point guard Jeremy Lin has turned to Arent Foxa firm with the distinction of having a sandwich named for it at one New York deli—to help him obtain and preserve his trademark, even as some medicinal marijuana dispensaries seek to cash in on "Linsanity." We called Lin's lawyer, Arent Fox IP partner Pamela Deese, last month to see how she came to represent her high-profile client, but haven't heard back.

—Finally, ESPN aired a documentary this month about the life of Dewey Bozella, who spent 26 years in prison for a murder he never committed. Bozella was ultimately freed in 2009 thanks to the pro bono efforts of a team of lawyers from Wilmer Cutler Pickering Hale and Dorr. Last summer, members of that team attended the annual ESPY Awards in Los Angeles, where Bozella received the Arthur Ashe Courage Award. Those same lawyers appear in The Dewey Bozella Story, an hour-long documentary produced by ESPN Films, according to sibling publication The Blog of Legal Times.

Photo: Citi Field, Wikimedia Commons

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